UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K


[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  For the fiscal year ended December 31, 2013


Or


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  For the transition period from _________ to _____________


Commission file number: 000-53835

MEDIENT STUDIOS, INC.

 (Exact name of registrant as specified in its charter)


 

 

 

Nevada

 

41-2251802

State or other jurisdiction of incorporation or organization

 

I.R.S. Employer Identification No.


1635 Old River Road, Bloomingdale, Georgia 31302

 (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code:

(912) 298 2000


Securities registered pursuant to Section 12(b) of the Act:


 

 

Title of each class registered

Name of each exchange on which registered

Not Applicable

Not Applicable


Securities registered pursuant to Section 12(g) of the Act:

Common Stock

(Title of Class)



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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes |_| No |X|


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. |_|


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

         Yes |X_| No ||


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

         Yes |X_| No |_


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X|


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One).


Large accelerated filer    [  ]

Accelerated filer                    [  ]

Non-accelerated filer      [  ]

Smaller reporting company     [X]


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal year. The market value of the Registrant’s voting $.001 par value common stock held by non-affiliates of the Registrant was approximately $2,248,993.


Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.   The number of shares outstanding of the Registrant’s only class of common stock, as of March 31, 2014 was 327,883,654 shares of its $0.001 par value common stock.




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TABLE OF CONTENTS

PART I

ITEM 1 Business

5

ITEM 1A Risk Factors

10

ITEM 1B Unresolved Staff Comments

17

ITEM 2 Properties

17

ITEM 3 Legal Proceedings

17

ITEM 4 Mine Safety Disclosure

17


PART II


ITEM 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

18

ITEM 6 Selected Financial Data

20

ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations

21

ITEM 7A Quantitative and Qualitative Disclosures about Market Risk

26

ITEM 8 Financial Statements and Supplementary Data

27

ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

47

ITEM 9A Controls and Procedures

47

ITEM 9B Other Information

48


PART III

ITEM 10 Directors, Executive Officers, and Corporate Governance

49

ITEM 11 Executive Compensation

52

ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

57

ITEM 13 Certain Relationships and Related Transactions, and Director Independence

59

ITEM 14 Principal Accounting Fees and Services

60


PART IV

ITEM 15 Exhibits, Financial Statement Schedules

61

SIGNATURES

63



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FORWARD LOOKING STATEMENTS


This document includes forward-looking statements, including, without limitation, statements relating to Medient Studios, Inc. ("Medient") plans, strategies, objectives, expectations, intentions and adequacy of resources.


For further information about risks, uncertainties and other factors, please review the disclosure included in this report under Item 1A "Risk Factors."




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PART I


ITEM 1. BUSINESS


The following is a summary of some of the information contained in this document. Unless the context requires otherwise, references in this document to the “Registrant” "We," Us," “Our” “Medient” or the "Company" are to Medient Studios, Inc.


About Medient Studios, Inc.


The Company, headquartered in Effingham County, Georgia, is a global film production and distribution company with a strong presence in the key markets of North America, Europe and India. Medient's management team has approximately 150 years of experience in the motion picture industry and is responsible for producing or financing in excess of 250 movies. To date, some 14 movies, in multiple languages and continents, two music acts and several hundred live performance shows have been produced under the Medient banner.


Medient was incorporated on September 10, 2007 in the state of Nevada. The Company operates on a calendar year-end.


Change of Control


On August 28, 2012, Mr. Manu Kumaran (“Mr. Kumaran”) acquired controlling interest in the Company via a stock purchase agreement.

 

On August 28, 2012, a change of control of the Registrant was made when Mr. Kumaran acquired 1,083,000 common shares from selling shareholders, which represented 77.1% of the issued and outstanding common shares.  As a result of this acquisition, Mr. Kumaran became the majority shareholder of the Registrant.

 

On August 28, 2012, the Board of Directors appointed Mr. Kumaran as a director.  Upon the effective date of the resignations, Mr. Kumaran was appointed chief executive officer, chief financial officer, and secretary. On November 5, 2012, Messrs. Matthew Mellon and Joseph Giamichael were appointed to the Board of Directors.


On August 27, 2012, the Board of Directors of Fairway Properties, Inc. adopted a resolution approving an amendment to our Articles of Incorporation to:


- effectuate an increase from one hundred forty million (140,000,000) shares of common stock, par value $0.001 per share, to five hundred million (500,000,000) shares of common stock, par value $0.001 per share;




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- authorize the creation of fifty million (50,000,000) preferred shares and


- change the name of the corporation to Medient Studios, Inc.   


Fairway Properties, Inc. obtained the written consent of stockholders representing 77.14% of Fairway Properties, Inc.’s outstanding common stock as of August 25, 2012 approving an amendment to Fairway Properties, Inc.’s Articles of Incorporation to affect the above-mentioned corporate actions.  Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as amended, the actions became effective and a Certificate of Amendment to our Articles of Incorporation effectuating the corporate actions was filed with the Secretary of State for the State of Nevada twenty (20) days after the date the Information Statement was filed with the Securities and Exchange Commission and a copy was mailed to each of Fairway Properties, Inc.’s stockholders.


The Creation of Preferred Stock


The Board of Directors approved an amendment to further the Company’s best interest to have authorized but unissued 50 Million preferred shares available in order to provide (a) flexibility for future corporate action; (b) to further the Company’s best interest in order to raise additional capital and to be used for corporate opportunities; and (c) the need to issue shares of preferred stock or securities convertible into common stock in connection with strategic corporate transactions, acquisitions, and other business arrangements and corporate purposes, is desirable to avoid repeated separate amendments to the Company’s Articles of Incorporation and the delay and expense incurred in amending the Articles of Incorporation.   


Change of the name of Fairway Properties, Inc. to Medient Studios, Inc. to more accurately reflect the business of Fairway Properties, Inc.


Due to the change in the nature of Fairway Properties, Inc.’s business, the name of Fairway Properties, Inc. no longer represented the Company’s business.  Changing its name does not have any effect on the Company’s corporate status.  All new stock certificates are issued bearing the new name.


On November 26, 2012, The Company acquired Kumaran Holding, LLC (“KH”) an Oklahoma limited liability corporation that was founded for the acquisition and exploitation of theatrical quality motion picture rights on a global basis including rights in Storage 24 and Yellow .


2013 Events


On March 19, 2013, the Company entered into a Memorandum of Understanding with the Effingham County Industrial Development Authority, Georgia, whereby the Company shall have the beneficial ownership of 1560 acres of real property (“Property”) in Effingham



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County, Georgia together with an option to purchase the legal title to the Property.


On May 7, 2013, the Company announced that Prime Focus Limited (“Prime Focus”) and Medient had entered into a non-binding Memorandum of Understanding that provides that Prime Focus and Medient shall execute a definitive agreement for the provision of equipment, technology and skill transfer by Prime Focus to Medient. The Company is in the process of finalizing the definitive agreement. The value of the Prime Focus contribution is estimated by Medient management to be in excess of $40 Million.


The Effingham County Industrial Development Authority (“IDA”) at its Board meeting held on the 19 th of June 2013 approved the issuance of $300 Million Industrial Development Bonds maturing on July 1, 2033 bearing 6% interest related to Medient’s Studioplex in Effingham County.


On July 30, 2013 Medient announced that it had signed a Memorandum of Understanding to acquire one hundred percent ownership of Germany based Atlas International Film GmbH (“Atlas”). This acquisition was completed in the first quarter of 2014.


On August 21, 2013, the Company entered into a lease agreement (“Lease”) with the IDA. for the Property. The Lease is effective from August 21, 2013 through July 1, 2033.  No interest is payable and no payments are due for the first two years, with the total rent of $10 Million being paid in 18 equal annual installments, commencing February 28, 2016. The Company is obligated to pay additional rent if it does not achieve the specified goals of $90 Million in investment and 1,000 jobs on or before the end of year five (5).  At the end of the Lease, the Company has the option to purchase the Property for $100.  


On December 4, 2013 Charles Koppelman, Chairman and CEO of CAK Entertainment Inc., joined the Company as Vice Chairman of the Board of Directors.


Basis of Presentation


The Company prepares its financial statements on the accrual basis of accounting.  All intercompany balances and transactions are eliminated.   Management believes that all adjustments necessary for a fair presentation of the results of the twelve (12) months ended December 31, 2013 and 2012 respectively have been made. The Company does not have any subsidiaries.


Employees


The Company has begun initial operations. We have 28 full time consultants at the present time.




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STRATEGY AND SALES SUMMARY


Strategy


The Company’s management team has identified the following strategies to drive the growth and potential success of the Company. Subject to financing, due diligence, and approval by the Board of Directors, the Company intends –

1) To vertically reintegrate the film production process to eliminate waste, reduce inefficiencies and maximize profitability.

2) To horizontally expand potential markets for the same intellectual property through simultaneous production of electronic games and multiple language film versions.

3) To build a cutting edge, technologically superior production facility in an environmentally sustainable fashion. This live and work campus will enhance efficiency and create exponential reductions in the costs of movies and games.


4) To maximize all available inter alia soft monies including but not restricted to State tax credits, New Market tax credits, employment creation tax credits green energy tax credits etc…to further minimize the effective cost of production.


5) To expand the footprint of operations of the Company into mainland Europe, South East Asia, China and South America to ensure optimal presence in key and emerging entertainment markets.


6) To aggressively pursue a strategy of acquisitions to build scale and comprehensive integrated interface for all elements of the entertainment industry.


Sales Summary


The Company has a number of domestic and international sales distribution agreements with companies such as Universal Pictures Visual Programming Limited, Magnolia Pictures and others.  


STORAGE 24


Storage 24 is a horror genre movie directed by Johannes Roberts, and starring Noel Clarke. The rights to Storage 24 were acquired by the Company on October 18, 2012.




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There are executed distribution agreements for theatrical and video on demand with a number of international distributors, including Universal Pictures Visual Programming Limited, CN Entertainment, IPA Asia Pacific, and domestically with Magnolia Pictures.


Rights for the development, production and exploitation of any prequel, sequel or remake film(s) of the Storage 24, together with such rights required for the inclusion of the Monster in film(s) have been sold in 2013.


YELLOW


Yellow is a drama that was written and directed by Nick Cassavetes, and stars Heather Wahlquist, Ray Liotta, Melanie Griffith, Sienna Miller, and others. The rights to Yellow were acquired by the Company on October 18, 2012.


The movie has been screened at several prestigious festivals around the world including the Toronto International Film Festival, Tokyo International Film Festival, South by Southwest Film Conference & Festival and the Catalina Film Festival, where it won “Best Film”. Atlas acts as international sales agent and ICM/Jeff Berg handles domestic distribution.


COMPETITION, MARKETS AND REGULATION


Competition


The Company competes both domestically and internationally for the exploitation and commercialization of theatrical films, DVD and on-demand sales, cable and television rights, and other forms of intellectual property.  Our competitors range from small independent film producers to well financed established film studios, such as Lionsgate, Sony, and Disney.


Markets


The Company’s target market is domestic and international film distributors, as well as domestic and international film theater patrons.


Current Operational Status


The Company’s first film rights acquisition, Storage 24 , has been and continues to be distributed globally. Rights for the development, production and exploitation of any prequel, sequel or remake film(s) of the Storage 24, together with such rights required for the inclusion of the Monster in film(s) have been sold.


 The Company's second major film rights purchase was Yellow, The Company is currently reviewing dates for the film’s domestic and international releases.



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The Company is actively engaged in the development and/or acquisition of multiple intellectual properties for production in 2014.


The Company has commenced preconstruction activities on the Property. Multiple statutory and mandatory engineering surveys are under way.


Investment Company Act 1940


Although the Company will be subject to regulation under the Securities Act of 1933, as amended, and the 1934 Act, it believes that it will not be subject to regulation under the Investment Company Act of 1940 (the "1940 Act") insofar as it will not be engaged in the business of investing or trading in securities. The Company has obtained no formal determination from the SEC as to its status under the 1940 Act and, consequently, any violation of the 1940 Act would subject it to material adverse consequences. The Company believes that, currently, it is exempt under Regulation 3a-2 of the 1940 Act.


ITEM 1A. RISK FACTORS


GENERAL BUSINESS RISK FACTORS


COMPANY RISK FACTORS


Each prospective investor should carefully consider the following risk factors, as well as all other information set forth elsewhere in this filing, before purchasing any of the shares of the Company’s common stock.


1.  We incorporated and now operate the Company during challenging general economic conditions.


The entertainment industry has suffered difficult times over the past several years. Sales of film DVDs and console games have dropped dramatically, therefore making it more difficult for film productions to obtain necessary financing and exploitation revenues.


2.  We have a limited revenue and performance history.


Our revenue has not been enough to support operations. We are not profitable, and must be regarded as a rapidly evolving Company with all of the unforeseen costs, expenses, problems, risks and difficulties to which such companies are subject.




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3.  We can give no assurance of success or profitability.


There is no assurance that We will generate profits or that the market price of our common stock will be increased thereby.


 4.  We may have a shortage of working capital in the future due to delays in realizing revenues and/or increased capital requirements for construction of the Studioplex or film production which could jeopardize Our ability to carry out Our business plan.

.

5.   The costs of producing and marketing feature films have steadily increased and may further increase in the future, making it more difficult for a film to generate a profit or compete against other films.


6.   Budget overruns may adversely affect Our business .


7.  We may in the future issue more shares that could cause a loss of control by Our present management and current stockholders.


We may issue further shares as consideration for the cash or assets or services out of Our authorized, but unissued, common stock that would, upon issuance, represent a majority of the voting power and equity of the Company. The result of such an issuance would be those new stockholders and management would control the Company, and persons unknown could replace our management at that time. Such an occurrence would result in a greatly reduced percentage of ownership of the Company by Our current shareholders, which could present significant risks to investors.


8.  Our officers and directors are significant shareholders of the Company. As such there is a possibility of them controlling the Company to the detriment of outsiders.  None of the officers or directors of the Company are relatives.


9.  Mr. Kumaran, our CEO, has preferred shares with 250 for one voting rights.  He has the ability to control and make corporate decisions and investors will have limited ability to affect corporate decisions.


10.  We have agreed to indemnification of officers and directors as is provided by Nevada Statute.  Nevada Statutes provide for the indemnification of Our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities the Company’s behalf. The Company will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person's promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification.




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11.  Our success depends on certain key employees.


Our success depends to a significant extent on the performance of a number of senior management and other key employees, including production and creative personnel. We particularly depend upon Our Chief Executive Officer, Mr. Kumaran.  As a result, Our success depends to a significant extent on Mr. Kumaran’s creative and business decisions regarding the motion pictures We develop, acquire, produce and distribute.


We do not currently have “key person” insurance on the lives of any of Our officers or directors. In addition, competition for the limited number of business, production and creative personnel necessary to create and distribute our intellectual property is intense and may grow in the future. Our inability to retain or successfully replace where necessary members of Our senior management and other key employees could have a material adverse effect on Our business, results of operations and financial condition.


12.   Our revenues and results of operations may fluctuate significantly.  Revenues and results of operations are difficult to predict and depend on a variety of factors . Our revenues and results of operations depend significantly upon the performance of the motion pictures that We license for distribution, which We cannot predict with certainty. Accordingly, Our revenues and results of operations may fluctuate significantly from period to period, and the results of any one period may not be indicative of the results for any future periods. Furthermore, largely as a result of these predictive difficulties, We may not be able to achieve the earnings projected by any analysts that follow Our stock.


13.   Accounting practices used in Our industry may accentuate fluctuations in operating results . In addition to the cyclical nature of the entertainment industry, industry accounting practices may accentuate fluctuations in Our operating results. In accordance with U.S. generally accepted accounting principles and industry practice, We amortize film costs using the “individual-film-forecast” method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films. The majority of a film’s costs are generally amortized within three years of the picture's initial release.


Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release. Film costs are stated at the lower of amortized cost or the film’s estimated fair value. Individual film costs are reviewed on a title-by-title basis, when an event or change in circumstances indicates that the fair value of a film is less than its unamortized cost. The fair value of the film is determined using management’s future discounted revenue and cost estimates. Additional amortization is recorded in the amount by which the unamortized costs exceed the estimated fair value of the film. Estimates of future revenue



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involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films may be required as a consequence of changes in management’s future revenue estimates.


14.   We depend on a limited number of projects, and the loss or failure of a major project could have a material adverse effect on Our business . Our revenue is generated from a limited number of film rights, currently principally Storage 24 and Yellow . Films that We develop, finance, or license for distribution vary due to the opportunities available to Us and to targeted audience response, both of which are unpredictable and subject to change. The loss or failure of a major project could have a material adverse effect on Our results of operations and financial condition as well as on the market price of Our securities. We cannot assure that any project We undertake or participate in will be successful.


15.   We rely upon pre-sales, advances and guarantees for film finance . Market conditions can fluctuate dramatically which could result in an inability to finance Our film productions.


16.  We rely on tax preference and tax credit transactions and similar programs for a substantial portion of Our revenues and recovery of film costs. We cannot be certain that such revenues and cost recoveries will be available to us in future periods. These benefits accrue pursuant principally by means of statutes in various states in the U.S., the United Kingdom and other countries, which could be repealed or amended based on general income tax considerations or political changes. We are aware of no such changes proposed or threatened at the present time.


17.  We currently have a credit facility. We have a secured credit facility with respect to financing development, production and exploitation of Our motion pictures. The lender has certain lien rights on the Company’s accounts receivables and intellectual property. In general, We have primarily depended upon financing arrangements tied to specific motion pictures for the funding of Our film productions. We cannot assure investors that We can secure a credit facility or that, if We secure a credit facility, the terms will be favorable to Us. Without a credit facility, We will not have the same flexibility with Our financing arrangements as some of Our competitors and will need to continue to rely upon financing arrangements tied to specific motion pictures for the funding of Our productions and the exploitation thereof.


18.   Our success depends on the performance of our films and games. It is widely acknowledged that the entertainment industry is inherently volatile and therefore unpredictable .


 19.   We license exploitation rights to Our films and games to distributors worldwide. We do not control the timing and manner in which the distributors promote and release Our product which may have an adverse impact on our revenues..  




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20.   The film industry is heavily unionized and We could be adversely affected by strikes, potential strikes or other union job actions .


21.   We are smaller and less diversified than many of Our competitors .


22.   Protecting and defending against intellectual property claims may have a material adverse effect on our business.  Our ability to compete depends, in part, upon successful protection of Our intellectual property. We do not have the financial resources to protect Our rights to the same extent as major studios. We are not a member of the Motion Picture Association of America (“MPAA”) as are the major studios and as a result We cannot rely on MPAA resources to prevent piracy and copyright infringements. We attempt to protect proprietary and intellectual property rights to Our productions through available copyright and trademark laws and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries. We also distribute Our products in other countries in which there may be no copyright or trademark protection. As a result, it may be possible for unauthorized third parties to copy and distribute our productions or certain portions or applications of our intended productions, which could have a material adverse effect on Our business, results of operations and financial condition.


Litigation may also be necessary in the future to enforce Our intellectual property rights, to protect Our trade secrets, or to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and the diversion of resources and could have a material adverse effect on Our business, results of operations and financial condition. We cannot assure investors that infringement or invalidity claims will not materially adversely affect Our business, results of operations and financial condition. Regardless of the validity or the success of the assertion of these claims, We could incur significant costs and diversion of resources in enforcing Our intellectual property rights or in defending against such claims, which could have a material adverse effect on Our business, results of operations and financial condition.


23.   Others may assert intellectual property infringement claims against Us.  One of the risks of the film production business is the possibility that others may claim that Our productions and production techniques misappropriate or infringe the intellectual property rights of third parties with respect to their previously developed films, stories, characters, other entertainment or intellectual property. We may receive in the future claims of infringement or misappropriation of other parties’ proprietary rights. Any such assertions or claims may materially adversely affect Our business, financial condition or results of operations. Irrespective of the validity or the successful assertion of such claims, We could incur significant costs and diversion of resources in defending against them, which could have a



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material adverse effect on Our business, financial condition or results of operations. If any claims or actions are asserted against Us, we may seek to settle such claim by obtaining a license from the plaintiff covering the disputed intellectual property rights. We cannot assure, however, that under such circumstances a license, or any other form of settlement, would be available on reasonable terms or at all.


24.   Piracy of motion pictures, including digital and internet piracy may reduce the gross receipts from the exploitation of Our films.  Motion picture piracy is extensive in many parts of the world and is made easier by technological advances and the conversion of motion pictures into digital formats.


25.   There is a potential for disputes and litigation in the motion picture business.  There are risks of disputes and litigation with financiers, competitors, unions, producers and other talent, and with distributors. We cannot assure investors that We will prevail in the event of any disputes or litigation.

 

26.  The regulation of penny stocks by SEC and FINRA may discourage the tradability of our securities.  We are a "penny stock" company. Our common stock trades on the OTCQB Market and We are subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of investors to sell their securities in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions.


In addition, the Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute "penny stocks" within the meaning of the rules, the rules would apply to Us and to Our securities. The rules will further affect the ability of owners of shares to sell Our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions.


Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged



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matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although We do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to Our securities.


27.  We will pay no dividends in the foreseeable future.  We have not paid dividends on our common stock and do not ever anticipate paying such dividends in the foreseeable future.


28.  Our shareholders may suffer future dilution due to issuances of shares for various considerations in the future.  There may be substantial dilution to Our shareholders as a result of future decisions of the Board of Directors to issue shares without shareholder approval for cash, services, or acquisitions.


29.  Medient's stock may be thinly traded and as a result an investor may be unable to sell at or near ask prices or at all if the investor needs to liquidate shares.  The shares of Medient's common stock may be thinly-traded in the OTCQB, meaning that the number of persons interested in purchasing Medient's common shares at or near ask prices at any given time may be relatively small or non-existent. Due to these conditions, Medient can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if the investor needs money or otherwise desires to liquidate the securities of Medient.


30.  Trading in Our shares in the public market will most likely be volatile because of factors beyond Our control. There can be no assurance that Our shares will continue to be quoted on the OTCQB or that if they are, there will be an active trading market for the shares. Accordingly, it could be difficult for holders of Our common stock to liquidate their shares.


The market price of our common stock could be subject to significant fluctuations and the market price could be subject to any of the following factors:


 o   Our failure to achieve and maintain profitability;

 o   changes in earnings estimates and recommendations by financial analysts;

 o   actual or anticipated variations in Our quarterly and annual results of operations;

 o   changes in market valuations of similar companies;

 o announcements by Us or Our competitors of significant contracts, new services,                 acquisitions, commercial relationships, joint ventures or capital commitments;



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 o   loss of significant clients or customers;

 o   loss of significant strategic relationships; and

 o   general market, political and economic conditions.


ITEM 1B. UNRESOLVED STAFF COMMENTS


Not applicable.


ITEM 2. PROPERTIES


We have offices located at 131 Southern Boulevard, Savannah, GA 31405, and adjacent to the property at 1635 Old River Road, Bloomingdale, GA 31302. Monthly rent of $2,500 is charged re the Savannah office, and We are responsible for upkeep and other costs at the site office although no rent is charged.


We have also signed a 20 year lease on the Property. We have no lease payments due until August, of 2016.


ITEM 3. LEGAL PROCEEDINGS


Medient anticipates that it (including any future subsidiaries) will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and Medient cannot assure that their ultimate disposition will not have a materially adverse effect on Medient's business, financial condition, cash flows or results of operations. As of the filing of this document, We are not a party to any pending legal proceedings, nor are We aware of any civil proceeding or government authority contemplating any legal proceeding.


ITEM 4. MINING SAFETY DISCLOSURE


Not applicable.




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PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Market Information


There is a limited public trading market for the common stock. On March 18, 2011, the Company's common stock was accepted for trading by FINRA on the OTCQB and was assigned the symbol is "FRYP" on the OTCQB. On October 17, 2012, the name and symbol change was effected to “Medient Studios, Inc.” and the symbol “MDNT.”


The following table sets forth the range of high and low sales prices for the Company's common stock for each of the fiscal quarters for the past year as reported on the OTC Markets' OTCQB and the OTC Bulletin Board. These prices represent inter-dealer prices without adjustments for mark-up, markdown, or commission and do not necessarily reflect actual transactions.

 

 

 

 

 

 

 

High

 

Low

Year Ended December 31, 2013

 

First quarter

$    3.00

 

$    0.30

Second quarter  

 1.85

 

0.19

Third quarter

2.33

  0.33

Fourth quarter

0.43

 

0.01



Holders


As of January 15, 2014, We have approximately 878 shareholders of record of our common stock.


Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about Us. Under Rule 144(k), a person who has not been one of Our affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least 6 months, is entitled to sell shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144.




18




Dividend Policy


As of the filing of this Annual Report, We have not paid any dividends to shareholders. There are no restrictions which would limit Our ability to pay dividends on common equity or that are likely to do so in the future. The Nevada Revised Statutes, however, do prohibit Us from declaring dividends where, after giving effect to the distribution of the dividend; We would not be able to pay Our debts as they become due in the usual course of business; or Our total assets would be less than the sum of the total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution


Recent Sales of Unregistered Securities


During the years ended December 31, 2011 and 2010, We made no sale or issuance of our unregistered securities.


During the year ended December 31, 2012, the Company issued 27,054,000 shares.


On October 24, 2012, the Company issued 179,000 restricted shares to members of the former management team as consultant fees.


On October 24, 2012 the Company issued 250,000 restricted shares as compensation for Directors fees.


On November 26, 2012, the Company issued 26,000,000 restricted common shares and 10,000,000 preferred shares pursuant to the terms of the Kumaran Holding, LLC securities purchase and sales agreement.


On December 4, 2012, the Company issued 3,250,000 common shares in exchange for the conversion of  $1,300,000 of liabilities.


On January 9, 2012, and February 6, 2013, the Company issued a total of 2,500,000 common shares in exchange for the conversion of $1,000,000 of liabilities.


During the Year ended December 31, 2013, the Company issued 81,383,420 common shares.


On March 19, 2013 the Company issued a total of 2,898,551 of common shares in exchange for the conversion of $2,000,000 of liabilities.


On April 11, 2013, the Company issued 2,625,000 shares that were remaining to be issued as per the Kumaran Holding, LLC acquisition agreement.




19





During the three months ended September 30, 2013, the Company issued 4,165,778 shares of its common stock due to financing activities.


On December 13, 2013, the Company issued 11,000,000 shares in Directors consultancy services.


On December 13, 2013, the Company issued 13,800,000 shares pursuant to previously signed debt conversion agreements related to the production of Yellow and Storage 24 .


On December 13, 2013, the Company issued 2,000,000 shares in as compensation for outside legal counsel.


On December 13, 2013, the Company issued 325,000 shares as a retainer fee for investment banking services.


On December 13, 2013, the Company issued 420,000 shares pursuant to various employment agreements.


On December 13, 2013, the Company issued 2,855,000 shares in various third party consultants.


During the three months ended December 31, 2013, an additional 41,294,091 shares were issued pursuant to financing activities.


Issuer Purchases of Equity Securities


Medient did not repurchase any shares of its common stock during the years ended December 31, 2013 or 2012.


ITEM 6. SELECTED FINANCIAL DATA


Not applicable.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS


MANAGEMENTS' DISCUSSION AND ANALYSIS


The following discussion should be read in conjunction with Our audited financial statements and notes thereto included herein and “Forward Looking Statements” above.




20




PLAN OF OPERATIONS


Plan of Operations


We are a content creation company with a truly global footprint. 2013 was a year of great momentum and 2014 will see Us consolidate on those gains and activate the full power of a Company and a management group with over a decade of experience. Movies will be greenlit in multiple languages, Yellow will be released and Phase I of the Studioplex construction will commence.


Movie Production


We expect to finalize Our slate for 2014-15 by May 1, 2014 and announce it during the Cannes Film Festival in May. Cannes is the biggest congregation of all elements of the film industry and the launch of the slate will also dovetail into the introduction of the Studioplex for several key industry demographics.


The objective will be have three films into principal photography by the end of the year and to have at least one film complete by the end of the year.


As stated in the 2013 letter to the share owners The production plan has a narrow focus on the most profitable segment of the film business -- action, horror, sci fi fantasy and thrillers. Interestingly, these genres are also the most indifferent to the star system. Most studio tent pole releases over the past few years have featured unknown or relatively lower level stars in the leading role. The "star independent" nature of the genre allows Medient to ensure optimal utilization of the studio further enhancing profitability .


Our production team will also provide production services and tax credit management for a number of Indian films that are expected to shoot in Georgia to take advantage of the State’s film tax rebate program.


The film industry has maintained a very healthy rate of growth, and is projected to continue growing in both domestic and international markets. According to a recent study by PWC, global consumer/end-user spending on entertainment and media is anticipated to grow by a CAGR of 5.6% from 2012 to 2017.  International box office is up 32% over five years, driven by growth in various international markets, including China, Russia and Brazil.  The Chinese box office grew by 36% in 2012 to become the largest international market. The Indian film industry generated US$3.2 Billion in 2010, and is projected to grow to US$5 Billion by 2014 with a projected CAGR of 14.1%.




21




Our horizontal integration plan to produce the same script in multiple languages targets specific high growth markets like China, India and Latin America. The simultaneous production plan minimizes the incremental cost per additional language version while potentially multiplying the revenues.


Film Sales


Our acquisition of Atlas furthers our strategy of complete vertical integration. Founded in 1967 Atlas is one of the oldest independents in the international film licensing business, with more than 46 years of experience.  Atlas arranges production financing, provides worldwide sales, marketing and distribution services and structures co-productions for theatrical and television product, and their portfolio represents more than 100 producers from all over the world, for which the company has signed over 12,000 license deals.


This year Atlas will represent a minimum of four independent films in addition to Yellow and the new Medient slate and market these films to distributors around the world.


One of two big events for 2014 will be the release in the USA of Our film Yellow . The film has had extremely positive reviews from the trade and the festival audiences and We are confident that it will appeal to the young audience in the USA. We will announce a release date for Yellow by May 31, 2014.


Studioplex


The Medient Studioplex will be the most advanced film and game production facility in the world. The sound stages will feature the latest robotics technology and the pre and post production infrastructure planned will facilitate an entirely new work flow in the creation of content. Once operational these tools will exponentially reduce the cost of movies and will allow real time sharing of assets between the various processes of film and game creation.


The facility will be a carbon neutral sustainable complex with a host of green technologies and will be a live - work campus.


Overview


Through the vertical integration of production and distribution, the horizontal integration of multiple language films, the application of technologies and logistics to reduce cost, and the support from the County and State, Medient management believes this strategy will be highly successful in reaching its goals to reach unusual levels of profitability.

RESULTS OF OPERATIONS




22




For the year ended December 31, 2013, We earned revenues of $2,056,307. We spent $11,687 in commissions and fees, and recorded $1,069,473 for the amortization of film costs, earning a gross margin of $975,147. We had depreciation expense of $5,748, general and administrative expenses of $1,193,997 and licensing fees of $2,638.  We incurred $478,845 on professional fees, investment banking fees and the other professional services. We issued stock for services of $456,585. Such services included investment banking of $9,750, payroll of $12,600 and consultancy of $434,235.  We incurred other net expenses of $203,963 (which included interest expense of $269,346, offset by other income of $65,383). As a result, We had a net loss of $1,366,629 for the year ended December 31, 2013.


Comparatively, for the year ended December 31, 2012, We earned revenues of $3,267,825.  We incurred $156,960 in commissions and fees, and recorded $2,658,647 for the amortization of film costs, earning a gross margin of $452,218. We recorded depreciation expense of $31, general and administrative expenses of $216,955 and paid licensing fees of $4,000. We incurred $79,688 on professional fees and $227,400 on stock for services. We incurred other expenses of $41,774 that primarily included interest. As a result, We had a net loss of $117,630 for the year ended December 31, 2012.  The increase in net loss between the year ended December 31, 2012 and 2013 is primarily due to increased operating costs in 2013 related to the construction of the Studioplex.


For the year ended December 31, 2013, We had an increase in accounts receivable of $2,060,500, an increase in accounts receivable from related parties of $61,255, obtained  deposits of $74,700 and incurred $3,475,732 in film costs.  We added $22,100,000 related to the Studioplex Property and added $276,831 as site development costs. Fixed assets increased by $19,482.


We had an increase in accounts payable of $15,590 and an increase in accounts payable to related parties of $211,718. Accrued expenses increased by $826,699 primarily arising from increased operations. A settlement of $385,000 was settled in full. Notes payable reduced by a net of $196,000. We issued $3,764,000 in notes payable for post production film costs related to Yellow and pre visualization film costs on two further film productions. In addition $3,791,868 in notes payable were converted into common stock. Our credit line borrowings increased by $600,000 and further increased by $188,289 related to investment banking and other fees. Restricted notes were issued in a net amount of $966,000, with interest thereon increasing by $23,644. Aged debt of $617,382 was issued and accrued interest on aged debt increased by $8,278.


As a result, we had net cash used by operating activities of $2,099,533, net cash used in investing activities of $296,313 and net cash provided by financing activities of $2,395,846 for the year ended December 31, 2013.




23




Comparatively, for the year ended December 31, 2012, We had an increase in accounts receivable of $500, an increase in accounts receivable from related parties of $3,267,825 from the exploitation of Storage 24 and acquired $20,187,173 of film rights. We spent $72,872 on site development costs and acquired equipment for $19,000. We had an increase in accounts payable of $171,910, an increase in accounts payable to related parties of $486,905 and We had an increase in accrued liabilities of $255,321. We recorded a settlement payable of $385,000 and issued $6,040,000 in notes payable in connection with the acquisitions of film rights to Storage 24 and Yellow . We incurred $190,321.in accrued interest on loans, and a decrease in Our line of credit of $1,000.  


As a result, We had net cash used by operating activities of $19,744,097, net cash used in investing activities of $93,872 and net cash provided by financing activities of $19,827,951 for the year ended December 31, 2012.


CAPITAL LEASE AND GOVERNMENT ASSISTANCE


On August 21, 2013, the Company entered into a lease agreement (“Lease”) with the Effingham County Industrial Development Authority (the “IDA”). Under the Lease, the Company leased approximately 1,560 acres of land located primarily within Effingham County, Georgia. The Lease is effective from August 21, 2013 through July 1, 2033. No interest is payable and no payments are due for the first two years, with the total rent of $10 Million being paid in 18 equal annual installments, commencing February 28, 2016. The Company is obligated to pay additional rent if it does not achieve the specified goals of $90 Million in investment and 1,000 jobs on or before the end of year 5 (five). At the end of the Lease, the Company has the option to purchase the Property for $100. Furthermore, the State of Georgia and the IDA are providing additional cash grants, rebates, and tax incentives for the Studioplex. The Lease has been accounted for as a capital lease and the net present value of the minimum lease payments under the Lease is $3.6 Million.


The Company obtained an independent third party appraisal on the Lease land, which indicated that the land has a fair market value of $22.1 Million. The difference between the net present value of the minimum Lease payments and the fair market value of the land is considered the value of the government assistance under the Lease.


The $18.5 Million of government assistance has been deferred on the accompanying balance sheet until such time as the Company’s obligations under the Lease have been fulfilled. During the course of the Lease, the Company has beneficial ownership of the land and can utilize the land as collateral for financing purposes. The Company incurred approximately $276,831 and $72,872 of site development costs on the land in 2013 and 2012, respectively.




24




The discounted rate used in calculating the present value of the minimum lease payment was 10.72, which represents the Company’s incremental borrowing rate.


Future interest and principal payments under the Lease are as follows:


For Period Ended         Interest            Principal        Total Payment        Balance

    2014                                                                                                $4,158,082

    2015                                                                                                  4,622,217

    2016                       $465,478           $90,078            $555,556         4,532,141

    2017                         455,410           100,146              555,556         4,431,994

   2018                          444,213           111,343              555,556         4,320,651

Thereafter                $5,034,899      $3,298,433         $8,333,332       $             0


LIQUIDITY


In 2012 and 2013 We generated revenues from the release of Storage 24 , and the sale of prequel and sequel rights on the film. It is anticipated that accounts receivable therefrom will be paid to the Company in the third quarter of 2014.  We will be releasing the film Yellow both domestically and internationally either late in the second quarter or beginning of the third quarter of 2014. In addition to the revenues generated by Storage 24, the Company has raised sufficient investor capital to cover the Company’s overhead requirements pending the release of Yellow . Upon the film’s release, the net proceeds of the film are expected by the Company’s management to not only fund the Company’s operations, but also provide capital for additional new film productions. The Company has completed or has financing agreements in place for the Property, and $40 Million in special effects, production and post production equipment and services. The Company is currently working to complete additional project financing for the construction of the Studioplex.


Non Cash Flow Items


We acquired the beneficial interest in the land valued at $22,100,000 and entered a capital lease for $10,000,000 that is discounted to a net present value of $3,635,538. Deferred government assistance was $18,464,462. We issued common stock of $3,791,868 from the conversion of debt and issued stock for services of $456,585. We issued notes payable for film costs incurred of $3,764,000 and we assumed payables of $311,244.


For the year ended December 31, 2012, We assumed $7,725,000 of liabilities in an acquisition of film rights. We issued 10,000,000 preferred shares for the film rights acquisition, and issued 2,112,951 common shares for the acquisition. In addition, we issued common stock of $1,300,000 from the conversion of debt and issued $277,400 of common stock for services.




25




Capital Resources


We have common stock and preferred stock as Our capital resources.


We currently have no material commitments for capital expenditures within the next year related to the construction of the Studioplex; however we anticipate entering into material contracts in 2014. We intend funding these contracts with vendor financing, third party financing and internally generated cash flow.


In 2012 We had no material commitments for capital expenditures within the next year, however, We intended to incur significant expenses and capital expenditures as part of Our business plan.


Need for Additional Financing


In 2012 and 2013 We generated revenues from the release of Storage 24 , and the sale of prequel and sequel rights on the film. It is anticipate that the accounts receivable therefrom will be paid to the Company in the third quarter of 2014. We will be releasing the film Yellow both domestically and internationally either late in the second quarter or beginning of the third quarter of 2014. In addition to the revenues generated by Storage 24, the Company has raised sufficient investor capital to cover the Company’s overhead requirements pending the release of Yellow . Upon the film’s release, the net proceeds of the film are expected by the Company’s management to not only fund the Company’s operations, but also provide capital for additional new film productions. The Company has completed or has financing agreements in place for the Property, and $40 Million in special effects, production and post production equipment and services. The Company is currently working to complete additional project financing for the construction of the Studioplex.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Medient's operations do not employ financial instruments or derivatives which are market sensitive. Short-term funds are held in non-interest bearing accounts and funds held for longer periods are placed in interest bearing accounts. Large amounts of funds, if available, will be distributed among multiple financial institutions to reduce risk of loss. Our cash holdings do not generate any significant interest income.





26




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Medient Studios, Inc.

Index to

Financial Statements


 

 

 

 

 

Page

Report of Independent Registered Public Accounting Firm

 

28

 

 

 

Balance Sheets as of December 31, 2013 and 2012

 

29

 

 

 

Statements of Operations for the Years Ended December 31, 2013 and 2012

 

31

 

 

 

Statement of Changes in Stockholders' Equity (Deficit) for the Period from September 10, 2007 through December 31, 2013

 

32

 

 

 

Statements of Cash Flows for the Years Ended December 31, 2013 and 2012

 

33

 

 

 

Notes to Financial Statements

 

34





27




Report of Independent Registered Public Accounting Firm


To the Board of Directors

Medient Studios, Inc.

Effingham, Georgia


We have audited the accompanying balance sheets of Medient Studios, Inc. (the “Company”) as of December 31, 2013 and 2012, and the related statements of operations, changes in stockholders’ equity, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Medient Studios, Inc. as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.


We were not engaged to examine management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 and 2012, included in the Form 10-K and, accordingly, we do not express an opinion thereon.




The Hall Group, CPAs

Dallas, Texas

March 28, 2014




28




MEDIENT STUDIOS, INC.

BALANCE SHEETS

AS OF DECEMBER 2013 AND 2012


 

December 31, 2013

December 31, 2012

Assets

 

 

  Current Assets:

 

   Cash and Cash Equivalents

$                   -

$                  -

   Accounts Receivable

2,061,000

500

   Accounts Receivable - Related Party

3,329,080

3,267,825

   Deposits

74,700

-

    Total Current Assets

5,464,780

3,268,325

 

 

 

 Non-Current Assets:

 

   Film Costs, net of accumulated amortization

21,004,258

17,528,526

   Land

22,100,000

-

   Site Development Costs

349,703

72,872

   Equipment

38,482

19,000

   Accumulated Depreciation

(5,779)

(31)

    Total Non-Current Assets

43,486,664

17,620,367

 Total Assets

$48,951,444

$20,888,692

 

 

 

Liabilities and Stockholders' Equity

  Current Liabilities:

 

   Accounts Payable

$     187,500

$    171,910

   Accounts Payable - Related Party

698,623

486,905

   Accrued Expenses

1,082,020

255,321

   Settlement Payable

-

385,000

   Notes Payable

5,844,000

6,040,000

   Credit Line

788,289

-

   Restricted Notes

966,000

-

   Aged Debt

617,382

-

    Total Current Liabilities

10,183,814

7,339,136

 

 

 

 Long Term Liabilities:

  Capital Lease Obligation

3,635,538

-

  Deferred Government Assistance

18,464,462

-

   Total Long Term Liabilities

22,100,000

-

Total Liabilities

$32,283,814

$7,339,136

 

 

 



29




MEDIENT STUDIOS, INC.

BALANCE SHEETS

AS OF DECEMBER 2013 AND 2012

(Continued from previous page)


Stockholders' Equity (Deficit)

  Preferred Stock, 50,000,000 shares authorized, 10,000,000 Issued and Outstanding

$10,000,000

$10,000,000

  Common stock, $0.001 par value; 500,000,000 shares authorized, and 109,841,420 and 28,458,000 shares issued and outstanding, respectively

109,841

28,458

  Additional Paid-in Capital

8,167,131

3,763,811

  Retained (deficit)

(1,609,342)

(242,713)

Total Stockholders' Equity (Deficit)

16,667,630

13,549,556

Total Liabilities and Stockholders' Equity

$48,951,444

$20,888,692


See the notes to these financial statements.



30




MEDIENT STUDIOS, INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012


 

Year Ended December 31, 2013

Year Ended December 31, 2012

Revenue

$2,056,307

$3,267,825

 

 

 

Cost of Sales

 

  Commissions and Fees

11,687

156,960

  Amortization of Film Costs

1,069,473

2,658,647

 Total cost of sales

1,081,160

2,815,607

Gross Margin

975,147

452,218

 

 

 

Operating Expenses:

 

  Depreciation expense

5,748

31

  General and administrative expenses

1,193,997

216,955

  Licensing fees

2,638

4,000

  Professional Fees

478,845

79,688

  Stock for services

456,585

227,400

Total operating expenses

2,137,813

528,074

 

 

 

Other

 

 

  Other expense (net)

203,963

41,774

 

 

 

Net (Loss)

$(1,366,629)

$(117,630)

 

 

 

Earnings per share information:

Net loss per common share, basic and fully diluted

$        (0.01)

$      (0.03)

Weighted average number of common stock outstanding, basic and diluted

72,358,210

3,958,773


See the notes to these financial statements.



31




MEDIENT STUDIOS, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM SEPTEMBER 10, 2007 (INCEPTION) THROUGH DECEMBER 31, 2013


 

Preferred Stock Number of Shares

Preferred stock $1.00 par

Common stock number of shares

Common stock $.001 par

Additional Paid-in Capital

Retained earnings

Total

Balance - December 31, 2011

-

$              -

1,404,000

$1,404

$75,181

$(125,083)

$(48,498)

  Assumption of liabilities by previous shareholders

-

-

-

-

75,333

-

75,333

  Common stock issued for services

-

-

429,000

429

226,971

-

227,400

  Common stock issued in satisfaction of debt

-

-

3,250,000

3,250

1,296,750

-

1,300,000

  Common stock issued for acquisition of Kumaran Holding

-

-

23,375,000

23,375

2,089,576

-

2,112,951

  Preferred stock issued for acquisition of Kumaran Holding

10,000,000

10,000,000

-

-

-

-

10,000,000

 Net loss

-

-

-

-

-

(117,630)

(117,630)

 

 

 

 

 

 

 

 

Balance - December 31, 2012

10,000,000

$10,000,000

28,458,000

$28,458

$3,763,811

$(242,713)

$13,549,556

  Common stock issued for services

-

-

16,600,000

16,600

439,985

-

456,585

  Common stock issued in satisfaction of liabilities

-

-

62,158,426

62,158

3,729,710

-

3,791,868

  Common stock issued for acquisition of Kumaran Holdings

-

-

2,625,000

2,625

233,625

-

236,250

 Net loss

-

-

-

-

-

(1,366,629)

(1,366,629)

 

 

 

 

 

 

 

 

Balance - December 31, 2013

10,000,000

$10,000,000

109,841,420

$109,841

$8,167,131

$(1,609,342)

$16,667,630


See the notes to these financial statements.



32




MEDIENT STUDIOS, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2013 and 2012


 

Year ended December 31, 2013

Year ended December 31, 2012

Cash flows from operating activities:

  Net loss

$(1,366,629)

$    (117,630)

  Adjustments to reconcile net loss to net cash used in operating activities:

   Common stock issued for services

456,585

227,400

   Depreciation

5,748

31

   Amortization of film costs

1,069,473

2,658,647

  Movement in assets and liabilities:

   (Increase) in accounts receivable

(2,060,500)

(500)

   (Increase) in accounts receivable from related parties

(61,255)

(3,267,825)

   (Increase in film costs

(781,205)

(20,187,338)

   Increase in accounts payable

15,590

171,910

   Increase in accounts payable to related parties

211,718

486,905

   Increase in accrued expenses

370,114

225,321

 Increase in Other

40,828

59,000

Net cash used by operating activities

(2,099,533)

(19,744,079)

 

 

 

Cash flows from investing activities

  Purchase of fixed assets

(19,482)

(19,000)

  Site Development Costs

(276,831)

(74,872)

Net cash used in investing activities

(296,313)

(93,872)

 

 

 

Cash flows from financing activities:

  Assumption of liabilities in film rights acquisition

-

7,725,000

  Issuance of preferred stock for acquisition of film rights

-

10,000,000

  Issuance of common stock

24,175

2,112,951

  Credit line borrowings

788,289

-

  Aged debt borrowings

617,382

-

  Restricted notes borrowings

966,000

-

Net cash provided by financing activities

2,395,846

19,837,951

 

 

 

Net (decrease) in cash

-

(814)

Cash and cash equivalents - beginning of period

-

814

Cash and cash equivalents - end of period

$                -

$                -

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

Capital lease and Government assistance

$22,100,000

$                -

Shares of common stock issued in conversion of debt

3,791,868

1,300,000

Notes payable issued for film costs

3,764,000

-

Stock issued for services

456,585

227,400

Payables assumed

311,244

75,333




33




MEDIENT STUDIOS, INC.

Notes to the Financial Statements

For the Years Ended December 31, 2013 and 2012


NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES


Business


Medient is a global film production and distribution company with a strong presence in the key markets of North America and India. In 2013, the Company entered into a lease with the IDA under which the Company has the beneficial ownership of the Property together with an option to purchase the legal title to the Property on which Company intends to build a Studioplex.


Basis of Presentation


The Company prepares its financial statements on the accrual basis of accounting.   Management believes that all adjustments necessary for a fair presentation of the results of the years ended December 31, 2013 and 2012 have been made. The Company currently does not have any subsidiaries.


Significant Accounting Policies


The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application.  The application of accounting principles requires the estimating, matching and timing of revenue and expense.  It is also necessary for management to determine, measure and allocate resources and obligations within the financial process according to those principles.  The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.


The financial statements and notes are representations of the Company’s management that is responsible for their integrity and objectivity.  Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.  The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded  transactions are valid;  2) valid  transactions  are recorded;  and  3) transactions  are  recorded in the proper  period in a timely  manner to produce financial  statements which present fairly the financial  condition,  results of operations  and cash  flows of the  Company  for the  respective  periods  being presented.




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Use of Estimates


The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.


Cash and Cash Equivalents


The Company considers all highly liquid investments with an original maturity of three months or less and money market instruments to be cash equivalents


Film Costs


The Company has acquired the rights to two completed films: Storage 24 and Yellow . Storage 24 was released in Europe in 2012 and in the United States in 2013.  The Company is currently reviewing dates for domestic and international release of Yellow


Film costs include the costs of the film rights that were acquired by the Company plus additional costs incurred prior to release. The films are amortized using the individual film forecast method, and the costs are amortized pro-rata for the current period’s revenue over management’s estimate of ultimate revenue.    The Company began amortizing films in the fourth quarter of 2012, when they began to recognize revenue.


Film costs are presented as the lower of amortized cost or estimated fair value. Each film will be reviewed quarterly and if circumstances indicate that the fair value of the film (calculated as the discounted future cash flows from the film) is less than its unamortized cost, then impairment will be recorded. Estimates of future revenue are based on the best information currently available, but do involve uncertainty, and it is possible that reductions in the carrying value of the film assets may be required as a result of changes in circumstances that affect the revenue estimates for the future.


Impairment of Long Lived Assets


The Company evaluates, on a periodic basis, long-lived assets to be held and used for impairment in accordance with the reporting requirements of ASC 360-10, “ Accounting for the Impairment or Disposal of Long-Lived Assets ”. The evaluation is based on certain impairment indicators, such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If these impairment indicators are present or other



35




factors exist that indicate that the carrying amount of the asset may not be recoverable, then an estimate of the value of expected future discounted operating cash flows is used to determine whether the asset is recoverable and the amount of any impairment is measured as the difference between the carrying amount of the asset and its estimated fair value. The fair value is estimated using valuation techniques such as market prices for similar assets or future discounted operating cash flows.  The Company reviews capitalized film costs for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable or at least once per year. As of March 31, 2014, management determined that both major assets were not impaired.


Revenue Recognition


The Company recognizes revenue from the sale or licensing arrangement of a film in accordance with ASC 605-15 “ Revenue Recognition ”. Revenue will be recognized only when all of the following criteria have been met:


Persuasive evidence of a sale or licensing arrangement with a customer exists.

The film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery.


The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale.

The arrangement fee is fixed or determinable.


Collection of the arrangement fee is reasonably assured.


A written contract with a distributor indicating the film name, territory and period is required for the recognition of revenue.   Revenue is recognized when the performance criteria in the contracts have been met.


Film Tax Relief Revenue

 

Many countries make tax credits and the like available to encourage film production in the territory. Medient benefits from United Kingdom Film Tax Relief (“FTR”).   The FTR may be treated as a reduction in the capitalized costs of the film assets financed or as revenue to the production company. The FTR has been earned by the production company, assigned to the previous film rights owner, Medient Unstoppable Limited, and then assigned to the Company as revenue.



36




Medient Unstoppable Limited Revenue

 

Revenue is due to the Company from a related party, Medient Unstoppable Limited, of which the Company’s co-founder is a significant shareholder, in the amount of the net proceeds from the FTR as well as income from sales of Storage 24 . In accordance with an intercompany agreement between the Company and Medient Unstoppable Limited, all revenues earned by Medient Unstoppable Limited for the movie Storage 24 are due to the Company. This includes FTR.


Earnings per Share


Earnings per share (basic) is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period covered.  There were no potentially dilutive common stock equivalents as of December 31, 2013; therefore basic earnings per share is the same as diluted earnings per share for the year ended December 31, 2013. As the Company incurred net losses during the years ended December 31, 2013 and 2012 the basic and diluted loss per common share is the same amount, as any common stock equivalents would be considered anti-dilutive.


Comprehensive Income


ASC 220 establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements.  For the years ended December 31, 2013 and 2012, the Company had no items of other comprehensive income.  Therefore, the net loss equals the comprehensive loss for the years then ended.


Income Taxes


Provision for income taxes represents actual or estimated amounts payable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying balance sheets, and for operating loss and tax credit carry forwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustment to the tax provision or benefit in the period of enactment.




37




Fair Value of Financial Instruments


In accordance with the reporting requirements of ASC 820, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this statement and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments.   At December 31, 2013, the Company did not have any financial instruments.


Emerging Growth Company Critical Accounting Policy Disclosure


The Company qualifies as an “emerging growth company” under the 2012 JOBS Act.    Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.   As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.     The Company may elect to take advantage of the benefits of this extended transition period in the future.


Recent Accounting Pronouncements


There were various accounting standards and interpretations issued during the year ended December 31, 2013, none of which are expected to have a material impact on the Company's financial position, operations or cash flows.


NOTE 2 - CAPITAL LEASE AND GOVERNMENT ASSISTANCE


On August 21, 2013, the Company entered into a lease agreement (“Lease”) with the Effingham County Industrial Development Authority (the “IDA”). Under the Lease, the Company leased approximately 1,560 acres of land located primarily within Effingham County, Georgia. The Lease is effective from August 21, 2013 through July 1, 2033. No interest is payable and no payments are due for the first two years, with the total rent of $10 Million being paid in 18 equal annual installments, commencing February 28, 2016. The Company is obligated to pay additional rent if it does not achieve the specified goals of $90 Million in investment and 1,000 jobs on or before the end of year 5 (five). At the end of the Lease, the Company has the option to purchase the Property for $100. Furthermore, the State of Georgia and the IDA are providing additional cash grants, rebates, and tax incentives for the Studioplex. The Lease has been accounted for as a capital lease and the net present value of the minimum lease payments under the Lease is $3.6 Million.




38




The Company obtained an independent third party appraisal on the Lease land, which indicated that the land has a fair market value of $22.1 Million. The difference between the net present values of the minimum Lease payments and the fair market value of the land is considered the value of the government assistance under the Lease.


The $18.5 Million of government assistance has been deferred on the accompanying balance sheet until such time as the Company’s obligations under the Lease have been fulfilled. During the course of the Lease, the Company has beneficial ownership of the land and can utilize the land as collateral for financing purposes. The Company incurred approximately $276,831 and $72,872 of site development costs on the land in 2013 and 2012, respectively.


The discounted rate used in calculating the present value of the minimum lease payment was 10.72, which represents the Company’s incremental borrowing rate.


Future interest and principal payments under the Lease are as follows:


For Period Ended         Interest            Principal        Total Payment        Balance

    2014                                                                                                $4,158,082

    2015                                                                                                  4,622,217

    2016                       $465,478           $90,078            $555,556         4,532,141

    2017                         455,410           100,146              555,556         4,431,994

   2018                          444,213           111,343              555,556         4,320,651

Thereafter                $5,034,899      $3,298,433         $8,333,332       $             0


NOTE 3 – MATERIAL AGREEMENTS


The Company was assigned agreements with Universal Pictures Visual Programming Limited (“Universal”) to distribute the film Storage 24 for a period of 25 years commencing on the date of the firm release of the film via any media by Universal.    The territories covered by this agreement are the United Kingdom and Eire, Australasia (as defined), Germany, Austria, and German speaking Switzerland and Benelux (consisting of Belgium, Netherlands and Luxembourg). The agreement outlines the royalty payments, which vary based on the type of distribution (internet streaming, free television, pay television, etc) and range from 20% to 50% of net receipts.


Other distribution agreements with similar terms have been entered into for other territories, including the United States and other international territories, for Storage 24 .  


The Company has sold the rights for the development, production and exploitation of any prequel, sequel or remake film(s) of the Storage 24, together with such rights required for the inclusion of the Monster in film(s).



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On May 7, 2013, the Company and Prime Focus entered into a Memorandum of Understanding that provides that Prime Focus and Medient shall execute a definitive agreement for the provision of equipment, technology and skill transfer by Prime Focus to Medient. The Company is in the process of finalizing the definitive agreement


NOTE 4 – FILM COSTS


The Company has acquired the rights to two completed films: Storage 24 and Yellow .   Storage 24 was released in Europe in 2012 in the United States in 2013. The Company is currently reviewing domestic and international release dates for Yellow . A number of other films are currently being developed by the Company.


The following presents the cost basis of each of the films:


  

December 31,

2013

  December 31,

2012

Yellow

$17,783,918

$14,653,173

Storage 24

5,500,000

5,500,000

Films in Development

1,448,460

34,000

Film Costs, Prior to Amortization

      24,732,378

20,187,173

Less: Accumulated Amortization

       (3,728,120)

(2,658,647)

Total Film Costs (net)

$21,004,258  

$17,528,526


Film costs include the unamortized costs of the film rights that were acquired by the Company in addition to film costs incurred by the Company.   The films are amortized using the individual film forecast method, and the costs are amortized pro-rata for the current period’s revenue over management’s estimate of ultimate revenue.         


Film costs are presented as the lower of amortized cost or estimated fair value. Each film will be reviewed quarterly and if circumstances indicate that the fair value of the film (calculated as the discounted future cash flows from the film) is less than its unamortized cost, then impairment will be recorded. Estimates of future revenue are based on the best information currently available, but do involve uncertainty, and it is possible that reductions in the carrying value of the film assets may be required as a result of changes in circumstances that affect the revenue estimates for the future.    

  



40




The Company evaluates, on a periodic basis, long-lived assets to be held and used for impairment in accordance with the reporting requirements of ASC 360-10, “ Accounting for the Impairment or Disposal of Long-Lived Assets ”. The evaluation is based on certain impairment indicators, such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If these impairment indicators are present or other factors exist that indicate that the carrying amount of the asset may not be recoverable, then an estimate of the value of expected future operating cash flows is used to determine whether the asset is recoverable and the amount of any impairment is measured as the difference between the carrying amount of the asset and its estimated fair value. The fair value is estimated using valuation techniques such as market prices for similar assets or future operating cash flows.   As of December 31, 2013, no indications of impairment exist


NOTE 5 – SETTLEMENT PAYABLE


In 2012 the Company assumed a $385,000 settlement payable that was filed against Yellow Productions, LLC prior to the acquisition of the rights to Yellow by the Company. The settlement was payable upon demand and was settled in 2013.


NOTE 6 – NOTES PAYABLE


The Company has assumed certain debt in the acquisition of the film assets, as discussed in Note 1.   The following presents the notes payable outstanding as of December 31, 2013:


                                                                             December 31, 2013

 

Lender

Date of Loan

Due Date

Original Principal Amount

Principal Balance Only

Balance with Accrued Interest

Film

Prime Focus

10/01/13

10/01/16

     3,764,000

               3,764,000

3,764,000

Yellow &   New Projects

Tommee May

5/18/2011

Post Release

   180,000

   180,000

 180,000

 Yellow

Indion Group

4/27/2012

Post Release

 4,556,130

500,000

  500,000

 Yellow

AMAG

9/13/2011

8/31/2012

1,000,000

800,000

1,146,063

 Yellow

Derreck Lee

5/1/2011

 Post Release

  500,000

 600,000

  600,000

 Yellow

 

 

 

 

 $5,844,000

 $6,190,063

 




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Prime Focus is a multi-national visual effects and post-production company. The Dubai division of Prime Focus provided $3,764,000 of services, of which $2,500,000 was in relation to special effects costs of Yellow and $1,264,000 was in relation to pre visualization costs for two current projects. No interest is payable.


Tommee May, a media investor, made a loan of $180,000 towards the production cost of the film Yellow . This liability was assumed by the Company upon the acquisition of the rights in Yellow as of October 18, 2012.  No interest is payable.


Indion Group, a media and tax credit investor, made an initial loan of $4,556,130 towards the production cost of the film Yellow . This liability was reduced by the receipt of the film’s tax rebate to the amount of $600,000, and assumed by the Company upon the acquisition of the rights in Yellow as of October 18, 2012. No interest is payable.


AMAG, Inc. is a media investment company. It made a loan of $1,000,000, which has accumulated $346,063 of interest, towards the production cost of the film Yellow . In addition to repayment of principal and interest, AMAG shall receive a three percent participation in Yellow . This liability was assumed by the Company upon the acquisition of the rights in Yellow as of October 18, 2012. This note is currently in default. The Company is in the process of negotiating an extension. Annual interest is payable at 12%.


Mr. Derreck Lee, a media investor made a loan of $500,000, which has accumulated $100,000 of interest, towards the production cost of the film Yellow . In addition to repayment of principal and interest, Mr. Lee shall receive profit participation in the film after all other debts and equity investors in the film are paid in full. This liability was assumed by the Company upon the acquisition of the rights in Yellow as of October 18, 2012. No interest is payable.


As of December 31, 2013, it cannot be reasonably estimated as to how much, if any, may be paid out as profit participation under these agreements and therefore, nothing (other than interest where applicable) has been accrued.   


NOTE 7 - CREDIT LINE


The Company’s former line of credit was repaid by the former majority shareholders of the Company during the year. As of December 31, 2013, the Company has a new credit line of which $600,000 has been drawn down and with interest and other costs the amount outstanding of $788,289.  The Company has no other outstanding liabilities on any credit facilities. The annual interest rate on the credit line is 12%.




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NOTE 8 – RESTRICTED NOTES


During the year ended December 31, 2013, the Company issued $1,044,500 of Restricted Notes of which $78,500 were converted to common stock during the year. The balance of Restricted Notes as at December 31, 2013 was $966,000.


Annual interest rates on Restricted Notes range from 0% to 12%. Accrued Interest as of December 31, 2013 on the Restricted Notes was $23,644.


NOTE 9 -AGED DEBT


During the year to December 31, 2013, the Company retired debt with the use of Aged Debt in the amount of $1,400,000. Of this, $782,618 was converted to common stock during the year, with a balance outstanding of $617,382 as a December 31, 2013.


Annual interest rates on Aged Debt range from 0% to 12%. Interest Accrued on Aged Debt as of December 31, 2013 was $8,278.


NOTE 10 – SCREEN ACTORS GUILD


During the year ended December 31, 2013, the Company assumed a debt due to the Screen Actors Guild (“SAG”) regarding the film, Yellow , in the amount of $311,244. The Company repaid $42,000 of the debt in 2013, leaving a balance of $269,244 as of December 31, 2013.


The Company also obtained a deposit held by SAG in the amount of $70,000.


NOTE 11 - STOCKHOLDERS' EQUITY


The authorized capital stock of the Company is 500,000,000 shares with a $0.001 par value. At December 31, 2013 and 2012, the Company had 109,841,420 and 28,458,000 shares of its common stock issued and outstanding respectively. The Company has 50,000,000 preferred shares authorized and 10,000,000 and 10,000,000 shares issued and outstanding, respectively.


During the years ended December 31, 2013 and 2012, the Company issued 109,841,420 and 27,054,000 shares, respectively.  The Company issued 105,000 shares (179,000 in 2012) for services performed by the former majority shareholders of the Company, 105,000 shares earned for services performed by board members (250,000 in 2012), 62,283,420 shares issued in exchange for debt (3,250,000 in 2012), and 23,375,000 in 2012 for the acquisition of Kumaran Holding, LLC.




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NOTE 12 - INCOME TAXES


The Company has adopted ASC 740-10 which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset).   Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.


The cumulative tax effect at the expected tax rate of 20% of significant items comprising the Company’s net deferred tax amounts as of December 31, 2013 and 2012 are as follows:


Prior Year

$

48,543

$

25,017

Tax Benefit for Current Period

 

273,326

  

23,526

Total Deferred Tax Asset

 

321,869

  

48,543

Less: Valuation Allowance

 

(321,869)

  

(48,543)

 Net Deferred Tax Asset

$

0

$

0


At December 31, 2013 and at December 31, 2012, the Company had net deferred tax assets of $0 and $0, respectively, for federal income tax purposes. These assets, if not utilized to offset taxable income, will begin to expire in 2028.


NOTE 13 – EMPLOYEE BENEFIT PLANS


During the years ended December 31, 2013 and 2012, there were no qualified or non-qualified employee pension, profit sharing, stock option, or other plans authorized for any class of employees.


NOTE 14 – DUE TO RELATED PARTY

 

The Company is obligated to a shareholder for funds advanced to the Company for operating expenses. The advances are unsecured and are to be paid back upon demand. The amounts due at December 31, 2013 and 2012 are $698,623 and $486,905, respectively.


NOTE 15 – COMMITMENTS AND CONTINGENCIES


As presented in Note 6, the Company has entered into participation agreements in which the Company will pay the participation holders a portion of the proceeds from films after all debt has been repaid.    As of December 31, 2013, it cannot be reasonably estimated as to how much, if any, may be paid out under these agreements, and therefore, no interest has been accrued.  



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As of December 31, 2012, Michael A Littman, who had served as legal counsel to the Company, had accrued professional fees of $25,081. As part of the share purchase agreement dated August 24, 2012, the Sellers shall pay all debts, and obtain releases from creditors of the Company.    As of December 31, 2012, the assumption of these liabilities has been recorded as additional paid in capital from the Sellers. It is the view of Management that upon completion of the funding of the escrow agreement, the Sellers shall pay these professional fees and Mr. Littman will provide the Company with the appropriate release.


NOTE 15 - SUBSEQUENT EVENTS


The Company has evaluated its activities subsequent to the year ended December 31, 2013 and noted the following reportable events:  


On January 23, 2014 Mr. Matthew Mellon resigned as a director of the Company   


On January 28, 2014, Medient completed the acquisition of Atlas International Film GmbH (“Atlas”).

On January 6, 2014, the Board of Directors of Medient Studios, Inc. adopted a resolution approving an amendment to our Articles of Incorporation to:


·

effectuate an increase of the authorized common shares from 500,000,000, par value $.001 per share, to 5,000,000,000, par value $.001 per share; and

·

effectuate an increase in the votes per share of the Company’s Series A Preferred Stock, par value $.001 per share, from 25 to 250 votes per share.


Medient obtained the written consent of stockholders representing 64.0% of the voting power of the Company’s outstanding stock as of January 6, 2014, approving an amendment to the Company’s Articles of Incorporation to affect the above-mentioned corporate actions.  Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as amended, the actions will not be effective and an amendment to our Articles of Incorporation effectuating the corporate actions will not be filed with the Secretary of State for the State of Nevada, until twenty (20) days after the date this Information Statement is filed with the Securities and Exchange Commission and a copy thereof is mailed to each of the Company’s stockholders.


On January 29, 2014, Medient appointed San Francisco based Merriman Capital, Inc. (“Merriman Capital”) as the Company's capital markets advisor and Designated Advisor for Disclosure for the OTCQX market. The OTCQX marketplace is the premier tier of the U.S. Over-the-Counter (“OTC”) market, providing investors with an objective measure to distinguish the best OTC-traded companies.



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On February 10, 2014, Mr. Kumaran, Chairman of the Board and Chief Executive Officer,  converted $660,000 of personal loans to the Company into common stock at $0.064 per share, the book value of the Company. The approximately 10.3 Million represents an 822% premium to the closing market price on February 7, 2014.

On March 21, Medient announced that Shore Development and Construction, LLC was engaged by the Company and contracted as the construction manager for the Studioplex.




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


Not applicable.



ITEM 9A. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures:


We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to insure that information required to be disclosed in the reports We file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to Our management, including Our chief executive officer and chief financial officer, or the persons performing similar functions, to allow timely decisions regarding required disclosure.


Under the supervision and with the participation of Our CEO, or the persons performing similar functions, Our management has evaluated the effectiveness of Our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on that evaluation, Our CEO, or the persons performing similar functions, concluded that Our disclosure controls and procedures were effective as of December 31, 2013.


Management’s Annual Report on Internal Control over Financial Reporting:


Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is the process designed by and under the supervision of Our CEO, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of Our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America.  Management has evaluated the effectiveness of Our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting – Guidance for Smaller Public Companies.


Under the supervision and with the participation of Our CEO, or the persons performing similar functions, our management has assessed the effectiveness of Our internal control over financial reporting as of December 31, 2013, and concluded that it is effective.




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This Annual Report does not include an attestation report of Our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Registrant’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Registrant to provide only management’s report in this annual report.


Evaluation of Changes in Internal Control over Financial Reporting:


Under the supervision and with the participation of Our CEO, or those persons performing similar functions, Our management has evaluated changes in Our internal controls over financial reporting that occurred during 2013.  Based on that evaluation, Our CEO, or those persons performing similar functions, did not identify any change in Our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, Our internal control over financial reporting.


Important Considerations:


The effectiveness of Our disclosure controls and procedures and Our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of Our systems, the possibility of human error, and the risk of fraud.


Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.


ITEM 9B. OTHER INFORMATION


Not applicable.




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PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


The following table sets forth information as to persons who currently serve as Medient's directors or executive officers, including their ages as of December 31, 2013.


 

 

 

 

 

 

 

Name

 

Age

 

Position

 

Term

Mr. Manu Kumaran

 

44

 

Chief Executive Officer and Director

 

Annual

 

 

 

 

 

 

 

Mr. Graham Bradstreet

 

61

 

Task Leader

 

Annual


Mr. Pankaj Kapoor

 

41

 

Task Leader  

 

Annual

 

 

 

 

 

 

 

Mr. Matthew Mellon

 

51

 

Director

 

Annual

(Resigned January 23, 2014)

 

 

 

 

 

 


Mr. Charles Koppelman       73          Director                                                    Annual

(Appointed December 4, 2013)


Mr.Joseph Giamichael

 

36

 

Director

 

Annual


Medient officers are elected by the board of directors at the first meeting after each annual meeting of Medient shareholders and hold office until their successors are duly elected and qualified under Medient bylaws.


The directors named above will serve until the next annual meeting of Medient's stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the pleasure of the Board of Directors absent any employment agreement. There is no arrangement or understanding between the directors and officers of Medient and any other person pursuant to which any director or officer was or is to be selected as a director or officer.




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Biographical Information


Mr. MANU KUMARAN, age 44, is Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of Medient Studios, Inc.


Manu Kumaran is a second-generation international film producer, who has produced 19 feature films in four languages.  The oldest son of renowned Malayalam film director-producer K.P. Kumaran, Mr. Kumaran has been a part of the film business from an early age, working on all aspects of production and distribution. An expert in film tax credits and incentives, Mr. Kumaran has built a reputation for producing theatrical quality releases at minimal costs with strong net margins.


Mr. GRAHAM BRADSTREET, age 61, is a task leader of Medient Studios, Inc.


Graham Bradstreet, prior to joining Medient, joined the Working Title Group of Companies in 1986 as a shareholder and Finance Director. Working Title grew to become the UK’s pre-eminent production company ( Drop Dead Fred, A World Apart, Map of the Human Heart ) Mr . Bradstreet developed innovative film financing structures that have established him as one of the leading motion picture financiers in the world. He developed the concept of insurance-backed financing and, through ICE Media, raised in excess of US$1 Billion of insurance-backed funding that contributed to budgets in excess of US$ 3 Billion covering more than 100 movies (including The Truman Show, Face/Off, Runaway Bride, Sleepy Hollow… ) for both the studio and independent sectors of the film industry.


Mr. PANKAJ KAPOOR, age 41, is a task leader of Medient Studios, Inc.


Pankaj Kapoor is veteran journalist-turned-script-writer and co-founder of Medient. He started his career with Times of India (the world's largest English language newspaper), reporting extensively on the Indian film industry. He was a film critic for Asian Age newspaper before turning to screen writing on a full-time basis. He wrote the controversial Hindi film Ek Choti Se Love Story , which was considered one of the sleeper “hits” of 2002. This was followed in 2004 by a Bollywood musical film, Kiss Kis Ko ( Who Gets the Kiss?), which was based on the lives of ABOB , India's first boy band. In 2005 he wrote Time Bomb , a mini-series produced and directed by internationally acclaimed filmmaker Ketan Mehta that won the Indian Television Academy Award for best mini-series. That year Kapoor also wrote a horror show, Rooh ( Spirits ), which won the RAPA award.  Mr. Kapoor has executive produced Yellow and Storage 24 . He has served as associate producer on the Hindi films Mr. Singh Mrs. Mehta   and Tera Kya Hoga Jonny ( Ride the Wave Jonny ), which he also co-wrote.




50




Mr. MATTHEW MELLON, age 51, was a member of the board of directors and chairman of the compensation committee. Mr. Mellon resigned as of January 23, 2014.


Mr. Mellon is a direct descendant of Judge Thomas Mellon, founder of the Mellon Bank, now Bank of New York Mellon Corp., on his paternal side. On his maternal side, he is a direct descendant of Mr. Anthony Joseph Drexel, founder of Drexel-Burnham-Lambert. Mr. Mellon maintains associations with Drexel University and Carnegie Mellon University, both of which were founded by family members. He is also involved with the National Gallery of Art in Washington, DC, where his Great Uncle, Andrew Mellon, donated the nucleus of the institution’s collection to the nation.


Mr. CHARLES KOPPELMAN, age 73, is Vice Chairman and a Member of the Board of Directors of Medient Studios, Inc. Mr. Koppelman was appointed December 4, 2013.

Mr. Koppelman is a leading brand building figure in the entertainment industry. Koppelman has served as CEO and Chairman of Martha Stewart Living Omnimedia, Chairman and CEO of EMI Records and Chairman of Steve Madden. Currently he is a member of the Board of Directors of Six Flags Entertainment Corp., a director of the Las Vegas Sands Corp., as well as the Chairman and CEO of CAK Entertainment Inc., a brand development firm that provides advisory work for artists including, but not limited to, Jennifer Lopez, Marc Anthony, Nicki Minaj and Adam Levine.

Mr. JOSEPH GIAMICHAEL, age 36, is a member of the board of directors, and chairman of the audit committee.


Mr. Giamichael is the founder and Chief Executive Officer of Umbrella Research and Advisory, an emerging growth research and advisory financial services boutique. Mr. Giamichael has extensive capital markets experience, including over a decade as a publishing analyst and several years as a trader with an emphasis on special situations, as well as having served as an advisor to a middle markets-oriented private equity firm. Mr. Giamichael earned his Bachelor of Science degree from Skidmore College and was previously employed by Global Hunter Securities LLC, Rodman and Renshaw LLC, CJS Securities LLC, and Knight Capital Group.


Committees of the Board of Directors


Medient is managed under the direction of its Board of Directors.


  Compensation Committee


The members of the Board of Directors serve as its executive committee, with Mr. Mellon serving as its chairman. Mr. Mellon resigned on January 23, 2014.




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Audit Committee


The members of the Board of Directors serve as its audit committee, with Mr. Giamichael serving as its chairman.


Previous "Blank Check" or "Shell" Company Involvement


Management of Medient has not been involved in prior private "blank-check" or "shell" companies.


Annual Meeting


The annual meeting of Medient stockholders is expected to be held at a future date as soon as practicable. This will be an annual meeting of stockholders for the election of directors. The annual meeting will be held at Medient's principal office or at such other place as permitted by the laws of the State of Nevada and on such date as may be fixed from time to time by resolution of Medient’s Board of Directors.


ITEM 11. EXECUTIVE COMPENSATION


The following table sets forth the compensation paid to officers and Board of Directors members during the fiscal years ended December 31, 2013 and 2012. The table sets forth this information for Medient, and the previous management team prior to the name change from Fairway Properties, Inc., including salary, bonus, and certain other compensation to the Board of Directors members and named executive officers for the past three fiscal years and includes all Board of Directors members and officers as of December 31, 2013.




52




SUMMARY COMPENSATION TABLE

Name & Position

Year

Salary ($)

Bonus ($)

Stock awards ($)

Option awards ($)

Non-equity incentive plan compensation ($)

Non-qualified deferred compensation earnings ($)

All other compensation ($)

Total ($)

Manu Kumaran

2013

0

0

0

0

0

0

0

0

CEO

2012

0

0

0

   0

0

0

0

0

 

 

 

 

 

 

 

 

 

 

Graham Bradstreet

2013

59,000

0

0

0

0

0

0

 59,000

Task Leader

2012

14,500

0

0

0

0

0

0

14,500

 

 

 

 

 

 

 

 

 

 

Matthew Mellon

2013

0

0

0

0

0

0

150,000

150,000

Director (2)

2012

0

0

  78,500

0

0

0

0

78,500


Charles Koppelman      

Director (3)

2013

5,000

0

0

0

0

0

150,000

155,000

 

 

 

 

 

 

 

 

 

 

Joseph Giamichael

2013

0

0

 

0

0

0

30,000

  30,000

Director

2012

0

0

  52,000

0

0

0

0

52,000

 

 

 

 

 

 

 

 

 

 

Pankaj Kapoor

2013

6,000

0

0

0

0

0

0

6,000

Task Leader

2012

0

0

0

0

    0

0

0

0

 

 

 

 

 

 

 

 

 

 


Michael D. Murphy

2012

0

0

0

0

0

0

0

0

CEO, Treasurer (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sean Murphy

2012

0

0

0

0

0

0

0

0

President (1)

 

 

 

 

 

 

 

 

 



(1)

Messrs Michael and Sean Murphy resigned from the Company on August 28, 2012.

(2)

Mr. Matthew Mellon resigned from the Company on January 23, 2014

(3)

Mr. Koppelman was appointed December 4, 2013.




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OPTION/SAR GRANTS IN THE LAST FISCAL YEAR


Medient does not have a stock option plan as of the date of this filing. There was no grant of stock options to the Chief Executive Officer and other named executive officers during the fiscal years ended December 31, 2013 and 2012.


Employment Contracts and Termination of Employment and Change-in-Control arrangements.


There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company, with respect to any of Our directors or executive officers which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with Us, any change in control of Us, or a change in the person's responsibilities following such a change in control.


Compensation Committee Interlocks and Insider Participation


The Medient Board of Directors in its entirety acts as the compensation committee for Medient, with Mr. Matthew Mellon serving as Chairman of the committee.


Stock Option Plan


The Company does not have or intend to develop a stock option plan at this time.




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Director Compensation


The following table sets forth certain information concerning compensation paid to our directors for services as directors, but not including compensation for services as officers reported in the "Summary Compensation Table" during the year ended December 31, 2013:


 

 

 

 

 

 

 

 

Name

Fees earned or paid in cash ($)

Stock awards ($)

Option awards ($)

Non-equity incentive plan comp. ($)

Non-qualified deferred comp. earnings ($)

All

other comp.

($)

Total ($)

Manu Kumaran

0

0

0

0

0

0

0

Matthew Mellon

0

0

0

0

0

150,000

150,000

Charles Koppelman

5,000

0

0

0

0

150,000

155,000

Joseph Giamichael

0

0

0

0

0

30,000

  30,000


Mr. Mellon, Mr Koppelman and Mr. Giamichael continue to be active in other companies. They have retained the right to conduct their own independent business interests.


It is possible that situations may arise in the future where the personal interests of the independent directors may conflict with Our interests. Such conflicts could include determining what portion of their working time will be spent on Our business and what portion on other business interest. To the best ability and in the best judgment of Our officers and directors, any conflicts of interest between Us and the personal interests of Our officers and directors will be resolved in a fair manner which will protect Our interests. Any transactions between Us and entities affiliated with Our officers and directors will be on terms which are fair and equitable to Us. Our Board of Directors intends to continually review all corporate opportunities to further attempt to safeguard against conflicts of interest between their business interests and Our interests.


At this time, Our directors receive a monthly fee of $5,000 as cash compensation for serving on the Medient Board of Directors. Mr. Mellon, Mr. Koppelman and Mr. Giamichael were issued shares of common stock upon their initial appointment to the Board of Directors.




55




Limitation on Liability and Indemnification


Medient is a Nevada corporation. The Nevada Revised Statutes (“NRS”) provides that the Articles of Incorporation of a Nevada corporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except that any such provision may not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its shareholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) acts specified in Section 78 (concerning unlawful distributions), or (iv) any transaction from which a director directly or indirectly derived an improper personal benefit. Medient Articles of Incorporation contain a provision eliminating the personal liability of directors to Medient or Medient shareholders for monetary damages to the fullest extent provided by the NRS.


The NRS provides that a Nevada corporation must indemnify a person who was wholly successful, on the merits or otherwise, in defense of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal (a "Proceeding"), in which he or she was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the Proceeding, unless such indemnity is limited by the corporation's articles of incorporation. Medient’s Articles of Incorporation do not contain any such limitation.


The NRS provides that a Nevada corporation may indemnify a person made a party to a Proceeding because the person is or was a director against any obligation incurred with respect to a Proceeding to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred in the Proceeding if the person conducted himself or herself in good faith and the person reasonably believed, in the case of conduct in an official capacity with the corporation, that the person's conduct was in the corporation's best interests and, in all other cases, his or her conduct was at least not opposed to the corporation's best interests and, with respect to any criminal proceedings, the person had no reasonable cause to believe that his or her conduct was unlawful. The Company's Articles of Incorporation and bylaws allow for such indemnification. A corporation may not indemnify a director in connection with any Proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or, in connection with any other Proceeding charging that the director derived an improper personal benefit, whether or not involving actions in an official capacity, in which Proceeding the director was judged liable on the basis that he or she derived an improper personal benefit. Any indemnification permitted in connection with a Proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with such Proceeding.




56




The NRS, unless otherwise provided in the articles of incorporation, a Nevada corporation may indemnify an officer, employee, fiduciary, or agent of the corporation to the same extent as a director and may indemnify such a person who is not a director to a greater extent, if not inconsistent with public policy and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract. Medient’s Articles of Incorporation provide for indemnification of directors, officers, employees, fiduciaries and agents of Medient to the full extent permitted by Nevada law.


Medient’s Articles of Incorporation also provide that Medient may purchase and maintain insurance on behalf of any person who is or was a director or officer of Medient or who is or was serving at the request of Medient as a director, officer or agent of another enterprise against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not Medient would have the power to indemnify him or her against such liability.


EQUITY COMPENSATION PLAN INFORMATION


The Company has not established an equity compensation plan or Incentive Stock Option Plan.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.


The following table sets forth, as of December 31, 2014, the number and percentage of Our outstanding shares of common stock owned by (i) each person known to Us to beneficially own more than 5% of its outstanding common stock, (ii) each director, (iii) each named executive officer and significant employee, and (iv) all officers and directors as a group.


Name and Address

 

Number and Class of Shares

 

Percentage of Outstanding Common Shares

Manu Kumaran

 

0 common

 

0%

1635 Old River Road.

 

10,000,000 preferred

 

 

Bloomingdale, GA 31302

 

 

 

 

 

 

 

 

 

Graham Bradstreet

 

1,500,000 common

 

1.37%

1635 Old River Road

 

 

 

 

Bloomingdale, GA 31302

 

 

 

 



57





Pankaj Kapoor

 

4,625,000 common

 

4.21%

1635 Old River Road

 

 

 

 

Bloomingdale, GA 31302

 

 

 

 

Matthew Mellon

 

5,150,000 common

 

4.69%

795 Fifth Avenue

 

 

 

 

New York, NY 10065

 

 

 

 

 

 

 

 

 

Charles Koppelman

1330 Avenue of the Americas

Suite 1800

New York, NY 10019

 

5,000,000 common

 

4.55%

Joseph Giamichael

 

1,100,000 common

 

1.00%

1576 Third Avenue

 

 

 

 

New York, NY 10128

 

 

 

 

 

 

 

 

 

Directors/ Officers

 

17,375,000 common

 

15.82%

As a group six (6) persons

 

10,000,000 preferred

 

100.00%


Joel Shapiro

 

3,000,000 common

 

2.73%

1635 Old River Road

 

 

 

 

Bloomingdale, GA 31302

 

 

 

 

 

 

 

 

 

Pankaj Rajani

 

2,750,000 common

 

2.50%

19C Grove End Road

 

 

 

 

Harrow, Middlesex, UK

 

 

 

 

 

 

 

 

 



58




 

Al Imran General Trading

 

3,250,000 common

 

2.96%

 

Bank House, St. Johns Road

 

 

 

 

 

Harrow, Middlesex, UK

 

 

 

 


  Jasmine Valley

 

3,000,000 common

 

2.73%

  Bank House, St. Johns Road

 

 

 

 

  Harrow, Middlesex, UK

 

 

 

 

 

 

 

 

 

  Dinesh Panicker

 

3,250,000 common

 

2.96%

  Renfrew Cottage, US Road

 

 

 

 

  Trivandrum, India 695010

 

 

 

 

  Shilpa Sharma

 


2,250,000 common

 


2.05%

  Hem Madhu Kunj

 

 

 

 

 Bungalow No. D60, Sector 4

 

 

 

 

 Airoli, Navi Mumbai 400708

 

 

 

 

 India

 

 

 

 


Based upon 109,841,420 outstanding common shares and 10,000,000 outstanding preferred shares as of December 31, 2013.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


Other than the acquisition of Kumaran Holding, LLC, We have not entered into any transaction nor are there any proposed transactions in which any of Our founders, directors, executive officers, shareholders or any members of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.


Mr. Manu Kumaran, the Company’s Chief Executive Officer and a member of the Board of Directors, has loaned the Company as of December 31, 2013, a total of $698,623 on an interest free basis.




59




ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES


Ronald R. Chadwick, P.C. served as the Company's principal registered independent accounting firm.   On September 30, 2012, The Hall Group, CPAs was appointed as the Company’s principal registered independent accounting firm.   During the years ended December 31, 2011 and 2010 and through the date of his dismissal, there were no disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope and procedure which, if not resolved to the satisfaction of Chadwick, would have caused it to make reference to the subject matter of the disagreement(s) in connection with any report.


Chadwick’s report on the financial statements for either of the past two years did not contain a disclaimer of opinion or was qualified or modified as to uncertainty, audit scope or accounting principles. A going concern note was issued for the Company for the years ended December 31, 2011 and 2010.


The following table represents aggregate fees billed to the Company for the years ended December 31, 2013 and December 31, 2012 by Chadwick and The Hall Group, CPAs.

 

 

 

 

 

 

 

Year Ended December 31,

 

 

  2013

 

     2012

Audit Fees

$52,485

 

$49,000

Audit-related Fees

0

 

0

Tax Fees

 

0

 

0

All Other

 

0

 

0

Total Fees

$52,485

 

$49,000



More than 50% of the audit work was performed by the accounting firm's full time employees.




60




PART IV


ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES  


(a)(1)  List of Financial statements included in Part II hereof  


Balance Sheets as of December 31, 2013 and 2012

Statements of Operations for the Years Ended December 31, 2013 and 2012

Statements of Stockholders' Equity (Deficit) for the Period from September 10, 2007 through December 31, 2013

Statements of Cash Flows for the years ended December 31, 2013 and 2012

Notes to the Financial Statements  


(a)(2) List of Financial Statement schedules included in Part IV hereof:  None.

(a)(3) Exhibits  


The following exhibits are included herewith:


Exhibit No.

      Description

31

 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema Document

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document


*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.



61





Following are a list of exhibits which we previously filed in other reports which We filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.



NO.

DESCRIPTION

FILED WITH

DATE FILED

3.1

Articles of Incorporation of Fairway Properties, Inc.

Form 10-12G

November 18, 2009

3.2

Bylaws of Fairway Properties, Inc.

Form 10-12G

November 18, 2009

10.1

Technology License Agreement

Form 10-12G

November 18, 2009

10.2

Amended Technology License Agreement

Form 10-12G/A

April 26, 2010

21.1

List of Subsidiaries of Fairway Properties, Inc.

Form 10-12G

November 18, 2009




62




SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


/s/ Manu Kumaran

March 31, 2014

Manu Kumaran

Chief Executive Officer

Chief Financial Officer

Chairman


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/ Manu Kumaran

March 31, 2014

Manu Kumaran

Chief Executive Officer

Chief Financial Officer

Chairman

Controller


/s/ Graham Bradstreet

March 31, 2014

Graham Bradstreet

Task Leader


/s/ Pankaj Kapoor

March 31, 2014

Pankaj Kapoor

Task Leader


/s/ Charles Koppelman

March 31, 2014

Charles Koppelman

Director


/s/ Joseph Giamichael

March 31, 2014

Joseph Giamichael

Director



63