MOCI – Modern Cinema Group Inc

MOCI On a Path to Disrupt Global Media Production and Distribution

As the third quarter winds down, market participants are beginning to see a move toward a diffusion of capital by larger fund managers. Higher nominal growth in the global economy is sparking a rotation trade out of mega-cap technology stocks like Facebook (FB), Google (GOOGL), and Amazon (AMZN). And rumors of a tax reform bill hitting the wires has fueled a rush of those funds into domestic, high-beta stocks.

That means: small caps and micro-caps are on the move again.

The river of money coming into these market segments will be looking for two things: a good story and an undervalued position relative to a big end market. As far as we can see, MOCI is as attractive as anything out there from that perspective. However, this company is more than just another pretty face value setup: these guys are up to something that could be a unique and valuable innovation a market segment with virtually no pure-play competition.

The game is the coordination and development of a new model of market-based funding mechanisms supporting independent cinematic media that explicitly targets underserved emerging markets. It’s fascinating, and it might be hugely lucrative as well.

Quick Facts:

• MOCICEO Ross Cooper is one of the most experienced guys in the industry, with three decades in the game.
• MOCIalready owns a successful Chinese film fund and is looking to expand its operational reach and investments in emerging markets worldwide.
• MOCIhas begun to crusade for a new process to manage and view mobile video, with an innovative exchange model to network together financing from .
• MOCIis an emerging leader in the nearly $80B mobile app space.
• MOCIis coming off an RSI trough under 45, pointing to a massively oversold stock now heading back the other way.
• MOCIjust recorded a MACD Bullish reversal, suggesting a technical change in trend.
• MOCIis knocking on a potential technical breakout that could occur on a surge above the 200-day simple moving average at $0.95. The stock recently broke out above its 50-day SMA earlier this year, and has held those gains.

Understanding the Basic Story

Modern Cinema Group Inc. (OTCMKTS:MOCI)is gearing up, as far as we can see through our research, to disrupt the business of film making. This is a new kind of Hollywood studio. The emphasis is on creating a new model for how movies and television shows are financed as the modern content-sphere becomes an increasingly global phenomenon.

If you set out to make a new film, you may need to go affiliate with a major production house and they will work with you to pitch to investors and fund the production if the project makes business sense.

That’s the way it is currently done, and has been done for a long time.

MOCI is looking to change all of that. That model doesn’t work if you have a project that could really work in the emerging world. The fundraising step is where the operation breaks down. However, MOCI is working on a model that borrows from the mechanisms inherent in the functioning of futures exchanges to distribute the weight of the financing process among self-interested and unconnected speculators.

If the model gets traction, it could truly revolutionize not only how films and TV series are financed, but also the range of projects that can be seen as economically viable in the first place. This last point is critical to fostering a burgeoning media consumer culture in market territories such as Asia, Europe, Africa and South America. But, whoever solves that puzzle could potentially capture and have direct connection to over 50% of the world's population. So this is Big Game stuff.

That brings us to another point of strength: The company’s CEO is Ross Cooper, a man with 30 years of experience as a successful entrepreneur and corporate officer. According to the company’s materials, Mr. Cooper is also an accomplished inventor with numerous patents to his name.

From what we can see, Cooper has been an innovator throughout his career and continues to find avenues that provide an edge. He has a few exits already as an entrepreneur and managed to entrench himself in the fabric of Hollywood as the Executive Producer for movie, television and music projects.

Mr. Cooper has been responsible for the creation and operation of many companies in the areas of Media & Entertainment, Education, Psychometrics and Health Sciences.  Mr. Cooper is currently negotiating the rights to his original story named “Wingman”.

Now, he leads this new effort to exploit the virgin territory of emerging market dynamic media content financing and distribution. According to company materials, MOCI has numerous divisions that provide novel and timely solutions with the ultimate goal of building a worldwide dominant motion picture network. Right now, Modern Cinema Group provides libraries of movies, television and game content to large population groups by way of its distribution partners (primarily mobile carriers).

During the summer of 2014, Modern Cinema opened a film (and media) financing fund within the Free-Trade located in Shanghai China before these types of funds were closed to foreign entities.

Since China is now the largest market for filmed entertainment, and media investments in China are highly attractive to the numerous funds; Modern Cinema Group is well positioned to either finance or co-finance productions along with Chinese entities (both private and corporate). Modern Cinema plans to begin Chinese Co-Productions in early 2018.

One of the company’s primary insights is a focus on “pre-positioning” media content, where users are able to gain on-demand access to content actually stored locally on the device. This circumnavigates one of the primary hurdles to consumer experience of media where infrastructural resources are second- or third-tier.

With this in mind, one can imagine that MOCI execs are targeting the 2018 World Cup as a major breakout point for the business: nothing is more core for emerging market media engagement than the World Cup. And this is exactly when mobile carriers will need to increase efficiencies as these games will introduce unprecedented demands on mobile networks in Latin America, Europe and Asia. Modern Cinema Group and its partners are working to secure opportunities for the World Cup now.
 

A Brave New World

The move to focus on emerging markets is itself enormously compelling precisely because the niche offers a mouth-watering combination of low-competition and high potential growth over time. The only hurdle is the technological barrier to entry: the reason why competition is low is because the economics normally don’t favor targeting media towards emerging markets given that costs of production and distribution may be higher and revenues from things like advertising are normally going to be quite a bit lower. So, the ROI simply isn’t there.

That is true unless you start with a new model for both financing projects and distributing media. That appears to be exactly where the MOCI story is going. With a diversified funding draw model and an ability to drive high-quality locally-relevant media content to consumers operating on older (3G and 4G) mobile networks with major delays or buffering obstacles is the holy grail. And it would appear that Cooper has his team on tract to make a run at this outcome through Multicasting using MBMS. Newer LTE networks will use eMBMS or LTE Broadcasting.

As the company’s materials explain, this allows both older 3G/4G and newer LTE networks to potentially send our content to millions of user devices simultaneously.  The content titles will be stored on user’s devices to be played at a later time (On-Demand) — the Pre-Positioning methodology we covered earlier.

According to the company’s website, MOCI Media is already in contract negotiations with mobile carriers located around the world.

Technical Analysis

As it stands, the stock has been increasingly showing signs of a being in a new and burgeoning bullish trend: we saw a clear bullish breakout above its 50-day simple moving average in June on a bullish inflection in the MACD indicator.

Those gains have been preserved, and the stock is now clearly knocking on the door of a similar breakout above its 200-day SMA as well. That could push shares above the key psychological marker at the $1/share level.

All of this has happened ahead of a planned surge in investor relations noted by management as a next step, suggesting that we are sitting in front of a positive technical feedback loop with major implications.

About MOCI

MOCI (Modern Cinema Group Inc.) is a new Hollywood studio “disrupting the way movies and television series are financed in the new Golden Age of Content Everywhere.”

Based in Beverly Hills, founded in San Diego, the company has a decidedly technological spin on how to finance movies by allowing the world's largest Multichannel Video Program Distributors (primarily Cable and Satellite Operators) to compete with on-line services by offering their own branded Hollywood movies and television series. The production budgets for movies being between $40 million and $100 million. Budgets for television series in the range of $100 million per season. Financing partnerships currently in place with numerous Chinese Film funds.

Sincerely,

AST

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