FONU2 Inc. (OTCMKTS:FONU) Drops Down On Record Volume
Back in April FONU2 Inc. (OTCMKTS:FONU) announced that they wanted to expand their business through the acquisition of suitable companies. For the next seven months though, except for e brief update published in July that said that the company is still looking for potential acquisition targets, investors were left in dark.
Understandably the lack of progress left its mark on the share price of the company and it deteriorated rapidly. From around 7 cents at the end of April FONU found themselves deep into the triple zero price ranges in November, reaching a new 52-week low of $0.0003.
This Wednesday the company finally broke its silence announcing a definitive agreement to acquire Studioplex City LLC for 2.5 million Series B Preferred shares. The news was significant but investors didn’t seem too impressed and FONU crashed by 12.5% that day. The daily volume stood at 362 million traded shares which surpassed the average volume of 70 million by 5 times. Although the crash was quite severe yesterday the sell-off got even worse – 454 million shares were dumped on the market resulting in the loss of another 28% and a close at $0.0005.
By now you might be wondering why did the PR not only fail to push FONU up the chart but actually caused them to sink even lower. The press release did state that Stuidoplex City have a two picture deal with the movie director Ms. Penny Marshall who has directed multiple movies that grossed over $100 million, didn’t it? Well, the problem is that the PR also mentioned the name of Mr. Jake Shapiro.
Mr. Shapiro is the CEO of Moon River Studios Inc (OTCMKTS:MDNT), the new name of Medient Studious, Inc. Those of you who have followed the world of pennystocks for at least some time might remember that MDNT were developing a massive construction project in Georgia called the Studioplex. The connections between the two companies got even stronger with the appointment of Mr. Shapiro as chairman of FONU‘s Board of Directors. Back in June MDNT were suspended from trading by the SEC because of “questions regarding the accuracy and adequacy of publicly available information about the company” and currently they are placed on the Grey Market. MDNT was also known for drowning its shareholders in dilution.
Some traders think that FONU might be headed down the same road with the appointment of Mr. Shapiro but to be fair the company has already been issuing millions of shares as a conversion of debt long before that. All you need to do is to take one look at the 8-K form filed on December 9 to see that a total of 566 025 114 shares were issued at an average price of $0.00025. In just 10 months the number of the outstanding shares has grown from 76 million to 617 million. With just $24 thousand in cash, $100 thousand in total current assets and net loss of $1.2 million at the end of June FONU might be forced to take on even more convertible debt.
The multitude of red flags around the company turn FONU2 into an extremely risky choice for investment. The lackluster financials coupled with the hundreds of millions of discounted shares could prevent the ticker from reaching higher price ranges. If you are determined to play the stock be sure to do extensive due diligence before putting any money on the line.