On4 Communications Inc (OTCMKTS:ONCI) has been on a warpath, with extraordinary gains over the past two months. ONCI first launched higher back in early August from the extremely cheap level of $0.001, deep in sub-penny territory. The company continues to pile up dealership partner agreements, and investors continue to respond in step. In all, we have seen as much as 1,820% in upside since the breakout 7 weeks ago, and one might start to assume some sort of corrective breather on the near horizon.
The latest from the company was its announcement late last week that it has signed a contract with a 250 Dealer Extended Warranty Company in New York. According to the release, the Contract is 200 units per month to start, at $200 per unit with option for an additional 500 units. ON4 Communications CEO Steve Berman states, “They sell extended warranties including dent and ding as well as tire and wheel to 250 dealerships. This allows On4 Communications to sign 250 dealerships immediately without having to visit each one individually.”
On4 Communications Inc (OTCMKTS:ONCI) frames itself as a company that seeks to acquire and/or merge with businesses that present new opportunities and innovative business plans, especially with respect to new technologies.
The Company owns a 49% equity/ownership stake in Family Mobil Safety Marketing, the distributor of a safe driving App and a 49% equity/ownership stake in Digital Media Management & Consulting, a joint venture which implements electronic sell-through and content advertising supported networks.
According to company materials, “On4 is a holdings company with an aggressive focus of acquiring proven and profitable businesses. Our first project is focusing on businesses operating in the $1.7 trillion U.S. healthcare industry. Our newest targeted businesses are operating in the trillion-dollar mobile App space. Our first acquisition in the mobile App space is FMS Marketing a global creator and distributor of mobile Apps for Android and iPhones. We are also targeting businesses to acquire and joint venture with in the medical marijuana and emerging MJ ancillary products space.”
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As noted above, ONCI shares have been on an express elevator to the upside. One wonders if this rally may be getting at least a bit overheated and in need of some level of consolidation or healthy corrective action to restore some semblance of normal market activity. But you certainly wouldn’t this is anything other than business as usual if you hear management’s take on things.
“We are also pleased to announce we have signed an additional JV with NECA Corp to create 3 additional apps for the auto insurance, safety and warranty business. We will use NECA’s team to develop the apps and On4’s marketing team to sell the apps via SEO and target marketing. These apps will go BETA in January 2018 and rollout is expected June 2018.”
“Further updates on San Antonio and Michigan as well as more revenue contracts to announce next week,” Berman concludes.
Finally, we would note that company also slipped into its latest release an additional note about reforming the cap table: “In addition, I am retiring 30 million preferred shares: 15 million today and 15 million in 30 days. These are my own shares and I am retiring them as a Thank You to shareholders. These are voting/control shares with a conversion ratio of 5000:1 common.”
We’ve witnessed just shy of 420% piled on for shareholders of the company during the trailing month. This is emblematic of the stock. ONCI has evidenced sudden upward volatility on many prior occasions. Furthermore, the company has benefitted from a jump in recent trading volume to the tune of 66% beyond what we have been seeing over the larger time frame.
Now commanding a market cap of $5.64M, ONCI has virtually no reported cash on the books, which must be weighed relative to about $491K in total current liabilities. ONCI is pulling in trailing 12-month revenues of $896K. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 73.2%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $ONCI stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: We hold no position in $ONCI, either long or short, and we have not been compensated for this article.