Full Alliance Group Inc (OTCMKTS:FAGI) Is A Penny Stock Winner

Today, we need to talk again about Full Alliance Group Inc (OTCMKTS:FAGI), which focuses on organic agriculture, acquisitions, and CBD-based nutraceuticals. Our readers will be remembering very well this company since we featured it in June 2017 in an article called "Full Alliance Group Inc. (OTCMKTS:FAGI) Due For A Bounce." In that article, we said that the trading volume was increasing and the company was entering the cannabis industry, which was expected to increase its growth. We said that we appreciate these initiatives and a share price turnaround could be expected.We were not wrong in saying so.In November, Grupo Richard seems to have correctly identified growth opportunities in FAGI. It has signed an acquisition agreement with the company, which has created an astonishing share price reaction.The share price increased from below $0.1 to hit the $0.5 share price level in less than a five-day-period. These are one year highs.But, the most significant is the amount of shares that changed hands. On December 1st, 2017, we could see more than 2 million shares in volume, but the volume was not small either in previous sessions. Have a look at the following stock chart and form your own opinion before we provide more details. 1 month chart for FAGIRecent DevelopmentsOn July 6, 2017, the company released that it had finally completed negotiations with Wincon Distributing Inc. to create a joint venture with Wincon’s tobacco distribution business. FAGI will be financing the working capital and will receive 40% monthly gross profit. Wincon will receive the rest. The new business line will not be small; it is expected that gross proceeds from operations will reach $15 million or approximately $2.5 million/month.We appreciate the news, even if the market did not react a lot to it. In our opinion, the agreement means that FAGI will be having access to a new business model from a company giving service to 93 active accounts in California. Wincon’s current brands include Monarch, Market, King Mountain, Gator, Buffalo and Smokin’ Joes cigarettes. In our opinion, it should increase company’s growth.On November 28, 2017, the company released that it will acquire subsidiaries, technology and real estate holdings associated with Grupo Richard. It was noted that the assets were already transferred into escrow. The reaction of market participants was quite significant, which made a lot of sense, as the net equity of the group is over $40 million. The following companies were included in the deal:

• Operadora de Servicios GRMS de RI de CV
• Grupo Internacional Richard S de RI de CV
• Grupo Richard y Lange SAPI de CV SA de CV
• Asesores en Comercio ON de Mexico

The general tone of the press release was quite positive, which, we believe, was the reason for the astonishing share price reaction that we could see in the market. It was noted that individuals from Asia and Central America could be interested in these new assets acquired. Read the following text from the press release:

"FAGI executives are quite excited with the development potential of these assets, and already had discussions with investors from Asia and Central America prepared to assist with the growth of these new subsidiaries." Source

Financials and Reaction to the new Financial statementsAccording to the last financial statements, the current net asset is negative; $0.625 million. The good news is that these financial statements do not include the new acquisition signed with Grupo Richard. The new balance sheet to be released soon will have to include those assets. We encourage readers to check this new information very closely.So far, we know that the net equity of the group acquired is $40 million and the company has a total amount of shares equal to 20 million shares. We let the readers calculate which is the expected intrinsic value of the company once it releases the new financial statements.Low Float RunnerThere is another thing to like in this stock. Its low float will be appreciated by those interested in volatility plays. Have a look at the share capital statistics:Authorized Shares300,000,000a/o Oct 31, 2016Outstanding Shares20,108,330a/o May 10, 2017-RestrictedNot Available-UnrestrictedNot AvailableHeld at DTCNot AvailableFloat4,292,368a/o Feb 07, 2017SourceWhat did we see?Only 20% of the total outstanding shares is owned by the public. This means that large market orders could make the share price move quite a bit.ConclusionCurrently trading with a market cap of $6.9 million, FAGI is an exciting story among small caps. We believe that we will be receiving more information about the new merger in the following months. This is the most significant catalyst.Additionally, we will be interested in what is going to happen with the old divisions of FAGI. If the new management decides to make cash and commences selling those assets, the market could push up the share price as well.To sum up, there are many catalysts on this name, be ready to assess the news!We will be updating our subscribers as soon as we know more. For the latest updates on FAGI, sign up below!Image courtesy of Thomas Scibilia via FlickrDisclosure: We have no position in FAGI and have not been compensated for this article.