Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Fab Blames Bad Info on Stock Oddity NYSE Requested Media Distributor Address Activity

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Fab Blames Bad Info on Stock Oddity NYSE Requested Media Distributor Address Activity

Article excerpt

FAB Universal, a Pittsburgh company that's been called the Redbox of China, on Wednesday blamed misinformation for unusual, high- volume trading in its shares.

The company's statement came after the New York Stock Exchange asked FAB Universal to respond to the activity.

Since Sept. 16, an average of about 4 million FAB Universal shares have traded daily versus average daily trading of 124,000 shares over the prior three months. Volume peaked at nearly 9.3 million shares Thursday, when the stock hit a 52-week intraday high of $11.48.

On Wednesday, the stock closed at $6.05, up 6 cents, on volume of nearly 3 million shares.

FAB Universal was formed in September 2012, when Wizzard Software, an unprofitable Pittsburgh publicly traded company involved in podcasting and selling applications for mobile phones and other devices, bought Digital Entertainment International, a Hong Kong company that sells video games, movies, music, books and other content to Chinese consumers.

The acquisition came after Wizzard completed a 1-for-12 reverse stock split to elevate its share price, which had been languishing under $1. The growing Chinese market for digital content provided a big boost for its sagging revenue and allowed the former Digital Entertainment to get a listing on the New York Stock Exchange.

The misinformation that the company cited Wednesday concerns the number of shares to be issued to Digital Entertainment's owners as part of the sale. The company said it has consistently disclosed that the owners are entitled to receive 27.7 million shares in three installments once performance criteria are met.

That's 33 percent more shares than the 20.8 million that were outstanding in August, when FAB Universal reported its second fiscal quarter earnings. The company said it earned $10.8 million on revenue of $48. …

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