Amfil Technologies Inc (OTCMKTS:FUNN) is drawing a lot of investor interest lately. The excitement in the stock comes as Amfil management has recently taken important steps aimed at maximizing shareholder value.
Below we show you why investors are warming up to Amfil stock in 2020. But first, for investors who are coming across OTCMKTS:FUNN for the very first time, here is a brief introduction of the company.
OTCMKTS:FUNN is based in Canada. It operates through subsidiaries that serve different industries. The company currently operates three business units, namely Snakes & Lattes, GRO3 Antimicrobial Systems and Interloc-Kings.
Snakes & Lattes is the flagship business. Through this unit Amfil operates board game themed bars and cafes. GRO3 provides ozone-based antimicrobial products targeting the marijuana cultivation industry. GRO3 says its solution can eliminate 99.9% of bacteria and other pathogens marijuana cultivation facilities, thereby reducing or removing the need for conventional chemical and pesticides in the cultivation process. Interloc-Kings is a hardscape construction and winter services provider.
Investors have warmly received Amfil’s efforts to streamline its corporate structure and build on its strength. These efforts have produced good results that have gone a long way into boost investor confidence in Amfil stock. For example, Amfil was able to record revenue growth of more than 4,900% in three fiscal years from 2016 to 2019.
Here are some of the strengths that investors see in Amfil and why they are betting their money on the stock.
OTCMKTS:FUNN to spin off non-core operations to focus on the strongest business
To allocate its capital more prudently, increase operational efficiency and expand quickly in growth areas, Amfil has set out to drop certain operations. Specifically, the company has decided to spin off its GRO3 and Interloc-Kings subsidiaries. The spinoff of these units will leave board game bar and café brand Snakes & Lattes as Amfil’s core business.
OTCMKTS:FUNN wants to spin off GRO3 and Interloc-Kings into a separate independent public entity. Current Amfil shareholders will receive a stake in the new public entity once the spinoff is completed. As a provider of cultivation solutions to the marijuana industry, you cannot dispute that GRO3 has a bright future thanks to the legalization of marijuana in Canada. Therefore, a spinoff should help unlock the full potential of GRO3 as the management of the business will become undistracted by side issues.
In addition to removing non-core businesses, the spinoff of GRO3 and Interloc-Kings also promises to unlock cash for Amfil if it chooses an initial public offering route for the separated entity public. That would give the company more cash to invest in the development of its flagship business Snakes & Lattes.
Amfil’s Snakes & Lattes in a major US expansion drive
OTCMKTS:FUNN is underway with a major expansion program for its Snakes & Lattes business in the United States. The company set up a US expansion team to lead the opening of nearly a dozen new Snakes & Lattes outlets across the US. The team recently turn in its progress report and there is a lot to like in what the team is doing.
The team reported that it has started negotiations with landlords and potential strategic partners for plans to open Snakes & Lattes locations in major US cities. In those negotiations, the team is looking for prime spots to open outlets to maximize sales.
The team has put measures in place to ensures that locations will be able to open quickly once the right spots have been identified and leases signed. The goal is to initially open four Snakes & Lattes locations in the US and eventually bring the number to 10. Opening 10 locations in the US would see Snakes & Lattes triple its location footprint.
As it works on US expansion, Amfil is also looking for more expansion opportunities in the domestic market Canada. In Canada, Amfil’s expansion strategy for Snakes & Lattes consists of new location openings and acquisition of existing establishments.
Amfil stock has strongly rebounded from its record lows. But the breakout is just beginning to unfold. At current levels, OTCMKTS:FUNN looks to be a discount entry opportunity.
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Disclosure: We have no position in OTCMKTS:FUNN and have not been compensated for this article.