Amfil Technologies Inc (OTCMKTS:AMFE) has been a great trade for our readers. When we first highlighted the company back in February, it was trading for less than two cents a share. During the months subsequent to our analysis, the stock has appreciated to trade at a current level of $0.10 a share – a return of 400% for anyone that took a position on the back of our initial spotlighting of the company.
While some may be happy to take profits off the table at this level, and justifiably so, for those willing to maintain an exposure, we think there is plenty of reward left to take advantage of in the stock going forward.
In short, we think that fundamental developments over the past three months have positioned the company to take off in its target market over the coming 12 to 24 months and that – in line with its operational expansion – we should see a considerable upside reevaluation from a market capitalization perspective.
Last time we looked for this one, we noted that the company might be about to announce its acquisition of the distribution rights for an upcoming card game, one called Bears Vs Babies.
The game, which has grown to become the third most highly funded game on Kickstarter, is the follow up to the wildly successful Exploding Kittens game from Elan Lee, previously Chief Design Officer for the Xbox at Microsoft Corporation (NASDAQ:MSFT) and Matt Inman, a cartoonist and designer has nearly 4 million Facebook fans of his highly successful digital cartoon site TheOatmeal.com.
While we remain in the dark about the Bears Vs. Babies distribution rights deal, we have learned that the company has picked up Canadian distribution rights to the above-noted Exploding Kittens game – something that it seems markets have missed (since the company looks to have failed to publicize it).
How do we know about this?
Take a look at this quote, pulled from a recent press release outlining the spin off of one of the company’s subsidiaries, Interloc-Kings Inc:
“Snakes & Lattes Inc… recently acquired the exclusive distribution rights throughout Canada for some of the most popular board games in the world such as Cards Against Humanity and Exploding Kittens.”
Exploding Kittens is the most successful ever Kickstarter campaign for a crowdfunded game and, as of late last year, estimates suggest the game had generated more than $50 million in revenues.
With exclusive distribution rights in Canada to both this game and Cards Against Humanity, Amfil is in an incredibly strong position to serve as a major distributor domestically in this industry – and that’s without the Bears vs. Babies announcement.
That’s domestic growth. There are also ongoing discussions with a number of North American retailers including EB Games/GameStop and HMV to discuss said retailers’ immediate and ongoing requirements for the game titles that the company exclusively distributes.
To pull another quote from a recent PR:
“We anticipate a number of large purchase orders to be received and fulfilled in the near future, and on an ongoing basis from these newly formed relationships.”
Bottom line here is that it’s incredibly difficult to see any other way than up for Amfil medium to long-term. The company’s Snakes & Lattes subsidiary has proven a hit in its target markets and looks set to expand exponentially from a location count perspective. Couple this with revenues expansion on the back of distribution deals and purchase order fulfillment, and Amfil is onto a winner.
The recent spinoff, the one mentioned briefly above, is a smart move in our opinion. The way we are looking at this is that Amfil had three shots on goal – one in the gaming industry, one in the construction industry and one in the cannabis industry. The one that really hit the target was the gaming industry venture and we think it’s sensible to focus resources on this one right now as opposed to focusing on the full subsidiary portfolio and risking falling between two stools.
There’s still room for the cannabis shot to hit, but it’s not the primary focus right now.
We’re going to be watching upcoming earnings (which we are going to see near term on the back of an effort to get fully reporting compliant) closely to see just how much potential the recent distribution deals add to top and bottom line.
We will be updating our subscribers as soon as we know more. For the latest updates on AMFE, sign up below!
Image courtesy of PCguiri via Flickr
Disclosure: We have no position in AMFE and have not been compensated for this article.