Pocket Games Inc (OTCMKTS:PKGM) Is A Smart Risk/Reward Play

Today, we need to talk about a new stock that seems to be creating expectations in the market. It is Pocket Games Inc (OTCMKTS:PKGM).There are a few things that we appreciate in this company. Firstly, the company's financial situation seems stable. The balance sheet is very solid.But, there is more.The company seems to have an innovative business model that seems to be interesting the market participants.

Company LogoThe next stock chart shows how the market interest has increased in the last two years.The volume, which is one of the most significant indicators of the market interest, has increased. Some days more than 1 billion shares changed hands.Have a look at it before we explain what's going on:

4 years chart for PKGM

1 month chart for PKGMBusinessPKGM, which was founded on October 4, 2013 in Florida, is focused "on the development, marketing, and sale of interactive games for mobile devices, tablets, and computers." Additionally, the company has a division for server support, and cloud management. 24/7 support is provided for company client's infrastructure.PKGM seems to have grown in these years by acquiring and forming other businesses.On March 18, 2015, the company created GodSpeed Games, Ltd. in India, which provides "Quality Assurance and testing services across all the major platforms and has vast experience in different game genres." The company seems to have accumulated sufficient expertise in providing services to other companies trying to release new games.Furthermore, on February 9, 2016, the company entered into a share exchange agreement with the owners of Social Technology Holdings, Inc. Under the agreement, the company acquired Social Technology Holdings with a combination of stock and preferred stock. A change of control was recognized after this agreement.Recent DevelopmentsThe most significant news released in 2017 were the following.On May 2, 2017, the market seemed to excite the market when it released the new development of its title Idol Hands. The company noted that virtual reality features will be added in the last part of 2017. We will need to be alert, as news regarding new innovations could make the share price pop up.The company explained a bit the Idol Hands in the press release:"Originally developed in partnership with Intel and distributed as an OEM title with Creative Labs Senz3D, Idol Hands is a God Strategy Game whereby the player takes the role of a God and gradually takes over a land, populates it with his people and builds farms, temples, workshops, garrisons and houses." SourceAccording to the new innovation, the user will not have to use the keyboard to play. Instead, the camera will recognise the user’s hand movements.We believe that the development is quite a smart move. Virtual Reality seems to be what market participants are looking for right now, thus the company is doing it at the right time. It was highlighted in the press release:

"The opportunities to explore how we can take this further are exciting not just from a game play point of view, but because the market in VR is set to explode over the coming months and years." Source

On May 8, 2017, the company released that the ‘Kicksend’ photo App was available again to its 1m+ user base. CEO, David Lovatt, noted:

“We have taken our time to go back out to market with the Kicksend Photo App for the simple reason that it has to be right; we had to get the right partners to go back out to market with. Now the release is out in the market, I can focus on our next big opportunity.” Source

Furthermore, the company reminded that Kicksend was achieving revenues in excess of $2m per year. Additionally, it was noted that FujiFilm was going to integrate Kicksend, which may drive revenues.For those who don't know, it is a "simple and fast way to print out high quality photos either for collection at Walmart or delivered directly at the home." Kicksend from Pocket Games Inc OTCMKTS:PKGMFinancialsThe company reported, in the last annual report, $9.7 million in assets. The most significant is the increase in assets that the company saw after the share exchange in 2015.We believe that market participants should have appreciated the transaction. A new business model, more assets and, most importantly, a lot of intangible assets were obtained:

Assets - Pocket Games Inc OTCMKTS:PKGM

The following are the liabilities. Please note that the total amount of liabilities is lower than the total amount of assets. The balance sheet is solid. Total amount of Liabilities - Pocket Games Inc OTCMKTS:PKGMConclusionCurrently trading with a market cap of $0.5 million, PKGM is an exciting story among small caps. With 5,872 million shares and an extremely low float of 8.6 million shares, we believe that the share price volatility could be very high. For those who appreciate volatility plays, this a stock to follow. Furthermore, give the strong balance sheet and limited downside, the risk/reward dynamics look favorable.We will be updating our subscribers as soon as we know more. For the latest updates on PKGM, sign up below!Image courtesy of CommScope via FlickrDisclosure: We have no position in PKGM and have not been compensated for this article.