- $15 million annual run rate
- $1.676 million in fresh equity
- Significant investment in Big Data
- Uplisting potential
FingerMotion Inc. (OTCMKTS: FNGR) announced their quarterly report yesterday with a sound financial performance. The company has 4 business segments, the mobile recharge business, Sim Card, SMS, and InsureTech. During the quarter the SMS and the mobile recharge business contributed to the majority of revenues. Growth in the SMS business was up 24% over last quarter and up 137% over last year on a quarterly basis. The mobile recharge business was up 71% over last quarter but down 13% over last year. In this latest quarter there seemed to be a rebalancing of business toward the mobile recharge. This decision was probably driven by margins. The gross margin on SMS was only 4.47% this quarter versus 9.45% in the prior year whereas mobile recharge was up to 15.54% versus 11.33% in the prior quarter. The overall growth in the quarter seemed to be attributable to management’s optimization of their cash flow. The run rate for the quarter hit a new high of $14.5 million.
Large Inflow of Capital
During the quarter through October there was a significant inflow of funds of $1.676 million. Most of these funds came in the summer but were issued after the quarter ended and listed as a subsequent event. For investors the important aspect of this money raise was that these were all unregistered shares and not able to join the float without a registration statement. This large capital inflow should translate into an exponential bump in revenue in the current quarter. This was the largest equity raise in the company’s history and a good sign to existing investors that the business is very financeable.
New InsureTech Business
There was a big investment in the InsureTech business. There was $277,144 invested in the first half of this year and $390,288 in the last fiscal year. In total $667,432 was invested in the past year and a half in this business. Over the summer Sapientus their InsureTech business was unveiled. Their new website is targeting insurance carriers in China to show what is possible with their big data insight technology.
Although the topic was not discussed in the quarterly financials the company is generating sizeable revenue and it is growing fast. The recent inflow of capital may put net equity on the balance sheet as soon as next quarter. The minimum NASDAQ listing price of $4.00 has been met and the company has clearly made inroads with respect to Sarbanes Oxley compliance and has an independent board. In addition, the company is a full reporting SEC filer that has been relatively timely in keeping its reporting requirements. Earlier this year they established an investment banking relationship which telegraphs their desire to uplist. Although not imminent this potential should be factored into an investors overall assessment of the company.
FingerMotion could be on an exponential growth trajectory and the stock price along with it. Their large inflow of capital should be responsible for another strong performance in the current quarter. AliBaba’s (NASDAQ: BABA) singles day (November 11th) is in the current quarter. FingerMotion’s core business is dependent upon capital and now that the company has proved it can make a solid return on capital more should follow feeding the growth. The company seems to be attracting long term equity investors willing to put in capital in the absence of a registration statement that allows them to sell. Their new business Sapientus is likely to be a driver in the future quarters. While this patient equity fuels growth in the current quarter, any InsureTech sales or contract wins will drop right to the bottom line given that the business segment has a propensity for high margins. All these developments are creating a perfect storm for an uplisting to a major exchange. The next catalyst should be the CEO update on October 29th.
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