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Amfil Technologies Inc (OTCMKTS:AMFE) Can Continue To Run: Here's How

Amfil Technologies Inc (OTCMKTS:AMFE) Can Continue To Run: Here's How
Written by
Chris Sandburg
Published on
May 12, 2017
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Back in mid-April, we published this piece on Amfil Technologies Inc (OTCMKTS:AMFE). At the time of our coverage, the company was trading for around $0.05 a share, having just run up to the tune of 350% on the back of some speculative loading ahead of some pending, and potentially major, announcements. We highlighted the announcements and asked the question: can the company continue to run? We concluded with the suggestion that yes, the company can run if it can get to market with the announcements that shareholders, and potential trigger pullers, were waiting for.Fast forward a few weeks, and the company has delivered.At market open on Friday, Amfil will trade for $0.077. This is down slightly on the $0.093 recorded on May 1 but still represents a 54% premium to the price at which we highlighted the company last month.The question now, is what’s next? Can Amfil continue to run, and if so, what’s going to drive the action?Let’s take a look. For those new to this company, it’s well worth checking out our previous coverage here. We actually first highlighted it as a potential runner back in February, when it traded for $0.020, but we’re not here to blow our own trumpet. Anyway, as a quick introduction, it’s a pretty diverse play with a few irons in various fires. Anyway, as a quick introduction, it’s a pretty diverse play with a few irons in various fires. The name Amfil refers to an umbrella-type entity, which controls three (primary) subsidiaries: Snakes & Lagers (and Snakes & Lattes), GROzone and Interloc-Kings Inc. The first is a coffee shop brand that offers board games to its customers. The second is a hydroponic tech company. We’ll go into both in a little more detail shortly. The third, which we’re not going to focus on for the purposes of this discussion, is a construction entity operating in and around Toronto. So, the latest developments involve Snakes & Lattes and GROzone. First up, Snakes & Lattes. When we last looked at this stock, we said we were on the lookout for a development relating to Cineplex, based on a company Tweet. We actually got two developments. One was the Cineplex deal, which isn't that big; it’s basically a trial game type night at a few Cineplex locations that has the potential to be big, but right now isn't overly important. The second was much bigger. It details the fact that Snakes & Lattes (and by proxy, Amfil) has become the exclusive distributor in Canada (and a few other undisclosed locations) for the card game Cards Against Humanity. This is one of the biggest, or perhaps the biggest, games in the world right now, and for Amfil to have exclusive distribution rights is a big deal. The company has expanded to a 100 staff count, added some fresh warehouse space and is set to see a considerable topline advance on the back of the development. The second news comes, as again we highlighted last time, in the form of a GROzone deal. Specifically, the company has signed an agreement with a Canadian publicly traded company called Roto-Gro International Ltd (ASX:RGI), which will see the two team up in the hydroponics space. Roto-Gro has a technology that allows for hydroponic plant growth as part of a sort of rotating system, designed to maximize growth volume in restricted spaces. GROzone’s technology basically plugs into the Roto-Gro system and feeds it with ozone gas, which removes bacteria and gets rid of things like greenflies, aphids etc. Why is this important?Because medical cannabis is a major market in Canada right now, but beyond that, recreational cannabis is set to become legal early next year. This is going to result in a booming demand for the plant, and by proxy, grow space. The combination offering from GROzone and Roto-Gro is unique and attractive, and we think it’s going to be a fairly big top line driver in the coming years. So that’s what’s happened, what’s next?We are looking for a couple of things to solidify our long-term bullish thesis on the stock. We’d like to see the Cards Against Humanity impact quantified as part of the next earnings release, so as to get an idea of what margins the company is pulling in on the units it wholesales, retails directly, dropships, etc. We’d also like to see some grow space figures that can tell us what sort of rollout the company is expecting from its GROzone collaboration.Finally, and this one’s probably not going to be too popular, we want to see the company raise some money. Cash is tight right now and we think there’s a lot of opportunity for growth that Amfil is missing because it’s not got the resources it needs to capitalize. With a healthy cash balance, we think there’s plenty to close the gap on any dilution driven dip and we think the longer term holders of this stock would be more than willing to shoulder a bit of dilution if it affords management an opportunity to expand into its potential. We will be updating our subscribers as soon as we know more. For the latest updates on AMFE, sign up below!Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.

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