Pocket Games Inc (OTCMKTS:PKGM) Climbing Back Up The Charts

Pocket Games Inc. (OTCMKTS:PKGM), which was featured by InsiderFinancial.com in "Pocket Games Inc. (OTCMKTS:PKGM) Is A Smart Risk/Reward Play," is again moving the market.In our previous report, we highlighted that volatility could come back at any time since the float was remarkably reduced. We were not wrong in saying so. As the company released the new annual report accompanied by an attorney letter, the share price was pushed up by an incredible momentum. From $0.0001, the share price jumped and touched $0.0005; the 52-weeks record. It is home run returns, but the story doesn't end here.The most significant is the number of shares that changed hands recently; more than 1 billion some days.Check out the following stock chart before we provide more details: 1-year chart for PKGM 1-month chart for PKGMLet's take some time to explain the business of PKGM for those who are joining us now. The company is based in New York and is engaged in the development, marketing, and sale of interactive games for mobile devices, tablets, and computers. Idol Hands Image - Pocket Games Inc OTCMKTS:PKGMThe business strategy consists of the acquisition of intellectual property and building new brands. The amount of purchases has been significant, which shows the ambition of the management. We will not address all the transactions here. Thus we will provide only what, in our opinion, are the most significant:

• In 2014, it remarked the acquisition of the games ‘Idol Hands; Legend of the Furlings’ and ‘God Game’ were acquired (Intel Corporation invested in these projects.).
• For the year 2015, we appreciate the partnership with one of the companies of Green Man Games, which helped the company promote “Idol Hands.” The expertise accumulated in this project was used to create Testing and Development teams in Pune, India.
• In 2016, the company acquired Social Technology Holdings, Inc., and Kicksend Holdings, Inc. These transactions were recently reversed after legal matters.

We agree with the management regarding the work done so far; it has achieved a lot, and we expect it to continue.In our opinion, if the company's games become mainstream games, the growth will decline, and the opportunity will be less significant. Hence, PKGM seems to be a microcap to be studied right now while it is growing at a high pace.The company is compliant with the regulatory frameworkAs the management of PKGM noted in many reports, executing transactions is a grand strategy to proliferate. It helps in increasing the number of assets, know-how and facilitates hiring new talent.But, there is a caveat. Sometimes, the legal work is pervasive and micro caps have no time to deal with it. Some companies are not even able to file all the annual and quarterly reports, which the market usually dislikes.We appreciate the hard work of the management, because, after a large number of acquisitions cited previously, PKGM has been able to remain compliant with the financial regulations. That's what an attorney recently communicated to the market:

"- Constitute “adequate current public information” concerning the securities and the Company “is available” within the meaning of Rule 144(c)(2) under the Securities Act of 1933;- Include all of the information that a broker-dealer would be required to obtain from the Company to publish a quotation for the securities under Rule 15c2-11 under the Securities Exchange Act of 1934;" Source

As expected, the reaction of the market was quite positive. The letter was published on January 31, 2018, and the increase in volume and price commenced around this date.What's our take? When external professionals issue a legal opinion about listed companies, many market participants who may have doubts become interested. As a result, the liquidity in the market increases, and many times it also has a positive effect on price.Additionally, the annual report was also released about two days before. Thus the market expectation was even more significant.The new information contained in the new annual reportLike every annual report, there are definite and less positive aspects. Let's start with the positive features. We believe that not many market participants got to know the following information regarding the company hiring M&A advisor:

"Effective August 1, 2017, the Company entered into a consulting agreement with Green Light Developments LLC (“Green Light”), in which Green Light will provide business planning, M&A strategy, financial planning and other business development related services" Source

What does it mean? It means that the company may be planning to acquire new assets or businesses. It is precisely what the market wants to hear after the acquisitions of Social Technology Holdings, Inc., and Kicksend Holdings, Inc. did not work out. It also means that the market will be very vigilant, as announcements in this regard could make the share price spike quite a bit. We also encourage readers to be ready; opportunities are usually presented to those who do the hard work.Conversely, the new numbers reported in the balance sheet show that the company needs to recapitalize again. The total amount of assets is equal to $1,057, while the balance sheet of 2016 contained many more intangible assets and goodwill. Obviously, the acquisitions made in 2016 did not close, and the company needed to take it into account in the 10-k.Regarding the reaction of the market, in our opinion, the market was expecting bad financial figures, but the balance reported was better than expected. That's the reason to explain the increase in the share price.The company is entering the Cryptocurrency Mining IndustryVery recently, in February, the company created a new Florida subsidiary PocketChain, LLC, which is intended to explore the Cryptocurrency mining opportunity that exists in the market at the moment. Developments seem to go very fast since the company was said to be approached by several companies offering explosive returns at the Bitcoin Miami Conference in January.

"The key to creating incredible returns from mining Cryptocurrency is choosing the right company to work with; finding those partners who not only understand the market trends, but also can get the maximum 'mining to power' output ratio. We have created this LLC specifically to test this market." said CEO, David Lovatt

Let's see where the new venture brings PKGM. In our opinion, if the company can get only a fraction of some of the returns that cryptocurrency miners are getting right now, shareholders will be satisfied.ConclusionCurrently trading with a market cap of $2.9 million, PKGM is an exciting story among small caps. Be sure to monitor the momentum that the recent news is creating; the float continues to be very reduced, and the price volatility could be quite high.Be sure to check out our coverage on PKGM!We will be updating our subscribers as soon as we know more. For the latest updates on PKGM, sign up below!Disclosure: We have no position in PKGM and have not been compensated for this article.Image courtesy of Mike Bean via Flickr