Sam is a trader and one of our lead stock analysts at AskTraders. After starting his career predominantly in the forex markets, Sam now focuses on gold and stocks with a preference for macroeconomic analysis.
Mobile Streams plc (LSE: MOS) announced on Thursday an agreement to acquire a 49% interest in KrunchData Limited for £735,000.
The deal comprises £500,000 in cash and 90.3 million in ordinary shares, with the option to purchase the remaining 51% at any time over the next two years for £765,000.
The two firms formed a partnership in November 2019 that saw Krunch provide expertise, software, and systems to build a second revenue stream.
The current revenue share agreement, under which Mobile Streams receives 100% from Streams Data, will be terminated immediately.
The Streams Data business is expected to generate about £15,000 in monthly revenue in March, with revenues expected to rise to around £25,000 per month in April, increasing 178% from December, following a contract with Quanta Media Group Holdings.
The existing agreement requires the company to pay Krunch for client set up costs, data clean-up costs and agreed on software development.
Krunch has the option to terminate the current contract at 90 days notice, leaving Mobile Streams to retain the rights to customer/client data, but not to the systems, software and IP licensed to Krunch, leaving them unable to continue operating the Streams Data business without significant further investment.
However, the new deal resolves this issue with the revenue share agreement terminated immediately.
Non-Executive Director Nigel Burton said the deal “removes a significant risk by securing access to and the rights to full ownership of the Krunch platform and intellectual property as well as removing the potential future costs of the revenue share arrangement, whilst fully aligning the interests of the Krunch team with the Company”.
The company's CEO, Mark Epstein, is a 33.5% shareholder and director of Krunch, but Mobile Streams non-executives have backed the deal. The current share price for Mobile Streams is down 1.92% at 0.261p.
Mobile Streams shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Mobile Streams shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies
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