E InfoSonics: Latin America Play With Big Connection

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

The competitive wireless handset market has left small companies such as InfoSonics (IFON) struggling to reach the scale needed to effectively compete against the tech giants in the space. A proposed merger could shift the equation for IFON and bring the combined new entity into the spotlight with a key relationship with a tech giant. 

The stock only trades at around $0.40 with a micro-cap value. A merger that provides synergies and adds access to the products of the largest company in the world is a possible game changer as InfoSonics looks to shift further into the rebounding Latin America markets. 

Struggling Business

InfoSonics had a bustling business a few years back. The company has now exited the U.S. markets and shifted focus towards Latin America. For Q1, revenues declined 34% to $6.2 million due to weakness at carrier customers in Central and South America. The company had revenues of nearly $40 million in 2016 leaving the current market value around only $6 million as surprisingly low. 

The company sells wireless handset solutions and tablets under the Verykool brand with the goal of offering exceptional value in a market dominated with the high-end products of Apple (AAPL) and Samsung (SSNLF). The San Diego-based company has executives from some of the largest tech companies in the U.S. providing the leadership to compete in the large tech sector. 

What the company needed was an edge in a difficult market. Enter Cooltech into the picture. 

Cooltech Merger

On July 26, InfoSonics and Cooltech Holdings agreed to merge. Cooltech is a licensed Apple partner and reseller with a distribution business that includes a retail footprint under its OneClick branded stores with a growing presence in Latin America. 

The deal involves Cooltech becoming a subsidiary in exchange for 62.5 million shares of InfoSonics stock. At the current stock price, the deal is valued at roughly $25 million and will boost the value of the stock 5 fold to over $30 million. 

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Audry Marek 2 months ago Member's comment

Thanks for the update on InfoSonics. I just keep wondering what kind of plan InfoSonics has with AAPL. It would be interesting to know more about this life saving plan in detail. South America has a decent size of the economy, I am still a bit worried about the current social unrest due to its 2-year-long economic downturn.