Sparta Commercial Services (OTCMKTS: SRCO) is a financial solutions company and understands fiscal responsibility. As such there are several reasons the share structure alone makes SRCO a potential breakout play.
Low-Float- The lower a company’s float is the higher its volatility will be, for investors this means the stock can move easily. While there is not a listed float number on OTCMarkets.com, it does show only ~6.5 million shares are held at DTC. This is less than half of the entire OS. Of the ~15 million total shares outstanding, just over 10 million are unrestricted which is a good indicator of what the actual float is.
All an investor has to look at to see how much potential for price appreciation SRCO has is its recent trading history.
On February 11th a mere 414 thousand shares almost doubled the company’s share price from $0.09 to $0.16.
On March 2nd it took fewer shares (263,448) to double the share price from $0.14 to $0.27.
It does not take much for this stock to move, and it is at a favorable position on the chart for entry.
Low Risk of Toxic Dilution- The only thing that can ruin a good trading situation is when a company starts issuing shares irresponsibly. Again, this is a financial solutions company with years of market experience, as such, it is tightly held. Even with the ongoing need for capital, SRCO’s management has exhibited its ability to maintain a tight share structure. Its OS is less than 2% of the total authorized, giving the company leverage and flexibility to complete new non-dilutive offerings.
Executive Incentive for a Higher Share Price- One source of dilution in the OTC markets is generally executive compensation represented as free trading shares. While a higher share price is generally the goal of any responsible CEO, on the OTC C-level management generally secures their compensation regardless of share price or company performance.
SRCO’s executive compensation is calculated via the Black Scholes pricing model. This is the same model utilized to calculate the value of options. As such, SRCO’s C-suite has increased the incentive for a higher valuation.
Make sure you are in a position to benefit from the above factors that could send SRCO soaring.
SPARTA COMMERCIAL’s STORY
The balance sheet and share structure should tell investors all they need to know about SRCO, but there is obviously an underlying story to how its business will continue to grow.
How SRCO Makes Money
Currently, there are two main verticals driving SRCO’s revenue growth:
- Vehicle History Reports- The company’s e-commerce technology earns SRCO a large majority of its revenue. Its subsidiary, iMobile Solutions, Inc., through Cyclechex, RVchex, CarVINreport and Truckchex, offer car buyers assurances and are available on Kelly Blue Book, Auto Trader, AllState, and various dealership websites. These reports have been sold in all 50 states and 62 countries.
- Health and Wellness Products – New World Health Brands, Inc. a CBD and natural dietary supplement brand, is an example of a calculated risk paying off for SRCO. While health and wellness products wouldn’t seem to fit a ‘financial solutions’ model on the surface, New World Health Brands was an opportunity for SRCO to leverage its e-commerce expertise in a fast-growing industry and so far this has proven profitable. Sales have grown by ~80% in the first 9 months of fiscal 2022 vs. the same period in 2021.
How SRCO Can Make More Money in 2022
While the above verticals have created revenue growth on their own which should continue, SRCO has several other revenue streams that could start showing up in the balance sheet as soon as the next 10-Q.
- Municipal Financing Business- The company’s foundation was built on auto-financing. After the 2008 financial crisis, it shifted its focus from consumers to municipalities. When COVID hit, many of these municipalities received grants reducing their need for funding. However, these grants are drying up and SRCO has already announced several new municipal deals, so expect to see this reflected in increased revenue.
- Mobile App Development- SRCO’s iMobile Solutions subsidiary has signed several app development deals already in 2022, meaning new revenue sources.
- Crypto-Payment App- SRCO’s crypto-payment app is an exciting solution for merchants looking to accept cryptocurrency payments. This could be a massive revenue stream if it secures adoption.
About SRCO’s Crypto Play
Sparta Commercial Services’ (OTCMKTS: SRCO) SpartaPayIQ is a crypto payment gateway developed for e-commerce and brick & mortar businesses. SpartaPayIQ will also serve as an integral component of another product (www.SpartaCrypto.com) being developed by SRCO to make the company a vertically integrated crypto commerce company.
According to a July 2021 Crypto.com Research Report, there are approximately 221 million cryptocurrency users worldwide holding over $2 Trillion worth of cryptocurrency to spend. That’s why the Global Crypto Payment Gateway Market is expected to grow at a compound annual growth rate (CAGR) of 22.8% over the next six years, according to Brandessence Market Research.
SRCO’s UNIQUE FEATURES TO HELP COMPANY GAIN MARKET SHARE
Sparta Commercial’s (OTCMKTS: SRCO) crypto payment gateway includes several unique features that will make it desirable for merchants.
- Zero Cost Merchant Platform- SpartaPayIQ does not charge the merchant any transaction fees for the conversion. Other cryptocurrency payment platforms charge 1% or higher.
SpartaPayIQ earns its commission on the exchange rate paid by the buyer so it is able to offer a “zero-cost” platform to the merchants.
- Eliminates Merchant Conversion Losses- SpartaPayIQ converts payment immediately so the merchant is never actually holding or receiving cryptocurrency. This eliminates the need to manually convert the crypto to fiat, which depending on how long the merchant takes to do the conversion can subject them to market volatility. (Merchants can, however, choose to receive cryptocurrency and convert at their own pace)
- Eliminates Capital Gains Issues- In many cases, merchants accepting crypto payments and converting are subject to accounting issues such as capital gains tax. SpartaPayIQ’s removes these issues by converting the currency before it touches the merchant.
SRCO’s SpartaPayIQ™ uses contactless, blockchain-based payment processing technology to instantly convert cryptocurrency payments to USD or other select fiat currencies. This mitigates exposure to market volatility by locking in an exchange rate for fifteen minutes after an invoice is created, guaranteeing that all parties are protected from unpredicted market swings.
The platform currently accepts:
Bitcoin (CRYPTO: BTC)
Ethereum (CRYPTO: ETH)
Bitcoin Cash (CRYPTO: BCH)
Litecoin (CRYPTO: LTC)
Dogecoin (CRYPTO: DOGE)
USDT (CRYPTO: USDT)
The company is also open to adding currencies as they gain wider adoption.
The payment can settle in USD or EUR. Businesses also have the option to keep the cryptocurrency if they don’t want to immediately convert it allowing them to take advantage of potential breakouts in value.
MAJOR MILESTONE FOR SRCO
Sparta’s CEO Anthony Havens, calls SpartaPayIQ a “milestone for the company.” SpartaPayIQ™ will operate under Sparta’s subsidiary, SpartaCrypto, Inc.
This article is part of a sponsored investor education program.