Why the Dorsavi (ASX:DVL) share price is flying 22% higher today

Wearable sensor technology company Dorsavi's shares are up over 32% in intraday trading. We look at why…

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Wearable sensor technology company Dorsavi Ltd's (ASX: DVL) share price is up 22% in late afternoon trading after posting gains of more than 32% earlier in the afternoon. This follows on the company's annual general meeting (AGM) results, released to the ASX this morning.

Shares in the microcap stock are up 85% for the year. And investors brave enough to go bargain hunting following the post COVID market rout to buy shares on 23 March will be sitting on gains of 270%.

By comparison the All Ordinaries Index (ASX: XAO) is up 49% since 23 March.

What does Dorsavi do?

Dorsavi provides wireless technology that's designed to accurately and objectively measure and analyse the way people move. How? Via tiny instruments that measure how you bend, twist and step. These include accelerometers, magnetometers and gyroscopes which combine with Dorsavi's patented algorithms.

The company offer 2 types of sensors. The first monitors movement while the second monitors muscle activity.

What did the AGM unveil to send Dorsavi's share price rocketing?

In his address to shareholders at today's virtual AGM, Dorsavi's Chairman Greg Tweedly revealed that the company had been highly resilient during the pandemic period, reducing costs as required and showing a level of growth in its recurring revenue.

On the cost front, Tweedly stated the company managed to reduce its cash expenses from $7.7 million in the 2019 financial year to $5.6 million in the 2020 financial year.

Dorsavi has also made progress on transitioning from consulting revenue to recurring revenue contracts. 74% of its FY2020 sales revenue was derived from recurring revenue. That's up from 51% in FY2019 and 25% in FY2018. Overall sales revenue, impacted by the pandemic, was down 20% year-on year, falling to $2.0 million from $2.5 million.

Additionally, Tweedly confirmed that Dorsavi has recently raised $2.15 million in capital at an issue price of 3.2 cents per share through a placement and entitlement offer. The company received $1.85 million from institutional and sophisticated investors via an oversubscribed placement and $300,000 from eligible shareholders via a 1-for-4 non-renounceable entitlement offer.

Among other allocations, the company plans to use the new capital to accelerate its product development, drive its commercialisation activities in the United States and invest in sales and marketing initiatives.

With the share price already up 85% in 2020, Dorsavi is one tiny ASX share that has seen big moves this year.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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