More than two months ago Amwest Imaging Incorporated (OTCBB: AMWI) announced they had acquired Instant Website Technology Inc., a “cloud software” technology company whose primary business was in “providing relationship building tools and processes that help any business cultivate profitable relationships with customers, all through web based solutions.” On Thursday AMWI essentially announced the same news, informing investors that they have “completed the final acquisition of all of the outstanding shares” of IWTI, and now shares are trading more than 400% higher than they were on Wednesday with trading volume hitting an astounding 40.5 million by midday.
Shares have actually hit a high of 0.207 during Thursday’s trading session and are now holding around the 0.1545 level, a 0.1245 increase from yesterday. For a company that has yet to produce any income since their inception back in April 2010 this “news” is an odd catalyst for growth and new found confidence.
It shouldn’t come as any surprise to investors that back in October AMWI adopted a resolution to a forward stock split of their issued and outstanding shares of common stock on a 1 for 26 basis, increasing their authorized capital from 75,000,000 to 600,000,000. Through this move AMWI bumped their issued and outstanding shares of common stock from 20,060,000 shares of common stock to 535,600,000 shares of common stock.
Now that a month has passed since that stock split AMWI is telling investors they have “immediately implemented an aggressive growth strategy to capitalize on the explosive growth in the Cloud Computing (SaaS) sector of the market,” this based on their completed acquisition of Instant Website Technology.
Of course in Thursday’s press release AMWI shares with investors the immense potential that they now have as they point out “Virtualization software for a cloud service market forecasts indicate that markets at $5.8 billion in 2010 are anticipated to reach $16 billion by 2017,” along with “The industry is poised for strong growth through 2014, when worldwide cloud services revenue is projected to reach $148.8 billion.” Just how AMWI is going to carve out their piece of the pie is unclear.
Looking at what the IWTI acquisition brings to AMWI it’s difficult to see the value. The “web based solutions” that the “cloud software technology” company developed were “specifically for businesses in need of a website and related online search engine & mobile marketing tools. The primary component of this web based solution is an on-demand fold out turn-key website for immediate use, as well as innovative mobile marketing solutions that meet the needs of small business.”
So what did this juggernaut of cloud software technology cost AMWI? Back in September they issued 6,060,000 shares of their common stock to the shareholders of IWTI, in exchange for all issued and outstanding shares of IWTI.
For that deal AMWI picked up technology that “provides powerful niche website presences for small business that attract and engage customers at a personal level delivering advertisements and marketing via email, online, and mobile.” AMWI now plans to drive revenue with this technology by charging a basic monthly fee of $49.99 for “for anyone wanting to build, develop and maintain a website.” There’s more, “Following the website creation, design, and listing online, the client can utilize additional online tools to develop a marketing plan for its customer base implementing SMS technology (“texting”) and email marketing which is a must-have in today’s social networking environment.”
It should come as no surprise that services like this are a dime a dozen right now and AMWI is offering no clear advantage over those other companies offering to build, develop and maintain a website. How this is linked to the worldwide cloud services revenue that is projected to reach $148.8 billion by 2014 is anybody’s guess.
If an investor managed to build a nice position prior to Thursday then the day’s activity certainly has been beneficial but for those buying at the high end right now there is considerable risk given the fact that the company has proven nothing up to this point.