Borislav Tonev

Cloudweb Inc (OTCBB:CLOW) is as Risky as it Gets

by Borislav Tonev February 5, 2016

A couple of days ago, a landing page and a video popped up. They're hosted by Finest Penny Stocks and towards its end, the voice from the video proudly proclaims “I'm Keith Richie, Editor of Finest Penny Stocks, and Cloudweb Inc (OTCBB:CLOW, CLOW message board) is my red hot stock pick this month”. The voice isn't completely honest.

The fine print under the video says that “Any first, middle, and/or last name referring to our “editor”, “analyst”, “copywriter”, or any other title or name is purely fictitious and statements by such fictitious characters should not be relied upon”.

Remind you of someone? Stock Tips, with its equally fictitious editor, Mike Statler, used similar techniques to pump penny stocks, but unfortunately for the people behind what was once the most influential promotional outfit, this led the newsletter nowhere and Stock Tips can now safely be declared dead.

The similarities between the pump for CLOW and the ones carried out by Stock Tips don't end there. Like Stock Tips, Finest Penny Stocks have also received a fat wad of cash ($220 thousand, to be precise) in order to tout CLOW and a few other newsletters have also jumped in which means that the total amount paid by Sunrise Holdings LLC, the entity responsible for the pump, sits at more than half a million.

The campaign is certainly doing its job. A couple of fairly active sessions on Tuesday and Wednesday were followed by an absolute explosion yesterday when in a matter of six and a half hours, investors traded more than $8 million worth of shares. On day one, the ticker surged from just $0.06 all the way to more than $0.46. It then wiped out a third of its value, but during Thursday's session, it gained a whopping 92% which means that it's now sitting at a hair under $0.60 per share.

The colossal volume and the market cap which currently sits at just under $186 million have drawn the attention of the OTC Markets. They took a good look at the company and they decided to put a Buyer Beware sign on CLOW's profile. We reckon that the stock deserves it.

A market cap of nearly $190 million is absolutely ridiculous when you have in mind that there's no current financial information regarding the company's operations. CLOW closed the acquisition of a UK-based web hosting company mere days ago and the results of the new subsidiary have yet to be posted. The only financial information that the new management team did disclose is that the hosting business has so far recorded an average annual revenue of ₤40 thousand. That's just over $58 thousand.

They also informed us that the number of issued and outstanding shares currently sits at 312,513,800 and they said that 252,500,000 of them are held by Liao Zhi De, CLOW's new CEO. And that begs the question: Who could be in possession of the other 60,013,800 shares?

About a year ago, the public entity currently traded under the CLOW symbol was called Formigli Inc and it was trying to get its stock listed on the OTC Markets. In order to do that, it sold 600,138 shares to “various parties” in exchange for $60,014. In December, shortly before closing the web hosting business acquisition, CLOW went through a 100 for 1 forward split which means that the various parties suddenly found themselves holding on to... that's right, 60,013,800 shares of CLOW common stock.

Thanks to the voice from the video, the current market value of these shares sits at a little less than $36 million.

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