IWEB closed the market at $0.25, 28.21% higher than the previous close and traded over 2.6 million shares for the day. Apart from the running stock promotions, the company’s registration statement for 26 million new shares of common stock got also declared effective by the SEC last month. In addition, IWEB filed its latest 10-Q report.
However, those were all events not considered that spectacular by traders, as it is questionable if the observed increase in the value of the stock last month would have happened without the paid promoters. Now, it looks like yesterday the event that could, according to many investors, justify the current market cap and provide future potential got finally revealed.
As promised on Friday afternoon, IceWEB announced a significant material event: the company has reached a definitive merger agreement with Promark Technology, Inc., a private distributor of data storage products and solutions. The press release sounds promising, but if the merger would actually change something for IWEB shareholders depends on the projected “immediate and dramatic improvement” in the company’s revenues, profits and market share resulting from the new agreement.
In the case of IceWEB, it is hard to speak about profits at this point, as it has been losing money in millions over the last three years. The company has also a working capital deficit to cover and debts exceeding the assets.
Moreover, it looks like it will not be possible for IceWEB to pay in cash its obligation under the agreement with its $256,000 available as of December 31, 2010. The corresponding SEC filing confirming the merger agreement reveals that pursuant to the terms of the transaction IceWEB will pay the selling shareholders total consideration of $10.78 million, for expected additional $100 million in revenues in the coming year.
