AMPD Ventures (AMPD.C): 52% jump on high performance computing provider validates CEO stance of ‘patience and focus’

08/20/2020

When folks ask AMPD Ventures (AMPD.C) CEO Anthony Brown what his company does, he usually asks, “Have you seen the Spielberg movie, Ready Player One?”

Most people say no. That’s a shame, because the movie is great, and it explains what AMPD is looking to achieve pretty well.

AMPD wants to build The Oasis, a global digital framework that would allow virtual worlds to be created in their high performance computing centres and pumped out to folks like you, in a manner that allowed a high definition universe to exist in which you could do pretty much anything from the comfort of your own home.

We’re not there yet.

But AMPD did just announce a three-year $1.6 million deal to build out a ‘virtual production’ movie studio in BC, which will allow movie producers to build those same ‘virtual worlds’ in a production setting for the sake of cheaper, faster, better film and TV creations.

Here’s how a virtual studio works.

Pretty cool stuff, and more than cutting edge – this will change the way film and TV is created – especially with the limitations of COVID-19 ravaging existing film studio timelines.

AMPD’s deal may only have been worth $550,000 a year, but you wouldn’t know it the way the stock sprung to life Thursday. Hitting a new recent trading volume high, the formerly dragging tech stock leapt from $0.125 to $0.19 in one sitting, adding a fresh lung full of air into a story line that had for some time been more about asking for patience than demonstrating execution.

At Equity.Guru, we’ve recently been the loudest ones compelling AMPD to get a move on and start publishing news, while also suggesting to readers that they might want to wait for some validation before buying in.

Here’s me, laying down some truth:

The frustration is that, despite knowing they can do it (because they have before) and knowing their system is good (because I’ve seen it and the Bardel deal confirms it works as advertised) and knowing there’s a massive need out there for what they do (because PUBG), THE DEALS HAVE NOT BEEN CLOSING.

That’s not to say those deals are being closed with competitors. Any time I’ve talked to AMPD about wanting them to announce something, the answer has been the same – it takes time to bring in a whale, and they’re still reeling those deals in. But, boys, we need one in the bucket.

The just announced deal is enough for me to take that all back.

Well played, AMPD.

A 52% stock jump Thursday was validation aplenty.

“It might seem like excuses to some investors to say these things take time,” CEO Anthony Brown told me Thursday after the day’s trading action, “But that’s how it is. Our potential clients are big, big companies that spend a lot of money on online hosting and have made big investments in whatever their current hosting solution is, so you can’t wrench them free of those systems without substantial discussion, demonstrations of why you’re better, and giving them time to pull the trigger. Nobody buys anything in the tech world without playing vendors off against each other  – and knowing you’re going to be around in a year.”

“We’ve had to earn our chops.”

Brown’s not wrong, but the markets aren’t wired for that kind of story. The penny stock space much prefers a hype piece from a blockchain cannabis company that’s going to cure COVID with bitcoin and oleander than it does a team putting together a sales force, growing within their means, and filling a customer pipeline with multinational partners.

“When we announced Bardel Entertainment, the animators of Rick and Morty, were using our system to render their work, we thought that would buy us some time and respect,” says Brown. “When we announced we had a deal with an Artificial Intelligence company, we thought that would get some love,” he adds.

“But the cold hard fact of it is, folks want us to talk more and do more deals, which is hard for us because we don’t want to be one of those public companies that promises the world every other day. We’re adults doing adult things, and to be properly respected by large scale potential clients, we have to show them we’re the most trustworthy guys in the room. To this point, we’ve had to focus on that.”

I count myself as one of those who’d been kicking AMPD in the ankles for the last while. I have nothing but respect for a management team trying to roll out things in an honest and professional way but, come on man! Shoot me an MOU once in a while! Daddy wants a steak.

Brown nods.

“We know we’ve been quiet,” he says, modestly adding, “This is my first public company outing, and the need to fill the vacuum is one I’m still coming to grips with.”

Brown has brought on advisors, brokers, an IR rep, and sales professionals recently, as well as reach out to market awareness sales channels in the last week. It’s easy, as any CEO will tell you, to be laser focused on your to-do list and imagine the stock will take care of itself. But smart executives quickly learn the value of gathering investor interest, and that relying on a handful of investors, as AMPD did when it came public, can be problematic if one of those decides they need to get out.

Or if they get in trouble on other deals (sup, Darren) and need to cash out early.

“We learned about the perils of being illiquid when one of our early investors decided to just bleed their stake out a few months back,” says Brown. “We kept thinking it would end soon, or that they’d reach out to us and figure out a cross, but we just didn’t have enough of an investor base to fight it off, or timely news to buffer against it. We had to take our punishment and hope investors kept the faith while we put some deals together. Considering what we’ve been up against, we’ve done pretty well, but it burned a lot of small good news pieces for us.”

Today, one of those deals landed; a decent sized partnership with an Asian-backed virtual film studio building out a production facility in Vancouver. Versatile is building out a 12k square feet studio facility that will allow film and TV productions to build an entire world using video game engines, which are then either displayed as backgrounds on LED walls, or even conjured using virtual reality that allows a production to be almost entirely created in high definition graphics.

“We’ve been saying all along, as the internet is forced to upgrade to come to terms with advances in technology, we become more and more necessary, and this deal puts us and our tech in the middle of every production that will come through the Versatile facility.”

The deal was a long time coming, and the news required a little education component to help investors see it for what it is. Regardless, the coiled spring under AMPD began to release and the stock ran.

“It’s hard for us because what we’re allowed to say about the deal is the most conservative case scenario,” says Brown. “We see this as a foothold in a massive new area of film and TV production, that will expose us to a litany of third parties that could also become clients. It makes us bigger, closer to profitable, and to get the deal we had to beat out serious providers with strong track records. This deal is a big validator for us, and will help us get more.”

To be sure, this deal is not the end of AMPD’s new client push. The company is pursuing a substantial lead pipeline, each one of which pays for the construction of more hosting going forward.

“When we get a new client, they’re essentially paying for us to build the infrastructure they’ll use,” says Brown. “We get decent margins, but also get to expand our offerings and cover more of the globe. So, sure, we could go sign up a lot of little fish and fill the news vacuum, but we want the whales, and we’re readying the harpoons right now.”

I’ve got a lot of AMPD stock, some acquired as it went public, some as it ran early, some as it got cheap, and some acquired fighting off a short seller. That’s because I trust Brown as a custodian of my dollars, and I trust his team to continue executing.

Offer me a buck per share for my stock tomorrow, and you can tell your story walking.

This is where the rubber hits the road.

— Chris Parry

FULL DISCLOSURE: I own a bunch of it. Not a client, but maybe some day.

 

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