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Cashing in on Cannabis: CrowdGather’s Smart Approach to capturing value from the Industry

Ryan Allway

August 24th, 2015

News, Top News

The cannabis industry could reach $35 billion in size by 2020, according to GreenWave Advisors, while it’s generally considered to be the fastest growing industry in the U.S. economy. While these dynamics should make the industry ripe for investment, the murky legality of industry on a federal level and the opaque nature of many existing publicly-traded companies in the space (that went public through reverse mergers) have made it treacherous for investors.

In this release, we’ll take a look at CrowdGather’s unique value proposition to investors interested in the cannabis industry.

Growing Institutional Interest

The cannabis industry has begun attracting significant levels of institutional interest. In January, venture capital heavyweight Peter Thiel announced that his $2 billion Founders Fund would be investing in Privateer Holdings, a marijuana company that owns several pot-related brands. The size of the investment wasn’t officially disclosed, but insiders say that it was a “multimillion dollar” participation in Privateer’s $75 million capital raise.

On a more granular level, ArcView Group has over 480 investor members that have invested over $45 million into 72 different companies. The group hosts webinars each week where up to five companies pitch investors, while offering large in-person events each quarter. With hundreds of high net worth individuals participating, the group has been an early pioneer in facilitating institutional level investments within the growing cannabis industry.

The common denominator is that these investments were all made in privately-held companies rather than publicly-traded companies. When it comes to traditional institutional investors – who may be limited to publicly-traded securities – there are fewer options. Many public companies have shaky finances, limited operating histories, and few disclosures when it comes to making regular filings with the Securities & Exchange Commission.

Ideal Risk-Free Exposure

CrowdGather operates a growing portfolio of special interest forums and scalable multi-platform games. In April, the company announced the acquisition of digital assets including WeedTracker.com, DispensaryWeed.com, and WeedInHollywood.com as part of an effort to diversify its digital assets to capitalize on the growing cannabis industry. The diversification also is consistent with its overall focus of accumulating online users and monetizing them.

While companies like GW Pharmaceuticals plc (NASDAQ: GWPH) and Cannabis Science Inc. (OTC: CBIS) are pursuing clinical trials, our business model enables them to immediately capitalize on the information component of the growing industry without relying on regulatory approvals to begin realizing revenue by providing web services to cannabis consumers and then generating revenue from advertising.

CrowdGather plan on building out WeedTracker.com into a fully-featured on-line cannabis community, while turning WeedInHollywood.com into its first cannabis themed gaming title. Beyond these efforts, management hopes to become a nexus for the entire digital cannabis movement by designing a crowdfunding platform focused on cannabis that it intends to launch on its root domain – CrowdGather.com – in early 2016.

Business Model

CrowdGather’s social gaming business generated nearly $700,000 in revenue at a 75% gross margin during the three-months ended January 31, 2015, creating a base upon which to grow its newly acquired cannabis-focused businesses.  Management believes the addition of high-growth cannabis opportunities on top of its existing business creates an opportunity for institutional and retail investors to get involved in the potential upside.

According to YCharts, the company’s stock is trading more than 40% below its historical valuation of $0.0872, and we believe, below our enterprise value, and with an attractive price-book ratio. Management believe these dynamics suggest that the stock may be undervalued based on its assets and historical valuations, despite the addition of its new gaming and cannabis-focused businesses that have the potential to create its opportunities.

The company’s management has also been making changes to the cost structure aimed at improving profitability. In May of last year, the company sold off some of its legacy assets in order to shore up its balance sheet and raise cash. While platform fees and payroll costs have risen from its subsequent Plaor acquisition, they believe that ongoing revenue growth will offset and leverage these higher expenses as it achieves scale.

Looking Ahead

CrowdGather offers an opportunity to capitalize on the rapidly growing cannabis industry without taking on any of the regulatory risk. In addition, the company has the added benefit of a rapidly growing gaming business and an equity that is trading at a compelling valuation. Investors in the cannabis industry, including those involved with companies like Surna Inc. (OTC: SRNA) and MaryJane Group Inc. (OTC: MJMJ), may want to take a closer look at the stock.

During its last fiscal year, the company reported revenue that increased 51% to $2.4 million and a net loss ($7.1 million) on a per share basis that was cut in half from ($0.13) to ($0.06) per share. The majority of these results were realized from its social gaming division, which accounted for about three-quarters of revenue, while forum revenue accounted for much of the remainder. Management’s daily bookings and other metrics have also been increasing.

As a vote of confidence in its future prospects, CrowdGather CEO Sanjay Sabnani has also been an active buyer of the stock in the open market, having purchased 50,000 shares in mid-June of this year at prices of $0.075 to $0.08 per share, according to Form 4 filings with the SEC. Additionally, Sabnani provided bridge financing to the company earlier this year of $270,000. These actions suggest that Mr. Sabnani remains confident in the company’s future and believes that the current price of the stock may be undervalued.

To learn more, visit the company’s website at www.crowdgather.com.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

Disclaimer: Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

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About CFN Media Group

CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

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