CrowdGather (CRWG) Parlays Social Casino Business to Bet on Digital Cannabis


Ryan Allway

April 27th, 2016

News, Top Story


The cannabis industry could reach $35 billion by 2020, according to GreenWave Advisors, driven by legalization in a growing number of states. Within this so-called green rush, investors have a number of different investment opportunities. Cannabis Science Inc. (OTC: CBIS) provides investors with exposure to the research side of the business, while American Cannabis Company (OTC: AMMJ) is focused on consulting services.

The media side of the business is often neglected by investors, but could become a large part of the overall industry moving forward. MassRoots Inc. (OTC: MSRT) has already attracted more than 775,000 users and thousands of businesses looking to reach those users. Pot Network Inc. (OTC: POTN) has similarly sought to build out a leading content network focused on breaking news, research, and other topics of interest to the growing cannabis community.

In this article, we’ll take a look at CrowdGather Inc. (OTCQB: CRWG) and why it could be the next big opportunity in the media niche of the burgeoning cannabis industry.

CrowdGather Focuses on Cannabis

CrowdGather Inc. (OTCQB: CRWG) recently announced the sale of its Plaor gaming subsidiary to focus its efforts on its specialty cannabis and consumer publishing network. Last year, the company acquired WeedTracker.com and various other cannabis-related domain names including WeedInHollywood.com and DispensaryWeed.com. The plan was to extend WeedTracker into a mobile locator app and build out the other domains into niche properties.

The rapid growth of its Plaor gaming business put some of those plans on hold, but recently, the company was forced to divest the business. On April 20th, the gaming division was sold for $3.5 million in a move that reduced its corporate debt by 43% and put it on more stable financial footing. The company’s primary creditor also agreed to convert debt at a price of $0.01 per share in order to help it complete an upcoming equity financing at the same price.

Management announced a restructuring at the same time that involves refocusing on its cannabis properties. With hundreds of thousands of visitors to its existing forum properties, the company has a lot of experience building up online communities and monetizing them. The company also built up its Plaor gaming business to 20,000 daily active users and launched a series of new products, which demonstrates its ability to execute on its vision.

Improved Balance Sheet

CrowdGather’s decision to exit the social gaming business and double-down on the cannabis industry helped significantly improve its financial condition. As a part of the transaction, the acquiring firm assumed approximately $1.8 million in debt and $500,000 in other liabilities, which reduced its total debt by around 43%. Deferred payments totaling nearly $1 million, beginning in a year, could further reduce these debt levels.

Management’s efforts to restructure its debt with Iconic Holdings could also make financing a lot easier moving forward. By converting their shares at $0.01, the company’s largest creditor has made it possible for the company to move forward with raising $1 million.

CEO Sanjay Sabnani also agreed to convert $240,000 in funding that he lent to the company on similar terms as part of a financing round not to exceed $1 million in aggregate. Mr. Sabnani’s willingness to convert funding on these terms represents a strong vote of confidence in the company’s future, especially when considered alongside his numerous net open market purchases of common stock – most recently at prices of around $0.04 per share.

CEO Sanjay Sabnani hopes to achieve a breakeven point by the end of the year, which will depend on the company’s ability to cost-effectively raise capital. The reduced debt load and cost-cutting measures implemented over the past couple of years should help improve margins and bring the company closer to that goal. By focusing on a single vertical, the company hopes to apply its skills and accelerate revenue with the proper funding in place.

Looking Ahead

CrowdGather’s move into the burgeoning cannabis industry marks a turning point in its corporate history. After selling off its gaming business, the company is concentrating its efforts on growing in the new vertical market and achieving a breakeven this year. Investors interested in capitalizing on the cannabis industry may want to keep an eye on the stock as the latest play in the rapidly growing media niche of the industry.

For more information, visit the company’s website at www.crowdgather.com.

Ryan Allway

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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