CrowdGather Inc (OTCMKTS:CRWG) Pumps Itself
Things were not looking good for CrowdGather Inc (OTCMKTS:CRWG)’s stock a few days ago. The volumes were absolutely pitiful and although the ticker wasn’t exactly crashing, it seemed to be drifting towards the $0.04 mark. A couple of inexplicable intraday dips to $0.01 and $0.02 from last month put additional fear in investors.
We witnessed some movement last week after the company published its latest 10-Q (which we’ll talk about in a minute), but apparently, the management team thought that it wasn’t enough. That’s why, they opened CRWG‘s checkbook and they called the paid promoters. The first emails started flying around on Sunday and some more alerts hit investors’ inboxes before yesterday’s opening bell. Mantle Media LLC, the owners of Stock Runway as well as a few other newsletters received $4,000 from CRWG and they shared half of their compensation with some smaller outfits like Wall Street Buzz.
About an hour after Monday’s opening bell, Emerging Growth LLC and their Cannabis Financial Network also pitched in with an optimistic article. Their disclaimer states that they have received quite a lot of money from CRWG over the years.
The pump worked. The dollar volume reached $180 thousand which hadn’t happened in quite a while and after a 51% surge, CRWG was stopped by the closing bell at a hair under $0.12 per share. To put things into perspective, this is the first close of more than $0.10 in over nine months.
So, the management team succeeded in drawing attention to the stock. All they need to do now is keep investors interested. But can they?
Let’s open the 10-Q we mentioned in our second paragraph and see what the financials looked like on July 31:
- cash: $169,881
- current assets: $448,649
- current liabilities: $4,872,128
- quarterly revenues: $709,151
- quarterly net loss: $943,985
As is often the case, there are some good things about the report and there are some bad things. The pumpers were pretty eager to tell you that the sales for the reported quarter are 74% higher than the ones logged during the corresponding period of last year and this, naturally enough, is true. What they didn’t say, however, is that on a sequential basis, the revenues have actually dropped by as much as 22%. They also make no mention of the rather big net loss and the huge working capital deficit.
Whether spending money on a promotion is the best way to attract investors is up to you to decide, but we must say that the management team do deserve a pat on the back for one thing – they seem to be determined to mitigate the effects of the convertible notes that were issued over the years. Although the shareholders had to swallow some pretty painful prepayment penalty fees, they were certainly happy to see some of the toxic debt being repaid with cash. They are not out of the woods just yet, though.
The company is still a long way away from being profitable and the management team need to find a way of financing the operations. In January, they signed a securities purchase agreement which allows an entity called Aladdin Trading to purchase up to $1.4 million worth of stock at a 40% discount to the market price. The agreement is dependent on an S-1 registration form which has yet to be filed, but it still goes to show that despite the retirement of convertible notes, some discounted stock might see the light of day after all. That’s why, keeping your eyes peeled and considering all the risks is, as always, essential.