Grey Cloak Tech Inc (OTCMKTS:GRCK): Plenty Of Upside Potential Here

We looked at the small cap universe and Grey Cloak Tech Inc (OTCMKTS:GRCK) caught our attention. In our opinion, this stock exhibits bright prospects, and looking at where it is trading now, it could deliver impressive returns when it starts to break out.In this piece, we examine catalysts that we believe will draw more investors into the stock and contribute more upward support for the stock price.Before we get into the details, have a look at GRCK’s price action to get a sense of what a breakout could mean for investors who grab the stock in the dip. GRCK Daily ChartBusinessFor the sake of our readers who are getting to know GRCK now, we’ll briefly review the company’s business model just to put things into perspective.GRCK has a pretty straightforward business model. The company is primarily engaged in providing digital advertising fraud prevention solutions. In this business, it provides critical support to marketers by enabling them to take control of their advertising budgets by cutting off fraudulent online advertising practices that can cause them to lose money.Online advertising fraud prevention industry presents a massive revenue opportunity for GRCK and we’re going to examine that shortly.Important to note at this juncture is that in addition to providing advertising fraud prevention, GRCK has diversified into the rapidly growing regulated cannabis industry in an effort to grow shareholder value. GRCK’s expansion into cannabis industry is one of the catalysts we’re examining here.The business of fighting online advertising fraudAlthough digital advertising fraud prevention industry is crowded and competitive, this doesn’t mean that the industry is not growing or that revenue opportunities have dried up for GRCK.We’ve figured out that businesses are losing increasing amounts of money through ad fraud and this can only be viewed as expanding market for GRCK’s core ad fraud prevention product Fraudlytic.According to a new report from agency group The&Partnership and ad verification firm Adloox, businesses worldwide will lose $16.4 billion to ad fraud this year. Last year, Adloox estimated that ad fraud cost businesses $12.5 billion.The problem has gotten so serious that even large advertising brands such as Procter & Gamble Co (NYSE:PG) have complained about it. According to a CNBC report, Procter & Gamble’s chief marketing officer, Marc Pritchard, made the following comment at a meeting of internet leaders early this year:

"We serve ads to consumers through a non-transparent media supply chain with spotty compliance to common standards, unreliable measurement, hidden rebates and new inventions like bot and methbot fraud."

SourceDigital ads purchased using automated systems, or what the industry calls programmatic advertising, are said to be at a higher risk of being hit by fraud. Yet, programmatic advertising is growing popular because it simplifies ad buying for businesses. Since businesses are not going to ditch programmatic advertising since it offers convenience, they will want to use ad prevention solutions such as the ones that GRCK provides to make their every ad dollar count.Expansion into cannabis industryWith GRCK’s prospects on ad fraud prevention industry clearly outlined, let’s now examine its expansion into regulated cannabis industry where it has chosen to focus on the medicinal cannabis market.On September 19, GRCK announced that it was acquiring Eqova Life Sciences. Although the mention of Eqova Life Sciences may not ring many bells, what it does will impress you.First off, Eqova Life Sciences is a player in a cannabis sector that is projected to register an explosive growth over the next few years. According to estimates by The Hemp Business Journal, the market for CBD (cannabidiol) products will grow 700% to reach $2.1 billion in annual sales by 2020.How does Eqova Life Sciences fit into this? The company provides full spectrum hemp oil health products that are sold exclusively to medical practitioner market. Eqova Life Sciences is a medically-focused CBD company. It’s important for readers to note that Eqova Life Sciences’ practitioner market is currently underserved, and this implies plenty of revenue and profit opportunity.GRCK expects to see a substantial boost to its revenues after it completes the acquisition of Eqova Life Sciences.This statement by William Bossung, the chief financial officer of GRCK, summarizes why the company made the leap into cannabis industry and what it expects with the move:

"For several months, we have been looking at the cannabis industry for an acquisition. While we have a good core product in our Fraudlytic, the click fraud prevention industry has become very crowded and competitive. Therefore, we have been examining the many opportunities available in the cannabis industry. We have been looking for a way to grow shareholder value by adding acquisitions from a rapidly growing industry such as CBD."

SourceConclusionTo sum up, we looked at GRCK’s financial statements and we noted that the company already generates revenues, its cash balance increased in 2Q17. Its assets also increased in the quarter but liabilities decreased. Overall, there's a lot to like with GRCK.We will be updating our subscribers as soon as we know more. For the latest updates on GRCK, sign up below!Image courtesy of Shibga Media via FlickrDisclosure: We have no position in GRCK and have not been compensated for this article.