Investors also get 10 warrants for every series B preferred purchased
By Devika Patel
Knoxville, Tenn., Oct. 15 - CrowdGather, Inc. settled a $400,000 final tranche of a $1 million private placement of 10% series B convertible preferred stock on Oct. 10, according to an 8-K filed Tuesday with the Securities and Exchange Commission. The company raised $300,000 on April 8 and $150,000 on each of July 16 and Aug. 2.
The company sold 1 million preferreds at $1.00 apiece. It sold 300,000 preferreds in the first tranche, 150,000 preferreds in each of the second and third tranches and 400,000 preferreds in the final tranche.
The preferreds were each sold with warrants for 10 common shares. The warrants are each exercisable at $0.08 for five years. The strike price is identical to the April 5 closing share price.
The preferreds may each be converted into 20 shares, for a conversion price of $0.05 per share, which is a 37.5% discount to the April 5 closing price. The preferreds may be redeemed at 120.
Proceeds will be used for general working capital purposes and to pursue the launch of the company's forum based advertising network by early 2014.
"This announcement represents the first key step in regaining our business momentum," chairman and chief executive officer Sanjay Sabnani said in a press release.
"Two of our most significant risk factors, a lack of operating capital and the threat of uncertain litigation costs, have been addressed to our satisfaction. We now intend to dedicate more attention to our efforts to complete and launch a successful forum advertising network and exchange.
"Over the past year, we have made significant cost cuts to conserve resources, and while we believe we have operated lean and efficiently, we were challenged to grow the company without new capital.
"With those two factors addressed, we have a renewed focus on our business and will deploy new working capital to complete our technology projects and carefully expand our sales force. We expect to deploy our ad network by early calendar 2014, with our ultimate goal to keep working towards the completion of a forum focused vertical ad exchange accessible by buyers and sellers in real time," Sabnani added.
CrowdGather is a Woodland Hills, Calif.-based internet company that specializes in developing and hosting forum based websites.
| Issuer: | CrowdGather, Inc.
|
| Issue: | Series B convertible preferred stock
|
| Amount: | $1 million
|
| Preferreds: | 1 million
|
| Price: | $1.00
|
| Dividends: | 10%
|
| Conversion price: | $0.05
|
| Conversion rate: | Into 20 shares (per preferred)
|
| Call: | Yes, at 120
|
| Warrants: | 10 warrants per preferred
|
| Warrant expiration: | Five years
|
| Warrant strike price: | $0.08
|
| Settlement date: | April 8 (for $300,000), July 16 (for $150,000), Aug. 2 (for $150,000), Oct. 10 (for $400,000)
|
| Stock symbol: | OTCBB: CRWG
|
| Stock price: | $0.08 at close April 5
|
| Market capitalization: | $4.75 million
|
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