WOODLAND HILLS, Calif.--(BUSINESS WIRE)--One of the leading networks of forum communities on the Internet, CrowdGather, Inc. (OTCQB:CRWG), today announced an initial closing of the Company’s newly created Series B Convertible Preferred Stock (“Preferred Stock”) in exchange for $300,000, or $1.00 per share of Preferred Stock. Pursuant to the Securities Purchase Agreement for this transaction, the Company anticipates closing on an additional $300,000 by July 12, 2013. The remaining $400,000 may be purchased at the option of the current investor, or other qualified investors if the current investor does not purchase the remaining $400,000 by October 12, 2013. The Company negotiated the financing independently, and did not incur any placement agent expenses.
The Series B Preferred Stock carries an annual dividend rate of 10% per share of Preferred Stock and is convertible into common shares of CrowdGather, Inc. at a conversion rate of 20 shares of common stock for each share of Preferred Stock. Additionally, the Preferred Stock may be redeemed by the Company at any time at a redemption price equal to 120% of the amount received from the Series B financing. However, the investors in the Series B financing have the option to convert their Preferred Stock into common shares in lieu of accepting the redemption.
“This financing comes with a directive for us to restructure our business for the maximum operational efficiency and leverage,” said Sanjay Sabnani, CrowdGather’s Chairman and CEO. “As we disclosed in our third quarter fiscal 2013 earnings release, we have already begun cost reductions and will endeavor to reduce cash expenses by over 40% while maintaining current revenue levels. The financing coupled with the cost reductions will guide us into a position where we have the greatest flexibility to help improve shareholder value. We believe that CrowdGather continues to demonstrate a viable and attractive business model that generates high gross margins. We also believe that the investment terms we have negotiated provide us with sufficient capital to streamline and refine our business as we consider the strategic opportunities before us.”
About CrowdGather, Inc.
With its growing portfolio of special interest forums and enthusiast message board communities, CrowdGather (www.crowdgather.com) has created a centralized network to benefit forum members, forum owners, and forum advertisers. CrowdGather provides a highly interactive and informational social network for members, a management and revenue-sharing resource for third-party forum owners, and a largely untapped advertising network for marketers worldwide.
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company’s growth and business strategy. Words such as “expects”, “will”, “intends”, “plans”, “believes”, “anticipates”, “hopes”, “estimates”, and variations on such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the Company’s business; general economic, industry and market sector conditions; the ability to generate increases revenues from the Company’s forums; the ability to obtain additional financing to implement the Company's long-term growth strategy; the ability to manage the Company's growth; the ability to develop and market new technologies to respond to rapid technological changes; competitive factors in the market(s) in which the Company operates; and other events, factors and risks disclosed from time to time in the Company’s filings with the Securities and Exchange Commission. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.