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CRWG > SEC Filings for CRWG > Form 8-K on 20-May-2014All Recent SEC Filings

Show all filings for CROWDGATHER, INC.

Form 8-K for CROWDGATHER, INC.


20-May-2014

Completion of Acquisition or Disposition of Assets, Unregistered Sale of Equity


Item 2.01. Completion of Acquisition or Disposition of Assets.

Merger with Plaor, Inc.

On May 19, 2014, CrowdGather, Inc., a Nevada corporation (the "Registrant," "Crowdgather," or "We"), closed the Agreement and Plan of Merger with Plaor, Inc., a Delaware corporation ("Plaor") and our wholly-owned subsidiary, Plaor Acquisition Corp. (the "Merger Agreement"), pursuant to which Plaor Acquisition Corp. merged with Plaor and Plaor survived as our wholly-owned subsidiary ("Merger"). Pursuant to the Merger, the shareholders of Plaor ("Plaor Stockholders") received 55,075,800 shares of common stock of CrowdGather (the "Merger Shares"). Immediately after the closing of the Merger, CrowdGather had 116,733,508 shares of common stock, 1,000,000 shares of Series B preferred stock, 6,218,750 options, and warrants to purchase 16,145,179 shares of common stock issued and outstanding.

The Merger Shares will be issued to the Plaor Stockholders in a transaction which the Registrant believes satisfies the requirements of that exemption from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Section 4(2) of that act and Regulation D promulgated pursuant to that act by the Securities and Exchange Commission.

The Merger Agreement further provides that in the event the Registrant files a registration statement with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, Plaor Stockholders has the right to request that the Registrant include in that registration statement the shares of common stock then held by Plaor Stockholders.

The transactions contemplated by the Merger Agreement were intended to be a "tax-free" reorganization pursuant to the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

In connection with the Merger, Hazim Ansari was appointed as one of our directors effective upon the closing of the Merger.

A copy of the Merger Agreement is attached as Exhibit 10.1 to our Current Report on Form 8-K which was filed on May 5, 2014. This brief description of the Merger Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement as attached as Exhibit 10.1 to that Current Report on Form 8-K filed on May 5, 2014.

Concurrently with the closing of the Merger Agreement, the Registrant entered into Lock-up Agreements with certain of the Plaor Stockholders for the Merger Shares ("Lock-up Agreement"). The Plaor Stockholders agreed that they may sell 45% of the shares of common stock after six months from the later of (i) May 1, 2014 and (ii) the closing date of an equity financing of more than $1,000,000, if such financing occurs during the six months after May 1, 2014, and 55% of the shares of common stock after twelve months from May 1, 2014.

The form of the Lock-up Agreement is attached hereto as Exhibit 10.2. The brief description of the form of Lock-up Agreement is a summary of the material terms only and is qualified in its entirety by reference to the full text of the Lock-up Agreement as attached as an exhibit.

Sanjay Sabnani, CrowdGather's officer, director and principal shareholder, previously acted as an advisor to Plaor and owned approximately 34,998 shares of common stock of Plaor prior to the Merger. Mr. Sabnani received approximately 34,998 shares of CrowdGather pursuant to the Merger. Prior to the Merger, Hazim Ansari, one of Plaor's principal shareholders, acted an advisor to the CrowdGather and provides patent services to Crowdgather. Mr. Ansari owned approximately 180,000 shares of CrowdGather's common stock prior to the Merger, and received an additional 3,554,446 shares of CrowdGather's common stock pursuant to the Merger.


Overview of Plaor, Inc.

The following is a description of Plaor and the assets acquired as a result of the Merger.

Background of Plaor. Plaor was initially organized as Plaor LLC in the State of Delaware on March 5, 2012. On May 1, 2014, Plaor filed a Certificate of Conversion with the Secretary of State of Delaware pursuant to which Plaor was converted to a corporation.

Plaor's Business. Plaor specializes in developing highly scalable multi-platform games that are available on Facebook, Google Play, and the Apple App Store. Plaor's initial social gaming platform is a simulated casino environment referred to as Mega Fame Casino wherein individual gamers are able to play online casino style games socially with other players from around the world. Unlike traditional casinos or their online counterparts, the betting on Mega Fame is virtual and no real money bets are accepted and there is no ability for a player to redeem their winnings for cash. Despite the lack of traditional cash betting, we believe that players experience the same entertainment as they experience in a casino setting. Mega Fame Casino is a gaming platform which includes multiple games, combined to emulate a casino environment. Along with the company's initial Hollywood Poker offering,the Mega Fame Casino also includes Video Poker, multiple slot machines, and a daily celebrity challenge designed to increase engagement and retention of players.

Mega Fame Casino features celebrities from film, television, professional sports, and the music industry and offers weekly celebrity tournaments which we believe bring unique experiences to social games as players can play and interact with their favorite stars. Mega Fame Casino generates revenue through the sale of virtual currency to players that they may exchange to play at any of our online slot machines, video poker machines, Hold'em style poker tables, or for other features and experiences available within Mega Fame Casino. Players can pay for our virtual currency using Facebook local currency payments when playing our games through Facebook and can use other payment methods such as credit cards or PayPal on other platforms. Mega Fame Casino currently has more than 20,000 daily active users.

Plaor's Strategy. Plaor's mission is to create great social game experiences that bring enjoyment and a sense of community to its players. Plaor strives to "treat everyone like a star" with high quality products, exceptional customer service, and personal attention for all of its players.

Technology. In addition to its focus on social games, Plaor has developed a web-based technology platform to facilitate short development cycles and data collection systems. Plaor collects and analyzes large volumes of player behavioral data continually and utilizes analysis of those data to understand its players and maximize its platform's potential as a creative social game environment.

Plaor's technologies include a mixture of native and managed frameworks deployed to both internal and hosted environments. Based on well-known web technologies, . . .



Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.



Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

In connection with the Merger, Hazim Ansari was appointed as one of our directors effective upon the closing of the Merger.

Hazim Ansari, age 43, is a specialist in the offshore intellectual property industry and a successful entrepreneur. For the past twelve years, Mr. Ansari has acted as CEO of NovelIP and has advised numerous emerging companies on their patent portfolios. He has negotiated licensing deals with over 50 universities and various U.S. government agencies, including the first ever privately held corporate consortium to conduct medical research using antimatter. In 2002, Hazim founded PatentMetrix, now named Novel IP, based in Delhi, India and was one of the first to use this high quality, cost-effective labor base to deliver patent services, such as mapping markets to help companies proactively manage patent infringement risk and building multi-institutional collaborations to further technology development.

Prior to founding PatentMetrix, Mr. Ansari was an executive at the Tomorrow Factory, a B2B software company, where he was appointed CEO by the Board of Directors, and successfully restructured the company for merger opportunities. Before joining Tomorrow Factory, Mr. Ansari was an intellectual property attorney in O'Melveny & Myers' Newport Beach office where he represented numerous high technology companies in the negotiation of intellectual property licensing and acquisition deals, filing and prosecution of patent portfolios, structuring of co-development and co-exploitation vehicles, and general management of intellectual property assets. Mr. Ansari began his intellectual property career as an associate at Christie, Parker & Hale. He graduated magna cum laude from Loyola Law School of Los Angeles and received his B.S. in Chemical Engineering from Stanford University.

There is no family relationship between Mr. Ansari and any of our current officers or directors. Mr. Ansari owned approximately 180,000 shares of CrowdGather's common stock prior to the Merger, and received an additional 3,554,446 shares of CrowdGather's common stock pursuant to the Merger. Prior to the Merger, Mr. Ansari has acted an advisor to the CrowdGather and provides patent services to Crowdgather.




Item 9.01 Financial Statement and Exhibits.

(a) Financial Statements of businesses acquired.

The audited financial statements of Plaor, Inc. for the year ended January 31, 2014 and for the period from inception (March 15, 2012) to January 31, 2013 are included below:

To the Members
Plaor, LLC
Boston, Massachusetts

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying balance sheets of Plaor, LLC (the "Company") as of January 31, 2014 and 2013, and the related statements of operations, changes in members' (deficit) equity, and cash flows for the year ended January 31, 2014 and for the period from inception (March 5, 2012) through January 31, 2013. The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2014 and 2013, and the results of its operations and its cash flows for the year ended January 31, 2014 and for the period from inception (March 5, 2012) through January 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company's significant operating losses raise substantial doubt about its ability to continue as a going concern. Management's plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

[[Image Removed]]

/s/ Moody, Famiglietti & Andronico, LLP
Tewksbury, Massachusetts
May 14, 2014


                                   PLAOR, LLC

                                 BALANCE SHEETS

                        AS OF JANUARY 31, 2014 AND 2013

                                                                   2014              2013

                           Assets

Current Assets:
Cash                                                           $     215,343     $    187,289
  Accounts Receivable                                                 55,794            2,510
  Prepaid Marketing Expenses                                         187,005           14,462
  Prepaid Expenses and Other Current Assets                            9,661           10,039

Total Current Assets                                                 467,803          214,300


Property and Equipment, Net                                           32,221           17,015
Intangible Assets, Net                                                31,876          414,376
Security Deposits                                                     22,078            3,310


Total Assets                                                   $     553,978     $    649,001



         Liabilities and Members' (Deficit) Equity

Current Liabilities:
  Accounts Payable                                             $     491,525     $    172,228
  Accrued Expenses                                                   259,062          275,662
  Deferred Revenue                                                   181,085            4,884

Total Liabilities                                                    931,672          452,774


Commitments and Contingencies (Note 6)                                     -                -

Members' (Deficit) Equity:
Class A Units: 139,886 and 82,286 Units Authorized, Issued
and Outstanding
  at January 31, 2014 and January 31, 2013, Respectively
(Liquidation
   Preference of $13,283,352)                                     13,283,352        7,229,002
Class B Units: 40,000 and 32,000 Units Authorized at January
31, 2014
  and January 31, 2013, Respectively; 32,841 and 22,189
Units Issued and
   20,914 and 12,035 Units Outstanding at January 31, 2014
and January 31,
   2013, Respectively                                                510,214          319,650
Class A Units Subscription Receivable                             (1,136,014 )     (3,030,014 )
Accumulated Deficit                                              (13,035,246 )     (4,322,411 )

Total Members' (Deficit) Equity                                     (377,694 )        196,227


Total Liabilities and Members' (Deficit) Equity                $     553,978     $    649,001


                                   PLAOR, LLC

                            STATEMENTS OF OPERATIONS

                    FOR THE YEAR ENDED JANUARY 31, 2014 AND

     FOR THE PERIOD FROM INCEPTION (MARCH 5, 2012) THROUGH JANUARY 31, 2013

                                   2014             2013

Revenue:
  Online Game                  $    220,453     $        197
  Events                             22,582                -

Total Revenue                       243,035              197

Cost of Revenue                     442,378          101,382

Gross Loss                         (199,343 )       (101,185 )

Operating Expenses:
  Sales and Marketing             3,565,423          941,973
  General and Administrative      2,820,454        2,031,679
  Research and Development        2,127,615        1,268,933

Total Expenses                    8,513,492        4,242,585

Loss from Operations             (8,712,835 )     (4,343,770 )

Other Income                              -           21,359

Net Loss                       $ (8,712,835 )   $ (4,322,411 )


                                   PLAOR, LLC

               STATEMENTS OF CHANGES IN MEMBERS' (DEFICIT) EQUITY

                    FOR THE YEAR ENDED JANUARY 31, 2014 AND

     FOR THE PERIOD FROM INCEPTION (MARCH 5, 2012) THROUGH JANUARY 31, 2013
[
                                                                                   Class A Units                Members'
                      Class A Units                Class B Units          Subscription       Accumulated       (Deficit)
                  Units          Amount         Units        Amount        Receivable          Deficit           Equity

Inception
(March 5,
2012)                   -     $          -            -     $       -     $           -     $           -     $          -

Issuance of
Class A Units
for
Subscriptions
Receivable
to Founders        58,480        4,700,000            -             -        (4,700,000 )               -                -
Issuance of
Class A Units
for
Contributed
Intangible
Assets
to Founders         9,520          765,000            -             -                 -                 -          765,000
Issuance of
Class A Units
for Cash            1,714          200,002            -             -                 -                 -          200,002
Issuance of
Class A Units
for Cash of
$50,000 and
in Exchange
for Services
of $214,000         2,255          264,000            -             -                 -                 -          264,000
Issuance of
Class A Units
for
Subscriptions
Receivable         10,317        1,300,000            -             -        (1,300,000 )               -                -
Vesting of
Class B Units
for
Equity-Based
Compensation            -                -        4,191       111,313                 -                 -          111,313
Vesting of
Class B Units
for Services            -                -        7,844       208,337                 -                 -          208,337
Class A Units
Subscription
Receivable
Payments                -                -            -             -         2,969,986                 -        2,969,986
Net Loss                -                -            -             -                 -        (4,322,411 )     (4,322,411 )

Balance at
January 31,
2013               82,286        7,229,002       12,035       319,650        (3,030,014 )      (4,322,411 )        196,227


Issuance of
Class A Units
for Cash of
$12,500 and
Equity-Based
Compensation
of $17,700            258           30,200            -             -                 -                 -           30,200
Issuance of
Class A Units
for
Subscription
Receivable         57,112        6,000,000            -             -        (6,000,000 )               -                -
Issuance of
Class A Units
for
Equity-Based
Compensation          230           24,150            -             -                 -                 -           24,150
Repurchase of
Class B Units           -                -       (1,143 )     (15,000 )               -                 -          (15,000 )
Vesting of
Class B Units
for
Equity-Based
Compensation            -                -        5,149       106,731                 -                 -          106,731
Vesting of
Class B Units
for Services            -                -        4,873        98,833                 -                 -           98,833
Class A Units
Subscription
Receivable
Payments                -                -            -             -         7,894,000                 -        7,894,000
Net Loss                -                -            -             -                 -        (8,712,835 )     (8,712,835 )

Balance at
January 31,
2014              139,886     $ 13,283,352       20,914     $ 510,214     $  (1,136,014 )   $ (13,035,246 )   $   (377,694 )

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