UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8‑K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
September 21, 2015
CROWDGATHER, INC.
(Exact name of registrant as specified in
its charter)
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NEVADA
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000-52143
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20-2706319
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(State or other jurisdiction of
incorporation)
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(Commission File Number)
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(IRS Employer Identification Number)
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23945
CALABASAS ROAD, SUITE 115, CALABASAS, CA 91302
(Address of Principal Executive Offices)
(Zip Code)
(818) 435-2472
Registrant's telephone number, including
area code
_____________________________________________________
(Former name or former address, if
changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONSItem 1.01 Entry into a Material Definitive Agreement
On September 21, 2015, CrowdGather,
Inc. (the "Company" or "we") issued a Convertible Promissory Note ("Note") with
an aggregate principal amount of $162,000 to Iconic Holdings, LLC ("Iconic"). On
September 22, 2015, the Note was funded and the Company received $150,000 with
$12,000 retained by Iconic through an original issue discount for due diligence
and legal bills related to this transaction. The Note bears interest at the rate
of 8% per annum, is due and payable on September 18, 2016. Iconic shall have the
right to convert any unpaid sums into common stock of the Company at the rate of
60% of the lowest trading price reported in the 15 days prior to date of
conversion, subject to adjustment as described in the Note. The Note also
provides that Iconic will not be permitted to convert any portion of the note if
the number of shares of the Company's common stock beneficially owned by Iconic
and its affiliates, together with the number of shares of our common stock
issuable upon any full or partial conversion, would exceed 9.99% of our
outstanding shares of common stock.
During the first 180 days following
the date of the Note, the Company has the right to prepay the principal and
accrued but unpaid interest due under the Note, together with any other amounts
we may owe the holder under the terms of the Note, at a graduating premium
ranging from 105% to 135% of face value. After this initial 180 day period, the
Company does not have a right to prepay the note without written consent from
Iconic. The Note also contains certain representations, warranties, covenants
and events of default, and increases in the amount of the principal and interest
rates under the Note in the event of such defaults.
The Company utilized approximately
$121,000 to extinguish a Convertible Promissory Note issued to JMJ Financial on
March 24, 2015. The remaining proceeds are intended for working capital.
The foregoing description of the Note
Purchase Agreement and the Note is qualified in its entirety by reference to the
full text of the Note Purchase Agreement and Note, which are included as
exhibits to this Current Report on Form 8-K and are incorporated by reference.
SECTION 2 - FINANCIAL
INFORMATION
Item 2.03 Creation of Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant
See the disclosures under Item
1.01 of this Current Report on Form 8-K.
SECTION 8
- OTHER EVENTS
Item 8.01
Other Events
Convertible Promissory Note Extinguishment
On September 22, 2015
the Convertible Promissory Note issued to JMJ Financial on March 24, 2015 was
paid in full. A payment of $121,333.50 was made which included $71,500
principal, $9,389 interest, and $40,444.50 prepayment fee.
Warrant Exercise
The Company is delivering 2,724,492
common shares which are tradable now, for the exercise of the outstanding
Warrant to Typenex, outstanding from a prior financing. The warrant is now fully
exercised.
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SECTION 9 - FINANCIAL STATEMENTS AND
EXHIBITS
Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following is a
complete list of exhibits filed as part of this Report. Exhibit numbers
correspond to the numbers in the exhibit table of Item 601 of Regulation S-K.
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Exhibit No.
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Description
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10.1
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Form of
Convertible Promissory
Note
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned, hereunto duly
authorized.
CROWDGATHER, INC.
By: /s/ Sanjay Sabnani
Sanjay Sabnani, Chief Executive Officer
Date: September 25, 2015
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EXHIBIT 10.1
Note: September 21, 2015
NEITHER THESE SECURITIES NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF
THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT,
FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE
OUTSTANDING PRINCIPAL SUM REPRESENTED BY THIS NOTE MAY BE LESS THAN THE
PRINCIPAL SUM AND ACCRUED INTEREST SET FORTH BELOW.
8%
CONVERTIBLE PROMISSORY NOTE
OF
CROWDGATHER, INC.
Issuance Date: September 21, 2015
Total Face Value of Note: $162,000
This Note is a duly authorized
Convertible Promissory Note of CrowdGather, Inc. a corporation duly organized
and existing under the laws of the State of Nevada (the "Company"), designated as the Company's 8%
Convertible Promissory Note due September 21, 2016 ("Maturity Date") in the principal amount of $162,000
(the "Note").
For Value Received, the Company hereby promises to pay to
the order of Iconic Holdings, LLC or its registered assigns or
successors-in-interest (the "Holder") the Principal Sum of $162,000 (the
"Principal Sum") and to pay "guaranteed" interest on the principal
balance hereof at an amount equivalent to 8% of the Principal Sum, to the
extent such Principal Sum and "guaranteed" interest and any other interest,
fees, liquidated damages and/or items due to Holder herein have been repaid or
converted into the Company's Common Stock (the "Common Stock"), in
accordance with the terms hereof. The sum of $150,000 shall be remitted and
delivered to the Company, and $12,000 shall be retained by the Purchaser
through an original issue discount (the "OID") for due diligence and
legal
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bills related to this transaction. The OID is set at 8% of any
consideration paid. In the event of partial payment by the Holder, the
principal sum due to the Holder shall be prorated based on the consideration
actually paid by Holder such that the company is only required to repay the
amount funded and the company is not required to repay any unfunded portion of
this note.
In addition to the
"guaranteed" interest referenced above, and in the Event of Default pursuant to
Section 2(a), additional interest will accrue from the date of the Event of
Default at the rate equal to the lower of 20% per annum or the highest rate
permitted by law (the "Default Rate").
This Note will become
effective only upon the execution by both parties, including the execution of
Exhibits B, C and D and the Irrevocable Transfer Agent Instructions and
delivery of the initial payment of consideration by the Holder (the "Effective
Date").
This Note may be
prepaid by the Company, in whole or in part, according to the following
schedule:
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Days
Since Effective Date
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Prepayment
Amount
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Under
45
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105%
of Principal Sum plus Accrued Interest
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46-90
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115%
of Principal Sum plus Accrued Interest
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91-135
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125%
of Principal Sum plus Accrued Interest
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136-180
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135%
of Principal Sum plus Accrued Interest
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After 180 days from the
Effective Date this Note may not be prepaid without written consent from
Holder, which consent may be withheld, delayed, denied, or conditions in
Holder's sole and absolute discretion. Whenever any amount expressed to be due
by the terms of this Note is due on any day which is not a Business Day (as
defined below), the same shall instead be due on the next succeeding day which
is a Business Day.
For purposes hereof the
following terms shall have the meanings ascribed to them below:
"Business Day"
shall mean any day other than a Saturday, Sunday or a day on which commercial
banks in the City of New York are authorized or required by law or executive
order to remain closed.
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"Conversion
Price" shall be equal to 60% of the lowest trading price of the
Company's common stock during the 15 consecutive trading days prior to the date
on which Holder elects to convert all or part of the Note. For the purpose of
calculating the Conversion Price only, any time after 4:00 pm Eastern Time (the
closing time of the Principal Market) shall be considered to be the beginning
of the next Business Day. If the Company is placed on "chilled" status with
the Depository Trust Company ("DTC"), the discount shall be increased by
10%, i.e., from 40% to 50%, until such chill is remedied. If the
Company is not Deposits and Withdrawal at Custodian ("DWAC") eligible
through their Transfer Agent and DTC's Fast Automated Securities Transfer ("FAST")
system, the discount will be increased by 5%, i.e., from 40% to 45%,.
In the case of both, the discount shall be a cumulative increase of 15%, i.e.,
from 40% to 55%. Any default of this Note not remedied within the applicable
cure period will result in a permanent additional 10% increase, i.e.,
from 40% to 50%, in addition to any other discount, as provided above, to the
Conversion Price discount.
"Principal Amount"
shall refer to the sum of (i) the original principal amount of this Note
(including the original issue discount, prorated if the Note has not been
funded in full), (ii) all guaranteed and other accrued but unpaid interest
hereunder, (iii) any fees due hereunder, (iv) liquidated damages, and (v) any
default payments owing under the Note, in each case previously paid or added to
the Principal Amount.
"Principal
Market" shall refer to the primary exchange on which the Company's
common stock is traded or quoted.
"Trading Day"
shall mean a day on which there is trading or quoting for any security on the
Principal Market.
"Underlying
Shares" means the shares of common stock into which the Note is
convertible (including interest, fees, liquidated damages and/or principal
payments in common stock as set forth herein) in accordance with the terms hereof.
The following terms and
conditions shall apply to this Note:
Section
1.00 Conversion.
(a)
Conversion Right. Subject to the terms hereof and restrictions
and limitations contained herein, the Holder shall have the right, at the
Holder's sole option, at any time and from time to time to convert in whole or
in part the outstanding and unpaid Principal Amount under this Note into shares
of Common Stock as per the Conversion Formula. The date of any conversion
notice ("Conversion Notice") hereunder shall be referred to herein as
the "Conversion Date".
(b) Stock
Certificates or DWAC. The Company will deliver to the Holder, or Holder's
authorized designee, no later than 2 Trading Days after the Conversion Date, a
certificate or certificates (which certificate(s) shall be free of restrictive
legends and trading restrictions if the shares of Common Stock underlying the
portion of the Note being converted are eligible under a resale exemption
pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) of the Securities Act of
1933, as amended) representing the number of shares of Common Stock being
acquired upon the conversion of this Note. In lieu of delivering physical
certificates
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representing the shares of Common Stock issuable upon conversion
of this Note, provided the Company's transfer agent is participating in DTC's
FAST program, the Company shall instead use commercially reasonable efforts to
cause its transfer agent to electronically transmit such shares issuable upon
conversion to the Holder (or its designee), by crediting the account of the
Holder's (or such designee's) broker with DTC through its DWAC program
(provided that the same time periods herein as for stock certificates shall
apply).
(c) Charges
and Expenses. Issuance of Common Stock to Holder, or any of its assignees,
upon the conversion of this Note shall be made without charge to the
Holder for any issuance fee, transfer tax, postage/mailing charge or any
other expense with respect to the issuance of such Common Stock. Company shall
pay all Transfer Agent fees incurred from the issuance of the Common stock to
Holder. Any such charges related to the issuance of Common Stock required to
be paid by the Holder (whether from the Company's delays or outright refusal to
pay) will be automatically added to the Principal Sum of the Note and tack back
to the Effective Date for purposes of Rule 144.
(d) Delivery
Timeline. If the Company fails to deliver to the Holder such certificate
or certificates (or shares through the DWAC program) pursuant to this Section
(free of any restrictions on transfer or legends, if eligible) prior to 3
Trading Days after the Conversion Date, the Company shall pay to the Holder as
liquidated damages an amount equal to $2,000 per day, until such certificate or
certificates are delivered. The Company acknowledges that it would be
extremely difficult or impracticable to determine the Holder's actual damages
and costs resulting from a failure to deliver the Common Stock and the
inclusion herein of any such additional amounts are the agreed upon liquidated
damages representing a reasonable estimate of those damages and costs. Such
liquidated damages will be automatically added to the Principal Sum of the Note
and tack back to the Effective Date for purposes of Rule 144.
(e) Reservation of Underlying
Securities. The Company covenants that it will at all times reserve and
keep available for Holder, out of its authorized and unissued Common Stock solely
for the purpose of issuance upon conversion of this Note, free from preemptive
rights or any other actual contingent purchase rights of persons other than the
Holder, initially five times the number of shares of Common Stock as
shall be issuable (taking into account the adjustments under this Section 1,
but without regard to any ownership limitations contained herein) upon the
conversion of this Note (consisting of the Principal Amount) to Common Stock
(the "Required Reserve"), provided, however, that the Required Reserve
shall be reduced to not less than four times the number of shares of
Common Stock (as calculated above) upon one or more such conversions as shall
have caused the Required Reserve to be reduced to such "four times" level. The
Company covenants that all shares of Common Stock that shall be issuable will,
upon issue, be duly authorized, validly issued, fully-paid, non-assessable and
freely-tradable (if eligible). If the amount of shares on reserve in
Holder's name at the Company's transfer agent for this Note shall drop below the
Required Reserve, the Company will, within 2 Trading Days of notification from
Holder, instruct the transfer agent to increase the number of shares so that the
Required Reserve is met. In the event
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that the Company does not instruct the
transfer agent to increase the number of shares so that the Required Reserve is
met, the Holder will be allowed, if applicable, to provide this instruction as
per the terms of the Irrevocable Transfer Agent Instructions attached to this
Note. The Company agrees that the maintenance of the Required Reserve is a
material term of this Note and any breach of this Section 1.00(e) will result in
a default of the Note.
The Company agrees that this is a
material term of this Note and any breach of this Section 1.00(e) will result
in a default of the Note.
(f) Conversion Limitation.
The Holder will not submit a conversion to the Company that would result in the
Holder owning more than 9.99% of the then total outstanding shares of the Company
("Restricted Ownership Percentage").
(g) Conversion
Delays. If the Company fails to deliver shares in accordance with the
timeframe stated in Section 1.00(b), the Holder, at any time prior to selling
all of those shares, may rescind any portion, in whole or in part, of that
particular conversion attributable to the unsold shares. The rescinded
conversion amount will be returned to the Principal Sum with the rescinded
conversion shares returned to the Company, under the expectation that any
returned conversion amounts will tack back to the Effective Date.
(h) Shorting
and Hedging. Holder may not engage in any "shorting" or "hedging"
transaction(s) in the Common Stock prior to conversion.
(i) Conversion
Right Unconditional. If the Holder shall provide a Conversion Notice as
provided herein, the Company's obligations to deliver Common Stock shall be
absolute and unconditional, irrespective of any claim of setoff, counterclaim,
recoupment, or alleged breach by the Holder of any obligation to the Company.
Section
2.00 Defaults and Remedies.
(a) Events of Default. An
"Event of Default" is: (i) a default in payment of any amount due
hereunder which default continues for more than 5 Trading Days after the due
date; (ii) a default in the timely issuance of underlying shares upon and in
accordance with terms of Section 2.00, which default continues for 2 Trading
Days after the Company has failed to issue shares or deliver stock certificates
within the 3rd Trading Day following the Conversion Date; (iii) failure by the
Company for 3 days after notice has been received by the Company to comply with
any material provision of this Note; (iv) failure of the Company to remain
compliant with DTC, thus incurring a "chilled" status with DTC; (v) if the
Company is subject to any Bankruptcy Event; (vi) any failure of the Company to
satisfy its "filing" obligations under Securities Exchange Act of 1934, as
amended (the "1934 Act") and the rules and guidelines issued by OTC Markets
News Service, OTCMarkets.com and their affiliates; (vii) any failure of the
Company to provide the Holder with information related to its corporate
structure including, but not limited to, the number of authorized and
outstanding shares, public float, etc. within 1 Trading Day of request by
Holder; (viii) failure by the Company to maintain the
-5-
Required Reserve in
accordance with the terms of Section 1.00(e); (ix) failure of Company's Common
Stock to maintain a closing bid price in its Principal Market for more than 3
consecutive Trading Days; (x) any delisting from a Principal Market for any
reason; (xi) failure by Company to pay any of its Transfer Agent fees in excess
of $2,000 or to maintain a Transfer Agent of record; (xii) any trading
suspension imposed by the Securities and Exchange Commission ("SEC")
under Sections 12(j) or 12(k) of the 1934 Act; or (xiii) failure by the Company
to meet all requirements necessary to satisfy the availability of Rule 144 to
the Holder or its assigns, including but not limited to the timely fulfillment
of its filing requirements as a fully-reporting issuer registered with the SEC,
requirements for XBRL filings, and requirements for disclosure of financial
statements on its website.
(b)
Remedies. If an event of default occurs, and is not remedied
within 5 days after the occurrence, the outstanding Principal Amount of this
Note owing in respect thereof through the date of acceleration, shall become,
at the Holder's election, immediately due and payable in cash at the "Mandatory
Default Amount". The Mandatory Default Amount means 150% of the
outstanding Principal Amount of this Note. Commencing 5 days after the
occurrence of any Event of Default that results in the eventual acceleration of
this Note, this Note shall accrue additional interest, in addition to the
Note's "guaranteed" interest, at a rate equal to the lesser of 18% per annum or
the maximum rate permitted under applicable law. Finally, commencing 5 days
after the occurrence of any Event of Default that results in the eventual
acceleration of this Note, an additional permanent 10% increase to the
Conversion Price discount will go into effect. In connection with such
acceleration described herein, the Holder need not provide, and the Issuer
hereby waives, any presentment, demand, protest or other notice of any kind,
and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and
annulled by the Holder at any time prior to payment hereunder and the Holder
shall have all rights as a holder of the note until such time, if any, as the
Holder receives full payment pursuant to this Section 2.00(b). No such
rescission or annulment shall affect any subsequent event of default or impair
any right consequent thereon. Nothing herein shall limit the Holder's right to
pursue any other remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief
with respect to the Issuer's failure to timely deliver certificates
representing shares of Common Stock upon conversion of the Note as required
pursuant to the terms hereof.
Section
3.00 General.
(a) Payment of Expenses.
The Company agrees to pay all reasonable charges and expenses, including
attorneys' fees and expenses, which may be incurred by the Holder in
successfully enforcing this Note and/or collecting any amount due under this
Note.
(b) Assignment,
Etc. The Holder may assign or transfer this Note to any transferee at
its sole discretion. This Note shall be binding upon the Company
-6-
and its successors and shall inure to the
benefit of the Holder and its successors and permitted assigns.
(c) Funding
Window. The Company agrees that it will not enter into a convertible debt
financing transaction, including any "3(a)9" or "3(a)10" debt exchanges, with
any party other than the Holder for a period of 20 Trading Days following the
Effective Date. The Company agrees that this is a material term of this Note
and any breach of this will result in a default of the Note.
(d) Piggyback
Registration Rights. The Company shall include on the next registration
statement that the Company files with the SEC (or on the subsequent
registration statement if such registration statement is withdrawn) all shares
issuable upon conversion of this Note. Failure to do so will result in
liquidated damages of 30% of the outstanding Principal Sum of this Note, but
not less than $20,000, being immediately due and payable to the Holder at its
election in the form of a cash payment or an addition to the Principal Sum of
this Note.
(e) Terms
of Future Financings. So long as this Note is outstanding, upon any
issuance by the Company or any of its subsidiaries of any convertible debt
security (whether such debt begins with a convertible feature or such feature
is added at a later date) with any term more favorable to the holder of such
security or with a term in favor of the holder of such security that was not
similarly provided to the Holder in this Note, then the Company shall notify
the Holder of such additional or more favorable term and such term, at the
Holder's option, shall become a part of this Note and its supporting
documentation. The types of terms contained in the other security that may be
more favorable to the holder of such security include, but are not limited to,
terms addressing conversion discounts, conversion look back periods, interest
rates, original issue discount percentages and warrant coverage.
(f) Governing
Law; Jurisdiction.
(i) Governing Law.
This
Note will be governed by and construed in accordance with the laws of the state
of California without regard to any conflicts of laws or provisions thereof
that would otherwise require the application of the law of any other
jurisdiction.
(ii) Jurisdiction and Venue. Any
dispute or claim arising to or in any way related to this Note or the rights
and obligations of each of the parties shall be brought only in the state
courts of California or in the federal courts located in San Diego County,
California.
(iii) No Jury Trial. The Company hereto knowingly and voluntarily
waives any and all rights it may have to a trial by jury with respect to any
litigation based on, or arising out of, under, or in connection with, this
Note.
(iv) Delivery
of Process by the Holder to the Company. In the event of an action or
proceeding by the Holder against the Company, and only by the Holder against the
Company, service of copies of summons and/or complaint and/or any other process
that may be served in any such action or
-7-
proceeding may be made by the
Holder via U.S. Mail, overnight delivery service such as FedEx or UPS, email,
fax, or process server, or by mailing or otherwise delivering a copy of such
process to the Company at its last known attorney as set forth in its most
recent SEC filing.
(v) Notices.
Any notice required or permitted hereunder (including Conversion Notices) must
be in writing and either personally served, sent by facsimile or email
transmission, or sent by overnight courier. Notices will be deemed effectively
delivered at the time of transmission if by facsimile or email, and if by
overnight courier the business day after such notice is deposited with the
courier service for delivery.
(g) No
Bad Actor. No officer or director of the Company would be disqualified
under Rule 506(d) of the Securities Act of 1933, as amended, on the basis of
being a "bad actor" as that term is established in the September 13, 2013 Small
Entity Compliance Guide published by the SEC.
(h) Usury.
If it shall be found that any interest or other amount deemed interest due
hereunder violates any applicable law governing usury, the applicable rate of
interest due hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law. The Company covenants (to the
extent that it may lawfully do so) that it will not seek to claim or take
advantage of any law that would prohibit or forgive the Company from paying all
or a portion of the principal, fees, liquidated damages or interest on this
Note.
IN WITNESS WHEREOF, the Company has caused this Convertible
Promissory Note to be duly executed on the day and in the year first above
written.
CROWDGATHER,
INC.
By:
Name:
Title:
Email:
Address:
This Convertible Promissory Note
of September 21, 2015 is accepted this ____ day of ______, 2015 by
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