- Company announces approximately
$700,000 in social gaming and forum bookings
- Company on track to replace revenues
from recent asset sales
Specialty social media and gaming network, CrowdGather, Inc.
(OTCQB:CRWG), today announced a corporate update and results for
the second quarter ended October 31, 2014.
“Earlier this year, when we were confronted with the challenges
of growing our forum advertising business without sufficient
capital, we embarked on a process of transforming our company into
the higher growth social gaming segment through our merger with
Plaor, creators of the Mega Fame Casino,” said Sanjay Sabnani,
CrowdGather’s Chairman and CEO. “I am pleased to announce that we
believe we are already seeing positive results from our decision to
sell off a portion of our forum assets in order to fund this
merger. Record bookings for this past fiscal quarter ended October
31st and the continued momentum we are enjoying in this current
fiscal quarter should result in a substantial replacement of the
revenues we lost as a result of the asset sale by next quarter.
Additionally based upon the success of our Mega Fame Casino growth,
we expect to close this fiscal year at a record revenue run rate
thereby confirming our decision to enter into the social gaming
sector. Our stockholder’s equity has also increased in the process
while combined net burn has reduced significantly from pre-merger
levels.”
Sabnani continued, “We are also excited to report that we
entered into an exchange agreement with each of our Series B
shareholders, whereby they agreed to exchange their series B
Preferred Stock which was convertible into 20 million common shares
and the 10 million warrants exercisable at $0.08 per share into
$1.1 million of principal of secured debt and warrants to purchase
5.5 million shares of common stock exercisable at 110% of the
closing price of our shares on the date of issuance. Additionally,
in support of the company, our largest common stockholder and
largest former Series B shareholder have joined other investors in
lending an additional $450,000 in working capital under the same
terms as the debt and warrants issued in Series B exchange. As a
result, CrowdGather has a total of $1,550,000 in senior secured
debt and a total of 7,750,000 warrants inclusive of those issued
for the Series B exchange. The company now no longer maintains any
preferred class of shares.
“We realized revenues of $800,324 for the six months ended
October 31, 2014, as compared to revenues of $837,039 for the six
months ended October 31, 2013. The variance between comparable
periods is primarily due to an increase of approximately $415,000
of social gaming revenue relating to the merger with Plaor for the
period from the acquisition date of May 19, 2014 to October 31,
2014. Offsetting this increase was reduced forum advertising
revenue of approximately $452,000 primarily due to the sale of
certain forum properties during the 4th quarter of fiscal 2014 and
1st quarter of fiscal 2015.
“Our cost of revenue for the six months ended October 31, 2014
was $254,914, as compared to cost of revenue of $2,622 for the six
months ended October 31, 2013. The increase of approximately
$252,000 is directly attributable to the platform fees relating to
our social games and hosting and data center costs related to
operating our online games, royalty fees and expenses for hosting
celebrity events, primarily appearance and facility fees.
“Our gross profit for the six months ended October 31, 2014 was
$545,410 as compared to gross profit of $834,417 for the six months
ended October 31, 2013.
“For the fiscal second quarter ended October 31, 2014, we
realized revenues of $393,734 for the three months ended October
31, 2014, as compared to revenues of $425,348 for the three months
ended October 31, 2013. The variance between comparable periods is
primarily due to an increase of approximately $217,000 of social
gaming revenue relating to the merger with Plaor. Offsetting this
increase was reduced forum advertising revenue of approximately
$248,000 primarily due to the sale of certain forum properties
during the 4th quarter of fiscal 2014 and 1st quarter of fiscal
2015.”
The Company generated approximately $700,000 in total bookings
during the quarter, of which approximately $522,000 were from
social gaming. Bookings is a non-GAAP financial measure the Company
uses in evaluating its business health and performance. It should
be considered supplemental in nature and is not meant as a
substitute for revenue recognized in accordance with US GAAP.
The Company also reported additional non-GAAP performance
metrics on its social gaming segment including a ABPU (“Average
Bookings per User”) of $.24 up 26% from last quarter’s $.19 ABPU.
Average daily bookings reported as $5,740 with an average DAU
(“Daily Active Users”) of 24,154, up 25% and 2% from $4,605 and
23,783 respectively. The Company believes these results are a
strong sign the focus on quality slot content with established
content partners is working.
“We are very excited to see our focus on quality content and the
user experience result in such strong growth of our ABPU and
average daily bookings,” said Richard Corredera, CrowdGather’s COO.
“With our strategy showing clear signs of success we are
looking forward to expanding our content pipeline and continue the
growth we have already realized in Mega Fame Casino further into
the coming quarters.”
The Company also reaffirmed it has secured additional slot
machine content for Mega Fame Casino, extending its schedule of
committed slot content released to August 2015. “The positive and
enthusiastic support we have received from our slot partners has
been incredible,” said Plaor EVP of Business Development Sidney
Oster. “With additional partners and exciting new games anticipated
through the summer, our casino players have a treasure trove of
games to look forward to in the upcoming year.”
The Company also announced today the BETA launch of its new
Search and Discover feature set on the Yuku platform. This feature
set includes a redesigned landing page for the site and enhanced
search features to help users more quickly find content within its
large network of forum content. In addition to better search
features in a new user interface the Search and Discover features
keep users more informed about new posted content with dynamic
content streams surfacing newly updated content specifically
selected for a user. Rollout of the new feature set started today
to certain users will full rollout planned in our current fiscal
quarter. “Now that the fruits of our merger with Plaor are coming
together, we are looking forward to innovating exciting new
features and user experience options to our forum users,” said
Richard Corredera.
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.
CrowdGather subsidiary, Plaor, a company that specializes in
developing highly scalable multi-platform games, is located in the
heart of Boston's fast growing Innovation District. Plaor produces
Mega Fame Casino, an innovative and highly rated social casino
available on iOS, Android & desktop. With over 20 employees,
the Plaor team is a mix of rising-star newcomers and
widely-recognized game development veterans from companies
including Rockstar Games, Turbine, Harmonix, Irrational Games,
Nanigans, Sony Online Entertainment, ThoughtWorks, THQ, and Caesars
Interactive Entertainment.
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
increased revenues from the Company’s forums and Plaor’s social
casino; the ability to obtain additional financing; 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.
CROWDGATHER, INC. CONSOLIDATED CONDENSED BALANCE
SHEETS October 31, 2014
April 30, 2014 (UNAUDITED)
ASSETS Current assets Cash $ 239,203 $ 546,158
Accounts receivable 289,890 130,709 Investments 21,480 21,480
Inventory 31,800 31,913 Prepaid expenses and deposits 89,151
48,652 Total current assets 671,524 778,912
Property and equipment, net of accumulated
depreciation of $565,537 and $493,887,
respectively
100,705 130,518 Intangible assets, net of accumulated
amortization of
$388,753 and $0, respectively
8,539,443 7,336,771 Goodwill 1,817,400 -
Total assets
$
11,129,072
$
8,246,201
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable $ 190,392 $ 8,000 Line of credit 262,684 -
Deferred revenue 566,638 - Accrued vacation 97,910 44,078 Other
accrued liabilities 449,998 154,746 Convertible note payable, net
of discount 74,642 - Derivative liability 77,409
- Total current liabilities 1,719,673 206,824
Stockholders’ equity
Convertible Preferred Series B stock,
$0.001 par value, 1,000,000shares authorized, 1,000,000 shares
issued and outstanding
1,000,000 1,000,000 Common stock, $0.001 par value, 975,000,000
shares
authorized, 116,733,508 and 61,657,708
issued and
outstanding, respectively
116,733 61,658 Additional paid-in capital 35,951,223 29,748,961
Accumulated deficit (27,630,037 ) (22,742,722 ) Accumulated other
comprehensive loss (28,520 ) (28,520 ) Total
stockholders’ equity 9,409,399 8,039,377
Total liabilities and stockholders’ equity $
11,129,072 $ 8,246,201
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX
MONTHS ENDED OCTOBER 31, 2014 AND 2013 (UNAUDITED)
Three Months Ended October 31,
Six Months Ended October 31,
2014 2013
2014 2013
Revenue
$
393,734
$
425,348 $ 800,324 $ 837,039 Cost of revenue 147,445
1,868 254,914 2,622
Gross profit 246,289 423,480 545,410 834,417
Operating expenses
Payroll and related expenses 573,641 322,874 1,246,683 671,164
Stock based compensation 100,000 320,600 199,000 430,600 General
and administrative 1,162,210 429,117 2,395,914 803,534 Loss on
disposal of assets - - 1,529,262 - Legal settlements, net 50,000 -
50,000 - Impairment of intangible assets -
140,026 - 140,026 Total
operating expenses 1,885,851 1,212,617
5,420,859 2,045,324
Loss from operations
(1,639,562
)
(789,137
)
(4,875,449 ) (1,210,907 ) Other income (expense) Interest
expense, net (13,749 ) (841 ) (13,508 ) (4,025 ) Change in fair
value of derivative liability 2,442 - 2,442 - Total other income
(expense) (11,307 ) (841 ) (11,066 ) (4,025 ) Net loss
before provision for income taxes (1,650,869 ) (789,978 )
(4,886,515 ) (1,214,932 ) Provision for income taxes
0 0 800 800
Net loss
$
(1,650,869 )
$
(789,978 ) $ (4,887,315 ) $ (1,215,732 )
Weighted average shares outstanding- basic
and diluted
116,733,508
59,261,198
111,046,333 58,881,850
Net loss per share – basic and diluted
$
(0.01
)
$
(0.01
)
$ (0.04 ) $ (0.02 )
Investor Contact:CrowdGather, Inc.Sanjay Sabnani,
818-435-2472 x 101sanjay@crowdgather.com
CrowdGather (PK) (USOTC:CRWG)
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