Item 2.01. Completion of Acquisition or Disposition of Assets.
May 19, 2014, CrowdGather, Inc., a Nevadacorporation (the "Registrant," " Crowdgather," or "We"), closed the Agreement and Plan of Merger with Plaor, Inc., a Delawarecorporation ("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, CrowdGatherhad 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 Commissionpursuant 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,
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, 2014and (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'sofficer, 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. Sabnanireceived approximately 34,998 shares of CrowdGatherpursuant to the Merger. Prior to the Merger, Hazim Ansari, one of Plaor's principal shareholders, acted an advisor to the CrowdGatherand provides patent services to Crowdgather. Mr. Ansariowned approximately 180,000 shares of CrowdGather'scommon stock prior to the Merger, and received an additional 3,554,446 shares of CrowdGather'scommon stock pursuant to the Merger. 2
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 LLCin the State of Delawareon March 5, 2012. On May 1, 2014, Plaor filed a Certificate of Conversion with the Secretary of State of Delawarepursuant 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 Casinowherein 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 Casinois 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 Casinoalso includes Video Poker, multiple slot machines, and a daily celebrity challenge designed to increase engagement and retention of players. Mega Fame Casinofeatures 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 Casinogenerates 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 Casinocurrently 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, Plaor has engineered systems built to maximize operating and development efficiencies while maintaining what we believe is a high quality experience for the user.
Plaor also has a content tool chain that allows for real time and seamless content deployment paths on all of its currently supported distribution . . .
Item 3.02 Unregistered Sales of
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, age 43, is a specialist in the offshore intellectual property industry and a successful entrepreneur. For the past twelve years, Mr. Ansarihas 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, Indiaand 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. Ansariwas 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. Ansariwas an intellectual property attorney in O'Melveny & Myers' Newport Beachoffice 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. Ansaribegan his intellectual property career as an associate at Christie, Parker & Hale. He graduated magna cum laude from Loyola Law School of Los Angelesand received his B.S. in Chemical Engineering from Stanford University.
There is no family relationship between
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, 2014and for the period from inception ( March 15, 2012) to January 31, 2013are 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, 2014and 2013, and the related statements of operations, changes in members' (deficit) equity, and cash flows for the year ended January 31, 2014and 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, 2014and 2013, and the results of its operations and its cash flows for the year ended January 31, 2014and 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.
Moody, Famiglietti & Andronico, LLP Tewksbury, Massachusetts May 14, 20146
PLAOR, LLC BALANCE SHEETS AS OF JANUARY 31, 2014 AND 2013 2014 2013 Assets Current Assets: Cash
$ 215,343 $ 187,289Accounts 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 $ 172,228Accrued 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
13,283,352 7,229,002 Class
20,914 and 12,035 Units Outstanding at
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 $ 649,0017
-------------------------------------------------------------------------------- PLAOR, LLC STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JANUARY 31, 2014 AND FOR THE PERIOD FROM INCEPTION (
MARCH 5, 2012) THROUGH JANUARY 31, 20132014 2013 Revenue: Online Game $ 220,453 $ 197Events 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 )8
PLAOR, LLCSTATEMENTS OF CHANGES IN MEMBERS' (DEFICIT) EQUITY FOR THE YEAR ENDED JANUARY 31, 2014AND 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
$50,000and in Exchange for Services of $214,0002,255 264,000 - - - - 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
$12,500and Equity-Based Compensation of $17,700258 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
$ 13,283,35220,914 $ 510,214$