CrowdGather Inc.(OTC:CRWG): Market Price Reacts To Expected Dilution
29 Mar 2010

Although CrowdGather Inc. has recently expanded its network of Internet communities, shortly after that the stock reached the absolute bottom for this year and closed at $1,04 on March 19. After the last filing with the SEC, investors seem to be concerned about ownership dilution and increasing net losses.

On March 16 CrowdGather Inc. announced the acquisition of FreeForums.org, the largest Internet platform hosting free forum communities. The expanded forum network will reach a traffic of 80 Million monthly page viewers, an increase by over 500%. The deal worth $1,000,000 in combination of stock and cash, will according to CrowdGather’s Chairman and CEO Sanjay Sabnani complement their broad portfolio of special interest forums. Thus, as an online platform profiting from the knowledge and information generated by its members and advertisers, CrowdGather believes to turn the anticipated enormous number of visitors into revenues through a higher demand by advertisers.

Obviously, the company has done significant investments over the last months, mainly in intangible assets, but it is still not able to generate positive earnings. Another fact raising concerns is that at the beginning of January CrowdGather sold a solid number of its common stock to an institutional investor at a relatively low price, who received in addition warrants to purchase another 125,000 shares for a period of three years.

Other factors expected to push the market price down in the future are the 2,955,000 outstanding stock options and that CrowdGather tends often to pay for external advisory services with stock-based compensations.

No comments
Leave a comment

*
To prove you're a person (not a spam script), type the security word shown in the picture. Click on the picture to hear an audio file of the word.
Click to hear an audio file of the anti-spam word