Los Angeles Business Journal

Higher Spending Increases CrowdGather’s Loss

By Deborah Crowe Tuesday, September 13, 2011

CrowdGather Inc.’s fiscal first quarter loss jumped 41 percent as the operator of Internet forum communities hired more people and saw higher costs as it integrated recent acquisitions.

The Woodland Hills company on Tuesday reported net loss of $871,235 (-1 cent per share) for the quarter ended July 31, compared with a net loss of $615,897 (-1 cent) in the same period a year a year earlier. The company now has more shares outstanding than a year ago.

Revenue rose 1 percent to $334,036. Gross profit rose 24 percent to $225,296, but operating expenses increased 27 percent.

CrowdGather has been on an acquisition spree, adding properties that included pbnation.com and writers.net during the first quarter. Last week it bought message board company Yuku for $750,000, saying the deal will increase its traffic by 50 percent.

“We are pleased to report that we met expectations for the first quarter,” Chief Executive Sanjay Sabnani said in a prepared statement. “This is a significant accomplishment in light of slower ad spending during summer months and our transition away from non-forum revenue sources ... We continue to seek other opportunities to acquire strategic properties that will help increase traffic.”

Shares were down 1 cent, or about 3 percent, to 35 cents in midday trading on the Over-the-Counter Bulletin Board.