UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              For
      the quarterly period ended October 31, 2009





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              For the transition period from to








Commission
File Number: 000-52143





CrowdGather,
Inc.


(Exact
name of small business issuer as specified in its charter)





Nevada
            20-2706319(State
      or other jurisdiction
              of
      incorporation or organization)
            (I.R.S.
      Employer
              Identification
      No.)





20300 Ventura Blvd. Suite 330, Woodland Hills,
      California 91364(Address
      of principal executive offices)





(818) 435-2472(Issuer’s
      Telephone Number)








Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. 
xYes  oNo





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes No





Indicate
by check mark whether the registrant is a large accelerated file, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
            o
            (Do
      not check if a smaller reporting company)
            Smaller
      reporting company
            x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). oYes  xNo





As
of December 15, 2009, there were 40,765,818 shares of the issuer’s $.001
par value common stock issued and outstanding.








1








PART
I - FINANCIAL INFORMATION








Item 1.  Financial
Statements







CROWDGATHER,
INC.
 CONDENSED
BALANCE SHEETS





ASSETS


October
      31, 2009
              (Unaudited)
            
            
            April
      30, 2009Current
      assetsCash
            
            $
            459,867
            
            
            $
            2,601Prepaid
      expenses and deposits
            
            
            4,172
            
            
            
            8,472Total
      current assets
            
            
            464,039
            
            
            
            11,073Property
      and equipment, net of accumulated
              depreciation
      of $45,783 and $29,086, respectively
            
            
            69,765
            
            
            
            83,951Intangible
      assets
            
            
            619,055
            
            
            
            606,610Total
      assets
            
            $
            1,152,859
            
            
            $
            701,634





LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)


Current
      liabilitiesAccounts
      payable and accrued expenses
            
            $
            47,706
            
            
            $
            54,107Accrued
      interest
            
            
            87,057
            
            
            
            62,283Income
      taxes payable
            
            
            -
            
            
            
            800Unearned
      revenue
            
            
            -
            
            
            
            12,500Note
      payable
            
            
            -
            
            
            
            50,000Convertible
      notes payable
            
            
            -
            
            
            
            1,162,000Total
      current liabilities
            
            
            134,763
            
            
            
            1,341,690Long-term
      liabilitiesConvertible
      notes payable, net of debt discount
            
            
            1,805,125
            
            
            
            -Total
      liabilities
            
            
            1,939,888
            
            
            
            1,341,690Stockholders’
      equityCommon
      stock, $0.001 par value, 975,000,000 shares
              authorized,
      40,765,818 and 40,684,818 issued
              and
      outstanding, respectively
            
            
            40,766
            
            
            
            40,685Additional
      paid-in capital
            
            
            3,883,622
            
            
            
            2,205,115Stock
      issuance obligation
            
            
            52,500
            
            
            
            -Accumulated
      deficit
            
            
            (4,763,917
            )
            
            
            (2,885,856
            )Total
      stockholders’ equity (deficit)
            
            
            (787,029
            )
            
            
            (640,056
            )Total
      liabilities and stockholders’ equity (deficit)
            
            $
            1,152,859
            
            
            $
            701,634





See
accompanying notes to financial statements
 2
 CROWDGATHER,
INC.
 CONDENSED
STATEMENTS OF OPERATIONS
 FOR
THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008
 UNAUDITED





Three
      Months Ended October 31,
            
            
            Six
      Months Ended October 31,2009
            
            
            2008
            
            
            2009
            
            
            2008Revenues
            
            $
            58,061
            
            
            $
            20,625
            
            
            $
            111,132
            
            
            $
            30,261Operating
      expenses
            
            
            (529,143
            )
            
            
            (768,783
            )
            
            
            (1,181,303
            )
            
            
            (1,335,160
            )Loss
      from operations
            
            
            (471,082
            )
            
            
            (748,158
            )
            
            
            (1,070,171
            )
            
            
            (1,304,899
            )Other
      income (expense):Interest
      income
            
            
            935
            
            
            
            571
            
            
            
            1,737
            
            
            
            1,230Interest
      expense
            
            
            (47,486
            )
            
            
            (11,667
            )
            
            
            (87,057
            )
            
            
            (14,167
            )Interest
      expense, debt discount  amortization
            
            
            (93,916
            )
            
            
            -
            
            
            
            (158,199
            )
            
            
            -Loss
      on extinguishment of debt
            
            
            -
            
            
            
            -
            
            
            
            (563,571
            )
            
            
            -Other
      income (expense), net
            
            
            (140,467
            )
            
            
            (11,096
            )
            
            
            (807,090
            )
            
            
            (12,937
            )Net
      loss before provision for income taxes
            
            
            (611,549
            )
            
            
            (759,254
            )
            
            
            (1,877,261
            )
            
            
            (1,317,836
            )Provision
      for income taxes
            
            
            -
            
            
            
            -
            
            
            
            800
            
            
            
            800Net
      loss
            
            $
            (611,549
            )
            
            $
            (759,254
            )
            
            $
            (1,878,061
            )
            
            $
            (1,318,636
            )Weighted
      average shares outstanding- basic and diluted
            
            
            40,496,713
            
            
            
            40,509,655
            
            
            
            40,489,670
            
            
            
            40,378,486Net
      loss per share – basic and diluted
            
            $
            (0.02
            )
            
            $
            (0.02
            )
            
            $
            (0.05
            )
            
            $
            (0.03
            )











See
accompanying notes to financial statements
 3
 CROWDGATHER,
INC.
 CONDENSED
STATEMENTS OF CASH FLOWS
 FOR
THE SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008
 UNAUDITED








2009
            
            
            2008Cash
      flows from operating activities:Net
      loss
            
            $
            (1,878,061
            )
            
            $
            (1,318,636
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
            
            
            16,697
            
            
            
            6,365Stock-based compensation
            
            
            318,000
            
            
            
            312,000Stock
      issued for services
            
            
            122,160
            
            
            
            74,428Amortization of debt discount
            
            
            158,199
            
            
            
            -Loss
      on extinguishment of debt
            
            
            563,571
            
            
            
            -Changes in operating assets and liabilities:Prepaid
      expenses and deposits
            
            
            4,300
            
            
            
            5,489Security
      deposits
            
            
            -
            
            
            
            (1,647
            )Accounts
      payable and accrued expenses
            
            
            79,856
            
            
            
            1,437Unearned
      revenue
            
            
            (12,500
            )
            
            
            -Net cash used
      in operating activities
            
            
            (627,778
            )
            
            
            (920,564
            )Cash
      flows from investing activities:Purchase of
      property and equipment
            
            
            (2,511
            )
            
            
            (73,295
            )Deposit in
      escrow
            
            
            -
            
            
            
            72,834Purchase of
      intangible assets
            
            
            (12,445
            )
            
            
            (465,989
            )Net
      cash used in investing activities
            
            
            (14,956
            )
            
            
            (466,450
            )Cash
      flows from financing activities:Proceeds from the
      sale of common stock
            
            
            -
            
            
            
            420,000Proceeds from
      issuance of debt
            
            
            1,354,000
            
            
            
            870,000Repayment of
      debt
            
            
            (254,000
            )
            
            
            -Net
      cash provided by financing activities
            
            
            1,100,000
            
            
            
            1,290,000Net
      increase (decrease) in cash
            
            
            457,266
            
            
            
            (97,014
            )Cash,
      beginning of period
            
            
            2,601
            
            
            
            295,934Cash,
      end of period
            
            $
            459,867
            
            
            $
            198,920Supplemental
      disclosure of cash flow information:Cash
      paid for:Interest
            
            $
            -
            
            
            $
            -Income
      taxes
            
            $
            800
            
            
            $
            -Non-cash
      transactions:Issuance
      of common stock for intangible assets
            
            $
            -
            
            
            $
            33,300Stock-based
      compensation
            
            $
            318,000
            
            
            $
            312,000Stock
      issued for services
            
            $
            122,160
            
            
            $
            74,428





See
accompanying notes to financial statements
 4
 CROWDGATHER,
INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 OCTOBER
31, 2009
 UNAUDITED





1.
            NATURE OF OPERATIONS
      AND SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES





Nature of
      Operations





CrowdGather,
Inc. is an internet company that specializes in developing and hosting forum
based websites and is headquartered in Woodland Hills, California.





CrowdGather,
Inc. (formerly WestCoast Golf Experiences, Inc., or “WestCoast”), (the
"Company") was incorporated under the laws of the State of Nevada on April 20,
2005.





On April
2, 2008, the Company, General Mayhem LLC (“General”) and the Company’s wholly
owned subsidiary, General Mayhem Acquisition Corp. (the “Acquisition
Subsidiary”), entered into an agreement and plan of merger (the “Merger
Agreement”). The merger contemplated by the Merger Agreement (“the “Merger”)
closed on April 8, 2008. The Merger resulted in General merging into the
Acquisition Subsidiary, with the Acquisition Subsidiary surviving. Prior to the
Merger, the Company effected a 13-for-1 stock split of its Shares. All share
numbers presented in the accompanying financial statements have been adjusted to
reflect the stock split. Each share of General was converted into and became one
(1) share, on a post-stock split basis, such that former members of General now
hold 26,000,000, or approximately 64.9%, of the outstanding shares of the
Company. On April 8, 2008, pursuant to the Agreement of Merger and Plan of
Merger and Reorganization dated April 8, 2008 by and between WestCoast and
Acquisition Subsidiary, the Acquisition Subsidiary merged with and into
WestCoast, with WestCoast surviving. In connection with the latter merger,
WestCoast changed its name to CrowdGather, Inc.





Basis of
Presentation





The
condensed unaudited financial statements included herein have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 8, Item 10 of Regulation S-X.  They do not include all information
and notes required by generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, there has been no
material changes in the information disclosed in the notes to the financial
statements included in the Company’s annual report on Form 10-K of CrowdGather,
Inc. for the year ended April 30, 2009. In the opinion of management, all
adjustments (including normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and six
months ended October 31, 2009, are not necessarily indicative of the results
that may be expected for any other interim period or the entire year. For
further information, these unaudited financial statements and the related notes
should be read in conjunction with the Company’s audited financial statements
for the year ended April 30, 2009, included in the Company’s annual report on
Form 10-K.





Use of
      Estimates





The
      preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements, and the reported
      amounts of revenues and expenses during the reported
      periods.  Actual results could materially differ from those
      estimates.





Cash
      Equivalents





For
      purposes of the balance sheets and statements of cash flows, the Company
      considers all highly liquid instruments purchased with maturity of three
      months or less to be cash
equivalents.





Identifiable Intangible
Assets





In
accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 350, Intangibles – Goodwill and
Other, goodwill and intangible assets with indefinite lives are not
amortized but instead are measured for impairment at least annually in the
fourth quarter, or when events indicate that an impairment exists.  As
required by ASC 350, in the impairment tests for indefinite-lived intangible
assets, the Company compares the estimated fair value of the indefinite-lived
intangible assets, website domain names, using a combination of discounted cash
flow analysis and market value comparisons.  If the carrying value
exceeds the estimate of fair value, the Company calculates the impairment as the
excess of the carrying value over the estimate of fair value and accordingly,
records the loss.





Intangible
assets that are determined to have definite lives are amortized over their
useful lives and are measured for impairment only when events or circumstances
indicate the carrying value may be impaired in accordance with ASC 360, Property, Plant and
Equipment  discussed below.





Impairment of Long-Lived
Assets





In
accordance with ASC 360, the Company estimates the future undiscounted cash
flows to be derived from the asset to assess whether or not a potential
impairment exists when events or circumstances indicate the carrying value of a
long-lived asset may be impaired.  If the carrying value exceeds the
Company’s estimate of future undiscounted cash flows, the Company then
calculates the impairment as the excess of the carrying value of the asset over
the Company’s estimate of its fair value.





5
 CROWDGATHER,
INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 OCTOBER
31, 2009
 UNAUDITED








1.
            NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)





Income
Taxes





The
Company accounts for income taxes under ASC 740, Income Taxes. Under the asset
and liability method of ASC 740, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and
their respective tax bases.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  Under ASC 740, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period the
enactment occurs.  The components of the deferred tax assets and
liabilities are individually classified as current and non-current based on
their characteristics.  A valuation allowance is provided for certain
deferred tax assets if it is more likely than not that the Company will not
realize tax assets through future operations.





Basic and Diluted Loss Per
Share





In
accordance with ASC 260, Earnings Per Share, basic
loss per common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares
outstanding.  Diluted loss per common share is computed similar to
basic loss per common share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive.  As of October 31, 2009, the Company had $2,374,283
convertible debt that could potentially be converted into 2,479,415 shares of
the Company’s common stock, 1,599,997 warrants and approximately 770,625 of
vested stock options that could be converted into 770,625 shares of the
Company’s common stock.  These potential common shares are excluded
from the diluted loss per share computation in net loss periods as their
inclusion would have been anti-dilutive.







Revenue
Recognition





The
Company currently works with third-party advertising networks and advertisers
pay for advertising on a cost per thousand views, cost per click or cost per
action basis.  Additionally the Company has entered into a web-based
software development contract with a customer, for which revenue is accounted
for in accordance with ASC 985-605, Software – Revenue
Recognition, and all related interpretations.  All sales are
recorded in accordance with ASC 605, Revenue Recognition.
 Revenue is recognized when all the criteria have been met:





• When
persuasive evidence of an arrangement exists.


• The
services have been provided to the customer.


• The fee
is fixed or determinable.


•
Collectability is reasonably assured.





Revenue
deferrals relate to the timing of revenue recognized for the sale of software in
which the customer has already paid for the development costs in advance.
 Revenue is recognized ratably over the periods in which the services are
performed.





Stock Based
Compensation





The
Company accounts for employee stock option grants in accordance with ASC 718,
Compensation – Stock
Compensation. ASC 718 establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services. ASC 718 requires a public entity to measure the cost of employee
services received in exchange for an award of equity instruments based on the
grant-date fair value of the award. That cost will be recognized over the period
during which an employee is required to provide service in exchange for the
award - the requisite service period (usually the vesting period). No
compensation cost is recognized for equity instruments for which employees do
not render the requisite service.





For
options and warrants issued as compensation to non-employees for services that
are fully vested and non-forfeitable at the time of issuance, the estimated
value is recorded in equity and expensed when the services are performed and
benefit is received as provided by ASC 505-50, Equity – Disclosure. For
unvested shares, the change in fair value during the period is recognized in
expense using the graded vesting method.








6
 CROWDGATHER,
INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 OCTOBER
31, 2009
 UNAUDITED






1.
            NATURE
      OF OPERATIONS AND BASIS OF PRESENTATION
  (Continued)








Recent Accounting
Pronouncements





On August
1, 2009, the Company adopted ASC 105-10, Generally Accepted Accounting
Principles – Overall. ASC 105-10 establishes the FASB Accounting Standards
Codification(“the Codification”) as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
(“GAAP”). Rules and interpretive releases of the Securities and Exchange
Commission (“SEC”) under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. All guidance contained in the
Codification carries an equal level of authority. The Codification superseded
all existing non-SEC accounting and reporting standards. All other
non-grandfathered, non-SEC accounting literature not included in the
Codification is non-authoritative. The FASB will not issue new standards in the
form of Statements, FASB Staff Positions or Emerging Issues Task Force
Abstracts. Instead, it will issue Accounting Standards Updates (“ASU”). The FASB
will not consider an ASU as authoritative in its own right.  An ASU
will serve only to update the Codification, provide background information about
the guidance and provide the bases for conclusions on the change(s) in the
Codification.  ASC 105 is effective for financial statements issued
for interim and annual periods ending after September 15,
2009.





On
May 1, 2009, the Company adopted ASC 825-10-65, Financial Instruments – Overall –
Transition and Open Effective Date Information. ASC 825-10-65 amends ASC
825-10 to require disclosures about fair value of financial instruments in
interim financial statements as well as in annual financial statements and also
amends ASC 270-10 to require those disclosures in all interim financial
statements. The adoption of ASC 825-10-65 did not have a material impact on the
Company’s results of operations or financial condition.





On
May 1, 2009, the Company adopted ASC 855, Subsequent Events. ASC 855
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. It requires the disclosure of the date through
which an entity has evaluated subsequent events and the basis for that date –
that is, whether that date represents the date the financial statements were
issued or were available to be issued. This disclosure should alert all
users of financial statements that an entity has not evaluated subsequent events
after that date in the set of financial statements being presented. The adoption
of ASC 855 did not have a material impact on the Company’s results of operations
or financial condition.




On
July 1, 2009, the Company adopted ASU No. 2009-05, Fair Value Measurements and
Disclosures (Topic 820). ASU 2009-05 provided amendments to ASC 820-10,
Fair Value Measurements and
Disclosures – Overall, for the fair value measurement of liabilities. ASU
2009-05 provides clarification that in circumstances in which a quoted price in
an active market for the identical liability is not available, a reporting
entity is required to measure fair value using certain techniques. ASU 2009-05
also clarifies that when estimating the fair value of a liability, a reporting
entity is not required to include a separate input or adjustment to other inputs
relating to the existence of a restriction that prevents the transfer of a
liability. ASU 2009-05 also clarifies that both a quoted price in an active
market for the identical liability at the measurement date and the quoted price
for the identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The adoption of ASU 2009-05 did not have a material impact on the
Company’s results of operations or financial condition.





In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, (amendments to ASC 605, Revenue Recognition). ASU
2009-13 requires entities to allocate revenue in an arrangement using estimated
selling prices of the delivered goods and services based on a selling price
hierarchy. The amendments eliminate the residual method of revenue allocation
and require revenue to be allocated using the relative selling price
method.  ASU 2009-13 should be applied on a prospective basis for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010, with early adoption permitted. The
Company does not expect adoption of ASU 2009-13 to have a material impact on the
Company’s results of operations or financial condition.





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB
ASC 810-10-65 (formerly SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements — an amendment of
ARB No. 51). FASB ASC 810-10-65 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent. Specifically, FASB ASC 810-10-65 requires the
presentation of non-controlling interests as equity in the Consolidated Balance
Sheets, and separate identification and presentation in the Consolidated
Statements of Income of net income attributable to the entity and the
non-controlling interest. It also establishes accounting and reporting standards
regarding deconsolidation and changes in a parent’s ownership interest. FASB
ASC 810-10-65 is effective as of January 1, 2009. The provisions of
FASB ASC 810-10-65 are generally required to be applied prospectively,
except for the presentation and disclosure requirements, which must be applied
retrospectively. The adoption of FASB ASC 810-10-65 did not have a material
effect on the Company’s financial statements.





On
January 1, 2009, the Company adopted FASB ASC topic 815-40 “Determining Whether an Instrument
(or Embedded Feature) is indexed to an Entity’s Own Stock”(formerly
EITF 07-5). ASC topic 815-40 provides guidance on determining whether an
instrument (or an embedded feature) is indexed to an entity’s own stock, which
would qualify as a scope exception under prior authoritative literature FASB
No. 133. “Accounting for Derivative Instruments and Hedging Activities” ASC
815-40 is effective for fiscal years beginning after December 15, 2008. The
adoption ASC topic 815-40 did not have a material impact on the Company’s
financial statements.




2.
            GOING
      CONCERN





The
Company has incurred a net loss of $1,878,061 for the six months ended October
31, 2009 and has an accumulated deficit of $4,763,917as of October 31,
2009, and additional debt or equity financing will be required by the Company to
fund its activities and to support its operations.  However, there is
no assurance that the Company will be able to obtain additional
financing.  Furthermore, there is no assurance that rapid
technological changes, changing customer needs and evolving industry standards
will enable the Company to introduce new products on a continual and timely
basis so that profitable operations can be attained.





7
 CROWDGATHER,
INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 OCTOBER
31, 2009
 UNAUDITED





3.
            FAIR VALUE OF ASSETS
      AND LIABILITIES




Determination
of Fair Value




At
October 31, 2009, the Company calculated the fair value of its assets and
liabilities for disclosure purposes as described below.




The
carrying value of cash and cash equivalents, prepaid expenses, accounts payable
and accrued expenses approximate their fair value due to the short period to
maturity of these instruments.




Valuation
Hierarchy




ASC 820
establishes a three-level valuation hierarchy for the use of fair value
measurements based upon the transparency of inputs to the valuation of an asset
or liability as of the measurement date:




Level 1.     Inputs to the valuation methodology
are quoted prices (unadjusted) for identical assets or liabilities in active
markets. Level 1 assets and liabilities include debt and equity securities
and derivative financial instruments actively traded on exchanges, as well as
U.S. Treasury securities and U.S. Government and agency mortgage-backed
securities that are actively traded in highly liquid over the counter
markets.




Level 2.     Observable inputs other than
Level 1 prices such as quoted prices for similar assets and liabilities in
active markets, quoted prices for identical or similar assets or liabilities in
markets that are not active, and inputs that are observable or can be
corroborated, either directly or indirectly, for substantially the full term of
the financial instrument. Level 2 assets and liabilities include debt
instruments that are traded less frequently than exchange traded securities and
derivative instruments whose model inputs are observable in the market or can be
corroborated by market observable data. Examples in this category are certain
variable and fixed rate non-agency mortgage-backed securities, corporate debt
securities and derivative contracts.




Level 3.     Inputs to the valuation methodology
are unobservable but significant to the fair value measurement. Examples in this
category include interests in certain securitized financial assets, certain
private equity investments, and derivative contracts that are highly structured
or long-dated.




Application
of Valuation Hierarchy




A
financial instrument's categorization within the valuation hierarchy is based
upon the lowest level of input that is significant to the fair value
measurement. The following is a description of the valuation methodology used to
measure fair value, as well as the general classification of such instruments
pursuant to the valuation hierarchy.




Convertible notes payable, net of
debt discount.





Market
prices are not available for the Company's convertible notes payable, nor are
market prices of similar convertible notes available. The Company assessed that
the fair value of this liability approximates its carrying value due to its
nature, the stated interest rate of the notes and the embedded conversion
features as calculated.




The
method described above may produce a current fair value calculation that may not
be indicative of net realizable value or reflective of future fair values. If
readily determined market values became available or if actual performance were
to vary appreciably from assumptions used, assumptions may need to be adjusted,
which could result in material differences from the recorded carrying amounts.
The Company believes its method of determining fair value is appropriate and
consistent with other market participants. However, the use of different
methodologies or different assumptions to value certain financial instruments
could result in a different estimate of fair value.




The
following table presents the fair value of financial instruments as of October
31, 2009, by caption on the balance sheet and by ASC 820 valuation hierarchy
described above.





Liabilities
      measured at fair value on arecurring
      and nonrecurring basisat
      October 31, 2009:
            Level 1
            
            Level 2
            
            Level 3
            
            TotalcarryingvalueNonrecurring:Convertible
      notes payable, net of debt discount
            
            $
            -
            
            
            $
            -
            
            
            $
            1,805,125
            
            
            $
            1,805,125Total
      liabilities at fair value
            
            $
            -
            
            
            $
            -
            
            
            $
            1,805,125
            
            
            $
            1,805,125





8
 CROWDGATHER,
INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 OCTOBER
31, 2009
 UNAUDITED








4.
            CONCENTRATION OF
      CREDIT RISK





The
Company maintains its cash deposits in two bank accounts which at times have
exceeded federally insured limits.  The Company has not experienced
any losses with respect to its cash balances.








5.   
INTANGIBLE
ASSETS





The
Company purchased online forums, message boards and website domain names for
cash in the amount of $12,445 during the six months ended October 31, 2009 and a
total consideration of $619,055 since inception. These assets have been
determined to have indefinite lives.  The Company accounts for its
intangible assets at cost.  Intangible assets acquired in a business
combination, if any, are recorded under the purchase method of accounting at
their estimated fair values at the date of acquisition.  As of October
31, 2009, the Company does not believe any impairment of intangible assets has
occurred.





6.   
NOTES
PAYABLE





On April
8, 2009 the Company issued a promissory note to its majority shareholder for
$50,000.  The note was due 60 days from the closing of the
transaction.  In the event the note was not repaid in the 60 day
period, interest at 10% would accrue for two years.  The note was
repaid May 29, 2009 and there was no balance outstanding at October 31,
2009.





On May 4,
2009 the Company issued a promissory note to its majority shareholder for
$54,000.  The note was due 60 days from the closing of the
transaction.  In the event the note was not repaid in the 60 day
period, interest at 10% would accrue for two years.  The note was
repaid May 29, 2009 and there was no balance outstanding at October 31,
2009.





7.     CONVERTIBLE NOTES
PAYABLE





On May
21, 2009, the Company closed the first tranches of a private offering of its
18-month Secured Convertible Debentures (“Debentures”) with a limited number of
foreign institutional purchasers.  During the initial closing, the
Company received cash proceeds of $1,300,000, and approximately $1,075,000 in
previously issued short-term promissory obligations were exchanged for the
Debentures.  In connection with the initial closing, the Company
granted warrants to purchase an aggregate of up to 1,599,997 shares of the
Company’s common stock, exercisable at $0.70 per share (the closing market price
on May 21, 2009).





The
Debentures bear interest at a rate of 8 % per annum, which is due and payable
upon conversion or upon maturity in November 2010.  The majority of
the Debentures are convertible into common stock, at the holder’s option, at an
initial conversion price of the greater of $0.50 or a 20% discount to the volume
weighted average share price (“VWAP”) for the 10 days prior to the date of
conversion.  The remaining Debentures ($532,500 of initial principal
value) that were exchanged by the holders of existing short-term promissory
notes are convertible into common stock, at the holder’s option, at an initial
conversion price of the greater of $0.50 or a 32% discount to the VWAP for the
10 days prior to the date of conversion.




Under ASC
470, Debt, the relative
fair value of the warrants and the intrinsic value of the beneficial conversion
feature were recorded as a discount to the notes.  A debt discount of
$727,357 was recorded thereby reducing the carrying value of the Debentures with
a corresponding increase to additional paid-in capital. The debt discount is
being amortized to interest expense over the term of the notes
payable.  Total amortized interest expense for the six months ended
October 31, 2009 was $158,199.





In
addition, the $1,075,000 in previously issued short-term promissory obligations
that were exchanged for the Debentures were considered to have been
extinguished.  Accordingly, the Company recorded a $563,571 loss on
extinguishment of debt which represents the difference between the fair value of
the new debt and the original value of the exchanged debt.





8.     COMMON
STOCK





In May
2009, the Company entered into a consulting and advisory agreement with a third
party.  Pursuant to the agreement, the Company is required to
compensate the advisory firm a non-refundable fee of $8,000 in four payments and
21,000 shares of its restricted common stock over three months.  The
shares were valued at $18,060 based on the fair value of the shares on the date
of the contract. The term of the agreement was for three months and expired
August 26, 2009.  The stock-based expense for these shares included in
operating expenses for the six months ended October 31, 2009 was
$18,060.





In May
2009, the Company entered into a consulting and advisory agreement with a third
party.  Pursuant to the agreement, the Company is required to
compensate the advisory firm a non-refundable fee of $8,000 in four payments and
60,000 shares of its restricted common stock over three months.  The
shares were valued at $51,600 based on the fair value of the shares on the date
of the contract. The term of the agreement was for three months and expired
August 26, 2009.  The stock-based expense for these shares included in
operating expenses for the six months ended October 31, 2009 was
$51,600.





In May
2009, the Company entered into a consulting and advisory agreement with a third
party.  Pursuant to the agreement, the Company is required to
compensate the advisory firm a non-refundable fee of $2,500 and 75,000 shares of
its restricted common stock.  The shares were valued at $52,500 based
on the fair value of the shares on the date of the contract. The term of the
agreement was for three months and expired August 26, 2009.  The
stock-based expense for these shares included in operating expenses for the six
months ended October 31, 2009 was $52,500.





9
 CROWDGATHER,
INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 OCTOBER
31, 2009
 UNAUDITED





9.   STOCK
OPTIONS





In May
2008 the board of directors of the Company approved the CrowdGather, Inc. 2008
Stock Option Plan (the “Plan”). The Plan permits flexibility in types of awards,
and specific terms of awards, which will allow future awards to be based on
then-current objectives for aligning compensation with increasing long-term
shareholder value.
  During
the six months ended October 31, 2009, the Company issued 325,000 stock options
for a total outstanding of 2,885,000 as of October 31, 2009, exercisable at
various dates through May 2013 and for various prices ranging from $0.86 -
$1.55, and convertible into approximately 2,885,000 shares of the Company’s
common stock to employees, directors and consultants pursuant to the
Plan.  The compensation cost for the six months ended October 31, 2009
was $318,000, and is included in operating expenses.
  For the
six months ended October 31, 2009 and 2008, the Company recognized $318,000 and
$312,000, respectively, of stock-based compensation costs as a result of the
issuance of options to employees, directors and consultants.  These
costs were calculated in accordance with ASC 505 and are reflected in operating
expenses.





Stock
      option activity was as follows for the six months ended October 31,
      2009:Number
      of Options
            
            Weighted-Average
      Exercise Price
            
            Weighted-Average
      Remaining Contract Term (Years)
            
            Aggregate
      Intrinsic ValueOutstanding,
      May 1, 2009
            2,560,000
            
            $
            1.16
            
            2.60
            $
            2,333,372Granted
            325,000
            
            
            0.86
            
            3.56
            
            339,102Forfeited/Expired
            -
            
            
            -
            
            -
            
            -Exercised
            -
            
            
            -
            
            -
            
            -Outstanding,
      October 31, 2009
            2,885,000
            
            $
            1.13
            
            2.71
            $
            2,672,474Exercisable,
      October 31, 2009
            770,625
            
            $
            1.15
            
            2.58
            $
            700,140




A
      summary of the status of the Company’s unvested shares as of October 31,
      2009 is presented below:Number
              of
      Shares
            
            
            Weighted-Average
      Grant-Date Fair ValueNon-vested
      balance, May 1, 2009
            
            
            2,119,375
            
            
            $
            0.92Granted
            
            
            325,000
            
            
            
            0.86Vested
            
            
            (330,000)
            
            
            
            0.89Forfeited/Expired
            
            
            -
            
            
            
            -Non-vested
      balance, October 31, 2009
            
            
            2,114,375
            
            
            $
            0.93





As
      of October 31, 2009, total unrecognized stock-based compensation cost
      related to unvested stock options was $1,719,036, which is expected to be
      recognized over a weighted-average period of approximately 2.71
      years.
                
                The
      fair value of each option grant is estimated on the date of the grant
      using the Black-Scholes option-pricing model based on the following
      weighted-average assumptions:


Six
      Months Ended October 31,2009
            
            
            2008Risk-free
      interest rate
            
            
            0.47%
            
            
            
            2.08%Expected
      volatility
            
            
            125.00%
            
            
            
            125%Expected
      option life (in years)
            
            
            4.00
            
            
            
            2.00Expected
      dividend yield
            
            
            0.00
            
            
            
            0.00





The risk-free
      interest rate is based on the implied yield currently available on
      U.S. Treasury zero coupon issues. The expected volatility is
      primarily based on historical volatility levels of the Company’s public
      company peer group. The expected option life of each award granted was
      calculated using the “simplified method” in accordance with ASC
      718.


10
 CROWDGATHER,
INC.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 OCTOBER
31, 2009
 UNAUDITED





10.    PROVISION FOR INCOME
TAXES





For the
six months ended October 31, 2009, the Company has recognized the minimum amount
of franchise tax required under California corporation law of
$800.  The Company is not currently subject to further federal or
state tax since it has incurred losses since its inception.





As of
October 31, 2009, the Company had federal and state net operating loss carry
forwards of approximately $4,000,000 which can be used to offset future federal
income tax.  The federal and state net operating loss carry forwards
expire at various dates through 2029.  Deferred tax assets resulting
from the net operating losses are reduced by a valuation allowance, when, in the
opinion of management, utilization is not reasonably assured.





As of
October 31, 2009, the Company had the following deferred tax assets related to
net operating losses.  A 100% valuation allowance has been established
due to the uncertainty of the Company’s ability to realize future taxable income
and to recover its net deferred tax assets.





Federal
      net operating loss (at 34%)
            $
            1,360,000State
      net operating loss (at 8.84%)
            
            350,0001,710,000Less:
      valuation allowance
            
            (1,710,000)Net
      deferred tax assets
            $
            -





The
Company’s valuation allowance increased by approximately $561,000 during the six
months ended October 31, 2009.









11.    SUBSEQUENT
EVENT





Website
and Domain Name Acquisition Agreement





On
November 4, 2009, the Company, entered into a website and domain name
acquisition agreement with EnzoTen Media Inc. (“Acquisition Agreement”) pursuant
to which the Company acquired the websites and domain names set forth
below:





·
            http://www.
    anythingbutipod.com·
            http://www.anythingbutiphone.com·
            http://www.anythingbutsansa.com·
            http://www.anythingbutzune.com·
            http://www.abimp3players.com·
            http://www.zuneelite.com





The
Acquisition Agreement provides that the total purchase price to be paid in cash
of $134,000 and the issuance of 104,000 shares of the Company’s common stock,
valued at $130,000.  The terms of the Acquisition Agreement provide
that the cash portion of the purchase price be paid in an initial payment of
$50,000 upon the execution of the Acquisition Agreement and the balance to be
paid in monthly amounts of $7,000 for each of the twelve months following the
closing of the Acquisition Agreement.





Services
Agreement





Concurrently
with the closing of the Acquisition Agreement, the Company entered into a
one-year services agreement engaging EnzoTen Media Inc. as an independent
contractor to operate the websites acquired (“Services
Agreement”).  The Services Agreement provides for the payment of
monthly compensation of $3,000, plus a bonus after one year in the event of a
100% increase in web traffic and revenue.





In
accordance with ASC 855 the Company has evaluated its subsequent events through
December 14, 2009, the date the financial statements were issued.





11











Item 2.  Plan of
Operation





This
following information specifies certain forward-looking statements of management
of the company. Forward-looking statements are statements that estimate the
happening of future events and are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology, such as
“may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”,
“probable”, “possible”, “should”, “continue”, or similar terms, variations of
those terms or the negative of those terms. The forward-looking statements
specified in the following information have been compiled by our management on
the basis of assumptions made by management and considered by management to be
reasonable. Our future operating results, however, are impossible to predict and
no representation, guaranty, or warranty is to be inferred from those
forward-looking statements.





The
assumptions used for purposes of the forward-looking statements specified in the
following information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed on
the achievability of those forward-looking statements. We cannot guaranty that
any of the assumptions relating to the forward-looking statements specified in
the following information are accurate, and we assume no obligation to update
any such forward-looking statements.





Critical Accounting Policies and
Estimates.Our Management’s Discussion and Analysis of Financial
Condition and Results of Operations section discusses our financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, management evaluates its estimates and
judgments, including those related to revenue recognition, accrued expenses,
financing operations, and contingencies and litigation. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. The most
significant accounting estimates inherent in the preparation of our financial
statements include estimates as to the appropriate carrying value of certain
assets and liabilities which are not readily apparent from other
sources.





The
following discussion of our financial condition and results of operations should
be read in conjunction with our audited financial statements for the year ended
April 30, 2009, together with notes thereto as previously filed with our Annual
Report on Form 10-K.  In addition, these accounting policies are
described at relevant sections in this discussion and analysis and in the notes
to the financial statements included in our Quarterly Report on Form 10-Q for
the period ended October 31, 2009.





Overview.We are an Internet
company that specializes in monetizing a network of online forums and message
boards designed to engage, provide information to and build community around
users. We are in the process of building what we hope will become one of the
largest social, advertising, and user generated content networks by
consolidating  existing groups of online users that post on message
boards and forums. Our goal is to create the world's best user experience for
forum communities, and world class service offerings for forum owners. We
believe that the communities built around message boards and forums are one of
the most dynamic sources of information available on the web because forums are
active communities built around interest and information exchange on specific
topics.





Part of
our growth strategy includes identifying and acquiring web properties.  In
the last six months we have been researching potential opportunities to acquire
online forums within targeted content and advertising verticals in our industry
in order to expand our operations. In addition to the over 70 properties and 300
domain names acquired to date, we also maintain ongoing discussions with
representatives of certain web properties and other companies that may be
interested in being acquired by us or entering into a joint venture agreement
with us.





The
network we create will rely initially upon our own properties, but it is our
goal to build a network that is open to third-party owned forums as
well.  Ultimately, the integration of these message board communities
on our central CrowdGather platform will allow for the creation of three things:
a user generated content network driven by a proprietary search interface; a
social network powered by central ID and log-on management through our
proprietary user profile; and an advertising network that allows for us to
leverage the targeted demographics of the combined network in order to generate
the highest advertising rates for all of our member sites.







12







Our Community of Online
Forums.Our forum community connects what we believe is a
robust and vibrant network of people sharing their questions, expertise and
experiences.  We hope that this collection of forums will help users
easily access relevant, dynamic, and compelling user-generated content,
conversations, and commerce.  Some of our representative properties
include:





Forum
      Name
            Target
      Community/Discussion TopicAnythingbutipod.com
            Consumer
      Electronics Media Player Community (purchased November 4,
      2009)ZuneBoards.com
            Microsoft
      Zune CommunityNgemu.com
            Software
      emulatorsABXZone.com
            Computer
      helpGenMay.com
            Off-topic
      and humorMotorcycleForum.com
            MotorcyclesAquaticPlantCentral.com
            AquascapesIronMass.com
            BodybuildingTech-gfx.net
            Graphic
      designVistaBabble.com
            Microsoft
      Vista discussionFashion-Forums.org
            FashionDemocracyForums.com
            PoliticsEternal-Allegiance.com
            Celebrities
      and their  fansFoodForums.com
            Food
      and diningActorsForum.com
            Acting
      and theater artsPocketbikeplanet.com
            Mini-bike
      owner societyClubxb.com
            Scion
      xB owner communityFreepowerboards.com
            Free
      forum hostingZealot.com
            Hobby
      enthusiast forumWiispace.com
            Nintendo
      Wii enthusiast community





In
addition, on November 4, 2009, we acquired the websites and domain names set
forth below:





·
            anythingbutipod.com


·
            anythingbutiphone.com


·
            anythingbutsansa.com


·
            anythingbutzune.com


·
            abimp3players.com


·
            zuneelite.com





We have
historically been reporting that the CrowdGather network represents an aggregate
of approximately 16 to 20 million monthly page views and 1.3 to 1.7 million
monthly unique visitors (new visitors to our network) based upon our own server
analytics.  From this date forward we have decided to measure our
monthly site traffic using Google analytics, the method preferred by the
majority of advertisers and other publishers in the industry.  Based
upon statistics from Google analytics, our monthly page views for the past
twelve months would have ranged between 9.5 million to 15 million and our
monthly unique visitors for the past twleve months would have ranged from 1.7 to
1.9 million. Additionally, approximately 2.9 million users have registered on
CrowdGather Network sites to date with 1.7 million monthly discussions
comprising over 40.5 million individual replies. Our belief is that the strong
search engine rankings of many of our properties will continue to result in
increased page views and registered members as we go forward.





We seek
to continually add to the number of communities our website services by
acquiring additional active forums, thereby increasing traffic to our site and
the number of forums we host.







13








For the three months ended
October 31, 2009, as compared to the three months ended October 31,
2008.





Results
of Operations





Revenues. We realized
revenues of $58,061 for the three months ended October 31, 2009, as compared to
revenues of $20,625 for the three months ended October 31, 2008. This increased
revenue is a result of increasing advertising related revenue and higher service
revenues. The services revenues relate to leveraging our excess engineering
capabilities towards developing web services applications for third-party
customers.  This will not be a significant focus of ours going
forward, but will help us towards reducing our net monthly deficit. We
anticipate that as we operate our new business and expand our holdings of
websites and domain names, we will begin to generate more significant revenues
as we implement the advertising and sponsorship initiatives for all of our web
properties.





We have
also decided to develop, market, and sell products that are focused on expanding
our visibility amongst owners of forums.  The first such product will
be our proprietary forum Content Management System (CMS),
CrowdReportTM.  We completed beta testing of our CMS on our busiest
sites commencing in January, 2009, and based upon the insights we have received
from the members of those respective communities, we are now developing the
final feature specification. While we had anticipated that CrowdReportTM CMS
would have been launched  for sale and distribution in October 2009,
we were forced to delay the launch due to circumstances beyond our control
resulting from the announcement by the developer of the forum software that they
were launching an upgraded version of the forum software. As a result, we will
delay the launch of CrowdReportTM CMS in order to ensure that it is compatible
with this new upgraded forum software. We expect to be in a position to launch
during our fiscal fourth quarter ending April 31, 2010.





To
implement our business plan during the next twelve months, we need to generate
increased revenues by expanding our online forum offerings and increasing the
capabilities of our existing online forums. Our failure to do so will hinder our
ability to increase the size of our operations and generate additional revenues.
If we are not able to generate additional revenues to cover our estimated
operating costs, we may not be able to expand our operations.




Operating Expenses. For the
three months ended October 31, 2009, our operating expenses were $529,143, as
compared to total operating expenses of $768,783 for the three months ended on
October 31, 2008.  The decrease between the comparable periods is primarily
due to a decrease in salaries, which decreased from $206,586 for the three
months ended October 31, 2008, to $129,448 for the three months ended October
31, 2009.   We also experienced decreases in our professional fees
from $84,219 in the three months ended October 31, 2008 to $52,551 in the three
months ended October 31, 2009, as well as a decrease in expenses related to
independent consultants from $43,700 in the three months ended October 31, 2008
to $28,650 in the three months ended October 31, 2009.




We
anticipate that our future monthly operating expenses going into 2010 will be
similar to our 2009 expenses barring any additional overhead related to large
acquisitions as we anticipate raising additional capital for further
acquisitions. We will continue to incur significant general and administrative
expenses, but expect to generate increased revenues after further developing our
business with the funds raised in our private offering in May,
2009.





Other Income and Expense. For
the three months ended October 31, 2009, we also had other income of $935,
interest expense of $47,486 and debt discount of $93,916, resulting in net other
expense of $140,467.  By comparison, for the three months ended
October 31, 2008, we had other income of $571 and interest expense of $11,667,
resulting in net other expense of $11,096. The increase in net other expense
between the comparable periods is primarily due to the interest and debt
discount which resulted from the secured convertible debenture financing that we
closed in May 2009.





Net Loss.For the
three months ended October 31, 2009, our net loss was $611,549, as compared to a
net loss of $759,254 for the three months ended on October 31,
2008.  The decrease in our net loss between the two periods was
primarily due to the decrease in salaries, as discussed above.









14





For the six months ended
October 31, 2009, as compared to the six months ended October 31,
2008.





Results
of Operations





Revenues. We realized
revenues of $111,132 for the six months ended October 31, 2009, as compared to
revenues of $30,261 for the six months ended October 31, 2008. This increased
revenue is a result of increasing advertising related revenue and higher service
revenues. The services revenues relate to leveraging our excess engineering
capabilities towards developing web services applications for third-party
customers.  This will not be a significant focus of ours going
forward, but will help us towards reducing our net monthly deficit. We
anticipate that as we operate our new business and expand our holdings of
websites and domain names, we will begin to generate more significant revenues
as we implement the advertising and sponsorship initiatives for all of our web
properties.





We have
also decided to develop, market, and sell products that are focused on expanding
our visibility amongst owners of forums.  The first such product will
be our proprietary forum Content Management System (CMS),
CrowdReportTM.  We completed beta testing of our CMS on our busiest
sites commencing in January, 2009, and based upon the insights we have received
from the members of those respective communities, we are now developing the
final feature specification.  While we had anticipated that
CrowdReportTM CMS would have been launched  for sale and distribution
in October 2009, we were forced to delay the launch due to circumstances beyond
our control resulting from the announcement by the developer of the forum
software that they were launching an upgraded version of the forum software. As
a result, we will delay the launch of CrowdReportTM CMS in order to ensure that
it is compatible with this new upgraded forum software. We expect to be in a
position to launch during our fiscal fourth quarter ending April 31,
2010.





To
implement our business plan during the next twelve months, we need to generate
increased revenues by expanding our online forum offerings and increasing the
capabilities of our existing online forums. Our failure to do so will hinder our
ability to increase the size of our operations and generate additional revenues.
If we are not able to generate additional revenues to cover our estimated
operating costs, we may not be able to expand our operations.





Operating Expenses. For the
six months ended October 31, 2009, our operating expenses were $1,181,303, as
compared to total operating expenses of $1,335,160 for the six months ended on
October 31, 2008.  The decrease between the comparable periods is primarily
due to a decrease in salaries, which decreased from 348,265 for the six months
ended October 31, 2008, to 254,732 for the six months ended October 31, 2009. We
also experienced decreases in our professional fees from $162,664 in the six
months ended October 31, 2008 to $104,858 in the six months ended October 31,
2009. As well as a decrease in expenses related to independent consultants from
$106,856 in the six months ended October 31, 2008 to $57,425 in the six months
ended October 31, 2009.





We
anticipate that our future monthly operating expenses going into 2010 will be
similar to our 2009 expenses barring any additional overhead related to large
acquisitions as we anticipate raising additional capital for further
acquisitions. We will continue to incur significant general and administrative
expenses, but expect to generate increased revenues after further developing our
business with the funds raised in our private offering in May,
2009.





Other Income and Expense. For
the six months ended October 31, 2009, we also had other income of $1,737,
interest expense of $87,057, debt discount of $158,199 and loss of
extinguishment of debt of $563,571, resulting in net other expense of
$807,090.  By comparison, for the six months ended October 31, 2008,
we had other income of $1,230 and interest expense of $14,167, resulting in net
other expense of $12,937. The increase in net other expense between the
comparable periods is primarily due to the interest, debt discount and the loss
of extinguishment of debt which resulted from the secured convertible debenture
financing that we closed in May 2009.





Net Loss.For the
six months ended October 31, 2009, our net loss was $1,878,061, as compared to a
net loss of $1,318,636 for the six months ended on October 31,
2008.  The increase in our net loss between the two periods was
primarily due to an increase in other expense, which resulted from the interest
and costs associated with the secured convertible debenture financing that we
closed in May 2009, as discussed above.







15








Liquidity and Capital
Resources. Our total assets were $1,152,859 as of October 31, 2009, which
consisted of cash of $459,867, prepaid expenses of $4,172, property and
equipment with a net value of $69,765, and intangible assets of $619,055,
represented by our domain names and other intellectual property
owned.





Our
current liabilities as of October 31, 2009, totaled $134,763, consisting of
accounts payable and accrued expense of $47,706 and accrued interest of $87,057.
We also had long term liabilities of $1,805,125 as of October 31, 2009, all of
which is represented by convertible notes payable, net of the debt discount. The
terms of those notes are described below. We had no other liabilities and no
long-term commitments or contingencies at October 31, 2009.





On May
21, 2009, we closed a private offering of 18-month secured convertible
debentures.  As of the initial closing, we received cash proceeds of
$1,300,000, and approximately $1,075,000 in previously issued short-term
convertible promissory notes were exchanged for the new debentures. The
debentures bear interest at a rate of 8 % per annum, which is due and payable
upon conversion or upon maturity in November 2010.  The majority of
the debentures are convertible into common stock, at the holder’s option, at an
initial conversion price of the greater of $0.50 or a 20% discount to the volume
weighted average share price (VWAP) for the 10 days prior to the date of
conversion.  The remaining debentures ($532,500 of initial principal
value) that were exchanged by the holders of existing short-term promissory
notes are convertible into common stock, at the holder’s option, at an initial
conversion price of the greater of $0.50 or a 32% discount to the VWAP for the
10 days prior to the date of conversion. Following the closing, we had no
short-term debt obligations.





After
repayment of certain current debt obligations, approximately $1 million was
available for our general corporate purposes and working capital. As of October
31, 2009, we had cash of $459,867. We estimate that our cash on hand subsequent
to the offering will not be sufficient for us to continue and expand our current
operations for the next twelve months. Our forecast for the period for which our
financial resources will be adequate to support our operations involves risks
and uncertainties and actual results could differ as a result of a number of
factors. In addition to generating revenues from our current operations, we will
need to raise additional capital to expand our operations to the point at which
we are able to operate profitably. Accordingly, we believe we will need to raise
additional capital to sustain our operations and to expand our business to the
point at which we are able to operate profitably. We are pursuing capital
through public or private financing as well as borrowings and other sources,
including our officers, directors and principal shareholders. We cannot guaranty
that additional funding will be available on favorable terms, if at all. If
adequate funds are not available from external sources, we are dependent on our
officers, directors and/or shareholders to loan us funds to pay for our expenses
to achieve our objectives over the next twelve months. In the event that we are
unable to raise additional capital or borrow additional funds, we may be forced
to undertake significant cost reductions or curtail operations.





Themajority of our research and
development activity is focused on development of our proprietary software
systems such as our forum Content Management System (CMS), CrowdReportTM; as a
result most of the cost of this is covered within our engineering budgets. 
We expect to invest under $50,000 for research and development over the next 12
months.





We do not
anticipate that we will purchase or sell any significant equipment except for
computer equipment and furniture which we anticipate will cost approximately
$50,000 over the next twelve months.





We do not
anticipate any significant changes in the number of employees unless we are able
to significantly increase the size of our operations. Our management believes
that we do not require the services of additional independent contractors to
operate at our current level of activity. However, if our level of operations
increases beyond the level that our current staff can provide, then we may need
to supplement our staff in this manner.





Off
Balance Sheet Arrangements





We had no
off balance sheet arrangements at October 31, 2009.





Item 3. Quantitative and
Qualitative Disclosures about Market Risk





Not
applicable.





Item 4. Controls and
Procedures





Evaluation of disclosure controls and
procedures. We maintain controls and procedures designed to ensure that
information required to be disclosed in the reports that we file or submit under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed as of October 31, 2009, the date of this
report, our chief executive officer and the principal financial officer
concluded that our disclosure controls and procedures were
effective.





Changes in internal controls.There were no changes in our internal control over financial reporting
that occurred during the fiscal quarter covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.







16








PART
II — OTHER INFORMATION





Item 1. Legal
Proceedings.





None.





Item 1A. Risk
Factors.





Not
applicable.





Item 2. Unregistered Sales
of Equity Securities and Use of Proceeds.





None.





Item 3.  Defaults
Upon Senior Securities





None.





Item
4.  Submission of Matters to Vote of Security
Holders





None.





Item 5.  Other
Information





None.





Item
6.  Exhibits





31.1
            Certification
      of Principal Executive Officer, pursuant to Rule 13a-14 and 15d-14 of
      the Securities Exchange Act of 193431.2
            Certification
      of Principal Financial Officer, pursuant to Rule 13a-14 and 15d-14 of
      the Securities Exchange Act of 193432.1
            Certification
      of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2
            Certification
      of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002


17


SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





CrowdGather,
      Inc.,
              a
      Nevada corporationDecember
      15, 2009
            By:
            /s/
      Sanjay SabnaniIts:
            Sanjay
      Sabnani
              President,
      Secretary, Director
              (Principal
      Executive Officer)








December
      15, 2009
            By:
            /s/
      Gaurav SinghIts:
            Gaurav
      Singh
              Chief
      Financial Officer
              (Principal
      Financial and Accounting Officer)