Crumbs Bake Shop, Inc. (NasdaqCM:CRMB) announced a private placement of convertible notes with a new investor Fischer Enterprises, LLC for $5,000,000 in funding on January 20, 2014. The company will issue tranche I note and tranche II note pursuant to the transaction. The notes carries a coupon of 7% per annum payable quarterly in arrears either in cash or by increasing the principal amount of the outstanding notes by the amount of interest due for such quarter. The notes will mature on July 1, 2016. The notes will be convertible into common shares of the company at a conversion price of $0.66 per share. Marc P. Press, of Cole, Schotz, Meisel, Forman & Leonard, P.A. will act as legal advisor to the company and Louis J. Price of McAfee & Taft A Professional Corporation will act as legal advisor to Fischer Enterprises, LLC. The company will pay lending fee of 1% of the loan amount, which is $50,000. The company will issue securities pursuant to exemption provided under Regulation D. Notwithstanding the conversion features of the notes, until March 31, 2016, subject to certain limited exceptions such as acceleration on an event of default or a change of control, the investor will be prohibited from converting its notes and the company will be prohibited from issuing shares of common stock to investor in an amount that would cause Investor to beneficially own more than 34.99% of the number of shares of common stock then outstanding common stock. Notes shall not be convertible at any time into that number of shares that would cause the number of shares beneficially owned by the investor to exceed more than 19.99% of the common stock then outstanding. The company has agreed to seek stockholder approval for the conversion of the notes at its annual meeting that it anticipates to hold on or about June 10, 2014.

On January 21, 2014, the company has received $3,500,000 in first tranche of the transaction. The company will receive its second tranche of $1,500,000 on or before April 1, 2014. As part of the transaction, the investor has the right at any time to appoint a representative to join the company's board of directors. The company paid lending fees of $35,000 pursuant to the first tranche of the transaction.

As of February 3, 2014, the company announced that GlassRatner Advisory & Capital Group LLC acted as placement agent to the company. The company paid sales commission of $300,000.