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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☒QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For
the quarterly period ended
March 31, 2022
OR
☐ 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:
001-38834
Verb Technology Company, Inc.
(Exact
name of registrant as specified in its charter)
Nevada |
|
90-1118043 |
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
3401 North Thanksgiving Way,
Suite 240,
Lehi,
Utah
|
|
84043
|
(Address
of principal executive offices) |
|
(Zip
Code) |
(855)
250-2300
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last
report)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common Stock, $0.0001 par value
Common Stock Purchase Warrants
|
|
VERB
VERBW
|
|
The
Nasdaq Stock Market LLC
The
Nasdaq Stock Market LLC
|
Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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.
Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted 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 such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
|
|
|
|
Non-accelerated filer |
☒ |
Smaller
reporting company |
☒ |
|
|
|
|
|
Emerging
growth company |
☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). ☐ Yes ☒
No
As of
May 10, 2022, there were
101,440,840 shares
of common stock, $0.0001 par value per share,
outstanding.
VERB
TECHNOLOGY COMPANY, INC.
TABLE
OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This
Quarterly Report on Form 10-Q for the three months ended March 31,
2022 (this “Quarterly Report”), includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
which statements are subject to considerable risks and
uncertainties. These forward-looking statements are intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include all statements that are not statements of
historical facts and can be identified by words such as
“anticipates,” “believes,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “projects,”
“seeks,” “should,” “will,” “would” or similar expressions and the
negatives of those expressions. Forward-looking statements also
include the assumptions underlying or relating to such
statements.
Our
forward-looking statements are based on our management’s current
beliefs, assumptions and expectations about future events and
trends, which affect or may affect our business, strategy,
operations, financial performance or liquidity. Although we believe
these forward-looking statements are based upon reasonable
assumptions, they are subject to numerous known and unknown risks
and uncertainties and are made in light of information currently
available to us. Some of the risks and uncertainties that may
impact our forward-looking statements include, but are not limited
to, the following factors:
● our
incursion of significant net losses and uncertainty whether we will
achieve or maintain profitable operations;
● our
ability to continue as a going concern;
● our
ability to grow and compete in the future, which is dependent upon
whether capital is available to us on favorable terms;
● our
ability to maintain and expand our customer base and our ability to
convince our customers to increase the use of our services and/or
platform;
● the
competitive market in which we operate;
● our
ability to increase the number of our strategic relationships or
grow the revenues received from our current strategic
relationships;
● our
ability to develop enhancements and new features to our existing
service or acceptable new services that keep pace with
technological developments;
● the
novel coronavirus (“COVID-19”) pandemic, which has had a sustained
impact on our business, sales, results of operations and financial
condition;
● our
ability to deliver our services, as we depend on third party
Internet providers;
● our
ability to pay our debt obligations as they become due;
and
● our
susceptibility to security breaches and other
disruptions.
The
foregoing list may not include all of the risk factors that impact
the forward-looking statements made in this Quarterly Report. Our
actual financial condition and results could differ materially from
those expressed or implied by our forward-looking statements as a
result of various additional factors, including those discussed in
the sections entitled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Risk
Factors” in this Quarterly Report and in our Annual Report on
Form 10-K for the year ended December 31, 2021 (our “Annual
Report”), as well as in the other reports we file with the
Securities and Exchange Commission (the “SEC”). You should read
this Quarterly Report, and the other documents we file with the
SEC, with the understanding that our actual future results may be
materially different from the results expressed or implied by our
forward-looking statements.
We
operate in an evolving environment. New risks and uncertainties
emerge from time to time and it is not possible for our management
to predict all risks and uncertainties, nor can we assess the
impact of all factors on our business or the extent to which any
factor, or combination of factors, may cause actual future results
to be materially different from those expressed or implied by any
forward-looking statements.
Forward-looking
statements speak only as of the date they were made, and, except to
the extent required by law or the rules of the Nasdaq Capital
Market, we undertake no obligation to update or review any
forward-looking statement because of new information, future events
or other factors.
We
qualify all of our forward-looking statements by these cautionary
statements.
PART I — FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
VERB TECHNOLOGY COMPANY, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share data)
See
accompanying notes to the condensed consolidated financial
statements
VERB TECHNOLOGY COMPANY, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands, except share and per share data)
(unaudited)
See
accompanying notes to the condensed consolidated financial
statements
VERB
TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY
(in
thousands, except share and per share data)
(unaudited)
For
the three months ended March 31, 2022
For
the three months ended March 31, 2021
|
|
Preferred
Stock
|
|
|
Class
A Units |
|
|
Class
B Units |
|
|
Common
Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
Balance
at December 31, 2020 |
|
|
2,006 |
|
|
$ |
- |
|
|
|
100 |
|
|
$ |
- |
|
|
|
2,642,159 |
|
|
$ |
3,065 |
|
|
|
47,795,009 |
|
|
$ |
5 |
|
|
$ |
89,216 |
|
|
$ |
(81,541 |
) |
|
$ |
10,745 |
|
Sale
of common stock from public offering |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,375,000 |
|
|
|
1 |
|
|
|
14,128 |
|
|
|
- |
|
|
|
14,129 |
|
Issuance
of common stock from warrant exercise |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,036,600 |
|
|
|
- |
|
|
|
1,103 |
|
|
|
- |
|
|
|
1,103 |
|
Issuance
of common stock from option exercise |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
332,730 |
|
|
|
- |
|
|
|
377 |
|
|
|
- |
|
|
|
377 |
|
Conversion
of Series A Preferred to common stock |
|
|
(300 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
272,728 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Fair
value of common shares issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
809,511 |
|
|
|
- |
|
|
|
1,414 |
|
|
|
- |
|
|
|
1,414 |
|
Fair
value of vested restricted stock awards |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
247,703 |
|
|
|
- |
|
|
|
447 |
|
|
|
- |
|
|
|
447 |
|
Fair
value of vested stock options and warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
448 |
|
|
|
- |
|
|
|
448 |
|
Extinguishment
of derivative liability upon exercise of warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,286 |
|
|
|
- |
|
|
|
2,286 |
|
Fair
value of common shares issued to settle accrued
expenses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
121,842 |
|
|
|
- |
|
|
|
207 |
|
|
|
- |
|
|
|
207 |
|
Fair
value of warrants issued to officer to modify note
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
287 |
|
|
|
- |
|
|
|
287 |
|
Conversion
of Class B Units to common shares |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,642,159 |
) |
|
|
(3,065 |
) |
|
|
2,642,159 |
|
|
|
- |
|
|
|
3,065 |
|
|
|
- |
|
|
|
- |
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,345 |
) |
|
|
(8,345 |
) |
Balance
at March 31, 2021 |
|
|
1,706 |
|
|
$ |
- |
|
|
|
100 |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
62,633,282 |
|
|
$ |
6 |
|
|
$ |
112,978 |
|
|
$ |
(89,886 |
) |
|
$ |
23,098 |
|
See
accompanying notes to the condensed consolidated financial
statements
VERB
TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in
thousands)
(unaudited)
See
accompanying notes to the condensed consolidated financial
statements
VERB
TECHNOLOGY COMPANY, INC.
Notes to Condensed Consolidated Financial
Statements
For
the Three Months Ended March 31, 2022 and 2021
(in
thousands, except share and per share data)
(unaudited)
1.
DESCRIPTION OF
BUSINESS
Our Business
References
in this document to the “Company,” “Verb,” “we,” “us,” or “our” are
intended to mean Verb Technology Company, Inc., individually, or as
the context requires, collectively with its subsidiaries on a
consolidated basis.
The
Company is a SaaS applications platform developer. Our platform is
comprised of a suite of interactive video-based sales enablement
business software products marketed on a subscription basis. Our
applications, available in both mobile and desktop versions, are
offered as a fully integrated suite, as well as on a standalone
basis, and include verbCRM, our Customer Relationship Management
(“CRM”) application, verbLEARN, our Learning Management System
application, verbLIVE, our Live Stream eCommerce application,
verbPULSE, our business/augmented intelligence notification and
sales coach application, and verbTEAMS, our self-onboarding
video-based CRM and content management application for professional
sports teams, small business and solopreneurs, with seamless
synchronization with Salesforce, that also comes bundled with
verbLIVE, and more recently, we introduced verbMAIL, our
interactive video-based sales communication tool integrated into
Microsoft Outlook. Of note is our forthcoming MARKET, a
multi-vendor, multi-presenter, livestream social shopping platform
at the forefront of the convergence of ecommerce and
entertainment.
The
Company also provides certain non-digital services to some of its
enterprise clients such as printing, fulfillment services, design
and print welcome kits and starter kits. We use the term “client”
and “customer” interchangeably.
COVID-19
As of
the date of this filing, there continues to be widespread concern
regarding the ongoing impacts and disruptions caused by the
COVID-19 pandemic in the regions in which the Company operates.
Although the impacts of the COVID-19 pandemic have not been
material to date, a prolonged downturn in economic conditions could
have a material adverse effect on our customers and demand for our
services. The Company has not observed any impairments of its
assets or a significant change in the fair value of its assets due
to the COVID-19 pandemic. At this time, it is not possible for the
Company to predict the duration or magnitude of the adverse results
of the outbreak and its effects on the Company’s business or
results of operations, financial condition, or
liquidity.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND SUPPLEMENTAL
DISCLOSURES
Basis of
Presentation
The
accompanying condensed consolidated financial statements are
unaudited. These unaudited interim condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”) and applicable rules and regulations of the Securities and
Exchange Commission (“SEC”) regarding interim financial reporting.
Certain information and note disclosures normally included in the
financial statements prepared in accordance with GAAP have been
condensed or omitted pursuant to such rules and regulations.
Accordingly, these interim condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto contained in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2021 filed with the SEC on March 31, 2022 (the “2021 Annual
Report”). The consolidated balance sheet as of December 31, 2021
included herein was derived from the audited consolidated financial
statements as of that date.
In
the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary
to fairly present the Company’s financial position and results of
operations for the interim periods reflected. Except as noted, all
adjustments contained herein are of a normal recurring nature.
Results of operations for the fiscal periods presented herein are
not necessarily indicative of fiscal year-end results.
Principles of
Consolidation
The
consolidated financial statements have been prepared in accordance
with GAAP and include the accounts of Verb, Verb Direct, LLC, Verb
Acquisition Co., LLC, and verbMarketplace, LLC. All intercompany
accounts have been eliminated in the consolidation. Certain prior
period amounts have been reclassified to conform to the current
presentation.
Going
Concern
The
accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the
normal course of business. As reflected in the accompanying
consolidated financial statements, during the three months ended
March 31, 2022, the Company incurred a net loss of $6,989 and used cash in operations of
$5,899. These
factors raise substantial doubt about the Company’s ability to
continue as a going concern within one year after the date of the
financial statements being issued.
On
January 12, 2022, the Company entered into a common stock purchase
agreement (the “Common Stock Purchase Agreement”) with Tumim Stone
Capital LLC (the “Investor”). Pursuant to the agreement, the
Company has the right, but not the obligation, to sell to the
Investor, and the Investor is obligated to purchase, up to
$50,000 of
newly issued shares (the “Total Commitment”) of the Company’s
common stock, par value $0.0001
per
share (the “Common Stock”) from time to time during the term of the
agreement, subject to certain limitations and conditions. The Total
Commitment is inclusive of
607,287 shares
of Common Stock (the “Commitment Shares”), issued to the Investor
as consideration for its commitment to purchase shares of Common
Stock under the Common Stock Purchase Agreement.
On
January 12, 2022, the Company also entered into a securities
purchase agreement with three institutional investors
(collectively, the “Note Holders”) providing for the sale and
issuance of an aggregate original principal amount of $6,300 in convertible
notes due January 2023 (each, a “Note,” and, collectively, the
“Notes,” and such financing, the “Note Offering”). The Company and
the Note Holders also entered into a security agreement, dated
January 12, 2022, in connection with the Note Offering, pursuant to
which the Company granted a security interest to the Note Holders
in substantially all of its assets.
On
April 20, 2022, the Company entered into a securities purchase
agreement (the “Purchase Agreement”), which provides for the sale
and issuance by the Company of an aggregate of (i) 14,666,667 shares of the
Company’s common stock, $0.0001 par value per share,
at a purchase price of $0.75 per share, and (ii) warrants to
purchase 14,666,667 shares of the
common stock at an exercise price of $0.75 per share, for
aggregate gross proceeds of $11,000 before deducting
placement agent commissions and other estimated offering expenses
(the “Registered Direct Offering”). The Purchase Agreement contains
customary representations, warranties and agreements by the
Company, customary conditions to closing, and customary
indemnification obligations of the Company. The Purchase Agreement
amongst other things restricts us from selling shares using at the
market (“ATM”) agreement with Truist Securities and the Common
Stock Purchase Agreement. As a result of this transaction, certain
of our Series A warrants priced at $1.10 per share were repriced
to $0.75 per share under
the terms of such warrant agreements. The fair value of such
warrants at this new exercise price is approximately $500 and the Company will
account for this change as a deemed dividend. In addition, as a
result of entering into the Purchase Agreement, the Company repaid
$1,650 in principal
payments to Note Holders pursuant to the terms of the Note
Offering, thereby reducing the outstanding principal balance from
$6,300 to $4,650.
On
April 20, 2022, the Company also entered into a placement agency
agreement (the “Placement Agency Agreement”) with A.G.P./Alliance
Global Partners (the “Placement Agent”). Pursuant to the terms of
the Placement Agency Agreement, the Placement Agent agreed to use
its reasonable best efforts to arrange for the sale of the
Securities in the Registered Direct Offering. See Note 14 –
Subsequent Events.
Use of
Estimates
The
preparation of financial statements in conformity with GAAP
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 revenue and
expenses during the reported periods. Significant estimates include
assumptions made in analysis of reserves for allowance of doubtful
accounts, inventory, assumptions made in purchase price
allocations, impairment testing of long-term assets, realization of
deferred tax assets, determining fair value of derivative
liabilities, and valuation of equity instruments issued for
services. Amounts could materially change in the future.
Revenue
Recognition
The
Company recognizes revenue in accordance with Financial Accounting
Standard Board’s (“FASB”) ASC 606, Revenue from Contracts with
Customers (“ASC 606”). The Company derives its revenue
primarily from providing application services through the SaaS
application, digital marketing and sales support services. The
Company also derives revenue from the sale of customized print
products and training materials, branded apparel, and digital
tools, as demanded by its customers.
A
description of our principal revenue generating activities is as
follows:
|
1. |
Digital
Revenue which is divided into two main categories: |
|
a. |
SaaS
recurring digital revenue based on contract-based subscriptions to
verb app products and platform services which include verbCRM,
verbLEARN, verbLIVE, verbTEAMS, and verbPULSE. The revenue is
recognized straight-line over the subscription period. |
|
b. |
Non-SaaS,
non-recurring digital revenue, which is revenue generated by the
use of app products and in-app purchases, such as sampling and
other services obtained through the app. The revenue for samples is
recognized upon completion and shipment, while the design fees are
recognized when the service has been rendered and the app is
delivered to the customer. |
Subscription
revenue from the application services is recognized over the life
of the estimated subscription period. The Company also charges
certain customers setup or installation fees for the creation and
development of websites and phone application. These fees are
accounted for as part of contract liabilities and amortized over
the estimated life of the agreement. Revenue is measured as the
amount of consideration expected to be received in exchange for
transferring the products or services to a customer
|
2. |
Non-digital
revenue, which is revenue generated from non-app, non-digital
sources through ancillary services provided as an accommodation to
clients and customers. These services, which are now outsourced to
a strategic partner as part of a cost reduction plan instituted in
2020, include design, printing services, fulfillment and shipping
services. The revenue is recognized upon completion and shipment of
products or fulfillment to the customer.
|
The
products sold by us are distinctly individual. The products are
offered for sale solely as finished goods, and there are no
performance obligations required post-shipment for customers to
derive the expected value from them. Other than promotional
activities, which can vary from time to time but nevertheless are
entirely within the Company’s control, contracts with customers
contain no incentives or discounts that could cause revenue to be
allocated or adjusted over time. The control of products we sell
transfers to our customers upon shipment from our facilities, and
our performance obligations are satisfied at that time. Amounts
related to shipping and handling that are billed to customers are
reflected as part of revenue, and the related costs are reflected
in cost of revenue in the accompanying Consolidated Statements of
Operations. Historically, we have not experienced any significant
payment delays from customers. The Company allows returns within 30
days of purchase from end-users. Customers may return purchased
products under certain circumstances. Returns from customers in the
past and during the three months ended March 31, 2022 and 2021 are
immaterial.
Revenues
during the three months ended March 31, 2022 and 2021 were
substantially all generated from the United States of
America.
Cost of
Revenue
Cost
of revenue primarily consists of the salaries of certain employees
and contractors, digital content costs, purchase price of consumer
products, packaging supplies, and customer shipping and handling
expenses. Shipping costs to receive products from our suppliers are
included in our inventory and recognized as cost of revenue upon
sale of products to our customers.
Contract
Liabilities
Contract
liabilities represent consideration received from customers under
revenue contracts for which the Company has not yet delivered or
completed its performance obligation to the customer. Contract
liabilities are recognized over the contract period.
Capitalized Software
Development Costs
The
Company capitalizes internal and external costs directly associated
with developing internal-use software, and hosting arrangements
that include an internal-use software license, during the
application development stage of its projects. The Company’s
internal-use software is reported at cost less accumulated
depreciation. Depreciation begins once the project has been
completed and is ready for its intended use. The Company will
depreciate the asset on a straight-line basis over a period of
three years, which is the estimated useful life. Software
maintenance activities or minor upgrades are expensed in the period
performed. As of March 31, 2022 and December 31, 2021, the Company
capitalized $6,207 and
$4,348,
respectively, in software development costs and recorded as
capitalized software development costs in our condensed
consolidated balance sheets (see Note 3).
Depreciation
expense related to capitalized software development costs are
recorded in Cost of revenue in the consolidated statements of
operations. There was no depreciation expense related to
capitalized software development costs for the three months ended
March 31, 2022 and 2021 as the software has not been completed and
utilized.
Fair Value of
Financial Instruments
The
Company follows the guidance of FASB ASC 820 and ASC 825 for
disclosure and measurement of the fair value of its financial
instruments. FASB ASC 820 establishes a framework for measuring
fair value under GAAP and expands disclosures about fair value
measurements. To increase consistency and comparability in fair
value measurements and related disclosures, ASC 820 establishes a
fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three (3) broad levels.
The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or
liabilities and the lowest priority to unobservable
inputs.
The
three (3) levels of fair value hierarchy defined by ASC 820 are
described below:
|
Level
1: |
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting date. |
|
Level
2: |
Pricing
inputs other than quoted prices in active markets included in Level
1, which are either directly or indirectly observable as of the
reporting date. |
|
Level
3: |
Pricing
inputs that are generally observable inputs and not corroborated by
market data. |
The
carrying amount of the Company’s financial assets and liabilities,
such as cash and cash equivalents, prepaid expenses, and accounts
payable and accrued expenses approximate their fair value due to
their short-term nature. The carrying values financing obligations
approximate their fair values due to the fact that the interest
rates on these obligations are based on prevailing market interest
rates. The Company uses Level 2 inputs for its valuation
methodology for the derivative liabilities.
Derivative Financial
Instruments
The
Company evaluates its financial instruments to determine if such
instruments are derivatives or contain features that qualify as
embedded derivatives. For derivative financial instruments that are
accounted for as liabilities, the derivative instrument is
initially recorded at its fair value and is then re-valued at each
reporting date, with changes in the fair value reported in the
consolidated statements of operations. The classification of
derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is evaluated at the end of
each reporting period. Derivative instrument liabilities are
classified in the balance sheet as current or non-current based on
whether or not net-cash settlement of the derivative instrument
could be required within 12 months of the balance sheet
date.
The
Company uses Level 2 inputs for its valuation methodology for the
derivative liabilities as their fair values were determined by
using a Binomial pricing model. The Company’s derivative
liabilities are adjusted to reflect fair value at each period end,
with any increase or decrease in the fair value being recorded in
results of operations as adjusted to fair value of
derivatives.
Share-Based
Compensation
The
Company issues stock options and warrants, shares of common stock
and restricted stock units as share-based compensation to employees
and non-employees. The Company accounts for its share-based
compensation in accordance with FASB ASC 718, Compensation –
Stock Compensation. Share-based compensation cost is measured
at the grant date, based on the estimated fair value of the award,
and is recognized as expense over the requisite service period. The
fair value of restricted stock units is determined based on the
number of shares granted and the quoted price of our common stock
and is recognized as expense over the service period. Recognition
of compensation expense for non-employees is in the same period and
manner as if the Company had paid cash for services.
Net Loss Per
Share
Basic
net loss per share is computed by using the weighted-average number
of common shares outstanding during the period. Diluted net loss
per share is computed giving effect to all dilutive potential
shares of common stock that were outstanding during the period.
Dilutive potential shares of common stock consist of incremental
shares of common stock issuable upon exercise of stock options. No
dilutive potential shares of common stock were included in the
computation of diluted net loss per share because their impact was
anti-dilutive.
As of
March 31, 2022, and 2021, the Company had total outstanding options
of 5,877,643 and 5,799,013, respectively, and
warrants of 10,984,740 and 12,422,562, respectively,
and outstanding restricted stock awards of 2,211,525 and 2,751,508, respectively,
which were excluded from the computation of net loss per share
because they are anti-dilutive.
Concentration of
Credit and Other Risks
Financial
instruments that potentially subject the Company to concentrations
of credit risk consist of cash and accounts receivable. Cash is
deposited with a limited number of financial institutions. The
balances held at any one financial institution at times may be in
excess of Federal Deposit Insurance Corporation (“FDIC”) insurance
limits of up to $250.
The
Company extends limited credit to customers based on an evaluation
of their financial condition and other factors. The Company
generally does not require collateral or other security to support
accounts receivable. The Company performs ongoing credit
evaluations of its customers and maintains an allowance for
doubtful accounts and sales credits. The Company believes that any
concentration of credit risk in its accounts receivable is
substantially mitigated by the Company’s evaluation process,
relatively short collection terms and the high level of credit
worthiness of its customers.
The
Company’s concentration of credit risk includes its concentrations
from key customers and vendors. As of March 31, 2022, we have one
vendor that accounted for 33% of our purchases
individually and in aggregate. In addition, we had one vendor that
accounted for 49% of accounts
payable individually and in aggregate.
As of
March 31, 2022, we had no customers that accounted for 10% of our accounts
receivable individually and in the aggregate.
During
the three months ended March 31, 2022 and 2021, we had no customers
that accounted for 10% of our revenues individually and in the
aggregate.
Supplemental Cash Flow
Information
SCHEDULE OF SUPPLEMENTAL CASH FLOW
INFORMATION
|
|
|
|
|
|
|
Supplemental disclosures of cash flow
information: |
|
|
|
|
|
|
Cash
paid for interest |
|
$ |
- |
|
|
$ |
34 |
|
Cash paid for
income taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Fair value of
derivative liability extinguished |
|
$ |
- |
|
|
$ |
2,286 |
|
Fair value of
common shares issued to settle accrued expenses |
|
|
350 |
|
|
|
207 |
|
Reclassification
of Class B upon conversion to common stock |
|
|
- |
|
|
|
3,065 |
|
Discount
recognized from advances on future receipts |
|
|
- |
|
|
|
1,133 |
|
Accrued software
development costs |
|
|
1,675 |
|
|
|
- |
|
Discount
recognized from notes payable |
|
|
300 |
|
|
|
- |
|
Derecognition of
operating lease right-of-use assets |
|
|
543 |
|
|
|
- |
|
Derecognition of
operating lease liabilities |
|
|
521 |
|
|
|
- |
|
Debt issuance
costs in accounts payable |
|
$ |
80 |
|
|
$ |
- |
|
Recent Accounting
Pronouncements
Recently Adopted Accounting Pronouncements
In
August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”)
“Debt—Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging—Contracts in Entity’s Own Equity
(Subtopic 815-40).” ASU 2020-06 reduces the number of
accounting models for convertible debt instruments by eliminating
the cash conversion and beneficial conversion models. As a result,
a convertible debt instrument will be accounted for as a single
liability measured at its amortized cost as long as no other
features require bifurcation and recognition as derivatives. By
removing those separation models, the effective interest rate of
convertible debt instruments will be closer to the coupon interest
rate. Further, the diluted net income per share calculation for
convertible instruments will require the Company to use the
if-converted method. ASU 2020-06 will be effective January 1, 2024,
for the Company and is to be adopted through a cumulative-effect
adjustment to the opening balance of retained earnings. Early
adoption is permitted, but no earlier than January 1, 2021,
including interim periods within that year. Effective January 1,
2022, the Company early adopted ASU 2020-06 and that adoption did
not have any material impact on the Company’s financial statements
and the related disclosures.
In
May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic
260), Debt—Modifications and Extinguishments (Subtopic 470-50),
Compensation—Stock Compensation (Topic 718), and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Issuer’s Accounting for Certain Modifications or Exchanges of
Freestanding Equity-Classified Written Call Options. ASU
2021-04 provides clarification and reduces diversity in an issuer’s
accounting for modifications or exchanges of freestanding
equity-classified written call options (such as warrants) that
remain equity classified after modification or exchange. An issuer
measures the effect of a modification or exchange as the difference
between the fair value of the modified or exchanged warrant and the
fair value of that warrant immediately before modification or
exchange. ASU 2021-04 introduces a recognition model that comprises
four categories of transactions and the corresponding accounting
treatment for each category (equity issuance, debt origination,
debt modification, and modifications unrelated to equity issuance
and debt origination or modification). ASU 2021-04 is effective for
all entities for fiscal years beginning after December 15, 2021,
including interim periods within those fiscal years. An entity
should apply the guidance provided in ASU 2021-04 prospectively to
modifications or exchanges occurring on or after the effective
date. The Company adopted ASU 2021-04 effective January 1, 2022.
The adoption of ASU 2021-04 did not have any material impact on the
Company’s consolidated financial statement presentation or
disclosures.
In
October 2021, the FASB issued ASU 2021-08, Business Combinations
(Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers. ASU 2021-08 will
require companies to recognize and measure contract assets and
contract liabilities relating to contracts with customers that are
acquired in a business combination in accordance with ASC 606.
Under current GAAP, an acquirer generally recognizes assets
acquired and liabilities assumed in a business combination,
including contract assets and contract liabilities arising from
revenue contracts with customers, at fair value on the acquisition
date. ASU No. 2021-08 will result in the acquirer recording
acquired contract assets and liabilities on the same basis that
would have been recorded by the acquiree before the acquisition
under ASC Topic 606. The ASU is effective for fiscal years
beginning after December 15, 2022, with early adoption permitted.
The Company adopted this ASU as of January 1, 2022 on a prospective
basis and the adoption impact of the new standard will depend on
the magnitude of future acquisitions. The standard will not impact
acquired contract assets or liabilities from business combinations
occurring prior to the adoption date.
In
November 2021, the FASB issued ASU 2021-10, Government
Assistance (Topic 832)—Disclosures by Business Entities about
Government Assistance. ASU 2021-10 increases the transparency
of government assistance including the disclosure of (1) the types
of assistance, (2) an entity’s accounting for the assistance, and
(3) the effect of the assistance on an entity’s financial
statements. The ASU is effective for fiscal years beginning after
December 15, 2021. The Company adopted this ASU as of January 1,
2022 on a prospective basis. The adoption of this standard did not
have any material impact on the Company’s financial
statements.
Recently Issued Accounting Pronouncements Not Yet
Adopted
In
June 2016, the FASB issued ASU No. 2016-13, Credit Losses -
Measurement of Credit Losses on Financial Instruments (“ASC
326”). The standard significantly changes how entities will
measure credit losses for most financial assets, including accounts
and notes receivables. The standard will replace today’s “incurred
loss” approach with an “expected loss” model, under which companies
will recognize allowances based on expected rather than incurred
losses. Entities will apply the standard’s provisions as a
cumulative-effect adjustment to retained earnings as of the
beginning of the first reporting period in which the guidance is
effective. As a small business filer, ASU 2020-06 will be effective
January 1, 2024, for the Company and the provisions of this update
can be adopted using either the modified retrospective method or a
fully retrospective method. Management is currently assessing the
impact of adopting this standard on the Company’s financial
statements and related disclosures.
Other
recent accounting pronouncements issued by the FASB, including its
Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission (the
“SEC”) did not or are not believed by management to have a material
impact on the Company’s present or future consolidated financial
statements.
3.
CAPITALIZED SOFTWARE
DEVELOPMENT COSTS
In
2020, the Company began developing MARKET, the next generation of
interactive livestream ecommerce, and has capitalized $6,207
and
$4,348
of
internal and external development costs as of March 31, 2022 and
December 31, 2021, respectively. In October 2021, the Company
entered into a
10-year License and Services Agreement with a third party
(the “Primary Contractor”) engaged to develop certain components of
MARKET. The Primary Contractor’s fees for developing such
components, including the
10-year license fee for such components, is $5,750.
At March 31, 2022, the Company’s remaining software development
obligation to the Primary Contractor was $1,150,
which was subsequently paid in April 2022. The Primary Contractor
was also paid an additional $500
bonus
in April 2022. In addition, as of March 31, 2022 and December 31,
2021, the Company had paid or accrued $380
and
$248,
respectively, of other capitalized software development
costs.
There
has been no depreciation expense related
to capitalized software development costs for the three months
ended March 31, 2022 and 2021.
Option to Acquire Primary Contractor
In
August 2021, the Company entered into an agreement providing the
Company the option to purchase the Primary Contractor. In November
2021, the Company exercised this option. During 2021, the Company
and the Primary Contractor reached an agreement on the terms for
the Company’s acquisition of the Primary Contractor, which is
subject to the execution of a share purchase agreement (the “SPA”)
and the completion of an audit of the Primary Contractor (the
“Primary Contractor Audit”). The agreement stipulates that if the
Company enters into the SPA and successfully completes the Primary
Contractor Audit before May 15, 2022 or such other mutually agreed
date and thereafter determines not to consummate the acquisition of
the Primary Contractor, the Company may be liable for a $1,000
break-up
fee payable to the Primary Contractor. As of the date of the
issuance of these financial statements, the Primary Contractor
Audit is ongoing, the SPA has not been executed, and the parties
are determining a mutually agreeable date to consummate the
transaction. The purchase price for the Primary Contractor is
$12,000,
which can be paid in cash and/or stock, subject to the parties’
mutual agreement.
4.
INTANGIBLE
ASSETS
Intangible
assets, net consisted of the following:
SCHEDULE OF INTANGIBLE ASSETS
|
|
March
31,
2022
|
|
|
December
31,
2021
|
|
|
|
|
|
|
|
|
|
|
Amortizable finite-lived intangible assets
|
|
$ |
7,399 |
|
|
$ |
7,317 |
|
Accumulated amortization
|
|
|
(4,172 |
) |
|
|
(3,806 |
) |
Finite-lived intangible assets,
net |
|
|
3,227 |
|
|
|
3,511 |
|
|
|
|
|
|
|
|
|
|
Indefinite-lived intangible assets
|
|
|
442 |
|
|
|
442 |
|
|
|
|
|
|
|
|
|
|
Intangible
assets, net |
|
$ |
3,669 |
|
|
$ |
3,953 |
|
Amortizable
finite-lived intangible assets are being amortized over a period of
3
to 5
years. There were no impairment charges incurred in
the periods presented. During the three months ended March 31, 2022
and 2021, the Company recorded amortization expense of $366 and $370, respectively.
The
expected future amortization expense for amortizable finite-lived
intangible assets as of March 31, 2022 is as follows:
SCHEDULE OF ESTIMATED AMORTIZATION
EXPENSE
Year ending |
|
Amortization |
|
2022 remaining |
|
$ |
1,068 |
|
2023 |
|
|
1,386 |
|
2024 |
|
|
573 |
|
2025 |
|
|
200 |
|
Total
amortization |
|
$ |
3,227 |
|
5.
OPERATING
LEASES
On
January 3, 2022, the Company terminated the lease agreements for
our office and warehouse leases in American Fork, Utah. In
accordance with ASC 842, the Company derecognized the right of use
asset of $1,287,
net of accumulated amortization of $744.
The Company has also derecognized the corresponding lease
liabilities of $521,
resulting in a loss on lease termination of $22.
Effective
April 26, 2022, the Company entered into an office space sub-lease
agreement. See Note 14 – Subsequent Events.
The
components of lease expense and supplemental cash flow information
related to leases for the period are as follows:
SCHEDULE OF LEASE COST
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Lease
cost |
|
|
|
|
|
|
|
|
Operating lease cost
(included in general and administrative expenses in the Company’s
statement of operations) |
|
$ |
107 |
|
|
$ |
175 |
|
|
|
|
|
|
|
|
|
|
Other
information |
|
|
|
|
|
|
|
|
Cash paid for amounts included in the
measurement of lease liabilities |
|
$ |
171 |
|
|
$ |
196 |
|
Weighted average remaining lease term
– operating leases (in years) |
|
|
5.17 |
|
|
|
4.54 |
|
Weighted average discount rate –
operating leases |
|
|
4.0 |
% |
|
|
4.0 |
% |
SCHEDULE OF OPERATING LEASES
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Operating
leases |
|
|
|
|
|
|
|
|
Right-of-use assets |
|
$ |
1,548 |
|
|
$ |
2,177 |
|
|
|
|
|
|
|
|
|
|
Short-term operating lease
liabilities |
|
$ |
337 |
|
|
$ |
592 |
|
Long-term
operating lease liabilities |
|
|
1,874 |
|
|
|
2,299 |
|
Total operating
lease liabilities |
|
$ |
2,211 |
|
|
$ |
2,891 |
|
SCHEDULE OF PRESENT VALUE OF LEASE
LIABILITIES
Year ending |
|
Operating Leases |
|
2022 remaining |
|
|
337 |
|
2023 |
|
|
460 |
|
2024 |
|
|
472 |
|
2025 |
|
|
484 |
|
2026 and
thereafter |
|
|
705 |
|
Total lease payments |
|
|
2,458 |
|
Less:
Imputed interest/present value discount |
|
|
(247 |
) |
Present
value of lease liabilities |
|
$ |
2,211 |
|
6.
ADVANCES ON FUTURE
RECEIPTS
The
Company has the following advances on future receipts as of March
31, 2022 and December 31, 2021:
SCHEDULE OF ADVANCES ON FUTURE
RECEIPTS
Note |
|
Issuance Date |
|
Maturity Date |
|
Interest Rate |
|
|
Original Borrowing |
|
|
Balance at March 31, 2022 |
|
|
Balance at December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1 |
|
October 29, 2021 |
|
April 28, 2022 |
|
|
5 |
% |
|
|
2,120 |
|
|
|
288 |
|
|
|
1,299 |
|
Note 2 |
|
October 29, 2021 |
|
July 25, 2022 |
|
|
28 |
% |
|
|
3,808 |
|
|
|
1,813 |
|
|
|
2,993 |
|
Note 3 |
|
December 23, 2021 |
|
June 22, 2022 |
|
|
5 |
% |
|
|
689 |
|
|
|
344 |
|
|
|
689 |
|
Total |
|
|
|
|
|
|
|
|
|
$ |
6,617 |
|
|
|
2,445 |
|
|
|
4,981 |
|
Debt
discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(310 |
) |
|
|
(800 |
) |
Net |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,135 |
|
|
$ |
4,181 |
|
Note 1
On
October 29, 2021, the Company received secured advances from an
unaffiliated third party totaling $2,015 for the purchase of
future receipts/revenues of $2,120. During the three
months ended March 31, 2022, the Company paid $982 and amortized
$52 of the debt
discount. As of March 31, 2022, the outstanding balance of the note
amounted to $288 and the unamortized
balance of the debt discount was $18, the note was paid in
full on April 28, 2022.
Note 2
On
October 29, 2021, the Company received secured advances from an
unaffiliated third party totaling $2,744 for the purchase of
future receipts/revenues of $3,808. During the three
months ended March 31, 2022, the Company paid $1,180 and amortized
$419 of the debt
discount. As of March 31, 2022, the outstanding balance of the note
amounted to $1,813 and the
unamortized balance of the debt discount was $275.
Note 3
On
December 23, 2021, the Company received secured advances from an
unaffiliated third party totaling $651 for the purchase of future
receipts/revenues of $689. During the three
months ended March 31, 2022, the Company paid $345 and amortized
$19 of the debt
discount. As of March 31, 2022, the outstanding balance of the note
amounted to $344 and the unamortized
balance of the debt discount was $17.
7.
NOTES
PAYABLE
The
Company has the following outstanding notes payable as of March 31,
2022 and December 31, 2021:
SCHEDULE OF NOTES PAYABLE RELATED
PARTIES
Note |
|
Issuance Date |
|
Maturity Date |
|
Interest Rate |
|
|
Original
Borrowing
|
|
|
Balance
at
March
31,
2022
|
|
|
Balance
at
December
31,
2021
|
|
Related party note payable (A) |
|
December 1, 2015 |
|
April
1, 2023 |
|
|
12.0 |
% |
|
$ |
1,249 |
|
|
$ |
725 |
|
|
$ |
725 |
|
Related party note payable (B) |
|
April 4, 2016 |
|
June 4, 2021 |
|
|
12.0 |
% |
|
|
343 |
|
|
|
40 |
|
|
|
40 |
|
Note payable (C) |
|
May 15, 2020 |
|
May 15, 2050 |
|
|
3.75 |
% |
|
|
150 |
|
|
|
150 |
|
|
|
150 |
|
Notes payable (D) |
|
January 12, 2022 |
|
January 12, 2023 |
|
|
6.0 |
% |
|
|
6,300 |
|
|
|
6,300 |
|
|
|
- |
|
Debt discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(226 |
) |
|
|
- |
|
Debt issuance
costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(347 |
) |
|
|
- |
|
Total notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,642 |
|
|
|
915 |
|
Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(875 |
) |
|
|
(875 |
) |
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,767 |
|
|
$ |
40 |
|
|
(A) |
On
December 1, 2015, the Company issued a convertible note payable to
Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief
Executive Officer, to consolidate all loans and advances made by
Mr. Cutaia to the Company as of that date. On May 12, 2022, the
maturity date of the note was extended to April 1, 2023. As of
March 31, 2022, and December 31, 2021, the outstanding balance of
the note amounted to $725,
respectively. |
|
|
|
|
(B) |
On
April 4, 2016, the Company issued a convertible note payable to Mr.
Cutaia, in the amount of $343,
to consolidate all advances made by Mr. Cutaia to the Company
during the period December 2015 through March 2016. As of March 31,
2022 and December 31, 2021, the outstanding balance of the note
amounted to $40,
respectively. |
|
(C) |
On
May 15, 2020, the Company executed an unsecured loan with the U.S.
Small Business Administration (SBA) under the Economic Injury
Disaster Loan program in the amount of $150.
Installment payments, including principal and interest, will begin
on October 15, 2022. As of March 31, 2022, and December 31, 2021,
the outstanding balance of the note amounted to $150,
respectively.
|
|
(D) |
On January 12, 2022, the
Company entered into a securities purchase agreement with three
institutional investors (collectively, the “Note Holders”)
providing for the sale and issuance of an aggregate original
principal amount of $6,300
in convertible notes due 2023 (each, a “Note,” and, collectively,
the “Notes,” and such financing, the “Note Offering”). The Company
and the Note Holders also entered into a security agreement, dated
January 12, 2022, in connection with the Note Offering, pursuant to
which the Company granted a security interest to the Note Holders
in substantially all of its assets. There are no financial
covenants related to these notes payable.
|
|
|
The Company received $6,000
in gross proceeds from the sale of the Notes. The Note Offering
closed on January 12, 2022. The Notes bear interest of
6.0% per annum, have an original issue discount of
5.0%, mature 12 months from the closing date, and have an
initial conversion price of $3.00,
subject to adjustment in certain circumstances as set forth in the
Notes.
In
connection with the debt agreement, the Company incurred $460 of debt issuance costs. The
debt issuance costs and the debt discount of $300 are being amortized over the term
of the agreement using the effective interest rate method. During
the three months ended March 31, 2022, the Company amortized
$74 of debt discount and
$113 of debt issuance
costs. As of March 31, 2022, the amount of unamortized debt
discount and debt issuance costs was $226 and $347,
respectively.
As of
March 31, 2022, and December 31, 2021, the outstanding balance of
the notes amounted to $6,300, and
$0, respectively.
Subsequent to March 31, 2022, the Company repaid $1,650
in principal payments to Note Holders pursuant to the terms of the
Note Offering, thereby reducing the outstanding principal balance
from $6,300 to $4,650. See Note 14 –
Subsequent Events.
Beginning
on May 12, 2022, the Company is required to make nine monthly
principal payments of $246, plus accrued
interest, to the Note Holders, with the remaining principal amount
of $2,436, plus accrued
interest, due on the maturity date.
|
The
following table provides a breakdown of interest
expense:
SCHEDULE OF INTEREST EXPENSE
|
|
2022 |
|
|
2021 |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Interest expense –
amortization of debt discount |
|
$ |
(536 |
) |
|
$ |
(475 |
) |
Interest expense – amortization of
debt issuance costs |
|
|
(113 |
) |
|
|
- |
|
Interest
expense – other |
|
|
(107 |
) |
|
|
(33 |
) |
|
|
|
|
|
|
|
|
|
Total interest
expense |
|
$ |
(756 |
) |
|
$ |
(508 |
) |
Total
interest expense for notes payable to related parties (see Notes A
and B above) was $23
and
$32
for
the three months ended March 31, 2022 and 2021, respectively. The
Company paid $0
and
$34
in
interest for the three months ended March 31, 2022 and 2021,
respectively.
8.
DERIVATIVE
LIABILITY
Under
authoritative guidance used by the FASB on determining whether an
instrument (or embedded feature) is indexed to an entity’s own
stock, instruments that do not have fixed settlement provisions are
deemed to be derivative instruments. In prior years, the Company
granted certain warrants that included a fundamental transaction
provision that could give rise to an obligation to pay cash to the
warrant holder. As a result, the fundamental transaction clause of
these warrants are accounted for as a derivative liability in
accordance with ASC 815 and are being re-measured every reporting
period with the change in value reported in the statement of
operations.
The
derivative liabilities were valued using a Binomial pricing model
with the following average assumptions:
SCHEDULE OF DERIVATIVE LIABILITY USING BINOMIAL
PRICING MODEL ASSUMPTIONS
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Stock Price |
|
$ |
0.95 |
|
|
$ |
1.24 |
|
Exercise Price |
|
$ |
1.11 |
|
|
$ |
1.11 |
|
Expected Life |
|
|
2.72 |
|
|
|
2.97 |
|
Volatility |
|
|
104 |
% |
|
|
119 |
% |
Dividend Yield |
|
|
0 |
% |
|
|
0 |
% |
Risk-Free Interest Rate |
|
|
2.45 |
% |
|
|
0.97 |
% |
Total Fair
Value |
|
$ |
2,017 |
|
|
$ |
3,155 |
|
The
expected life of the warrants was based on the remaining
contractual term of the instruments. The Company uses the
historical volatility of its common stock to estimate the future
volatility for its common stock. The expected dividend yield was
based on the fact that the Company has not paid dividends in the
past and does not expect to pay dividends in the future. The
risk-free interest rate was based on rates established by the
Federal Reserve Bank.
As of
December 31, 2021, the outstanding fair value of the derivative
liability amounted to $3,155. During the three months
ended March 31, 2022, the Company recorded income of $1,138
to account for the changes in the fair value of these derivative
liabilities during the period. At March 31, 2022, the fair value of
the derivative liability amounted to $2,017.
During
the three months ended March 31, 2021, the Company recorded income
of $500
to
account for the changes in the fair value of these derivative
liabilities during the period. In addition,
1,027,578 shares
of the Series A warrants that were accounted for as a derivative
liability were exercised. As result, the Company computed the fair
value of the corresponding derivative liability one last time which
amounted to $(2,286)
and
the extinguishment was accounted for as part of equity.
The
details of derivative liability transactions for the three months
ended March 31, 2022 and 2021 are as follows:
SCHEDULE OF DERIVATIVE LIABILITY
TRANSACTIONS
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Beginning balance |
|
$ |
3,155 |
|
|
$ |
8,266 |
|
Change in fair value |
|
|
(1,138 |
) |
|
|
(500 |
) |
Extinguishment |
|
|
- |
|
|
|
(2,286 |
) |
Ending balance |
|
$ |
2,017 |
|
|
$ |
5,480 |
|
9.
COMMON
STOCK
The
Company’s common stock activity for the three months ended March
31, 2022 is as follows:
Common
Stock
Issuances of Common Stock
During
the three months ended March 31, 2022, the Company issued
7,396,683 shares
of common stock as part of the common stock purchase agreement in
exchange for cash of $7,435,
net of offering costs of $155.
In addition, the Company issued
607,287 shares
of common stock as a commitment fee to consummate the common stock
purchase agreement.
During
the three months ended March 31, 2022, the Company issued
372,446 shares
of common stock to certain employees and vendors for services
rendered and to be rendered with an aggregate fair value of
$510.
These
shares of common stock were valued based on the market value of the
Company’s common stock price at the issuance date or the date the
Company entered into the agreement related to the
issuance.
During
the three months ended March 31, 2022, the Company issued 227,136
shares of common stock to the former Chief Financial Officer as
part of a separation agreement, with an aggregate fair value of
$277.
These shares of common stock were valued based on the market value
of the Company’s common stock price at the issuance
date.
During
the three months ended March 31, 2022, the Company issued 457,046 shares of common
stock to officers and board members associated with the vesting of
a Restricted Stock Unit.
Exercise of Options
During
the three months ended March 31, 2022, a total of 332,730 options were
exercised into 332,730 shares of
common stock at a weighted average exercise price of $1.13. The Company
received cash of $377 upon exercise of
the options.
Issuances of Restricted Stock Units
During
the three months ended March 31, 2022, the Company granted an
additional 1,334,270 shares of its restricted
stock to employees and members of Board of Directors. The
Restricted Stock Units vest in various dates, starting on January
20, 2023 up to March 30, 2026. These Restricted Stock Units were
valued based on market value of the Company’s stock price at the
respective date of grant and had aggregate fair value of $1,561, which is being
amortized as stock compensation expense over its vesting
term.
Issuances of Stock Options
During
the three months ended March 31, 2022, the Company granted stock
options to employees and consultants to purchase a total of
1,983,555 stock
options for services to be rendered. The options have an average
exercise price of $1.25 per share, expire in
five years, and vest between one and
four years from grant date. The total fair value of these options
at the grant date was $2,241 using the
Black-Scholes option pricing model.
10.
RESTRICTED STOCK
UNITS
A
summary of restricted stock unit activity for the three months
ended March 31, 2022 is presented below.
SUMMARY OF RESTRICTED STOCK AWARD
ACTIVITY
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Grant
Date |
|
|
|
Shares |
|
|
Fair Value |
|
|
|
|
|
|
|
|
Non-vested at January 1, 2022 |
|
|
1,821,833 |
|
|
$ |
1.41 |
|
Granted |
|
|
1,334,270 |
|
|
|
1.17 |
|
Vested/deemed vested |
|
|
(457,046 |
) |
|
|
1.67 |
|
Forfeited |
|
|
(487,532 |
) |
|
|
1.33 |
|
Non-vested at March 31, 2022 |
|
|
2,211,525 |
|
|
$ |
1.23 |
|
During
the three months ended March 31, 2022, the Company granted
1,334,270 restricted stock units to
officers, directors, and employees that vest over four years. These
restricted stock units were valued based on market value of the
Company’s stock price at the date of grants and had an aggregate
fair value of $1,561.
The
total fair value of restricted stock units that vested or deemed
vested during the three months ended March 31, 2022 was $247. As
of March 31, 2022 the amount of unvested compensation related to
issuances of restricted stock units was $2,359 which
will be recognized as an expense in future periods as the shares
vest. When calculating basic net loss per share, these shares are
included in weighted average common shares outstanding from the
time they vest. When calculating diluted net loss per share, these
shares are included in weighted average common shares outstanding
as of their grant date.
11.
STOCK
OPTIONS
A
summary of option activity for the three months ended March 31,
2022 is presented below.
SCHEDULE OF STOCK OPTION
ACTIVITY
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
Average |
|
|
|
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
|
|
|
|
|
Exercise |
|
|
Contractual |
|
|
Intrinsic |
|
|
|
Options |
|
|
Price |
|
|
Life (Years) |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2022 |
|
|
5,404,223 |
|
|
$ |
1.72 |
|
|
|
2.24 |
|
|
$ |
107 |
|
Granted |
|
|
1,983,555 |
|
|
|
1.25 |
|
|
|
- |
|
|
|
- |
|
Forfeited |
|
|
(1,177,405 |
) |
|
|
1.54 |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
(332,730 |
) |
|
|
1.13 |
|
|
|
- |
|
|
|
- |
|
Outstanding at March 31,
2022 |
|
|
5,877,643 |
|
|
$ |
1.64 |
|
|
|
2.29 |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested March 31, 2022 |
|
|
2,993,429 |
|
|
$ |
1.86 |
|
|
|
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2022 |
|
|
1,982,249 |
|
|
$ |
2.08 |
|
|
|
|
|
|
$ |
- |
|
At
March 31, 2022, the intrinsic value of the outstanding options was
$0.
During
the three months ended March 31, 2022, the Company granted stock
options to employees and consultants to purchase a total of
1,983,555 shares of common stock
for services rendered. The options have an average exercise price
of $1.25 per
share, expire between one and five years, vesting from zero and
four years from grant date. The total fair value of these options
at grant date was approximately $2,241 using the
Black-Scholes Option Pricing model. The total stock compensation
expense recognized relating to the vesting of stock options for the
three months ended March 31, 2022 amounted to $531. As of March
31, 2022, the total unrecognized share-based compensation expense
was $4,276,
which is expected to be recognized as part of operating expense
through March 2026.
In
addition, a total of 332,730 shares of stock options
were exercised. As a result of the exercise of the option, the
Company issued 332,730 shares of common stock
and received cash of $377.
The
fair value of share option award is estimated using the
Black-Scholes option pricing method based on the following
weighted-average assumptions:
SCHEDULE OF FAIR VALUE ASSUMPTIONS USING
BLACK-SCHOLES METHOD
|
|
Three
Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Risk-free
interest rate |
|
|
1.24% - 2.10 |
% |
|
|
0.10% - 0.36 |
% |
Average
expected term |
|
|
5 years |
|
|
|
5 years |
|
Expected
volatility |
|
|
149.53 |
% |
|
|
240.03 |
% |
Expected
dividend yield |
|
|
- |
|
|
|
- |
|
The
risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of measurement corresponding with the
expected term of the share option award; the expected term
represents the weighted-average period of time that share option
awards granted are expected to be outstanding giving consideration
to vesting schedules and historical participant exercise behavior;
the expected volatility is based upon historical volatility of the
Company’s common stock; and the expected dividend yield is based on
the fact that the Company has not paid dividends in the past and
does not expect to pay dividends in the future.
12.
STOCK WARRANTS
The
Company has the following warrants outstanding as of March 31,
2022, all of which are exercisable:
SCHEDULE OF WARRANTS OUTSTANDING
|
|
Warrants |
|
|
Weighted- Average Exercise Price |
|
|
Weighted- Average Remaining Contractual Life (Years) |
|
|
Aggregate Intrinsic Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2022 |
|
|
10,984,740 |
|
|
$ |
2.67 |
|
|
|
2.38 |
|
|
$ |
507 |
|
Granted |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding at March 31, 2022, all
vested |
|
|
10,984,740 |
|
|
$ |
2.67 |
|
|
|
2.14 |
|
|
$ |
- |
|
At
March 31, 2022 the intrinsic value of the outstanding warrants was
$0.
13.
COMMITMENTS AND CONTINGENCIES
Litigation
The
Company is currently in a dispute with a former employee of its
predecessor bBooth, Inc. who has interposed a breach of contract
claim in which he alleges that he is entitled to approximately
$300 in
unpaid bonus compensation from 2015. This former employee filed his
complaint in the Superior Court of California for the County of Los
Angeles on November 20, 2019, styled Meyerson v. Verb Technology
Company, Inc., et al. (Case No. 19STCV41816). The Company does
not believe his claims have any merit as they are contradicted by
documentary evidence, and barred by the applicable statute of
limitations, and barred by a release executed by the former
employee when the Company purchased all of his shares of stock more
than 4 years ago in January 2016. On February 9, 2021, the former
employee’s counsel filed a motion for summary judgment, or in the
alternative, summary adjudication against the Company. On October
13, 2021, the court issued an order (i) denying the former
employee’s motion for summary judgment, (ii) partly granting the
former employee’s motion for summary adjudication, and (iii) partly
denying the former employee’s motion for summary adjudication. The
court has set a trial date of June 27, 2022. The Company believes
that the resolution of this matter will have no material effect on
the Company or its operations.
|
b. |
Legal
Malpractice Action |
The
Company is currently in a dispute with Baker Hostetler LLP (“BH”)
relating to corporate legal services provided by BH to the Company.
The Company filed its complaint in the Superior Court of California
for the County of Los Angeles on May 17, 2021, styled Verb
Technology Company, Inc. v. Baker Hostetler LLP, et al. (Case
No. 21STCV18387). The Company’s complaint arises from BH’s alleged
legal malpractice, breach of fiduciary duties owed to the Company,
breach of contract, and violations of California’s Business and
Professions Code Section 17200 et seq. The Company is seeking,
amongst other things, compensatory damages from BH. On October 5,
2021, BH filed a cross-complaint against the Company alleging,
amongst other things, that the Company owes it approximately
$915 in legal fees. The Company disputes
owing this amount to BH. The Company believes that the resolution
of these matters will have no material effect on the Company or its
operations.
The
Company knows of no material proceedings in which any of its
directors, officers, or affiliates, or any registered or beneficial
stockholder is a party adverse to the Company or any of its
subsidiaries or has a material interest adverse to the Company or
any of its subsidiaries.
The
Company believes it has adequately reserved for all litigation
within its financial statements.
Board of Directors
The
Company has committed an aggregate of $475 in board fees to its five
board members over the term of their appointment for services to be
rendered. Board fees are accrued and paid monthly. The members will
serve on the board until the annual meeting for the year in which
their term expires or until their successors has been elected and
qualified.
Total
board fees expensed during the three months ended March 31, 2022
was $119. As of March 31, 2022, total
board fees to be recognized in future period amounted to $356 and will be
recognized once the service has been rendered.
14.
SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through May 16, 2022, the
date these financial statements are available to be issued. The
Company believes there were no material events or transactions
discovered during this evaluation that requires recognition or
disclosure in the financial statements other than the items
discussed below.
Equity Financing and Repayment of Notes
On
April 20, 2022, the Company entered into a securities purchase
agreement (the “Purchase Agreement”), which provides for the sale
and issuance by the Company of an aggregate of (i) 14,666,667 shares of the
Company’s common stock, $0.0001 par value per share,
at a purchase price of $0.75 per share, and (ii) warrants to
purchase 14,666,667 shares of the
common stock at an exercise price of $0.75 per share, for
aggregate gross proceeds of $11,000 before deducting
placement agent commissions and other estimated offering expenses
(the “Registered Direct Offering”). The Purchase Agreement contains
customary representations, warranties and agreements by the
Company, customary conditions to closing, and customary
indemnification obligations of the Company. The Purchase Agreement
amongst other things restricts us from selling shares using at the
market (“ATM”) agreement with Truist Securities and the Common
Stock Purchase Agreement. As a result of this transaction, certain
of our Series A warrants priced at $1.10 per share were repriced
to $0.75 per share
under the terms of such warrant agreements. The fair value of such
warrants at this new exercise price is approximately $500 and the Company will
account for this change as a deemed dividend. In addition, as a
result of entering into the Purchase Agreement, the Company repaid
$1,650 in
principal payments to Note Holders pursuant to the terms of the
Note Offering, thereby reducing the outstanding principal balance
from $6,300 to $4,650.
On
April 20, 2022, the Company also entered into a placement agency
agreement with A.G.P./Alliance Global Partners. Pursuant to the
terms of the Placement Agency Agreement, the Placement Agent agreed
to use its reasonable best efforts to arrange for the sale of the
Securities in the Registered Direct Offering. The Company paid the
Placement Agent a cash fee equal to 6.0%
of the aggregate gross proceeds from the sale of the
Securities.
Issuance of Common Stock
Subsequent
to March 31, 2022, the Company issued 656,996 shares of common
stock to vendors for services rendered with a fair value of
$486. These shares
of common stock were valued based on the market value of the
Company’s stock price at the issuance date or the date the Company
entered into the agreement related to the issuance.
Issuances of Stock Options
Subsequent
to March 31, 2022, the Company granted stock options to employees
to purchase a total of 419,000
stock options for services to be rendered. The options have an
average exercise price of $0.67 per share, expire
in five years, and vest four years from
grant date. The total fair value of these options at the grant date
was $224 using the
Black-Scholes option pricing model.
Execution of Lease Agreement
Subsequent
to March 31, 2022, the Company entered into a corporate office
sub-lease agreement for its office in Utah. The agreement requires
us to pay $12 per month for an
initial term of eighteen months, which increases by 3% per annum after twelve
months.
ITEM
2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking
Statements
The
following discussion and analysis of the results of operations and
financial condition of our company for the three-month periods
ended March 31, 2022 and 2021 should be read in conjunction with
the financial statements and related notes and the other financial
information that are included elsewhere this Quarterly Report on
Form 10-Q. This discussion includes forward-looking statements
based upon current expectations that involve risks and
uncertainties, such as our plans, objectives, expectations, and
intentions. Forward-looking statements are statements not based on
historical fact and which relate to future operations, strategies,
financial results, or other developments. Forward-looking
statements are based upon estimates, forecasts, and assumptions
that are inherently subject to significant business, economic, and
competitive uncertainties and contingencies, many of which are
beyond our control and many of which, with respect to business
decisions, are subject to change. These uncertainties and
contingencies can cause actual results to differ materially from
those expressed in any forward-looking statements made by us, or on
our behalf. We disclaim any obligation to update forward-looking
statements. Actual results and the timing of events could differ
materially from those anticipated in these forward-looking
statements as a result of a number of factors. We use words such as
“anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking
statements.
As
used in this Quarterly Report on Form 10-Q, the terms “we,” “us,”
“our,” and “Verb” refer to Verb Technology Company, Inc., a Nevada
corporation, individually, or as the context requires, collectively
with its subsidiaries, Verb Direct, LLC, or Verb Direct, Verb
Acquisition Co., Inc., or Solofire, and verbMarketplace, LLC, or
MARKET, on a consolidated basis, unless otherwise
specified.
Overview
We
are a Software-as-a-Service (“SaaS”) applications platform
developer. Our platform is comprised of a suite of interactive
video-based sales enablement business software products marketed on
a subscription basis. Our applications, available in both mobile
and desktop versions, are offered as a fully integrated suite, as
well as on a standalone basis, and include verbCRM, our Customer
Relationship Management (“CRM”) application, verbLEARN, our
Learning Management System application, verbLIVE, our Live Stream
eCommerce application, verbPULSE, our business/augmented
intelligence notification and sales coach application, and
verbTEAMS, our self-onboarding video-based CRM and content
management application for professional sports teams, small
business and solopreneurs, with seamless synchronization with
Salesforce, that also comes bundled with verbLIVE, and more
recently, we introduced verbMAIL, our interactive video-based sales
communication tool integrated into Microsoft Outlook. Of note is
our forthcoming MARKET, a multi-vendor, multi-presenter, livestream
social shopping platform at the forefront of the convergence of
ecommerce and entertainment.
Our Technology
Our
suite of applications can be distinguished from other sales
enablement applications because our applications utilize our
proprietary interactive video technology as the primary means of
communication between sales and marketing professionals and their
customers and prospects. Moreover, the proprietary data collection
and analytics capabilities of our applications inform our users on
their devices in real time, when and for how long their prospects
have watched a video, how many times such prospects watched it, and
what they clicked on, which allows our users to focus their time
and efforts on ‘hot leads’ or interested prospects rather than on
those that have not seen such video or otherwise expressed interest
in such content. Users can create their hot lead lists by using
familiar, intuitive ‘swipe left/swipe right’ on-screen navigation.
Our clients report that these capabilities provide for a much more
efficient and effective sales process, resulting in increased sales
conversion rates. We developed the proprietary patent-pending
interactive video technology, as well as several other
patent-issued and patent-pending technologies that serve as the
unique foundation for all our platform applications.
Our Products
verbCRM
combines the capabilities of CRM lead-generation, content
management, and in-video ecommerce capabilities in an intuitive,
yet powerful tool for both inexperienced as well as highly skilled
sales professionals. verbCRM allows users to quickly and easily
create, distribute, and post videos to which they can add a choice
of on-screen clickable icons which, when clicked, allow viewers to
respond to the user’s call-to-action in real-time, in the video,
while the video is playing, without leaving or stopping the video.
For example, our technology allows a prospect or customer to click
on a product they see featured in a video and impulse buy it, or to
click on a calendar icon in the video to make an appointment with a
salesperson, among many other features and functionalities designed
to eliminate or reduce friction from the sales process for our
users. The verbCRM app is designed to be easy to use and navigate
and takes little time and training for a user to begin using the
app effectively. It usually takes less than four minutes for a
novice user to create an interactive video from our app. Users can
add interactive icons to pre-existing videos, as well as to newly
created videos shot with practically any mobile device. verbCRM
interactive videos can be distributed via email, text messaging,
chat app, or posted to popular social media directly and easily
from our app. No software download is required to view Verb
interactive videos on virtually any mobile or desktop device,
including smart TVs.
verbLEARN
is an interactive, video-based learning management system that
incorporates all of the clickable in-video technology featured in
our verbCRM application and adapts them for use by educators for
video-based education. verbLEARN is used by enterprises seeking to
educate a large sales team or a customer base about new products,
or elicit feedback about existing products. It also incorporates
Verb’s proprietary data collection and analytics capabilities that
inform users in real time when and for how long the viewers watched
the video, how many times they watched it, and what they clicked
on, in addition to adding gamification features that enhance the
learning aspects of the application.
verbLIVE
builds on popular video-based platforms such as Facebook Live,
Zoom, WebEx, and Go2Meeting, among others, by adding Verb’s
proprietary interactive in-video ecommerce capabilities – including
an in-video Shopify shopping cart integrated for Shopify account
holders – to our own live stream video broadcasting application.
verbLIVE is a next-generation live stream platform that allows
hosts to utilize a variety of novel sales-driving features,
including placing interactive icons on-screen that appear on the
screens of all viewers, providing in-video click-to-purchase
capabilities for products or services featured in the live video
broadcast, in real-time, driving friction-free selling. verbLIVE
also provides the host with real-time viewer engagement data and
interaction analytics. verbLIVE is entirely browser-based, allowing
it to function easily and effectively on all devices without
requiring the host or the viewers to download software, and is
secured through end-to-end encryption.
verbPULSE
is a business/augmented intelligence notification-based sales
enablement platform feature set that tracks users’ interactions
with current and prospective customers and then helps coach users
by telling them what to do next in order to close the sale,
virtually automating the selling process.
verbTEAMS
is our interactive, video-based CRM for professional sports teams,
small-and medium-sized businesses and solopreneurs. verbTEAMS also
incorporates verbLIVE as a bundled application. verbTEAMS features
self-sign-up, self-onboarding, self-configuring, content management
system capabilities, user level administrative capabilities, and
high-quality analytics capabilities in both mobile and desktop
platforms that sync with one another. It also has a built-in
one-click sync capability with Salesforce.
We
continue to invest in the future of interactive livestreaming.
Following are some of our recent initiatives:
MARKET
is akin to a virtual shopping mall, a centralized online
destination where shoppers could explore hundreds, and over time
thousands, of shoppable stores for their favorite brands,
influencers, creators and celebrities, all of whom can and will
host livestream shopping events from their virtual stores that can
be seen by all shoppers at the virtual mall. Every store operator
can host livestream events, even simultaneously, and over time we
expect there will be thousands of such events, across numerous
product and service categories, being hosted by people from all
over the world, always on – 24/7 - where shoppers could communicate
with the hosts and ask questions about products directly to the
host in real-time through an on-screen chat visible to all
shoppers. Shoppers can invite their friends and family to join them
at any of the events to share the experience - to communicate
directly with each other in real time, and then simply click on a
non-intrusive - in-video overlay to place items in an on-screen
shopping cart for purchase – all without interrupting the video.
Shoppers can visit any number of other shoppable events to meet up
and chat with friends, old and new, and together watch, shop and
chat with the hosts, discover new products and services, and become
part of an immersive entertaining shopping experience. Throughout
the experience, the shopping cart follows shoppers seamlessly from
event to event, shoppable video to shoppable video, host to host,
product to product.
The
MARKET business model is a simple but next-level B to B play. It is
a multi-vendor platform, with a single follow-me style unified
shopping cart, and robust ecommerce capabilities with the tools for
consumer brands, big box brick and mortar stores, boutiques,
influencers and celebrities to connect with their clients,
customers, their fans, followers, and prospects by providing a
unique, interactive social shopping experience that we believe
could keep them coming back and engaged for hours.
A big
differentiator for MARKET is that it also provides an online
meeting place for friends and family to meet, chat, shop and enjoy
a fun, immersive shopping experience in real time together from
anywhere and everywhere in the world. MARKET will provide vendors
with extensive business building analytics capabilities not
available on, and not shared by many operators of other social
media sites who regard that information as valuable proprietary
property. All vendors on MARKET will retain this valuable
intelligence for their own, unlimited use.
MARKET
allows vendors an opportunity to reach not only the shoppers they
invite to the site from their own client and contact lists, but
also those shoppers who came to the site independently who will
discover these vendors as they browse through the many other
shoppable events hosted simultaneously on MARKET 24/7, from around
the world. We believe our revenue model will be attractive to
vendors and will consist of SaaS recurring revenue as well as a
share of revenue generated through sales on the
platform.
MARKET is simply a platform; we hold no inventory, we take no
inventory risk, and each vendor manages their own packing and
fulfillment, as well as returns. Only vendors that have a
demonstrated ability to manage inventory and fulfillment are
selected to participate on MARKET.
As we continue onboarding vendors to the platform, we are seeing
increased interest from product manufacturers seeking to embrace
MARKET’s direct-to-consumer selling capabilities, cutting-out
distribution channel partners in order to reduce costs and increase
profitability. As the economy tightens, we expect that trend to
accelerate.
MARKET
will also incorporate a modified version of our verbLIVE
Attribution technology, allowing vendors who so choose, to leverage
extremely powerful, built-in affiliate marketing capabilities.
Non-vendor visitors to the site can search for those vendors that
have activated the Attribution feature for their events and be
compensated when people they referred to that vendor, purchase
products or services during that vendor’s shopping event. We expect
that this feature, unique to MARKET, will drive many more shoppers
who will be referred from all over the world, producing a
cross-pollination effect enhancing the revenue opportunities for
all MARKET vendors, while also creating an attractive income
generating opportunity for non-vendor MARKET patrons.
MARKET
is an entirely new platform, built wholly independently and
separate from our verbLIVE sales platform, representing what we
believe is the state of the art of shoppable video technology. It
will utilize an ultra-low latency private global CDN network that
we control, allowing us to deliver a high-quality experience and
platform performance capabilities. We also believe that MARKET will
expose vendors to our entire suite of sales enablement products,
such as verbMAIL, among others, that could drive new cross selling
revenue opportunities.
verbTV
is an online destination for shoppable entertainment. Whereas
MARKET is a social shopping experience, verbTV is a destination for
those seeking commercial-free television content, such as concerts,
game shows, sports, including e-sports, sitcoms, podcasts, special
events, news, including live events, and other forms of video
entertainment that is all interactive and shoppable. verbTV
represents an entirely new distribution channel for all forms of
content by a new generation of content creators looking for greater
freedom to explore the creative possibilities that a native
interactive video platform can provide for their audience. We
believe content creators may also enjoy greater revenue
opportunities through the native ecommerce capabilities the
platform provides to sponsors and advertisers who will enjoy
real-time monetization, data collection and analytics. Through
verbTV, sponsors and advertisers will be able to accurately measure
the ROI from their marketing spend, instead of relying on
decades-old, imprecise viewership information.
At launch, verbTV will feature interactive, shoppable programming,
including the popular business pitch show “2 Minute Drill,” the
non-shoppable version of which is currently shown on AppleTV. Each
episode is a fast-paced reality show where 5-6 entrepreneurs
competing for $50,000 in cash and prizes, have 2 minutes to impress
the judges with the best investor pitch. Our CEO is one of the
judges on the show. verbTV viewers will be able to click on-screen
and purchase the products and services of the contestants featured
on the show, among other contemplated interactive features. Dave
Meltzer, the creator of the show, and Co-founder of Sports 1
Marketing and the former CEO of the renowned Leigh Steinberg Sports
& Entertainment agency, has signed-on with Verb to produce
other interactive and shoppable entertainment for verbTV. Other
such partnerships, as well as a creator program, are currently in
progress.
Verb Partnerships and Integrations
verbMAIL
for Microsoft Outlook is a product of our partnership with
Microsoft and is available as an add-in to Microsoft Outlook for
Outlook and Office 365 subscribers. verbMAIL allows users to create
interactive videos seamlessly within Outlook by clicking the
verbMAIL icon in the Outlook toolbar. The videos are automatically
added to an email and can be sent easily through Outlook using the
user’s contacts they already have in Outlook. The application
allows users to easily track viewer engagement and together with
other features represents an effective sales tool available for all
Outlook users worldwide.
Salesforce
Integration. We have completed and deployed the integration of
verbLIVE into Salesforce and have launched a joint marketing
campaign with Salesforce to introduce the verbLIVE plug-in
functionality to current Salesforce users. We have also developed a
verbCRM sync application for Salesforce users that is currently
being utilized by at least one of our large enterprise clients and
the verbLIVE plug-in is now being offered to all Salesforce users
on a monthly subscription fee basis while we work to build adoption
rates.
Popular
Enterprise Back-Office System Integrations. We have integrated
verbCRM into systems offered by 19 of the most popular direct sales
back-office system providers, such as Direct Scale, Exigo, By
Design, Thatcher, Multisoft, Xennsoft, and Party Plan. Direct sales
back-office systems provide many of the support functions required
for direct sales operations, including payroll, customer genealogy
management, statistics, rankings, and earnings, among other direct
sales financial tracking capabilities. The integration into these
back-office providers, facilitated through our own API development,
allows single sign-on convenience for users, as well as enhanced
data analytics and reporting capabilities for all users. Our
experience confirms that our integration into these back-end
platforms accelerates the adoption of verbCRM by large direct sales
enterprises that rely on these systems and as such, we believe this
represents a competitive advantage.
Non-Digital Products and Services
Historically,
we provided certain non-digital services to some of our enterprise
clients such as printing and fulfillment services. We designed and
printed welcome kits and starter kits for their marketing needs and
provided fulfillment services, which consisted of managing the
preparation, handling and shipping of our client’s custom-branded
merchandise they use for marketing purposes at conferences and
other events. We also managed the fulfillment of our clients’
product sample packs that verbCRM users order through the app for
automated delivery and tracking to their customers and
prospects.
In
May 2020, we executed a contract with Range Printing (“Range”), a
company in the business of providing enterprise class printing,
sample assembly, warehousing, packaging, shipping, and fulfillment
services. Pursuant to the contract, through an automated process we
have established for this purpose, Range receives orders for
samples and merchandise from us as and when we receive them from
our clients and users, and print, assemble, store, package and ship
such samples and merchandise on our behalf. The Range contract
provides for a service fee arrangement based upon the specific
services to be provided by Range that is designed to maintain our
relationship with our clients by continuing to service their
non-digital needs, while eliminating the labor and overhead costs
associated with the provision of such services by us.
Our Market
Historically,
our client base consisted primarily of multi-national direct sales
enterprises to whom we provide white-labeled, client-branded
versions of our products. During the year ended December 31, 2021,
our client base expanded to include large enterprises in the life
sciences sector, professional sports franchises, educational
institutions, and not-for-profit organizations, as well as clients
in the entertainment industry, and the burgeoning CBD industry,
among other business sectors. As of March 31, 2022, we provided
subscription-based application services to approximately 150
enterprise clients for use in over 100 countries, in over 48
languages, which collectively account for a user base generated
through more than 3.3 million downloads of our verbCRM application.
Among the new business sectors targeted for this year are medical
equipment and pharmaceutical sales, armed services and government
institutions, small businesses and individual
entrepreneurs.
Revenue Generation
A
description of our principal revenue generating activities is as
follows:
|
1. |
Digital
Revenue which is divided into two main categories: |
|
a. |
SaaS
recurring digital revenue based on contract-based subscriptions to
our verb app products and platform services which include verbCRM,
verbLEARN, verbLIVE, verbPULSE, and verbTeams. The revenue is
recognized over the subscription period. |
|
|
|
|
b. |
Non-SaaS,
non-recurring digital revenue, which is revenue generated by the
use of our app products and in-app purchases, such as sampling and
other services obtained through the app. The revenue for samples is
recognized upon completion and shipment, while the design fees are
recognized when the service has been rendered and the app is
delivered to the customer. |
|
2. |
Non-digital
revenue, which is revenue we generate from non-app, non-digital
sources through ancillary services we provide as an accommodation
to our clients and customers. These services, which we now
outsource to a strategic partner as part of a cost reduction plan
we instituted in 2020, include design, printing services,
fulfillment and shipping services. The revenue is recognized upon
completion and shipment of products or fulfillment to
customers. |
|
|
|
|
3. |
MARKET will generate revenue through several sources as
follows: |
|
a. |
All
sales run through our ecommerce facility on MARKET from which we
deduct a platform fee that ranges from 10% to 35% of gross sales,
with an average of between 15-20%, depending upon the pricing
package the vendors select as well as the product category and
profit margins associated with such categories. The revenue is
derived from sales generated during livestream events, from viewers
of previously recorded events available in each vendor’s store, as
well as from sales of product and merchandise done through the
vendors’ stores, all of which are available 24/7. |
|
b. |
Produced
events. MARKET will offer fee-based services that range from full
production of a livestream event, to providing professional hosts
and event consulting. |
|
c. |
The
MARKET site is designed to incorporate sponsorships and other
advertising based on typical industry rates. |
Impact of COVID-19 on Our Business and Industry
Governments
and businesses around the world continue to take actions to
mitigate the spread of COVID-19 and its variants, including, but
not limited to, shelter-in-place orders, quarantines, significant
restrictions on travel, as well as restrictions that prohibit many
employees from going to work. Uncertainty with respect to the
economic effects of the pandemic has introduced significant
volatility in the financial markets.
Despite
increased vaccine distribution programs and loosening of COVID-19
related restrictions in the regions in which we operate during the
three months ended March 31, 2022, both the pandemic and ongoing
containment and mitigation measures have had, and are likely to
continue to have, an adverse impact on the global and U.S.
economies, the severity and duration of which are uncertain. As
such, our business, operations and financial condition has been,
and we anticipate will continue to be, adversely impacted by
reduced demand for our applications and non-digital services, as
well as reduced access to capital. To mitigate the adverse impact
COVID-19 may have on our business and operations, we implemented a
number of measures to strengthen our financial position, including
eliminating, reducing, or deferring non-essential expenditures.
However, the extent to which the COVID-19 pandemic will impact our
business, financial conditions, and results of operations in the
future remains uncertain and will be affected by a number of
factors, including the duration and extent of the pandemic, the
emergence of variants to COVID-19 the duration and extent of
imposed or recommended containment and mitigation measures, the
extent, duration, and effective execution of government
stabilization and recovery efforts, including those from the
successful distribution of effective vaccines.
The
COVID-19 pandemic may have long-term effects on the nature of the
office environment and remote working. This may present operational
and workplace culture challenges that may adversely affect our
business. Throughout the three months ended March 31, 2022, we have
encouraged safe practices designed to stem the infection and spread
of COVID-19 within our workforce and beyond and to maintain the
mental health and well-being of our employees.
We
continue to actively communicate with and listen to our customers
to ensure we are responding to their needs in the current
environment with innovative solutions that will not only be
beneficial now but also over the long-term. We monitor developments
related to COVID-19 and remain flexible in our response to the
challenges presented by the pandemic.
Results
of Operations
Three Months Ended March 31, 2022 as Compared to the Three Months
Ended March 31, 2021
The
following is a comparison of our results of operations for the
three months ended March 31, 2022 and 2021 (in
thousands):
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Digital
revenue |
|
|
|
|
|
|
|
|
|
|
|
|
SaaS
recurring subscription revenue |
|
$ |
2,003 |
|
|
$ |
1,461 |
|
|
$ |
542 |
|
Other digital
revenue |
|
|
147 |
|
|
|
340 |
|
|
|
(193 |
) |
Total digital revenue |
|
|
2,150 |
|
|
|
1,801 |
|
|
|
349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-digital revenue |
|
|
541 |
|
|
|
725 |
|
|
|
(184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
2,691 |
|
|
|
2,526 |
|
|
|
165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Digital |
|
|
557 |
|
|
|
540 |
|
|
|
17 |
|
Non-digital |
|
|
416 |
|
|
|
675 |
|
|
|
(259 |
) |
Total cost of
revenue |
|
|
973 |
|
|
|
1,215 |
|
|
|
(242 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
|
1,718 |
|
|
|
1,311 |
|
|
|
407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
1,580 |
|
|
|
2,884 |
|
|
|
(1,304 |
) |
Depreciation and
amortization |
|
|
409 |
|
|
|
414 |
|
|
|
(5 |
) |
General and
administrative |
|
|
7,036 |
|
|
|
7,343 |
|
|
|
(307 |
) |
Total operating
expenses |
|
|
9,025 |
|
|
|
10,641 |
|
|
|
(1,616 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(7,307 |
) |
|
|
(9,330 |
) |
|
|
2,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(756 |
) |
|
|
(508 |
) |
|
|
(248 |
) |
Change in fair
value of derivative liability |
|
|
1,138 |
|
|
|
500 |
|
|
|
638 |
|
Other income
(expense) |
|
|
(64 |
) |
|
|
54 |
|
|
|
(118 |
) |
Debt
extinguishment, net |
|
|
- |
|
|
|
939 |
|
|
|
(939 |
) |
Total other income, net |
|
|
318 |
|
|
|
985 |
|
|
|
(667 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,989 |
) |
|
$ |
(8,345 |
) |
|
$ |
1,356 |
|
Revenue
Our
SaaS recurring subscription revenues continue to grow year over
year, which is a reflection of our systematic investment in our
business. SaaS recurring subscription revenue as a percentage of
total revenue for the three months ended March 31, 2022 was 74%,
compared to 58% for the three months ended March 31,
2021.
For
the three months ended March 31, 2022, our total digital revenue
was 80% of total revenue compared with 71% for the three months
ended March 31, 2021. Total digital revenue for the three months
ended March 31, 2022 was $2.2 million, an increase of 19% compared
to $1.8 million for the three months ended March 31, 2021. The
increase was primarily driven from SaaS recurring
subscription-based revenue associated with our verbCRM, verbLEARN,
verbTEAMS, verbLIVE, and verbPULSE applications totaling $2.0
million, an increase of 37% compared to $1.5 million reported for
the three months ended March 31, 2021.
Total
non-digital revenue for the three months ended March 31, 2022 was
$0.5 million, a decrease of 25% compared to $0.7 million reported
for the three months ended March 31, 2021, which is consistent with
the Company’s strategy to exit the low margin printing,
fulfillment, and shipping aspects of the legacy business to focus
on digital revenue streams.
The
table below sets forth our quarterly revenues from the three months
ended March 31, 2020 through the three months ended March 31, 2022,
which reflects the trend of revenue over the past nine fiscal
quarters (in thousands):
|
|
2020 Quarterly Revenue |
|
|
2021 Quarterly Revenue |
|
|
2022 |
|
|
|
Q1 |
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
SaaS recurring
subscription revenue |
|
$ |
1,057 |
|
|
$ |
1,274 |
|
|
$ |
1,478 |
|
|
$ |
1,305 |
|
|
$ |
1,461 |
|
|
$ |
1,601 |
|
|
$ |
1,846 |
|
|
$ |
1,923 |
|
|
$ |
2,003 |
|
Other digital |
|
|
400 |
|
|
|
406 |
|
|
|
360 |
|
|
|
218 |
|
|
|
340 |
|
|
|
209 |
|
|
|
510 |
|
|
|
288 |
|
|
|
147 |
|
Total digital
revenue |
|
|
1,457 |
|
|
|
1,680 |
|
|
|
1,838 |
|
|
|
1,523 |
|
|
|
1,801 |
|
|
|
1,810 |
|
|
|
2,356 |
|
|
|
2,211 |
|
|
|
2,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-digital
revenue |
|
|
897 |
|
|
|
972 |
|
|
|
1,022 |
|
|
|
576 |
|
|
|
725 |
|
|
|
582 |
|
|
|
544 |
|
|
|
495 |
|
|
|
541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand total |
|
$ |
2,354 |
|
|
$ |
2,652 |
|
|
$ |
2,860 |
|
|
$ |
2,099 |
|
|
$ |
2,526 |
|
|
$ |
2,392 |
|
|
$ |
2,900 |
|
|
$ |
2,706 |
|
|
$ |
2,691 |
|
Cost of Revenue
Total
cost of revenue for the three months ended March 31, 2022 was $1.0
million, compared to $1.2 million for the three months ended March
31, 2021. The decrease in cost of revenue is primarily attributed
to a decrease in non-digital costs partially offset by increased
digital costs to support additional enterprise customers on the
platform and increased users within our existing customer
base.
Gross Margin
Total gross margin for the three months ended March 31, 2022, was
$1.7 million, compared to $1.3 million for the three months ended
March 31, 2021, representing a 31% improvement. Gross margins
improved as a result of our strategy to focus on higher margin
digital revenue and systematic reduction in non-digital
revenue.
Operating Expenses
Research
and development expenses were $1.6 million for the three months
ended March 31, 2022, as compared to $2.9 million for the three
months ended March 31, 2021. Research and development expenses
primarily consisted of fees paid to employees and vendors
contracted to perform research projects and develop technology. As
our products move from research and development mode to operating
mode, we expect our research and development cost reductions to
continue, as experienced during the three months ended March 31,
2022.
Depreciation
and amortization expenses were $0.4 million for the quarters ended
March 31, 2022, and March 31, 2021.
General
and administrative expenses for the three months ended March 31,
2022 were $7.0 million, as compared to $7.3 million for the three
months ended March 31, 2021. The decrease in general and
administrative expenses is primarily due to lower spending on
marketing and promotion of $(0.4) million along with a decrease in
share-based compensation of $(1.1) million, both partially offset
by an increase in labor costs of $0.9 million to support future
growth with anticipated product launches.
Other
income, net, for the three months ended March 31, 2022 was $0.3
million, which was primarily attributable to a change in the fair
value of derivative liability of $1.1 million, offset by interest
expense of $(0.8) million.
Use of Non-GAAP Measures – Modified EBITDA
In
addition to our results under generally accepted accounting
principles (“GAAP”), we present Modified EBITDA as a supplemental
measure of our performance. However, Modified EBITDA is not a
recognized measurement under GAAP and should not be considered as
an alternative to net income, income from operations or any other
performance measure derived in accordance with GAAP or as an
alternative to cash flow from operating activities as a measure of
liquidity. We define Modified EBITDA as net income (loss), plus
interest expense, depreciation and amortization, share-based
compensation, financing costs and changes in fair value of
derivative liability.
Management
considers our core operating performance to be that which our
managers can affect in any particular period through their
management of the resources that affect our underlying revenue and
profit generating operations that period. Non-GAAP adjustments to
our results prepared in accordance with GAAP are itemized below.
You are encouraged to evaluate these adjustments and the reasons we
consider them appropriate for supplemental analysis. In evaluating
Modified EBITDA, you should be aware that in the future we may
incur expenses that are the same as or similar to some of the
adjustments in this presentation. Our presentation of Modified
EBITDA should not be construed as an inference that our future
results will be unaffected by unusual or non-recurring
items.
|
|
Three Months Ended March 31, |
|
(in thousands) |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,989 |
) |
|
$ |
(8,345 |
) |
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
409 |
|
|
|
414 |
|
Share-based compensation |
|
|
1,301 |
|
|
|
2,402 |
|
Interest expense |
|
|
756 |
|
|
|
508 |
|
Change in fair value of derivative
liability |
|
|
(1,138 |
) |
|
|
(500 |
) |
Other (income) / expense |
|
|
64 |
|
|
|
(54 |
) |
Debt extinguishment, net |
|
|
- |
|
|
|
(939 |
) |
Other non-recurring
|
|
|
126
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total EBITDA
adjustments |
|
|
1,518 |
|
|
|
1,831 |
|
Modified
EBITDA |
|
$ |
(5,471 |
) |
|
$ |
(6,514 |
) |
The $1.0 million increase in Modified EBITDA for the three months
ended March 31, 2022, compared to the same period in 2021, resulted
from increased revenues, decreases in cost of revenue, research and
development, and marketing and promotion, offset by an increase in
labor related costs to support future growth.
We
present Modified EBITDA because we believe it assists investors and
analysts in comparing our performance across reporting periods on a
consistent basis by excluding items that we do not believe are
indicative of our core operating performance. In addition, we use
Modified EBITDA in developing our internal budgets, forecasts and
strategic plan; in analyzing the effectiveness of our business
strategies in evaluating potential acquisitions; and in making
compensation decisions and in communications with our board of
directors concerning our financial performance. Modified EBITDA has
limitations as an analytical tool, which includes, among others,
the following:
|
● |
Modified
EBITDA does not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual
commitments; |
|
|
|
|
● |
Modified
EBITDA does not reflect changes in, or cash requirements for, our
working capital needs; |
|
|
|
|
● |
Modified
EBITDA does not reflect future interest expense, or the cash
requirements necessary to service interest or principal payments,
on our debts; and |
|
● |
Although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in
the future, and Modified EBITDA does not reflect any cash
requirements for such replacements. |
Liquidity
and Capital Resources
Going Concern
We
have incurred operating losses and negative cash flows from
operations since inception. We incurred a net loss of $7.0 million
during the three months ended March 31, 2022. We also utilized cash
in operations of $5.9 million during the three months ended March
31, 2022. As a result, our continuation as a going concern is
dependent on our ability to obtain additional financing until we
can generate sufficient cash flows from operations to meet our
obligations. We intend to continue to seek additional debt or
equity financing to continue our operations.
On
January 12, 2022, we entered into a common stock purchase agreement
with Tumim Stone Capital LLC. Pursuant to the agreement, the
Company has the right, but not the obligation, to sell to the
Investor, and the Investor is obligated to purchase, up to $50.0
million of newly issued shares of our common stock, par value
$0.0001 per share from time to time during the term of the
agreement, subject to certain limitations and conditions. The Total
Commitment is inclusive of 607,287 shares of common stock issued to
the Investor as consideration for its commitment to purchase shares
of common stock under the Common Stock Purchase
Agreement.
On
January 12, 2022, we also entered into a securities purchase
agreement with three institutional investors providing for the sale
and issuance of an aggregate original principal amount of $6.3
million in convertible notes due 2023. We also entered into a
security agreement with the Note Holders, dated January 12, 2022,
in connection with the Note Offering, pursuant to which we granted
a security interest to the Note Holders in substantially all of its
assets.
On
April 20, 2022, the Company entered into a securities purchase
agreement (the “Purchase Agreement”), which provides for the sale
and issuance by the Company of an aggregate of (i) 14,666,667
shares of the Company’s common stock, $0.0001 par value per share,
at a purchase price of $0.75 per share, and (ii) warrants to
purchase 14,666,667 shares of the common stock at an exercise price
of $0.75 per share, for aggregate gross proceeds of $11,000 before
deducting placement agent commissions and other estimated offering
expenses (the “Registered Direct Offering”). The Purchase Agreement
contains customary representations, warranties and agreements by
the Company, customary conditions to closing, and customary
indemnification obligations of the Company. The Purchase Agreement
amongst other things restricts us from selling shares using at the
market (“ATM”) agreement with Truist Securities and the Common
Stock Purchase Agreement. As a result of this transaction, certain
of our Series A warrants priced at $1.10 per share were repriced to
$0.75 per share under the terms of such warrant agreements. The
fair value of such warrants at this new exercise price is
approximately $0.5 million and the Company will account for this
change as a deemed dividend. In addition, as a result of entering
into the Purchase Agreement, we have repaid $1.65 million in
principal payments to Note Holders pursuant to the terms of the
Note Offering, thereby reducing our outstanding principal balance
from $6.3 million to $4.65 million.
On
April 20, 2022, we also entered into a placement agency agreement
(the “Placement Agency Agreement”) with A.G.P./Alliance Global
Partners (the “Placement Agent”). Pursuant to the terms of the
Placement Agency Agreement, the Placement Agent agreed to use its
reasonable best efforts to arrange for the sale of the Securities
in the Registered Direct Offering. We will pay the Placement Agent
a cash fee equal to 6.0% of the aggregate gross proceeds from the
sale of the Securities, subject to certain exceptions described in
the Placement Agency Agreement, and will reimburse the Placement
Agent for certain expenses. The Placement Agency Agreement contains
customary representations, warranties and agreements by us,
customary representations and warranties of the Placement Agent,
customary conditions to closing, and customary indemnification
obligations of the Company.
Our
consolidated financial statements have been prepared on a going
concern basis, which implies we may not continue to meet our
obligations and continue our operations for the next twelve months.
Our continuation as a going concern is dependent upon our ability
to obtain necessary debt or equity financing to continue operations
until we begin generating positive cash flow. In addition, our
independent registered public accounting firm, in its report on our
December 31, 2021 consolidated financial statements, has raised
substantial doubt about our ability to continue as a going
concern.
There
is no assurance that we will ever be profitable or that debt or
equity financing will be available to us in the amounts, on terms,
and at times deemed acceptable to us, if at all. The issuance of
additional equity securities by us would result in a significant
dilution in the equity interests of our current stockholders.
Obtaining commercial loans, assuming those loans would be
available, would increase our liabilities and future cash
commitments. If we are unable to obtain financing in the amounts
and on terms deemed acceptable to us, we may be unable to continue
our business, as planned, and as a result may be required to scale
back or cease operations for our business, the results of which
would be that our stockholders would lose some or all of their
investment. The consolidated financial statements do not include
any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classifications of liabilities that may result should we be unable
to continue as a going concern.
Overview
As of
March 31, 2022, we had cash of $3.7 million. We estimate our
operating expenses for the next twelve months may continue to
exceed any revenue we generate, and we may need to raise capital
through either debt or equity offerings to continue operations. Due
to market conditions and the early stage of our operations, there
is considerable risk that we will not be able to raise such
financings at all, or on terms that are not dilutive to our
existing stockholders. We can offer no assurance that we will be
able to raise such funds. If we are unable to raise the funds we
require for all of our planned operations, we may be forced to
reallocate funds from other planned uses and may suffer a
significant negative effect on our business plan and operations,
including our ability to develop new products and continue our
current operations. As a result, our business may suffer, and we
may be forced to reduce or discontinue operations.
The
following is a summary of our cash flows from operating, investing,
and financing activities for the quarters ended March 31, 2022 and
2021 (in thousands):
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Cash used in operating
activities |
|
$ |
(5,899 |
) |
|
$ |
(6,923 |
) |
Cash (used in) / provided by investing
activities |
|
|
(2,363 |
) |
|
|
5 |
|
Cash provided by financing
activities |
|
|
11,043 |
|
|
|
18,049 |
|
Increase in cash |
|
$ |
2,781 |
|
|
$ |
11,131 |
|
Cash Flows – Operating
For the three months ended March 31, 2022, our cash flows used in
operating activities amounted to $5.9 million, compared to cash
used for the three months ended March 31, 2021 of $6.9 million. We
generated $1.0 million additional cash from operations due to
higher revenues, decreases in research and development expenses,
marketing and promotion, which was offset by an increase in labor
related costs to support future growth.
Cash Flows – Investing
For
the three months ended March 31, 2022, our cash flows used in
investing activities amounted to $2.4 million, primarily due to our
investment in capitalized software development costs related to
MARKET.
Cash Flows – Financing
Our
cash provided by financing activities for the three months ended
March 31, 2022 amounted to $11.0 million, which represented $7.5
million of net proceeds from the issuance of shares of our common
stock, $6.0 million of gross proceeds from the issuance of notes
payable, and proceeds from option exercises of $0.4 million, all
offset by $(2.5) million of payments on advances on future receipts
and payments for debt issuance costs of $(0.4) million.
Advances
on Future Receipts
We
have the following advances on future receipts as of March 31, 2022
(in thousands):
Note |
|
Issuance Date |
|
Maturity Date |
|
Interest Rate |
|
|
Original Borrowing |
|
|
Balance at
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1 |
|
October 29, 2021 |
|
April 28, 2022 |
|
|
5 |
% |
|
|
2,120 |
|
|
|
288 |
|
Note 2 |
|
October 29, 2021 |
|
July 25, 2022 |
|
|
28 |
% |
|
|
3,808 |
|
|
|
1,813 |
|
Note 3 |
|
December 23, 2021 |
|
June 22, 2022 |
|
|
5 |
% |
|
|
689 |
|
|
|
344 |
|
Total |
|
|
|
|
|
|
|
|
|
$ |
6,617 |
|
|
|
2,445 |
|
Debt discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(310 |
) |
Net |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,135 |
|
Note 1
On
October 29, 2021, we received secured advances from an unaffiliated
third party totaling $2.0 million for the purchase of future
receipts/revenues of $2.1 million. As of March 31, 2022, the
outstanding balance of the note amounted to $0.3 million, which we
paid in full on April 28, 2022.
Note 2
On
October 29, 2021, we received secured advances from an unaffiliated
third party totaling $2.7 million for the purchase of future
receipts/revenues of $3.8 million. As of March 31, 2022, the
outstanding balance of the note amounted to $1.8
million.
Note 3
On
December 23, 2021, we received secured advances from an
unaffiliated third party totaling $0.7 million for the purchase of
future receipts/revenues of $0.7 million. As of March 31, 2022, the
outstanding balance of the note amounted to $0.3
million.
Notes
Payable
We
have the following outstanding notes payable as of March 31, 2022
(in thousands):
Note |
|
Issuance Date |
|
Maturity Date |
|
Interest Rate |
|
|
Original
Borrowing |
|
|
Balance at
March 31,
2022 |
|
Related party note payable
(A) |
|
December 1, 2015 |
|
April 1, 2023 |
|
|
12.0 |
% |
|
|
1,249 |
|
|
$ |
725 |
|
Related party note payable (B) |
|
April 4, 2016 |
|
June 4, 2021 |
|
|
12.0 |
% |
|
|
343 |
|
|
|
40 |
|
Note payable (C) |
|
May 15, 2020 |
|
May 15, 2050 |
|
|
3.75 |
% |
|
|
150 |
|
|
|
150 |
|
Notes payable (D) |
|
January 12, 2022 |
|
January 12, 2023 |
|
|
6.0 |
% |
|
|
6,300 |
|
|
|
6,300 |
|
Debt discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(226 |
) |
Debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(347 |
) |
Total notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,642 |
|
Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(875 |
) |
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,767 |
|
|
(A) |
On
December 1, 2015, we issued a convertible note payable to Mr. Rory
J. Cutaia, the Company’s majority stockholder and Chief Executive
Officer, to consolidate all loans and advances made by Mr. Cutaia
to us as of that date. On May 12, 2022, the maturity date of the
note was extended to April 1, 2023. As of March 31, 2022, the
outstanding balance of the note amounted to $0.7
million. |
|
(B) |
On
April 4, 2016, we issued a convertible note to Mr. Cutaia, in the
amount of $0.3 million, to consolidate all advances made by Mr.
Cutaia to us during the period December 2015 through March 2016. As
of March 31, 2022, the outstanding balance of the note amounted to
less than $0.1 million. |
|
(C) |
On May 15, 2020, we executed an unsecured loan with the U.S. Small
Business Administration (SBA) under the Economic Injury Disaster
Loan program in the amount of $0.15 million. Installment payments,
including principal and interest, will begin on October 15, 2022.
As of March 31, 2022, the outstanding balance of the note amounted
to $0.15 million.
|
|
(D) |
On January 12, 2022, we entered into a securities purchase
agreement with three institutional investors (collectively, the
“Note Holders”) providing for the sale and issuance of an aggregate
original principal amount of $6.3 million in convertible notes due
2023 (each, a “Note,” and, collectively, the “Notes,” and such
financing, the “Note Offering”). We also entered into a security
agreement with the Note Holders dated January 12, 2022, in
connection with the Note Offering, pursuant to which the Company
granted a security interest to the Note Holders in substantially
all of its assets. There are no financial covenants related to
these notes payable.
We received $6.0 million in gross proceeds from the sale of the
Notes. The Note Offering closed on January 12, 2022. The Notes bear
interest of 6.0% per annum, have an original issue discount of
5.0%, mature 12 months from the closing date, and have an initial
conversion price of $3.00, subject to adjustment in certain
circumstances as set forth in the Notes.
In connection with the debt agreement, we incurred $0.5 million of
debt issuance costs. The debt issuance costs and the debt discount
of $0.3 million are being amortized over the term of the agreement
using the effective interest rate method. As of March 31, 2022, the
amount of unamortized debt discount and debt issuance costs was
$0.2 million and $0.3 million, respectively.
As of March 31, 2022, the outstanding balance of the note amounted
to $6.3 million. Subsequent to March 31, 2022, we repaid $1.65
million in principal and $0.1 million of accrued interest. As a
result of the repayment, the outstanding principal balance was
$4.65 million as of the date of the issuance of the financial
statements.
Beginning on May 12, 2022, we are required to make nine monthly
principal payments of $0.2 million, plus accrued interest, to the
Note Holders, with the remaining principal amount of $2.4 million,
plus accrued interest, due on the maturity date.
|
Critical
Accounting Policies
Our
financial statements have been prepared in accordance with GAAP,
which require that we make certain assumptions and estimates that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of net revenue
and expenses during each reporting period.
Use of Estimates
The
preparation of financial statements in conformity with GAAP
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 reported periods. Significant estimates include
assumptions made for reserves of uncollectible accounts receivable,
assumptions made in valuing assets acquired in business
combinations, impairment testing of goodwill and other long-lived
assets, the valuation allowance for deferred tax assets,
assumptions used in valuing derivative liabilities, assumptions
used in valuing share-based compensation, and accruals for
potential liabilities. Amounts could materially change in the
future.
Revenue Recognition
The
Company derives its revenue primarily from providing application
services through the SaaS application, digital marketing and sales
support services. The Company also derives revenue from the sale of
customized print products and training materials, branded apparel,
and digital tools, as demanded by its customers.
The
Company recognizes revenue in accordance with Financial Accounting
Standard Board’s (“FASB”) ASC 606, Revenue from Contracts with
Customers (“ASC 606”). ASC 606 creates a five-step model that
requires entities to exercise judgment when considering the terms
of contract(s), which includes (1) identifying the contract(s) or
agreement(s) with a customer, (2) identifying our performance
obligations in the contract or agreement, (3) determining the
transaction price, (4) allocating the transaction price to the
separate performance obligations, and (5) recognizing revenue as
each performance obligation is satisfied.
A
description of our principal revenue generating activities is as
follows:
|
1. |
Digital
Revenue, which is divided into two main categories: |
|
a. |
SaaS
recurring digital revenue based on contract-based subscriptions to
our verb app products and platform services which include verbCRM,
verbLEARN, verbLIVE, verbTEAMS, and verbPULSE. The revenue is
recognized straight-line over the subscription period. |
|
|
|
|
b. |
Non-SaaS,
non-recurring digital revenue, which is revenue generated by the
use of our app products and in-app purchases, such as sampling and
other services obtained through the app. The revenue for samples is
recognized upon completion and shipment, while the design fees are
recognized when the service has been rendered and the app is
delivered to the customer. |
|
2. |
Non-digital
revenue, which is revenue we generate from non-app, non-digital
sources through ancillary services we provide as an accommodation
to our clients and customers. These services, which we now
outsource to a strategic partner as part of a cost reduction plan
we instituted in 2020, includes design, printing services,
fulfillment and shipping services. The revenue is recognized upon
completion and shipment of products or fulfillment to the
customer. |
Derivative Financial Instruments
We
evaluate our financial instruments to determine if such instruments
are derivatives or contain features that qualify as embedded
derivatives. For derivative financial instruments that are
accounted for as liabilities, the derivative instrument is
initially recorded at its fair value and is then re-valued at each
reporting date, with changes in the fair value reported in the
consolidated statements of operations. The classification of
derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is evaluated at the end of
each reporting period. Derivative instrument liabilities are
classified in the balance sheet as current or non-current based on
whether or not net-cash settlement of the derivative instrument
could be required within 12 months of the balance sheet
date.
We
use Level 2 inputs for our valuation methodology for the derivative
liabilities as their fair values were determined by using a
Binomial pricing model. Our derivative liabilities are adjusted to
reflect fair value at each period end, with any increase or
decrease in the fair value being recorded in results of operations
as adjustments to fair value of derivatives.
Share-Based Compensation
The
Company issues stock options and warrants, shares of common stock
and restricted stock units as share-based compensation to employees
and non-employees. The Company accounts for its share-based
compensation in accordance with FASB ASC 718, Compensation –
Stock Compensation. Share-based compensation cost is measured
at the grant date, based on the estimated fair value of the award,
and is recognized as expense over the requisite service period. The
fair value of restricted stock units is determined based on the
number of shares granted and the quoted price of our common stock
and is recognized as expense over the service period. Recognition
of compensation expense for non-employees is in the same period and
manner as if the Company had paid cash for services.
Goodwill
In accordance with FASB ASC 350, Intangibles-Goodwill and
Other, we review goodwill and indefinite lived intangible
assets for impairment at least annually or whenever events or
circumstances indicate a potential impairment. Our impairment
testing is performed annually at December 31 (our fiscal year end).
Impairment of goodwill and indefinite lived intangible assets is
determined by comparing the fair value of our reporting units to
the carrying value of the underlying net assets in the reporting
units. If the fair value of a reporting unit is determined to be
less than the carrying value of its net assets, goodwill is deemed
impaired and an impairment loss is recognized to the extent that
the carrying value of goodwill exceeds the difference between the
fair value of the reporting unit and the fair value of its other
assets and liabilities.
Intangible Assets
We have certain intangible assets that were initially recorded at
their fair value at the time of acquisition. The finite-lived
intangible assets consist of developed technology and customer
contracts. Indefinite-lived intangible assets consist of domain
names. Intangible assets with finite useful lives are amortized
using the straight-line method over their estimated useful life of
five years.
We review all finite lived intangible assets for impairment when
circumstances indicate that their carrying values may not be
recoverable. If the carrying value of an asset group is not
recoverable, we recognize an impairment loss for the excess
carrying value over the fair value in our consolidated statements
of operations.
Recently
Issued Accounting Pronouncements
For a summary of our recent accounting policies, refer to Note 2 -
Summary of Significant Accounting Policies, of our unaudited
condensed consolidated financial statements included under Item 1 –
Financial Statements in this Form 10-Q.
Off-Balance
Sheet Arrangements
As of
March 31, 2022, we did not have any off-balance sheet
arrangements.
ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
We
are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
required under this item.
ITEM
4 - CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act, that are designed
to ensure that information required to be disclosed in our reports
under the Exchange Act, is recorded, processed, summarized, and
reported within the time periods specified in the SEC’s rules and
forms, and that such information is accumulated and communicated to
our management, including our principal executive officer and our
principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
We
carried out an evaluation under the supervision and with the
participation of our management, including our principal executive
officer and principal financial officer, of the effectiveness of
our disclosure controls and procedures (as defined in Rule
13a-15(e) and 15d- 15(e) under the Exchange Act) as of December 31,
2021. Based on this evaluation, our principal executive officer and
principal financial officer concluded that our disclosure controls
and procedures were effective as of March 31, 2022.
Changes
in Internal Control Over Financial Reporting
There
were no additional changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the three months ended March 31, 2022 that
have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Inherent
Limitations on the Effectiveness of Controls
Management
does not expect that our disclosure controls and procedures or our
internal control over financial reporting will prevent or detect
all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control systems are met.
Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must
be considered relative to their costs. Because of the inherent
limitations in a cost-effective control system, no evaluation of
internal control over financial reporting can provide absolute
assurance that misstatements due to error or fraud will not occur
or that all control issues and instances of fraud, if any, have
been or will be detected.
These
inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because
of a simple error or mistake. Controls can also be circumvented by
the individual acts of some persons, by collusion of two or more
people, or by management override of the controls. The design of
any system of controls is based in part on certain assumptions
about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Projections of any
evaluation of controls effectiveness to future periods are subject
to risks. Over time, controls may become inadequate because of
changes in conditions or deterioration in the degree of compliance
with policies or procedures.
PART
II - OTHER INFORMATION
ITEM
1 - LEGAL PROCEEDINGS
For
information regarding legal proceedings, refer to Note 13 -
Commitments and Contingencies of the Notes to our Condensed
Consolidated Financial Statements, which is incorporated herein by
reference.
ITEM
1A. RISK FACTORS
Our business, results of operations, and financial condition are
subject to various risks. These risks are described elsewhere in
this Quarterly Report on Form 10-Q and our other filings with the
SEC, including the 2021
Form 10-K filed on March 31, 2022. The risk factors identified in
our 2021 Form 10-K have not changed in any material
respect.
ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None.
ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4 - MINE SAFETY DISCLOSURES
Not
applicable.
ITEM
5 - OTHER INFORMATION
Nasdaq Minimum Bid Requirement Deficiency Letter
On May 12, 2022 we received a deficiency letter (the “Nasdaq
Letter”) from the Nasdaq Listing Qualifications Department,
notifying us that we are not in compliance with Nasdaq Listing Rule
5550(a)(2), which requires the Company to maintain a minimum bid
price of at least $1 per share for continued listing on The Nasdaq
Capital Market (the “Minimum Bid Requirement”). Our non-compliance
with the Minimum Bid Requirement was based on our common stock
price per share being below the Minimum Bid Requirement for a
period of 30 consecutive business days. Pursuant to the Nasdaq
Letter, we have 180 calendar days from the date of the Nasdaq
Letter to regain compliance, which will expire November 8, 2022. If
we are unable to regain compliance by November 8, 2022, we may be
eligible for an additional 180 calendar day compliance period to
demonstrate compliance with the Minimum Bid Requirement. To
qualify, we will be required to meet the continued listing
requirement for market value of publicly held shares and all other
initial listing standards for The Nasdaq Capital Market (“Nasdaq”),
with the exception of the Minimum Bid Requirement, and will need to
provide written notice to Nasdaq of our intention to cure the
deficiency during the second compliance period. If we do not
qualify for the second compliance period or we are unable to regain
compliance during the second 180 calendar day period, Nasdaq may
notify us of its determination to delist our common stock, at which
point we would have an opportunity to appeal the delisting
determination to a Hearings Panel. We intend to actively monitor
the closing bid price of our common stock and will evaluate
available options to regain compliance with the Minimum Bid
Requirement.
Neither the Nasdaq Letter nor our noncompliance with the Minimum
Bid Requirement have an immediate effect on the listing or trading
of our common stock, which will continue to trade on The Nasdaq
Capital Market under the symbol “VERB.”
ITEM
6 - EXHIBITS
Reference
is made to the exhibits listed on the Index to Exhibits.
INDEX
TO EXHIBITS
Exhibit
Number |
|
Description |
4.1 |
|
Form
of Common Stock Purchase Warrant (incorporated by reference to
Exhibit 4.1 to Current Report on Form 8-K filed April 22,
2022) |
10.1 |
|
Common
Stock Purchase Agreement, dated January 12, 2022, between Verb
Technology Company, Inc. and Tumim Stone Capital LLC (incorporated
by reference to Exhibit 10.1 to Current Report on Form 8-K filed
January 13, 2022) |
10.2 |
|
Securities
Purchase Agreement, dated January 12, 2022, among Verb Technology
Company, Inc. and certain institutional investors thereto
(incorporated by reference to Exhibit 10.2 to Current Report on
Form 8-K filed January 13, 2022) |
10.3 |
|
Form
of Convertible Note due 2023 (incorporated by reference to Exhibit
10.3 to Current Report on Form 8-K filed January 13,
2022) |
10.4 |
|
Security
Agreement, dated January 12, 2022, among Verb Technology Company,
Inc. and certain institutional investors thereto (incorporated by
reference to Exhibit 10.4 to Current Report on Form 8-K filed
January 13, 2022) |
10.5 |
|
Form
of Securities Purchase Agreement (incorporated by reference to
Exhibit 10.1 to Current Report on Form 8-K filed April 22,
2022) |
31.1* |
|
Certification
Required by Rule 13a-14(a) of the Securities Exchange Act of 1934,
as amended, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
31.2* |
|
Certification
Required by Rule 13a-14(a) of the Securities Exchange Act of 1934,
as amended, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
32.1** |
|
Certification
of Principal Executive Officer Pursuant to Section 1350 of Chapter
63 of Title 18 of the United States Code |
32.2** |
|
Certification
of Principal Financial Officer and Principal Accounting Officer
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United
States Code |
101.INS |
|
Inline
XBRL Instance Document |
101.SCH |
|
Inline
XBRL Taxonomy Extension Schema |
101.CAL |
|
Inline
XBRL Taxonomy Extension Calculation Linkbase |
101.DEF |
|
Inline
XBRL Taxonomy Extension Definition Linkbase |
101.LAB |
|
Inline
XBRL Taxonomy Extension Label Linkbase |
101.PRE |
|
Inline
XBRL Taxonomy Extension Presentation Linkbase |
104 |
|
Cover
Page Interactive Data File (formatted as Inline XBRL and contained
in Exhibit 101) |
* |
Filed
herewith. |
|
|
** |
The
certifications attached as Exhibit 32.1 and 32.2 that accompany
this Quarterly Report pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
and shall not be deemed “filed” by the registrant for purposes of
Section 18 of the Exchange Act and are not to be incorporated by
reference into any of the registrant’s filings under the Securities
Act or the Exchange Act, irrespective of any general incorporation
language contained in any such filing. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
VERB
TECHNOLOGY COMPANY, INC. |
|
|
|
Date:
May 16, 2022 |
By: |
/s/
Rory J. Cutaia |
|
|
Rory
J. Cutaia |
|
|
President,
Chief Executive Officer, |
|
|
Secretary,
and Director |
|
|
(Principal
Executive Officer) |
|
|
|
Date:
May 16, 2022 |
By: |
/s/
Salman H. Khan |
|
|
Salman
H. Khan |
|
|
Chief
Financial Officer |
|
|
(Principal
Financial Officer and Principal Accounting Officer) |
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