Filing identity and reporting period
The supplied filing is Verb Technology Company, Inc.’s unaudited Form 10-Q for the three months ended March 31, 2024, filed May 10, 2024. It does not identify TON Strategy Co as the registrant; verify that this is the intended filing. Financial statement amounts below are in U.S. dollars, generally thousands unless stated otherwise.
Business context
After selling its operating SaaS assets in June 2023, Verb’s stated focus is MARKET.live, a livestream social-shopping platform. The disposed SaaS business is reported as discontinued operations. The sale consideration was $6.5 million, including $4.75 million paid at closing; up to $1.75 million in additional payments depends on specified profitability and revenue targets over the following two years.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue from continuing operations | $7 | $2 |
| Operating loss from continuing operations | $(3,217) | $(4,127) |
| Net loss from continuing operations | $(3,445) | $(4,640) |
| Discontinued-operations loss | — | $(874) |
| Net loss | $(3,445) | $(5,514) |
| Cash used in operating activities, continuing operations | $(2,209) | $(2,765) |
| Cash provided by financing activities, continuing operations | $12,079 | $5,233 |
Revenue remains minimal, so a meaningful revenue margin comparison is not informative. Management says the business is currently generating minimal revenue. General and administrative expense fell 16% to $2.963 million, primarily due to lower personnel expense following headcount reductions; depreciation and amortization declined to $256,000 from $583,000. Interest expense was $225,000, down from $470,000.
At March 31, cash was $14.182 million, total current assets $14.495 million, current liabilities $6.168 million, and total stockholders’ equity $14.001 million. Notes payable totaled $1.137 million, of which $1.024 million was current; operating lease liabilities totaled $214,000. Cash increased by $9.829 million during the quarter, principally reflecting equity financing. The company reported $2.209 million of continuing-operations operating cash use.
Modified EBITDA, a non-GAAP measure, was a loss of $2.499 million versus a loss of $2.388 million. The company cautions that this measure is not a substitute for GAAP results or operating cash flow.
Material changes and capital structure
- Continuing-operations net loss improved by $1.195 million year over year, while total net loss also benefited from the absence of the prior-year discontinued-operations loss. Comparisons are affected by the 2023 SaaS asset sale.
- Financing activities included $12.348 million of common-stock offering proceeds before offering-cost payments. The quarter included ATM issuances and a Regulation A offering of 27.4 million shares at $0.24 per share. Common shares outstanding rose from 21.2 million at December 31, 2023 to 79.3 million at March 31, 2024. The filing reports 104.6 million shares outstanding as of May 9, 2024.
- The November 2022 notes were paid off in March, including a $1.720 million principal reduction exchanged for 11.5 million common shares. The remaining Streeterville note was reported at $1.049 million including accrued interest at quarter-end; after quarter-end, shares were exchanged for a $1.057 million reduction and the note was repaid on May 3. The company says it was debt-free apart from a low-interest SBA loan after that repayment.
- On May 9, the company redeemed 505 Series C preferred shares in exchange for 4.76 million common shares. The preferred stock carries a 10% annual return and had $75,000 of accrued dividends payable at March 31.
Outlook, risks and contingencies
No quantitative revenue, earnings, or cash-flow guidance is provided. The company expects MARKET.live’s TikTok Shop partnership to generate service fees and potentially a share of revenue from referred sellers, but these are expectations, not reported results. The partnership was announced March 27, 2024; the filing does not provide a clear realized revenue contribution from it in Q1.
- Management identifies continued losses, uncertain profitability, customer and platform adoption, competition, technology execution, security, economic conditions, and reliance on third parties as risks. It specifically cites legislation that could restrict strategic relationships such as TikTok.
- Nasdaq had found the company compliant with its stockholders’ equity requirement in February 2024. On May 1, Nasdaq granted an additional 180 days, through October 28, 2024, to regain compliance with the $1.00 minimum bid-price rule; failure could lead to delisting proceedings.
- A former-employee case resulted in a $584,000 judgment against the company. The company has appealed; the appeal and a request for attorney fees and costs remain unresolved. The company says it accrued the liability and believes the accrual is adequate.
- Publicly traded VERBW warrants expired April 5, 2024 and were delisted. The company’s common stock remains subject to the separate Nasdaq bid-price compliance matter.
- The company states that its financial statements are prepared on a going-concern basis. It reports significant recurring losses and dependence on financing, but this filing text does not provide a clear quantified runway estimate.
Most important facts to verify
- Confirm the intended issuer: this filing is for Verb Technology Company, Inc., not TON Strategy Co.
- Check subsequent share issuance and dilution, including ATM proceeds, shares issued for debt repayment, and the Series C exchange.
- Assess MARKET.live’s actual sales, TikTok Shop referrals, seller adoption, and conversion of partnership opportunities into recurring revenue.
- Monitor Nasdaq’s October 28, 2024 bid-price deadline and any further listing notices.
- Review the unresolved litigation appeal and contingent SaaS sale payments against actual developments.