Business Context and Reporting Period
This Form 8-K is filed by Verb Technology Company, Inc. (trading symbol: VERB) on February 2, 2024. The report addresses the company's efforts to regain compliance with NASDAQ Listing Rule 5550(b)(1) regarding minimum stockholders' equity requirements. The financial data referenced covers the period from June 30, 2023, through December 31, 2023.
Key Financial Metrics
- Stockholders' Equity: Reported as a deficit of ($1,818,000) as of June 30, 2023. The company estimates total stockholders' equity to be $3,125,000 as of December 31, 2023.
- Debt Reduction: Total debt was reduced from $8,340,700 to $2,854,486 between June 30, 2023, and December 31, 2023, representing a reduction of $5,486,214.
- Capital Raise: On December 29, 2023, the company sold 3,000 shares of non-convertible Series C Preferred Stock for a total purchase price of $3,000,000.
- Preferred Stock Terms: The Series C Preferred Stock carries a 10% stated annual dividend, has no voting rights, and a face value of $1,300 per share.
Material Changes Versus Prior Period
The most significant change is the reversal of the stockholders' equity deficit. As of June 30, 2023, the company failed to meet the $2,500,000 minimum equity requirement, triggering a NASDAQ delisting notice. Through a combination of a $3,000,000 equity infusion and a $5,486,214 reduction in debt, the company projects its equity position has improved to $3,125,000, exceeding the minimum threshold.
Outlook, Risks, and Contingencies
Compliance Status: The company believes it has regained compliance with NASDAQ listing rules as of the filing date. An extension to evidence compliance was granted until February 14, 2024.
Risks: NASDAQ will continue to monitor ongoing compliance. If the company fails to evidence compliance in its next periodic report, it remains subject to delisting.
Unusual Items: The filing references an unaudited balance sheet as of December 31, 2023, attached as Exhibit 99.1, which supports the equity calculation.
Investor Verification Checklist
- Verify the unaudited balance sheet attached as Exhibit 99.1 to confirm the $3,125,000 stockholders' equity figure.
- Confirm the final terms and closing of the Series C Preferred Stock issuance with Streeterville Capital, LLC.
- Monitor the company's next periodic report (10-Q or 10-K) to ensure NASDAQ accepts the compliance evidence and avoids delisting.
- Review the impact of the 10% annual dividend obligation on future cash flows.