Business Context and Reporting Period
This Form 8-K filing by Verb Technology Company, Inc. (trading as VERB) reports events occurring on December 28 and 29, 2023. The company, incorporated in Nevada, is based in Las Vegas. The filing details the entry into a material definitive agreement and the unregistered sale of equity securities.
Key Financial Metrics and Transaction Details
- Transaction Type: Sale of 3,000 shares of newly designated non-convertible Series C Preferred Stock.
- Investor: Streeterville Capital, LLC.
- Total Purchase Price: $3,000,000.
- Share Economics: Face value of $1,300 per share; 10% stated annual dividend rate.
- Dividend Structure:
- Accrues at 10% per year, compounded annually.
- Quarterly dividends begin one year after issuance: 2.5% per quarter for years 1-2, increasing to 5% per quarter thereafter.
- Dividends payable in cash or additional Series C Preferred Stock.
- Voting Rights: None, except for matters materially affecting the preferred stock.
- Redemption: Company may elect to redeem all outstanding shares at the Liquidation Amount.
- Use of Proceeds: Working capital and general corporate purposes.
Note: This filing does not provide consolidated revenue, profit, cash flow, or debt metrics for the company's overall operations.
Material Changes
The primary material change is the capital raise of $3,000,000 through the issuance of non-dilutive preferred stock. The Series C Preferred Stock is explicitly non-convertible into common shares, meaning it does not dilute current common stockholders. The company filed a Certificate of Designation with the Nevada Secretary of State to authorize up to 5,000 shares of this series.
Guidance, Outlook, and Risks
Management Commentary: The company intends to utilize the proceeds for working capital and general corporate purposes. The transaction was executed under a Securities Purchase Agreement containing customary representations and warranties.
Risks and Contingencies:
- The sale was unregistered, relying on the Section 4(a)(2) exemption of the Securities Act of 1933.
- The company has an obligation to pay a 10% annual return on the preferred stock, which impacts future cash flow requirements.
- The company retains the discretion to redeem the shares, subject to the terms of the Certificate of Designation.
Investor Verification Checklist
- Verify the full text of the Securities Purchase Agreement (Exhibit 10.1) for specific covenants and redemption triggers.
- Review the Certificate of Designation (Exhibit 3.1) to understand the exact calculation of the Liquidation Amount and dividend settlement options.
- Confirm the company's current liquidity position to assess its ability to service the 10% annual dividend obligation.
- Check subsequent filings for any changes in the company's capital structure or use of the raised funds.