Business Context and Reporting Period
This Form 8-K Current Report is filed by Verb Technology Company, Inc. (Ticker: VERB) on February 25, 2020. The filing details the initial closing of a private placement of common stock and related agreements with existing preferred stockholders.
Key Financial Metrics and Transaction Details
- Initial Closing Proceeds: $1,933,000 gross proceeds from the sale of 1,610,833 shares of Common Stock.
- Offering Price: $1.20 per share (representing a 20% discount to the $1.50 closing price on February 5, 2020).
- Potential Additional Proceeds: $1,434,000 from 1,195,000 additional shares based on executed subscription agreements from 19 investors.
- Maximum Offering Size: Up to 5,000,000 shares total.
- Transaction Costs: $190,800 cash fee (10% of initial proceeds) and $38,160 expense allowance (2% of initial proceeds) paid to a consultant.
- Use of Proceeds: General corporate purposes.
Material Changes and Agreements
The filing reports the entry into a Material Definitive Agreement regarding the private placement. Key changes include:
- Waiver of Rights: Holders of Series A Convertible Preferred Stock (August 2019 Investors) waived their rights to participate in the private placement and declined price protection rights.
- Warrant Adjustments:
- August 2019 Warrants exercise price modified from $1.88 to $1.20 per share.
- New "February 2020 Warrants" granted to August 2019 Investors with a $1.55 exercise price.
- Consultant warrants granted for 159,000 shares at a $1.92 exercise price.
- Timeline: Further closings may occur through March 31, 2020, though no assurance is provided.
Guidance, Outlook, and Risks
Management does not provide specific financial guidance or outlook in this filing. The primary risk disclosed is the uncertainty regarding future closings of the private placement; the company explicitly states it cannot provide assurance of the possibility or probability of selling additional shares beyond the initial closing. The securities issued are restricted and unregistered, limiting their resale.
Investor Verification Checklist
- Verify the final total number of shares sold and total gross proceeds once the March 31, 2020 deadline passes.
- Confirm the dilution impact of the 159,000 consultant warrants and the modified August 2019 warrants.
- Review the full text of the Subscription Agreement (Exhibit 10.59) and Waiver agreements (Exhibits 10.58/10.58a) for specific covenants.
- Monitor subsequent filings for the actual use of proceeds and any further closings.