Business context and reporting period
This is Verb Technology Company, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2023—not a filing identified in the text as TON Strategy Co. Amounts below are in thousands of dollars unless stated otherwise. On June 13, Verb sold the operating assets of its SaaS businesses and is now focused on MARKET.live, its livestream shopping platform. The sold businesses are presented as discontinued operations.
Key financial metrics
| Metric | Three months ended June 30, 2023 | Six months ended June 30, 2023 |
|---|---|---|
| Continuing-operations revenue | $3 | $5 |
| Gross profit | $2 | $3 |
| Operating loss, continuing operations | $(3,266) | $(7,393) |
| Net loss, including discontinued operations | $(9,856) | $(15,370) |
| Loss per share | $(2.45) | $(4.09) |
For comparison, second-quarter 2022 net loss was $6,374 and first-half 2022 net loss was $13,363. SaaS discontinued-operation revenue was $1,601 for Q2 2023 and $3,814 for the first half, versus $2,399 and $5,090 in the comparable 2022 periods. The discontinued business recorded losses of $6,080 in Q2 and $6,954 in the first half, including a $5,441 impairment associated with the sale.
At June 30, cash was $3,526, total current assets $3,764, total current liabilities $12,749, and total liabilities $14,278. Stockholders’ deficit was $1,818. Current notes payable were reported at $5,605, related-party current notes at $765, and non-current notes at $150; operating lease liabilities totaled $1,861. Six-month cash used in continuing operations was $4,685; continuing investing activities used $244, and continuing financing activities provided $4,853. Cash increased by $1,097 from year-end 2022 to $3,526.
Material changes versus the prior comparable period
- Continuing-operations revenue remained minimal: $3 in Q2 and $5 in the first half of 2023, versus none reported in the comparable 2022 periods.
- Continuing-operations operating losses narrowed year over year, by $1,538 in Q2 and $2,586 for the first half, as general and administrative expense declined. The filing attributes the decrease primarily to headcount reductions. Depreciation and amortization rose, largely reflecting MARKET.live software amortization.
- Net losses increased, including discontinued-operation losses and, in Q2 2023, $1,239 of financing costs. The filing attributes these costs to missed payments and payment-failure increases under the November note.
- Cash from continuing operations used improved to $4,685 from $7,954 in the first half of 2022. The SaaS asset sale generated $4,750 cash at closing; a further $1,750 is contingent on meeting specified profitability and revenue targets within two years.
- Verb issued 901,275 shares in a January public offering, raising $6,578 net, and effected a 1-for-40 reverse stock split in April. Shares outstanding were 4,317,561 at June 30.
Outlook, risks, contingencies and unusual items
Management disclosed substantial doubt about Verb’s ability to continue as a going concern within one year after issuance of the financial statements. It cited the $8,416 first-half continuing-operations loss, $4,685 cash used in continuing operations, and dependence on additional financing. Management said operating expenses may continue to exceed revenue and that there is no assurance financing will be available on acceptable terms. Further equity funding could dilute existing shareholders; failure to obtain funding could require reduced or discontinued operations.
Management plans to focus resources on MARKET.live. It expected broader launches of social-platform checkout integration and a restructured, subscription-based creator/drop-ship program later in summer 2023. These were expectations, not reported results. The company also disclosed a non-binding LOI to acquire certain assets of an ecommerce business; any acquisition was subject to completion and proposed consideration included cash and stock structured as a seller note. The filing does not establish that the transaction was completed.
The November note carried an original principal amount of $5,470 and a 9% stated interest rate. The company disclosed missed payments, a $1,205 payment-failure balance increase, and a June 30 outstanding balance of $6,375 before unamortized discounts and issuance costs. The note includes monthly redemption requirements and provisions requiring use of a portion of proceeds from future financings or asset sales for prepayment. The company also reported $725 and $40 balances on related-party notes payable to its CEO, including accrued interest in the disclosed balances.
Legal matters include a former employee claim for approximately $300, with trial scheduled for August 28, 2023; a settled legal-malpractice dispute with a total settlement amount of $100; and Iroquois counterclaims alleging $1,500 in damages, which Verb disputes. Management said it believed the matters were adequately reserved and did not expect material adverse effects. The filing also reports a $1,528 Employee Retention Credit receivable with uncertain collection timing. After quarter-end, Verb issued shares to reduce the November note balance by $200 and agreed to terminate and replace office leases. Disclosure controls were deemed effective as of June 30, 2023.
Important facts for investors to verify
- Confirm the registrant identity: the supplied filing is Verb Technology Company, Inc. (VERB), not TON Strategy Co.
- Review the going-concern disclosure, available cash, near-term obligations, and Verb’s ability to secure financing.
- Verify November note balances, payment status, redemption terms, and any subsequent repayments or share settlements.
- Track MARKET.live revenue, adoption, and whether the planned checkout and creator/drop-ship launches generated meaningful sales.
- Confirm whether the contingent $1,750 SaaS-sale payment was earned and whether the proposed ecommerce acquisition proceeded.
- Assess dilution from share issuances, outstanding options and warrants, and the reverse split; the filing reports 4,317,561 common shares outstanding at June 30, 2023.