Business Context and Reporting Period
This Form 8-K was filed by Verb Technology Company, Inc. (trading symbol: VERB) on June 20, 2023, reporting events occurring on June 12 and June 13, 2023. The Company is a Nevada corporation headquartered in Lehi, Utah. The filing details a strategic pivot where the Company sold its direct sales and life sciences software units to focus exclusively on its livestream shopping platform, MARKET.live.
Key Financial Metrics and Transaction Details
- Asset Sale Proceeds: The Company sold its direct sales and life sciences SaaS applications for a total expected consideration of approximately $6.5 million in cash.
- Payment Structure: The $6.5 million includes a $1.5 million earn-out ($750,000 per year for two years) contingent on revenue targets. A $250,000 hold-back is retained for 90 days after the first anniversary to confirm adjusted EBITDA.
- Workforce Impact: The buyer (Scaleworks, Inc. via SW Direct Sales, LLC) will retain approximately 74 of the Company's 94 employees (nearly 80%), assuming the Utah office lease and related operational costs.
- Proposed Acquisition: The Company signed a non-binding Letter of Intent (LOI) to acquire an ecommerce business with approximately $9.5 million in Gross Merchandise Value (GMV) for the year ended December 31, 2022. The target is cash-flow positive with 70,000 active subscribers.
- Acquisition Consideration: The proposed acquisition consideration is a combination of cash and stock, structured as a seller note payable over 24 months, subject to actual cash receipts.
Material Changes Versus Prior Period
The filing represents a material change in the Company's business composition. Verb Technology is divesting its legacy direct sales and life sciences software units, which previously comprised the majority of its operations and staff. Post-transaction, the Company will operate solely as a livestream shopping platform provider (MARKET.live). The filing does not provide comparative revenue or profit figures for the Company's prior periods, only the GMV of the potential acquisition target.
Guidance, Outlook, and Risks
- Strategic Focus: Management intends to focus resources entirely on MARKET.live, integrating the technology and subscriber base of the proposed ecommerce acquisition to potentially drive higher margins and additional sales.
- Transaction Risks: The proposed acquisition of the ecommerce business is subject to definitive closing documents, further price negotiation, due diligence, and an audit. There is no assurance the transaction will close or on the terms currently contemplated.
- Earn-out Risk: A portion of the asset sale proceeds ($1.5 million) is contingent on the sold business units achieving specific revenue targets under new ownership.
- Financial Statements: Unaudited Pro Forma Condensed Combined Financial Statements are included as Exhibit 99.3, but specific pro forma revenue or earnings figures are not detailed in the text of this filing.
Investor Verification Checklist
- Verify the final closing terms and consideration amount for the proposed ecommerce acquisition, as the LOI is non-binding.
- Review the Unaudited Pro Forma Condensed Combined Financial Statements (Exhibit 99.3) to understand the projected financial impact of the asset sale and potential acquisition.
- Confirm the timeline for the $1.5 million earn-out payments and the conditions required to trigger them.
- Assess the integration plan for the 70,000 subscribers from the target ecommerce business into the MARKET.live platform.
- Monitor the Company's cash position post-transaction, noting that the acquisition consideration includes a seller note rather than immediate cash outflow.