Business Context and Reporting Period
This Form 8-K filing by Verb Technology Company, Inc. (trading as VERB) reports material definitive agreements entered into on January 12, 2022. The company, incorporated in Nevada, operates the MARKET platform and is listed on The Nasdaq Stock Market LLC.
Key Financial Metrics and Capital Structure
The filing details two distinct financing transactions executed on the same date:
- Equity Offering: Entered into a Common Stock Purchase Agreement with Tumim Stone Capital LLC for a total commitment of up to $50,000,000. This includes an immediate issuance of 607,287 "Commitment Shares" valued at $750,000.
- Debt Offering: Issued convertible notes with an aggregate original principal amount of $6,300,000. The company received $6,000,000 in gross proceeds (reflecting a 5.0% original issue discount).
- Debt Terms: Notes bear 6.0% annual interest, mature in 12 months, and have an initial conversion price of $3.00 per share.
- Collateral: The company granted a security interest in substantially all of its assets to the note holders.
Material Changes and Transaction Terms
The primary material change is the establishment of new capital access mechanisms:
- Equity Pricing: Future shares under the $50M agreement will be sold at 94% of the lowest daily volume-weighted average price (VWAP) over the three trading days following a purchase notice.
- Issuance Limits: The equity agreement initially limits sales to 19.99% of outstanding shares (approx. 14.75 million shares) without shareholder approval. A beneficial ownership limitation restricts the investor to 4.99% (expandable to 9.99% with notice).
- Duration: The equity agreement term is 36 months from the commencement date (January 12, 2022).
- Costs: The company incurred a 5.5% cash placement fee on the note proceeds paid to Alliance Global Partners.
Outlook, Management Commentary, and Risks
Use of Proceeds: Management intends to use net proceeds from both offerings for working capital and general corporate purposes, specifically citing the promotion, marketing, and expansion of the MARKET platform.
Risks and Contingencies:
- Dilution: The equity offering allows for the issuance of up to $50 million in shares at a discount to market price, which may dilute existing shareholders.
- Asset Encumbrance: The security agreement grants note holders a lien on substantially all company assets, which could restrict future borrowing capacity.
- Market Dependency: Actual sales under the equity agreement depend on market conditions and the company's discretion regarding funding needs.
Investor Verification Checklist
- Verify the current share count to calculate the exact dilution impact of the 19.99% issuance cap.
- Confirm the status of the 5.5% placement fee payment and its impact on net cash received.
- Review the specific covenants in the Security Agreement regarding restrictions on future asset sales or additional debt.
- Monitor the conversion price of the notes ($3.00) relative to the current trading price of VERB common stock.
- Check for any subsequent filings regarding the actual drawdown of funds under the $50 million equity facility.