SCHEDULE: Verb Tech Pivots to Crypto with Major Investment

Verb Technology Company, Inc. announced a significant capital raise and strategic shift to acquire Toncoin, following a major investment by Manuel Stotz and Kingsway Capital.

Summary

• Manuel Stotz and Kingsway Capital Partners Limited, along with several associated funds, have acquired 12,101,730 shares of Verb Technology Company, Inc. common stock, representing 19.99% of the outstanding shares.
• The acquisition also included a pre-funded warrant to purchase an additional 321,123 shares.
• The total purchase price for these securities was approximately $118,141,377.
• The broader transaction, which included other investors, generated aggregate gross proceeds of approximately $558 million.
• Net proceeds from the transaction are earmarked for Verb Technology Company, Inc. to purchase Toncoin (TON), the native cryptocurrency of The Open Network (TON) blockchain, and for general working capital.
• Manuel Stotz has been appointed Chairman of the Issuer's Board of Directors.
• Mr. Stotz plans to implement a new capital allocation strategy focused on acquiring TON as a treasury asset.
• He will also explore market opportunities and funding sources (debt and equity) for further TON acquisitions.

Sentiment

Score: 7

Explanation: The filing indicates a significant capital injection and a bold strategic pivot into the cryptocurrency space, led by a new Chairman with substantial ownership. This could be viewed positively for growth potential and innovation, but also introduces new risks associated with crypto volatility and regulatory uncertainty, which are not explicitly detailed in this specific filing.

Positives

• Significant capital injection of approximately $558 million, providing substantial funds for strategic initiatives and working capital.
• Appointment of Manuel Stotz, CEO of Kingsway Capital Partners, as Chairman of the Board, indicating strong institutional backing and strategic leadership.
• Clear strategic direction towards acquiring Toncoin (TON) as a treasury asset, potentially aligning the company with the growing blockchain and cryptocurrency market.
• Increased institutional ownership by Kingsway Capital and its associated funds, holding nearly 20% of the common stock.

Future Outlook

The Issuer, under the new leadership of Chairman Manuel Stotz, intends to pivot its capital allocation strategy to primarily focus on purchasing Toncoin (TON) as a treasury asset. This includes assessing market opportunities and exploring various funding sources, including debt and equity, to facilitate further TON acquisitions.

Management Comments

• Mr. Stotz intends to establish a new capital allocation strategy to purchase TON as an asset in the Issuer's treasury management program.
• In connection with such possible change in business focus, Mr. Stotz, as Chairman of the Issuer, intends to work with the Issuer to assess market opportunities to acquire TON and assess debt and equity funding sources for the acquisition of TON.

Industry Context

This announcement signifies a notable shift for Verb Technology Company, Inc. into the digital asset space, specifically targeting Toncoin (TON) and The Open Network (TON) blockchain. This aligns with a broader trend of companies exploring cryptocurrency as a treasury asset or integrating blockchain technology into their operations, moving beyond traditional business models. It positions Verb Technology Company, Inc. to potentially capitalize on the growth of the decentralized finance (DeFi) and Web3 ecosystems, a move that could be seen as either innovative or high-risk depending on market perception and regulatory developments in the crypto industry.

Comparison to Industry Standards

• The strategic pivot to holding a significant cryptocurrency asset like Toncoin in treasury is comparable to moves made by companies such as MicroStrategy, which has famously adopted Bitcoin as its primary treasury reserve asset.
• While MicroStrategy focuses on Bitcoin, Verb's focus on Toncoin suggests an interest in a specific blockchain ecosystem (The Open Network) that has gained traction, particularly with its ties to Telegram. This differentiates it from broader crypto treasury strategies.
• The capital raise of $558 million specifically for this purpose is substantial for a company of Verb's size, indicating a strong commitment to this new direction, similar to how larger tech companies might raise capital for significant M&A or R&D in new fields.
• The appointment of a new Chairman with a clear mandate for this strategic shift is a common corporate governance move when a company undergoes a significant transformation, akin to leadership changes seen in companies transitioning to AI or renewable energy.

Management Changes

Corporate Governance

Related Party Transactions

• The acquisition of shares by Kingsway Capital Partners Limited and its associated funds, managed by Manuel Stotz (who is now Chairman of the Issuer), constitutes a related party transaction.

Stakeholder Impact

• Shareholders: Potential for significant strategic shift and exposure to the cryptocurrency market, which could lead to increased volatility but also potential for high growth. Dilution from the capital raise is implied by the new shares issued.
• Management/Employees: A new Chairman signals a new strategic direction, potentially impacting existing business operations and future roles.
• Creditors: The intention to assess debt funding sources for TON acquisition could impact the company's debt profile.

Next Steps

• Verb Technology Company, Inc. will use net proceeds from the transaction to purchase Toncoin (TON) and for working capital.
• Manuel Stotz, as Chairman, will establish a new capital allocation strategy focused on acquiring TON as a treasury asset.
• Mr. Stotz will assess market opportunities to acquire TON.
• Mr. Stotz will assess debt and equity funding sources for the acquisition of TON.

Key Dates

Recommendation

The filing details a significant capital raise and a bold strategic pivot into the volatile cryptocurrency market by Verb Technology Company, Inc., led by a new Chairman with substantial ownership. While the capital injection and new strategic direction offer potential for growth and innovation, the inherent risks of cryptocurrency investments, including market volatility and regulatory uncertainty, are substantial and not fully elaborated in this disclosure. Investors should hold to observe the execution of this new strategy and its impact on the company's financial performance and risk profile before making further investment decisions.

Keywords

Verb Technology, Toncoin, TON blockchain, Cryptocurrency, Digital Assets, SEC Filing, Schedule 13D, Manuel Stotz, Kingsway Capital, Strategic Shift, Capital Raise, Treasury Management, Blockchain Technology, Investment