10-K: Verb Technology Company Reports 2023 Annual Results, Shifts Focus to MARKET.live Platform

Verb Technology Company's 2023 annual report highlights a strategic shift towards its MARKET.live platform, accompanied by the sale of its SaaS assets and a significant reduction in operating expenses.

Summary

• Verb Technology Company's 2023 annual report details a year of strategic transition, primarily marked by the sale of its SaaS assets for $6.5 million to focus on its MARKET.live livestream shopping platform.
• The company incurred a net loss of $22 million for the year, compared to a $37.4 million loss in 2022.
• Operating expenses decreased by $5 million, mainly due to reduced personnel costs.
• The company's MARKET.live platform is a multi-vendor, multi-presenter livestream social shopping destination.
• Verb has integrated MARKET.live with META (Facebook and Instagram) and TikTok, enabling seamless in-app purchases.
• A formal partnership with TikTok Shop designates MARKET.live as a service provider, expected to generate revenue through fees and a percentage of sales.
• The company's revenue is primarily derived from platform fees, produced events, drop ship programs, and TikTok store and affiliate programs.
• As of March 28, 2024, the company had 20 full-time employees, 3 part-time employees, and 3 independent contractors.
• The company has raised approximately $14.2 million in cash through various offerings and debt financing, and has approximately $1.2 million in notes payable as of March 28, 2024.
• The company believes its enhanced cash position and reduced operating costs mean its operations are fully funded for at least the next 14 months.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While the company has made strategic moves to focus on its MARKET.live platform and reduce operating expenses, it still faces significant financial challenges, including a substantial net loss and reliance on external funding. The partnership with TikTok Shop is a positive development, but the company's future success is not guaranteed.

Positives

• The company has successfully sold its SaaS assets, allowing a focused approach on the MARKET.live platform.
• The net loss has significantly decreased year-over-year, indicating improved financial performance.
• Operating expenses have been reduced, demonstrating cost-cutting measures.
• The MARKET.live platform has secured strategic integrations with major social media platforms.
• The partnership with TikTok Shop is expected to generate new revenue streams.
• The company has improved its cash position and believes it is fully funded for at least the next 14 months.

Negatives

• The company incurred a net loss of $22 million for the year ended December 31, 2023.
• The company's revenue is minimal, indicating the MARKET.live platform is still in its early stages.
• The company has a history of losses and negative cash flows from operations.
• The company has a history of relying on equity investments and debt financing to fund operations.
• The company has received deficiency notices from NASDAQ for not meeting minimum bid price and stockholders equity requirements.

Risks

• The company may not achieve or maintain profitable operations.
• The company's ability to continue as a going concern is uncertain.
• The company's ability to raise additional capital or borrow additional funds is not guaranteed.
• The company is susceptible to security breaches and other disruptions.
• The company may not be able to maintain compliance with Nasdaq listing requirements.
• The company operates in a highly competitive market.
• The company's success depends on maintaining and expanding its customer base.
• The company's ability to deliver services is dependent on third-party internet providers.
• The company's success is highly correlated to general economic conditions.

Future Outlook

The company expects the MARKET.live business unit to create greater shareholder value over time and is actively engaged in completing development on integrations into additional large social media platforms, as well as developing partnerships and strategic alliances.

Management Comments

• The company determined that by focusing all of our resources solely on the development and operation of MARKET.live, our livestream shopping platform, over time we could generate greater shareholder value than through the continued operation of our SaaS business platforms.
• We believe that our enhanced cash position coupled with our substantially reduced current operating costs means our operations are fully funded for at least the next 14 months, and possibly longer subject to revenue generation during that period.

Industry Context

The company is capitalizing on the convergence of e-commerce and entertainment, a growing trend in the retail industry. The integration with social media platforms like TikTok and META is a strategic move to reach a wider audience and facilitate seamless shopping experiences. The company is competing with other livestream shopping platforms and e-commerce solutions.

Comparison to Industry Standards

• The company's shift to a focused approach on MARKET.live aligns with the trend of businesses specializing in specific areas to gain a competitive edge.
• The integration with social media platforms is a common strategy among e-commerce companies to enhance user engagement and sales.
• The company's financial performance, while showing improvement, still lags behind established players in the e-commerce and SaaS sectors.
• The company's reliance on debt and equity financing is not uncommon for growth-stage companies, but it also indicates a need for sustainable revenue generation.
• The company's partnership with TikTok Shop is a strategic move to leverage the popularity of short-form video content for e-commerce, similar to other companies that have partnered with social media platforms.

Management Changes

Legal Proceedings

• The company is currently in a dispute with a former employee of its predecessor bBooth, Inc. who has interposed a breach of contract claim.
• The company was involved in a dispute with Baker Hostetler LLP relating to corporate legal services provided by BH to the Company.
• The company is currently in a dispute with Iroquois Capital Investment Group LLC and Iroquois Master Fund, Ltd relating to a securities purchase agreement.

Related Party Transactions

• The company had outstanding notes payable to Mr. Cutaia, its Chief Executive Officer, which were repaid in 2023.
• The company sold one share of Series B Preferred Stock to Mr. Cutaia, which was later redeemed.
• The company entered into a corporate office sublease agreement with Mr. Cutaia.

Stakeholder Impact

• Shareholders face the risk of further dilution due to potential future equity offerings.
• Employees may be affected by cost-cutting measures and potential changes in compensation.
• Customers of the SaaS business may have experienced changes due to the sale of assets.
• Customers of the MARKET.live platform may benefit from the new integrations and partnerships.
• Creditors may be impacted by the company's debt obligations and ability to repay.

Next Steps

• The company is actively engaged in completing development on integrations into additional large social media platforms.
• The company is developing partnerships and strategic alliances that it believes will help foster the growth of the Companys business.
• The company intends to continue actively monitoring the bid price for its common stock between now and April 30, 2024, and will consider available options to resolve the deficiency and regain compliance with the minimum bid price requirement, including, but not limited to seeking a six-month extension from The NASDAQ Stock Market in which to regain compliance.

Key Dates

Keywords

MARKET.live, livestream shopping, SaaS, e-commerce, TikTok, META, financial results, strategic partnership, capital raise, operating expenses