8-K/A: Verb Technology Files Amended 8-K Detailing Lyvecom Acquisition Financials and Restatement

Verb Technology Company, Inc. has filed an amended 8-K report providing comprehensive financial statements for its recently acquired subsidiary, Lyvecom, Inc., revealing significant historical losses and a restatement of prior period financials.

Summary

• Verb Technology Company, Inc. (VERB) completed the acquisition of Lyvecom, Inc. (Lyvecom) on April 11, 2025, as an amendment to its initial 8-K filing.
• The acquisition consideration included $3,000,000 in cash, repayment of $1,125,000 to Lyvecom's Simple Agreement for Future Equity (SAFE) investors, payment of $100,000 to a related party loan, and the issuance of 184,812 restricted shares of VERB common stock valued at $1,000,000.
• An additional earn-out payment of up to $3,000,000 in cash is possible over a 24-month period, contingent on Lyvecom's achievement of various performance metrics.
• Lyvecom's financial statements for the years ended December 31, 2024, and 2023, were restated primarily due to the reclassification of SAFE investments from equity to liabilities and a fair value adjustment of these liabilities, which increased the reported net loss and accumulated deficit.
• Lyvecom reported revenue of $496,651 for the year ended December 31, 2024, a significant increase from $151,847 in 2023.
• For the three months ended March 31, 2025, Lyvecom's revenue was $148,143, up from $73,365 in the same period of 2024.
• Despite revenue growth, Lyvecom incurred net losses of $(460,529) in 2024 and $(62,198) for Q1 2025, contributing to an accumulated deficit of $(1,222,849) as of March 31, 2025.
• The unaudited pro forma condensed combined financial information indicates a pro forma net loss of $(10,703) thousand for the year ended December 31, 2024, and $(2,250) thousand for the three months ended March 31, 2025, for the combined entity.
• Goodwill of $5,165 thousand and definite-lived intangible assets of $934 thousand were recognized as part of the acquisition accounting.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the significant historical losses of the acquired company, the necessity of a financial restatement due to accounting errors, and the continued pro forma losses for the combined entity. While the acquisition is strategically positive for market expansion, the financial implications and past accounting issues weigh heavily on the overall sentiment.

Positives

• The acquisition of Lyvecom, a live shopping software solutions provider, strategically expands Verb Technology Company's SaaS offerings.
• Lyvecom demonstrated strong revenue growth, with 2024 revenue increasing to $496,651 from $151,847 in 2023, and Q1 2025 revenue reaching $148,143 from $73,365 in Q1 2024.
• Management has assessed that no substantial doubt exists about Lyvecom's ability to continue as a going concern due to the acquisition by VERB.

Negatives

• Lyvecom has a history of significant net losses, reporting $(460,529) in 2024 and $(62,198) in Q1 2025.
• The company has an accumulated deficit of $(1,222,849) as of March 31, 2025, indicating a history of unprofitability.
• Lyvecom's financial statements for 2023 and 2024 were restated due to accounting errors, specifically the misclassification of SAFE investments as equity instead of liabilities, which increased reported losses and liabilities.
• The pro forma combined financial statements show continued net losses for the combined entity, with a pro forma net loss of $(10,703) thousand for 2024 and $(2,250) thousand for Q1 2025.
• Lyvecom had negative cash flows from operating activities of $(54,969) in 2024 and $(1,478) in Q1 2024, though Q1 2025 showed positive operating cash flow of $14,163.

Risks

• Lyvecom's history of recurring net losses and negative cash flows from operations poses a financial risk to the combined entity.
• The restatement of Lyvecom's prior financial statements highlights potential weaknesses in internal controls over financial reporting or accounting practices.
• Concentration of credit risk exists, with one customer representing approximately 27% of Lyvecom's total revenue in Q1 2025, and three customers comprising significant portions of accounts receivable (34%, 26%, and 15% as of March 31, 2025).
• The earn-out payment of up to $3,000,000 is contingent on Lyvecom's performance metrics, introducing variability and potential future cash outflows for VERB.
• Lyvecom has historically relied on related-party financing, including loans from KGJP Holdings LLC and advances to its CEO, which could indicate limited access to traditional financing sources.

Future Outlook

The acquisition agreement includes an earn-out payment of up to an additional $3,000,000 in cash to Lyvecom shareholders over a 24-month period, contingent on Lyvecom's achievement of various performance metrics, indicating future performance expectations for the acquired entity.

Management Comments

• Rory J. Cutaia, President and Chief Executive Officer of Verb Technology Company, Inc., signed the report on behalf of the registrant.

Industry Context

This acquisition positions Verb Technology Company, Inc. to expand its presence in the rapidly growing live shopping and software-as-a-service (SaaS) market. Lyvecom's focus on real-time interactive commerce experiences aligns with broader industry trends towards engaging digital customer interactions and direct-to-consumer sales channels. The integration of Lyvecom's platform could enhance VERB's offerings in a competitive landscape where companies are increasingly leveraging interactive video and e-commerce solutions.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess Lyvecom's performance against global industry benchmarks. Therefore, a direct comparison to industry standards is not feasible based solely on the provided information.
• Lyvecom's significant net losses and accumulated deficit, despite revenue growth, suggest it was operating below profitability standards typical for mature SaaS companies, though common for early-stage growth companies prior to scaling.

Related Party Transactions

• Lyvecom had a loan receivable from Maxwell Drut, Founder and CEO, totaling $12,632 as of March 31, 2025.
• Lyvecom had a note payable to KGJP Holdings LLC, an entity controlled by founder Kevin Gould, with a balance of $85,689 as of March 31, 2025, accruing 9% interest since 2024.
• Lyvecom incurred expenses of $133,192 in 2024 and $128,025 in 2023 paid to KGJP Holdings LLC for services provided under an operating agreement.

Stakeholder Impact

• **Shareholders (VERB):** The acquisition introduces a new business segment with growth potential but also significant historical losses and liabilities, which will impact the combined entity's financial performance and potentially dilute existing shareholders through share issuance.
• **Shareholders (Lyvecom):** Received cash and restricted shares of VERB, with potential for additional earn-out payments based on Lyvecom's future performance.
• **Employees (Lyvecom):** Integration into a larger public company, potentially offering more resources and stability, but also subject to organizational changes.
• **Customers (Lyvecom):** Expected to benefit from continued service and potentially enhanced offerings under VERB's ownership.
• **Creditors (Lyvecom):** Certain related-party loans and SAFE notes were repaid as part of the acquisition, resolving some liabilities.

Next Steps

• Lyvecom's achievement of various performance metrics over a 24-month earn-out period to potentially trigger an additional $3,000,000 cash payment from VERB.

Key Dates

Recommendation

Keywords

SEC Filing, 8-K/A, Acquisition, Lyvecom, Verb Technology Company, Financial Statements, Pro Forma, Restatement, SaaS, Live Shopping, Corporate Acquisition, Financial Reporting, Goodwill, Intangible Assets, Earn-out, SAFE Notes, Accumulated Deficit, Net Loss, Revenue Growth