8-K: Verb Technology Secures $5 Million Investment via Series D Preferred Stock Offering

Verb Technology Company, Inc. has entered into a securities purchase agreement with Streeterville Capital, LLC, resulting in a $5 million investment through the sale of newly designated Series D Preferred Stock.

Summary

• Verb Technology Company, Inc. has secured a $5 million investment by selling 5,000 shares of its Series D Preferred Stock to Streeterville Capital, LLC.
• The shares are non-convertible, non-voting, and have a face value of $1,200 per share.
• The proceeds from the sale will be used for general corporate purposes.
• The Series D Preferred Stock accrues a 9% annual return, compounded annually, payable quarterly in cash or additional shares of Series D stock at the company's discretion.
• The company has the option to redeem the Series D stock at any time for the Series D Preferred Liquidation Amount.
• The company filed a certificate of designation of preferences and rights for the Series D Preferred Stock with the Secretary of State of Nevada.
• The Series D Preferred Stock has no voting rights except on matters that materially and adversely affect its rights or as required by law.
• The maturity date for any shares of Series D Stock is twenty-four (24) months immediately following the applicable Issuance Date of such shares.

Sentiment

Score: 7

Explanation: The sentiment is neutral to positive. The company has secured funding, which is generally positive. However, the terms of the preferred stock (high dividend rate, redemption obligations) introduce some financial risk.

Positives

• The $5 million investment provides Verb Technology with additional capital for general corporate purposes.
• The non-convertible nature of the Series D Preferred Stock prevents dilution of existing common shareholders.
• The company has the flexibility to pay the quarterly preferred return in cash or additional shares of Series D stock.

Negatives

• The 9% annual return on the Series D Preferred Stock represents a cost of capital for the company.
• The company may be required to redeem the Series D stock in cash on the maturity date, which could strain its cash flow.
• The covenants in the Certificate of Designations restrict the company's ability to take certain actions without the consent of the Series D Holders.

Risks

• The company's ability to generate sufficient cash flow to pay the quarterly preferred return and redeem the Series D stock on the maturity date is uncertain.
• Failure to comply with the covenants in the Certificate of Designation could trigger an event of default and increase the stated value of the Series D Stock by 10%.
• The arbitration provisions in the Securities Purchase Agreement could be costly and time-consuming to enforce.

Future Outlook

The company intends to use the proceeds from the sale of the Series D Preferred Stock for general corporate purposes.

Industry Context

This announcement reflects a common financing strategy for companies seeking capital, particularly those in growth stages. Preferred stock offerings can be attractive to investors seeking a fixed return, while providing the company with non-dilutive financing (relative to common stock).

Comparison to Industry Standards

• Comparable companies in the technology sector, such as Fastly and Cloudflare, have utilized convertible notes and preferred stock offerings to raise capital.
• The 9% dividend rate is relatively high compared to current market rates for preferred stock, suggesting a higher risk profile for Verb Technology.
• Similar deals in the small-cap market often involve warrants or conversion rights, which are absent in this Series D offering.

Stakeholder Impact

• Shareholders: The investment provides the company with additional capital, which could lead to increased growth and profitability.
• Employees: The investment provides the company with additional capital, which could lead to increased job security and opportunities.
• Creditors: The investment improves the company's financial position, which could make it easier to repay debts.
• Customers: The investment provides the company with additional capital, which could lead to improved products and services.

Next Steps

• The company will use the proceeds for general corporate purposes.
• The company will make quarterly payments of the preferred return in cash or additional shares of Series D stock.
• The company may elect to redeem the Series D stock at any time.
• The company will need to comply with the covenants in the Certificate of Designation.

Key Dates

Keywords

Series D Preferred Stock, Securities Purchase Agreement, Streeterville Capital, Investment, Financing, Verb Technology, Non-Convertible, Non-Voting, Redemption, Preferred Return