UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
For the transition period from ________ to ________
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| ||
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
The
The
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒
As of August 9, 2021, there were shares of common stock, $0.0001 par value per share, outstanding.
VERB TECHNOLOGY COMPANY, INC.
TABLE OF CONTENTS
2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the three and six months ended June 30, 2021 (this “Quarterly Report”), includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not statements of historical facts and can be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” or similar expressions and the negatives of those expressions. Forward-looking statements also include the assumptions underlying or relating to such statements.
Our forward-looking statements are based on our management’s current beliefs, assumptions and expectations about future events and trends, which affect or may affect our business, strategy, operations, financial performance or liquidity. Although we believe these forward-looking statements are based upon reasonable assumptions, they are subject to numerous known and unknown risks and uncertainties and are made in light of information currently available to us. Some of the risks and uncertainties that may impact our forward-looking statements include, but are not limited to, the following factors:
● our incursion of significant net losses and uncertainty whether we will achieve or maintain profitable operations;
● our ability to continue as a “going concern”;
● the novel coronavirus (“COVID-19”) pandemic, which has had a sustained impact on our business, sales, results of operations and financial condition;
● our ability to grow and compete in the future, which is dependent upon whether capital is available to us on favorable terms;
● our ability to maintain and expand our customer base and our ability to convince our customers to increase the use of our services and/or platform;
● the competitive market in which we operate;
● our ability to increase the number of our strategic relationships or grow the revenues received from our current strategic relationships;
● our ability to develop enhancements and new features to our existing service or acceptable new services that keep pace with technological developments;
● our ability to deliver our services, as we depend on third party Internet providers; and
● our susceptibility to security breaches and other disruptions.
The foregoing list may not include all of the risk factors that impact the forward-looking statements made in this Quarterly Report. Our actual financial condition and results could differ materially from those expressed or implied by our forward-looking statements as a result of various additional factors, including those discussed in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2020 (our “Annual Report”), as well as in the other reports we file with the Securities and Exchange Commission (the “SEC”). You should read this Quarterly Report, and the other documents we file with the SEC, with the understanding that our actual future results may be materially different from the results expressed or implied by our forward-looking statements.
We operate in an evolving environment. New risks and uncertainties emerge from time to time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements.
Forward-looking statements speak only as of the date they were made, and, except to the extent required by law or the rules of the NASDAQ Capital Market, we undertake no obligation to update or review any forward-looking statement because of new information, future events or other factors.
We qualify all of our forward-looking statements by these cautionary statements.
3 |
PART I — FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
4 |
VERB TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2021 | December 31, 2020 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | $ | ||||||
Accounts receivable, net of allowance of $ | ||||||||
Inventory, net of allowance of $ | ||||||||
Prepaid expenses and other current assets | ||||||||
Total current assets | ||||||||
Right-of-use assets | ||||||||
Property
and equipment, net of accumulated depreciation of $ | ||||||||
Intangible assets, net of amortization of $ | ||||||||
Goodwill (including provisional goodwill of $ | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Accrued officers’ salary | ||||||||
Accrued interest (including $ | ||||||||
Advance on future receipts, net of discount of $ | ||||||||
Notes payable - related party | ||||||||
Deferred incentive compensation, current | ||||||||
Operating lease liability, current | ||||||||
Deferred revenue and customer deposits | ||||||||
Derivative liability | ||||||||
Total current liabilities | ||||||||
Long Term liabilities: | ||||||||
Notes payable | ||||||||
Note payable - related party, non-current | - | |||||||
Deferred incentive compensation to officers | - | |||||||
Operating lease liability, non-current | ||||||||
Total liabilities | ||||||||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Preferred stock, $ Series A Convertible Preferred Stock, shares authorized; and issued and outstanding as of June 30, 2021 and December 31, 2020 | par value, shares authorized: - | - | ||||||
Class A units, | issued and authorized as of June 30, 2021 and December 31, 2020- | - | ||||||
Class B units, | shares authorized, and issued and outstanding as of June 30, 2021 and December 31, 2020- | |||||||
Common stock, $ | par value, shares authorized, and shares issued and outstanding as of June 30, 2021 and December 31, 2020||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders’ equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements
5 |
VERB TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Statement of Operations | ||||||||||||||||
Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | |||||||||||||
Revenue | ||||||||||||||||
SaaS recurring subscription revenue | $ | $ | $ | $ | ||||||||||||
Other Digital | ||||||||||||||||
Welcome kits and fulfillment | ||||||||||||||||
Shipping | ||||||||||||||||
Total revenue | ||||||||||||||||
Cost of revenue | ||||||||||||||||
SaaS and other digital | ||||||||||||||||
Welcome kits and fulfillment | ||||||||||||||||
Shipping | ||||||||||||||||
Total cost of revenue | ||||||||||||||||
Gross margin | ||||||||||||||||
Operating Expenses: | ||||||||||||||||
Research and development | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
General and administrative | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other income (expense), net | ||||||||||||||||
Other income (expense), net | ||||||||||||||||
Interest expense - amortization of debt discount | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
Gain on extinguishment of PPP notes payable | - | - | ||||||||||||||
Debt extinguishment, net | - | - | ( | ) | - | |||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Deemed dividends to Series A stockholders | - | - | - | ( | ) | |||||||||||
Net loss to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Net loss per share to common stockholders - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average number of common shares outstanding - basic and diluted |
The accompanying notes are an integral part of these condensed consolidated financial statements
6 |
VERB TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(Unaudited)
Preferred Stock | Class A Units | Class B Units | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | - | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
Sale of common stock from public offering | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
Issuance of common stock from warrant exercise | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Issuance of common stock from option exercise | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of common shares issued to settle note payable – related party | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of common shares issued to settle lawsuit | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Conversion of Series A Preferred to common stock | ( | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Fair value of common shares issued for services | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of vested restricted stock awards | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of vested stock options and warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Extinguishment of derivative liability upon exercise of warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Fair value of common shares issued to settle accrued expenses | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of warrants issued to officer to modify note payable | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Conversion of Class B Units to common shares | - | - | - | - | ( | ) | ( | ) | - | - | - | |||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | - | $ | $ | $ | $ | $ | ( | ) | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements
7 |
Preferred Stock | Class A Units | Class B Units | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | - | $ | - | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
Fair value of common shares issued to settle note payable – related party | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of common shares issued to settle lawsuit | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of common shares issued for services | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of vested restricted stock awards | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Fair value of vested stock options and warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Extinguishment of derivative liability upon exercise of warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Fair value of common shares issued to settle accrued expenses | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | - | $ | - | $ | $ | $ | $ | ( | ) | $ |
Preferred Stock | Class A Units | Class B Units | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | - | $ | - | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
Sale of common stock from private placement | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
Fair value of warrants issued to Series A Preferred stockholders | - | - | - | - | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||
Conversion of Series A Preferred to common stock | ( | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Fair value of common shares issued for services | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of vested restricted stock awards | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of vested stock options and warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | - | $ | - | $ | $ | $ | $ | ( | ) | $ |
Preferred Stock | Class A Units | Class B Units | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | - | $ | - | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
Sale of common stock from private placement | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of common shares issued for services | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of vested restricted stock awards | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Fair value of vested stock options and warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | - | $ | - | $ | $ | $ | $ | ( | ) | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements
8 |
VERB TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended | ||||||||
June 30, 2021 | June 30, 2020 | |||||||
Operating Activities: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Fair value of common shares issued for services and vested stock options and warrants | ||||||||
Amortization of debt discount | ||||||||
Change in fair value of derivative liability | ( | ) | ||||||
Debt extinguishment | ( | ) | ||||||
Depreciation and amortization | ||||||||
Amortization of right-of-use assets | ||||||||
Allowance for inventory | ||||||||
Disposal of fixed assets | ( | ) | - | |||||
Allowance for doubtful account | ( | ) | ||||||
Effect of changes in assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Prepaid expenses and other assets | ( | ) | ( | ) | ||||
Inventory | ||||||||
Deferred incentive compensation | ( | ) | ||||||
Accounts payable, accrued expenses, and accrued interest | ||||||||
Operating lease liability | ( | ) | ( | ) | ||||
Deferred revenue and customer deposits | ( | ) | ||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
Investing Activities: | ||||||||
Proceeds from the sale of fixed assets | ||||||||
Purchase of property and equipment | ( | ) | ||||||
Net cash provided (used) in investing activities | ( | ) | ||||||
Financing Activities: | ||||||||
Proceeds from sale of common stock | ||||||||
Proceeds from notes payable | ||||||||
Advances on future receipts | ||||||||
Proceeds from warrant exercise | ||||||||
Proceeds from option exercise | ||||||||
Payment of advances of future receipts | ( | ) | ( | ) | ||||
Deferred offering costs | ( | ) | ||||||
Net cash provided by financing activities | ||||||||
Net change in cash | ||||||||
Cash - beginning of period | ||||||||
Cash - end of period | $ | $ | ||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for income taxes | ||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Fair value of common stock issued for subscription agreement | $ | $ | ||||||
Fair value of derivative liability extinguished | $ | $ | ||||||
Fair value of common shares issued to settle accrued expenses | $ | $ | ||||||
Reclassification of Class B upon conversion to common stock | $ | $ | ||||||
Fair value of common stock issued to settle notes payable – related party | $ | |||||||
Fair value of common stock received in exchange for employee’s payroll taxes | $ | |||||||
Fair value of common stock issued for future services | $ | |||||||
Discount recognized from advances on future receipts | $ | $ | ||||||
Fair value of derivative liability from issuance of warrants to Series A stockholders considered as a deemed dividend | $ | $ | ||||||
Fair value of common stock issued to settle lawsuit | $ | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements
9 |
VERB TECHNOLOGY COMPANY, INC.
Notes to Condensed Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)
1. DESCRIPTION OF BUSINESS
Organization
References in this document to the “Company,” “Verb,” “we,” “us,” or “our” are intended to mean Verb Technology Company, Inc., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.
Cutaia Media Group, LLC (“CMG”) was organized as a limited liability company under the laws of the State of Nevada on December 12, 2012. On May 19, 2014, CMG merged into bBooth, Inc. and bBooth, Inc., thereafter, changed its name to bBooth (USA), Inc., effective as of October 16, 2014.
On October 16, 2014, bBoothUSA was acquired by Global System Designs, Inc. (“GSD”), pursuant to a Share Exchange Agreement entered into with GSD (the “Share Exchange Agreement”). GSD was incorporated in the State of Nevada on November 27, 2012. The acquisition was accounted for as a reverse merger transaction. In connection with the closing of the transactions contemplated by the Share Exchange Agreement, GSD’s management was replaced by bBoothUSA’s management, and GSD changed its name to bBooth, Inc.
On April 21, 2017, we changed our corporate name from bBooth, Inc. to nFüsz, Inc. The name change was effected through a parent/subsidiary short-form merger of nFüsz, Inc., our wholly-owned Nevada subsidiary, formed solely for the purpose of the name change, with and into us.
On February 1, 2019, we changed our corporate name from nFüsz, Inc. to Verb Technology Company, Inc. The name change was effected through a parent/subsidiary short-form merger of Verb Technology Company, Inc., our wholly-owned Nevada subsidiary, formed solely for the purpose of the name change, with and into us.
On
February 4, 2019, we implemented a
On April 12, 2019, we acquired Sound Concepts Inc. (“Sound Concepts”). The acquisition was intended to augment and diversify Verb’s internet and SaaS business (see Note 3).
On September 4, 2020, Verb Acquisition Co., LLC (“Verb Acquisition”), a subsidiary of the Company, acquired Ascend Certification, LLC, dba SoloFire (“SoloFire”) The acquisition was intended to augment and diversify Verb’s internet and SaaS business (see Note 3).
Nature of Business
We are a Software-as-a-Service (“SaaS”) applications platform developer. Our platform is comprised of a suite of interactive video-based sales enablement business software products marketed on a subscription basis. Our applications, available in both mobile and desktop versions, are offered as a fully integrated suite, as well as on a standalone basis, and include verbCRM, our Customer Relationship Management application, verbLEARN, our Learning Management System application, verbLIVE, our Live Stream eCommerce application, and verbTEAMS, our self-onboarding video-based CRM and content management application for small business and solopreneurs, with seamless synchronization with Salesforce, that also comes bundled with verbLIVE, and verbMAIL, our interactive video sales communication tool integrated into Microsoft Outlook.
Historically, we provided certain non-digital services to some of our enterprise clients such as printing and fulfillment services. We designed and printed welcome kits and starter kits for their marketing needs and provided fulfillment services, which consisted of managing the preparation, handling and shipping of our client’s custom-branded merchandise they use for marketing purposes at conferences and other events, and product sample packs that verbCRM users order through the app for automated delivery and tracking to their customers and prospects. We use the term “client” and “customer” interchangeably.
COVID-19
As of the date of this filing, there continue to be widespread concerns regarding the ongoing impacts and disruptions caused by the COVID-19 pandemic in the regions in which the Company operates. Our sales team reported a higher level of interest in our products and services during the period ended June 30, 2021 compared to the same period in 2020. Although the impacts of the COVID-19 pandemic have not been material to date, a prolonged downturn in economic conditions could have a material adverse effect on our customers and demand for our services. The Company has not observed any impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations, financial condition, or liquidity.
As of June 30, 2021, the Company has followed the recommendations of local health authorities to minimize exposure risk for its employees, including the temporary closure of its corporate office and having employees work remotely. Most vendors have transitioned to electronic submission of invoices and payments.
10 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 31, 2021 (the “2020 Annual Report”). The consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.
Principles of Consolidation
The consolidated financial statements include the accounts of Verb Technology Company, Inc., Verb Direct, LLC, and Verb Acquisition Co., LLC. Intercompany accounts have been eliminated in the consolidation.
Going Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial
statements, during the six months ended June 30, 2021, the Company incurred a net loss of $
The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flows from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations. There is no assurance that we will ever be profitable or that debt or equity financing will be available to us. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.
11 |
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods. Significant estimates include assumptions made in analysis of reserves for allowance of doubtful accounts, inventory, assumptions made in purchase price allocations, impairment testing of long-term assets, realization of deferred tax assets, determining fair value of derivative liabilities, and valuation of equity instruments issued for services. Amounts could materially change in the future.
Revenue Recognition
The Company derives its revenue primarily from providing application services through the SaaS application, digital marketing and sales support services, from the sale of customized print products and training materials, branded apparel, and digital tools, as demanded by its customers. The subscription revenue from the application services are recognized over the life of the estimated subscription period. The Company also charges certain customers setup or installation fees for the creation and development of websites and phone application. These fees are accounted as part of deferred revenue and amortized over the estimated life of the agreement. Amounts related to shipping and handling that are billed to customers are reflected as part of revenue, and the related costs are reflected in cost of revenue in the accompanying Statements of Consolidated Operations.
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Pursuant to ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer.
The products sold by us are distinctly individual. The products are offered for sale solely as finished goods, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Other than promotional activities, which can vary from time to time but nevertheless are entirely within the Company’s control, contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time.
The control of products we sell transfers to our customers upon shipment from our facilities, and our performance obligations are satisfied at that time. Shipping and handling activities are performed before the customer obtains control of the goods and, therefore, represent a fulfillment activity rather than promised goods to the customer. Payment for sales are generally made by check, credit card, or wire transfer. Historically, we have not experienced any significant payment delays from customers.
We allow returns within 30 days of purchase from end-users. Our customers may return purchased products to us under certain circumstances.
A description of our principal revenue generating activities is as follows:
1. | Digital Revenue which is divided into two main categories: |
a. | SaaS recurring digital revenue based on contract-based subscriptions to our verb app products and platform services which include verbCRM, verbLEARN, verbLIVE, and verbTeams. The revenue is recognized over the subscription period. verbMAIL was released after the reporting period covered by this Form 10-Q and as such no revenue is attributed to verbMAIL. | |
b. | Non-SaaS, non-recurring digital revenue, which is revenue generated by the use of our app products and in-app purchases, such as sampling and other services obtained through the app. The revenue for samples is recognized upon completion and shipment, while the design fees are recognized when the service has been rendered and the app is delivered to the customer. |
2. | Non-digital revenue, which is revenue we generate from non-app, non-digital sources through ancillary services we provide as an accommodation to our clients and customers. These services, which we now outsource to a strategic partner as part of a cost reduction plan we instituted in 2020, include: |
a. | Design, printing services, and fulfillment. The revenue is recognized upon completion and shipment of products or fulfillment to the customer. | |
b. | Shipping services. The revenue is recognized when the corresponding products or fulfillment are shipped. |
Revenues during the three and six months ended June 30, 2021 and 2020 were all generated from the United States of America.
Cost of Revenue
Cost of revenue primarily consists of the salaries of certain employees, purchase price of consumer products, digital content costs, packaging supplies, and customer shipping and handling expenses. Shipping costs to receive products from our suppliers are included in our inventory and recognized as cost of revenue upon sale of products to our customers.
Concentration of Credit and Other Risks
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash and accounts receivable. Cash is deposited
with a limited number of financial institutions. The balances held at any one financial institution at times may be in excess of Federal
Deposit Insurance Corporation (“FDIC”) insurance limits of up to $
The Company extends limited credit to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for doubtful accounts and sales credits. The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company’s evaluation process, relatively short collection terms and the high level of credit worthiness of its customers.
The
Company’s concentration of credit risk includes its concentrations from key customers and vendors. As of June 30, 2021, we had
one vendor that accounted for
We had no customer that accounted for
During the three and six months ended
June 30, 2021 and 2020, we had no customer that accounted for
12 |
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a Binomial pricing model. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjusted to fair value of derivatives.
Deferred Revenue and Customer Deposits - Contract Liabilities
Contract liabilities represents consideration received from customers under a revenue contract, but the Company has not yet delivered or completed its performance obligation to the customer.
13 |
Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential shares of Common Stock that were outstanding during the period. Dilutive potential shares of Common Stock consist of incremental shares of Common Stock issuable upon exercise of stock options. No dilutive potential shares of Common Stock were included in the computation of diluted net loss per share because their impact was anti-dilutive.
As of June 30, 2021, and 2020, the Company had total outstanding options of and , respectively, and warrants of and , respectively, and outstanding restricted stock awards of and , respectively, which were excluded from the computation of net loss per share because they are anti-dilutive.
Goodwill
In accordance with FASB ASC Topic No. 350, Intangibles-Goodwill and Other, the Company reviews the recoverability of the carrying value of goodwill at least annually or whenever events or circumstances indicate a potential impairment. The Company’s impairment testing is performed annually at December 31 (its fiscal year end). Recoverability of goodwill is determined by comparing the fair value of Company’s reporting unit to the carrying value of the underlying net assets in the reporting units. If the fair value of a reporting unit is determined to be less than the carrying value of its net assets, goodwill is deemed impaired and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the difference between the fair value of the reporting unit and the fair value of its other assets and liabilities. As of June 30, 2021 and December 31, 2020, management determined there were no indications of impairment. The Company will perform their next impairment analysis in December 2021.
Intangible Assets with Finite Useful Lives
We have certain finite lived intangible assets that were initially recorded at their fair value at the time of acquisition. These intangible assets consist of developed technology. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful life of five years.
We review all finite lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess carrying value over the fair value in our consolidated statements of operations. As of June 30, 2021, and December 31, 2020, there was no impairment of intangible assets. The Company will perform their next impairment analysis in December 2021.
Fair Value of Financial Instruments
The Company follows the guidance of FASB ASC 820 and ASC 825 for disclosure and measurement of the fair value of its financial instruments. FASB ASC 820 establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
14 |
The three (3) levels of fair value hierarchy defined by ASC 820 are described below:
Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |
Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |
Level 3: | Pricing inputs that are generally observable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaid expenses, and accounts payable and accrued expenses approximate their fair value due to their short-term nature. The carrying values financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities.
Segments
The Company has acquired two operating subsidiaries, Verb Direct and Ascend Certification (dba “Solofire”) (see Note 3) with various revenue channels. Operations of these two subsidiaries are integrated since they have a similar customer base and the Company has a single sales team, marketing department, customer service department, operations department, finance and accounting department to support its operations. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker (the Company’s Chief Executive Officer) determined that the Company has only one reporting unit or segment.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As small business filer, the standard will be effective for us for interim and annual reporting periods beginning after December 15, 2022. Management is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.
In August 2020, FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).” ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. ASU 2020-06 will be effective January 1, 2024, for the Company and is to be adopted through a cumulative-effect adjustment to the opening balance of retained earnings. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. An issuer measures the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange. ASU 2021-04 introduces a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have a material impact on the Company’s financial statements or disclosures.
Other recent accounting pronouncements issued by FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (the “SEC”) did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
15 |
3. ACQUISITIONS
The Company made the following acquisitions in order to augment and diversify its internet and SaaS business:
a. | ACQUISITION OF VERB DIRECT |
On
April 12, 2019, Verb completed the acquisition of Verb Direct (formerly Sound Concepts, Inc.). As a result of this acquisition, the Company recorded goodwill of
$
16 |
b. | ACQUISITION OF ASCEND CERTIFICATION |
On
September 4, 2020, Verb Acquisition Co., LLC (“Verb Acquisition”), a subsidiary of the Company, entered into a Membership
Interest Purchase Agreement (the “Purchase Agreement”) with Ascend Certification, LLC, dba SoloFire (“SoloFire”),
the sellers party thereto (collectively, the “Sellers”), and Steve Deverall, solely in his capacity as the seller representative,
under which Sellers sold their entire interest in SoloFire, representing all of the outstanding limited liability company membership
interests of SoloFire, to Verb Acquisition for a base purchase price of $
The
acquisition was intended to augment and diversify Verb’s SaaS business. Key factors that contributed to the recorded provisional
goodwill and intangible assets in the aggregate of $
Verb is required to allocate the purchase price to the acquired tangible assets, identifiable intangible assets, and assumed liabilities based on their fair values. As of June 30, 2021, management has not yet finalized the purchase price allocation. The fair values of the assets acquired, as set forth below, are considered provisional and subject to adjustment as additional information is obtained through the purchase price measurement period (a period of up to one year from the September 2020 closing date). Any prospective adjustments would change the fair value allocation as of the acquisition date. The Company is still in the process of reviewing underlying models, assumptions and discount rates used in the valuation of provisional goodwill and intangible assets. The following table summarizes the provisional fair value of the assets assumed and liabilities acquired and the provisional purchase price allocation on the date of acquisition:
Assets Acquired: | ||||||||
Cash | $ | |||||||
Accounts receivable | $ | |||||||
Liabilities Assumed: | ||||||||
Current liabilities | ( |
) | ||||||
Long-term liabilities | ( |
) | ( |
) | ||||
Intangible assets (provisional) | ||||||||
Goodwill (provisional) | ||||||||
Purchase Price | $ |
The provisional goodwill recognized in connection with the acquisition is primarily attributable to anticipated synergies from future growth and is not expected to be deductible for tax purposes. Goodwill is not amortized but will be tested for impairment on an annual basis.
The
provisional intangible assets, which consist of developed technology of $
During
the six months ended June 30, 2021 and 2020, the Company recorded amortization expense of $
Year ending | Amortization | |||
2021 remaining (remaining 6 months) | $ | |||
2022 | ||||
2023 | ||||
2024 | ||||
2025 and thereafter | ||||
Total amortization | $ |
17 |
The following unaudited pro forma statement of operations present the Company’s pro forma results of operations for the three and six months ended June 30, 2020, to give effect to the acquisition of SoloFire as if it had occurred on January 1, 2020.
Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | |||||||
(Proforma, unaudited) | (Proforma, unaudited) | |||||||
SaaS recurring subscription revenue | $ | $ | ||||||
Other digital revenue | ||||||||
Welcome kits and fulfilment | ||||||||
Shipping | ||||||||
Total Revenue | ||||||||
Cost of revenue | ||||||||
Gross margin | ||||||||
Operating expenses | ( | ) | ( | ) | ||||
Other income, net | ||||||||
Net loss | ( | ) | ( | ) | ||||
Deemed dividends to Series A stockholders | - | ( | ) | |||||
Net loss attributed to common stockholders | $ | ( | ) | $ | ( | ) |
Pursuant to the provisions of ASC 805, the following results of operations of Verb Acquisition subsequent to the acquisition date included in the consolidated statement of operations for the reporting period:
Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | |||||||
Revenue | $ | $ | ||||||
Cost of revenue | ||||||||
Operating expenses | ( | ) | ( | ) | ||||
Gain on extinguishment of PPP note payable | ||||||||
Net loss | $ | ( | ) | $ | ( | ) |
18 |
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of June 30, 2021 and December 31, 2020.
June 30, 2021 | December 31, 2020 | |||||||
Computers | $ | $ | ||||||
Furniture and fixture | ||||||||
Machinery and equipment | ||||||||
Leasehold improvement | ||||||||
Total property and equipment | ||||||||
Accumulated depreciation | ( | ) | ( | ) | ||||
Total property and equipment, net | $ | $ |
During
the six months ended June 30, 2021, the Company sold certain machinery and equipment with a cost of $
5. RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES
The Company leases certain warehouse, corporate office space and equipment under an operating lease agreement. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets pursuant to ASC 842, Leases.
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
Period Ended June 30, 2021 | Period Ended June 30, 2020 | |||||||
Lease cost | ||||||||
Operating lease cost (included in general and administration in the Company’s statement of operations) | $ | $ | ||||||
Other information | ||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | $ | ||||||
Weighted average remaining lease term – operating leases (in years) | ||||||||
Average discount rate – operating leases | % | % |
June 30, 2021 | December 31, 2020 | |||||||
Operating leases | ||||||||
Right-of-use assets | $ | $ | ||||||
Short-term operating lease liabilities | $ | $ | ||||||
Long-term operating lease liabilities | ||||||||
Total operating lease liabilities | $ | $ |
Year ending | Operating Leases | |||
2021 (remaining 6 months) | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 and thereafter | ||||
Total lease payments | ||||
Less: Imputed interest/present value discount | ( | ) | ||
Present value of lease liabilities | $ |
19 |
6. ADVANCE OF FUTURE RECEIPTS
The Company has the following advances on future receipts as of June 30, 2021:
Note | Issuance Date | Maturity Date | Interest Rate | Original Borrowing | Balance at June 30, 2021 | Balance at December 31, 2020 | ||||||||||||||
Note 1 | % | $ | $ | $ | ||||||||||||||||
Note 2 | % | |||||||||||||||||||
Note 3 | % | |||||||||||||||||||
Note 4 | % | |||||||||||||||||||
Note 5 | % | |||||||||||||||||||
Note 6 | % | |||||||||||||||||||
Note 7 | % | |||||||||||||||||||
Note 8 | % | |||||||||||||||||||
Total | $ | |||||||||||||||||||
Debt discount | ( | ) | ( | ) | ||||||||||||||||
Net | $ | $ |
Note 1 and 2
On
June 30, 2020, the Company received two secured advances from an unaffiliated third party totaling $
During
the six months ended June 30, 2021, the Company paid the entire balance due of $
20 |
Note 3 and 4
On
January 13, 2021, the Company received two secured advances from the same unaffiliated third party (see Note 1 and 2) totaling $
During
the six months ended June 30, 2021, the Company paid $
Note 5
On
January 22, 2021, the Company received a secured advance from an unaffiliated third party totaling $
During
the six months ended June 30, 2021, the Company paid the entire balance of $
Note 6
In
February and March of 2021, the Company received secured advances from an unaffiliated third party totaling $
During
the six months ended June 30, 2021, the Company paid $
Note 7
On
June 30, 2021, the Company received secured advances from an unaffiliated third party totaling $
As
of June 30, 2021, the outstanding balance of the note amounted to $
Note 8
On
June 30, 2021, the Company received secured advances from an unaffiliated third party totaling $
As
of June 30, 2021, the outstanding balance of the note amounted to $
7. | NOTES PAYABLE – RELATED PARTIES |
The Company had the following related party notes payable as of June 30, 2021 and December 31, 2020:
Note | Issuance Date | Maturity Date | Interest Rate | Original Borrowing | Balance at June 30, 2021 | Balance at December 31, 2020 | ||||||||||||||
Note 1 (A) | % | $ | $ | $ | ||||||||||||||||
Note 2 (B) | % | |||||||||||||||||||
Note 3 (C) | % | |||||||||||||||||||
Total notes payable – related parties | ||||||||||||||||||||
Non-current | ( | ) | ||||||||||||||||||
Current | $ | $ |
(A) | ||
In
February 2021, the Mr. Cutaia and Company amended the note payable and extended the maturity date from February 8, 2021 to | ||
As
of June 30, 2021, the outstanding balance of the note amounted to $ | ||
(B) | ||
As
of June 30, 2021 and December 31, 2020, the outstanding principal balance of the note amounted to $ | ||
(C) | ||
As
of June 30, 2021, and December 31, 2020, the outstanding balance of the note amounted to $ |
Total
interest expense for notes payable to related parties was $
21 |
8. | NOTES PAYABLE |
The Company had the following notes payable as of June 30, 2021:
Note | Issuance Date | Maturity Date | Interest Rate | Balance at June 30, 2021 | Balance at December 31, 2020 | |||||||||||
Note A | % | $ | $ | |||||||||||||
Note B | % | |||||||||||||||
Note C | % | |||||||||||||||
Total notes payable | ||||||||||||||||
Non-current | ( | ) | ( | ) | ||||||||||||
Current | $ | $ |
(A) |
The
unforgiven portion of the PPP loan is payable over two years at an interest rate of
On
January 4, 2021 the entire note and accrued interest, totaling $ |
(B) |
As
part of the loan, the Company also received an advance of $ |
(C) |
On May 17, 2021 the entire note and accrued interest, totaling $ |
9. | DEFERRED INCENTIVE COMPENSATION TO OFFICERS |
Note | Date | Payment Date | Balance at June 30, 2021 | Balance at December 31, 2020 | ||||||||||
Rory Cutaia (A) | $ | $ | ||||||||||||
Rory Cutaia (B) | ||||||||||||||
Jeff Clayborne (A) | ||||||||||||||
Jeff Clayborne (B) | ||||||||||||||
Total | ||||||||||||||
Non-current | ( | ) | ||||||||||||
Current | $ | $ |
(A) |
During
the six months ended June 30, 2021, the Company paid $ |
(B) |