| Subsequent Events |
| 15. |
SUBSEQUENT EVENTS
Merger Agreement
On November 8, 2018, we entered into
an Agreement and Plan of Merger (the “Merger Agreement”), by and among Sound Concepts, Inc., a Utah corporation (“Sound
Concepts”), NF Merger Sub, Inc., a Utah corporation (“Merger Sub 1”), NF Acquisition Company, LLC, a Utah limited
liability company (“Merger Sub 2”), the shareholders of Sound Concepts (the “Sound Concepts Shareholders”),
the shareholders’ representative (the “Shareholder Representative”), and us, pursuant to which we will acquire
Sound Concepts (the “Sound Concepts Acquisition”) through a two-step merger, consisting of merging Merger 1 Sub with
and into Sound Concepts, with Sound Concepts surviving the “first step” of the merger as our wholly-owned subsidiary
(and the separate corporate existence of Merger Sub 1 will cease) and, immediately thereafter, merging Sound Concepts with and
into Merger Sub 2, with Merger Sub 2 surviving the “second step” of the merger, such that, upon the conclusion of the
“second step” of the merger, the separate corporate existence of Sound Concepts will cease and Merger Sub 2 will continue
its limited liability company existence under Utah law as the surviving entity and as our wholly-owned subsidiary (collectively,
the “Merger”). On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time
of the Merger (the “Effective Time”), each share of Sound Concepts’ capital stock issued and outstanding immediately
prior to the Effective Time (the “Sound Concepts Capital Stock”) will be cancelled and converted into the right to
receive a proportionate share of $25,000,000 of value (the “Closing Merger Consideration”), to be payable through a
combination of a cash payment by us of $15,000,000 (the “Acquisition Cash Payment”) and the issuance of shares of our
Common Stock with a fair market value of $10,000,000 (the “Acquisition Stock”). The Closing Merger Consideration is
not subject to any closing working capital adjustment or post-closing working capital adjustment. We expect the Sound Concepts
Acquisition to close in the first quarter of 2019. However, we cannot provide any assurance as to the actual timing of completion
of the Sound Concepts Acquisition, or whether the Sound Concepts Acquisition will be completed at all.
Issuances of Stock Options
On January 8, 2019, the Company granted
stock options to an officer to purchase a total of 16,667 shares of Common Stock pursuant to the officer’s employment agreement.
The options have an exercise price of $4.35 per share, and expire in five years. The options vested 50% on
the grant date and the remaining 50% will vest on the 12-month anniversary of the grant date. Total fair value of these options
at grant date was $70,000 using the Black-Scholes option pricing model.
On January 28, 2019, the Company granted
stock options to consultants to purchase a total of 1,667 shares of Common Stock for services to be rendered. The options have
an average exercise price of $7.80 per share, expire in five years and vest in sixty days. The total fair value of these options
at the grant date was $13,000 using the Black-Scholes option pricing model.
Exercise of Warrants
On January 25, 2019, a total of 161,969
warrants were exercised on a cashless basis for 141,512 shares of Common Stock at a weighted average exercise price of $1.05 per
share.
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Name-Change Merger
Effective 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. We were the surviving entity. To effectuate the name-change merger, we filed Articles of Merger with the
Secretary of State of the State of Nevada on January 31, 2019. The name-change merger became effective on February 1, 2019. Our
board of directors approved the name-change merger, which resulted in the name change on that date. In accordance with Section
92A.180 of the NRS, stockholder approval of the name-merger was not required.
Reverse Stock Split
On February 1, 2019,
we implemented a 1-for-15 Reverse Stock Split of our Common Stock. The Reverse Stock Split became effective upon commencement
of trading of our Common Stock on February 4, 2019. As a result of the Reverse Stock Split, every fifteen (15) shares of
our pre-Reverse Stock Split Common Stock were combined and reclassified into one share of our Common Stock. The number of
shares of Common Stock subject to outstanding options, warrants, and convertible securities were also reduced by a factor of
fifteen as of February 1, 2019. All historical share and per share amounts reflected throughout our consolidated financial
statements and other financial information in this Annual Report have been adjusted to reflect the Reverse Stock Split as if
the split occurred as of the earliest period presented. The par value per share of our Common Stock was not affected by the Reverse
Stock Split.
Issuance of Convertible
Note
On February 1, 2019, the
Company issued an unsecured convertible note to Bellridge, an unaffiliated third-party entity, in the aggregate principal amount
of $500,000 in exchange for net proceeds of $432,000, representing an original issue discount of $25,000 and paid legal and financing
expenses of $43,000. In addition, the Company issued 16,667 shares of its Common Stock with an estimated fair value of $128,000.
The note contained a mandatory conversion feature in case of default based upon a discounted VWAP. Furthermore, the note also
contained a provision that will require the Company to pay the noteholder an additional $25,000 and issue 8,600 shares of Common
Stock if the note is not be paid within 60 days after its issuance. The Company is currently in the process determining the appropriate
accounting for this promissory note. The note matures in August 2019.
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