| 16. |
ISSUANCE OF CLASS A and B UNITS |
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a. |
Class A Units – During the year ended December 31, 2020, the Company created an separate class of equity instrument called Class A Units. Concurrently, the Company formed a wholly owned subsidiary, Verb Acquisition, and issued 100 Class A units as part of the organization of Verb Acquisition. The Class A Units have the following rights and privileges: |
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1. |
Class A units are a standalone financial instrument; |
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2. |
Priority on distributions; |
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3. |
Ability to remove the manager; |
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4. |
Drag-along rights; |
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5. |
Power to dissolve Verb Acquisition provided that a majority of the Class B Units also approve the dissolution; |
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6. |
Ability to appoint a liquidator to wind up the affairs of Verb Acquisition; |
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7. |
Entitled to distributions; |
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8. |
Approve board appointments; and |
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9. |
Approve any amendments to Verb Acquisition’s operating agreement, provided that a majority of the Class B Units also approve the amendment. |
There were no issued and outstanding shares of Class
A Unit as of March 31, 2021 and December 31, 2020.
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b. |
Class B Units – During the year ended December 31, 2020, the Company created a separate class of an equity instrument called Class B Units. Concurrently, our wholly owned subsidiary, Verb Acquisition, issued 2,642,159 Class B Units as part of its acquisition of SoloFire (see Note 3). The Class B Units have the following rights and privileges: |
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1. |
Class B units are a standalone financial instrument; |
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2. |
Exchangeable for shares of the Company’s Common Stock at a conversion rate of 1 to 1; |
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3. |
Power to dissolve Verb Acquisition, provided that a majority of the Class A Units also approve the dissolution; |
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4. |
Entitled to profit distributions; |
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5. |
Approve board appointments made by the Class A Units; and |
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6. |
Approve any amendments to Verb Acquisition’s operating agreement, provided that a majority of the Class A Units also approve the amendment. |
As the Class B Units are exchangeable for the Company’s
Common Stock, for valuation purposes, the Company determined to use the trading price of the Company’s Common Stock at the date
of the acquisition of SoloFire which amounted to $3,065,000.
On March 4, 2021, 2,642,159 all Class B units were
converted into 2,642,159 shares of Verb Technology common stock.
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