Quarterly report pursuant to Section 13 or 15(d)

ISSUANCE OF CLASS A and B UNITS

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ISSUANCE OF CLASS A and B UNITS
9 Months Ended
Sep. 30, 2021
Issuance Of Class And B Units  
ISSUANCE OF CLASS A and B UNITS

16. ISSUANCE OF CLASS A and B UNITS

 

  a. Class A Units – During the year ended December 31, 2020, the Company created a 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:

 

  1. Class A units are a standalone financial instrument;
  2. Priority on distributions;
  3. Ability to remove the manager;
  4. Drag-along rights;
  5. Power to dissolve Verb Acquisition provided that a majority of the Class B Units also approve the dissolution;
  6. Ability to appoint a liquidator to wind up the affairs of Verb Acquisition;
  7. Entitled to distributions;
  8. Approve board appointments; and
  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 100 issued and outstanding shares of Class A Unit as of September 30, 2021 and December 31, 2020.

 

  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:

 

  1. Class B units are a standalone financial instrument;
  2. Exchangeable for shares of the Company’s Common Stock at a conversion rate of 1 to 1;
  3. Power to dissolve Verb Acquisition, provided that a majority of the Class A Units also approve the dissolution;
  4. Entitled to profit distributions;
  5. Approve board appointments made by the Class A Units; and
  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. As of December 31, 2020, Class B shares issued and outstanding totaled 2,642,159 shares.

 

During the period ended September 30, 2021, pursuant to the terms of the Class B shares, all holders of the Company’s Class B shares converted their shares to common stock. As a result of these conversions, the Company reclassified the recorded fair value of the Class B shares of $3,065,000 as part of additional paid in capital. As of the September 30, 2021, all 2,642,159 Class B units were converted into 2,642,159 shares of Verb Technology common stock.