Grant of Common Stock

Subsequent to March 31, 2019, the Company issued 25,772 shares of Common Stock to vendors for services rendered with a fair value of $34,000. These shares of Common Stock were valued based on the market value of the Company’s stock price at the grant date or the date the Company entered into the agreement related to the issuance.

Grant of Stock Options

Subsequent to March 31, 2019, the Company granted stock options to an employee to purchase a total 60,000 shares of Common Stock for services rendered. The options have an exercise price of $3.13 per share, expire in five years and vest on grant date or over a period of three years from grant date. The total fair value of these options at the grant date was $117,000 using the Black-Scholes option pricing model.

Convertible Note Additional Share Issuance

Subsequent to April 2, 2019, the Company issued Bellridge, an unaffiliated third-party entity 8,606 shares of Common Stock with an estimated value of $55,000 as the note was not paid within 60 days of issuance (see Note 6).

Conversion of Accounts Payable

On April 30, 2019, the Company issued 4,142 shares of Common Stock as full and final payment to a vendor owed $10,000. The fair value of the shares was $10,000.

Conversion of Note Payable

On April 9, 2019, the Company issued 182,333 shares of restricted Common Stock upon the conversion of notes payable and accrued interest of $410,000. For additional information, please see Note 6, Convertible Notes Payable, to these unaudited consolidated financial statements.

Issuance of Note Payable

On April 2, 2019, we issued an unsecured promissory note to an unaffiliated third-party in the aggregate principal amount of $158,000, in exchange for net proceeds of $150,000, representing an original issue discount of $8,000, which is included in the original principal amount. The note is unsecured and bears interest on the principal amount at a rate of 5% per annum. The note is due on demand at any time after July 10, 2019.

On April 30, 2019, we issued an unsecured promissory note to an unaffiliated third-party in the aggregate principal amount of $500,000, in exchange for net proceeds of $500,000. The note is unsecured and bears interest on the principal amount at a rate of 5% per annum. The note is due on demand at any time after April 29, 2020.

Underwritten Public Offering

On April 4, 2019, we entered into an Underwriting Agreement (the “Underwriting Agreement”) with A.G.P./Alliance Global Partners, as representative of the several underwriters named therein (the “Underwriter” or “AGP”), relating to a firm commitment public offering (the “Public Offering”) of 6,389,776 units (the “Units”) consisting of an aggregate of (i) 6,389,776 shares (the “Firm Shares”) of Common Stock, and (ii) warrants to purchase up to 6,389,776 shares of Common Stock (the “Firm Warrants”; and the shares of Common Stock issuable from time to time upon exercise of the Firm Warrants, the “Firm Warrant Shares”), at a public offering price of $3.13 per Unit. Pursuant to the terms of the Underwriting Agreement, we also granted the Underwriters an option, exercisable for 45 days, to purchase up to 958,466 additional Units, consisting of an aggregate of (x) 958,466 shares of Common Stock (the “Option Shares”; and, together with the Firm Shares, the “Shares”) and (y) warrants to purchase up to 958,466 shares of Common Stock (the “Option Warrants”; and, together, with the Firm Warrants, the “Warrants”; and the shares of Common Stock issuable from time to time upon exercise of the Option Warrants, the “Option Warrant Shares”; and, together with the Firm Warrant Shares, the “Warrant Shares”). The Warrants have an initial per share exercise price of $3.443, subject to customary adjustments, are exercisable immediately, and will expire five years from the date of issuance, or April 9, 2024.

On April 9, 2019, we closed the Public Offering and issued 6,389,776 Units, consisting of an aggregate of 6,389,776 Firm Shares and Firm Warrants to purchase up to an aggregate of 6,389,776 Firm Warrant Shares. In connection with the closing, the Underwriter partially exercised its over-allotment option and purchased an additional 159,820 Units, consisting of an aggregate of 159,820 Option Shares and Option Warrants to purchase up to an aggregate of 159,820 Option Warrant Shares. We received gross proceeds of approximately $20,500,000 before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company.

In connection with the Public Offering, we also issued the Underwriter warrants to purchase up to 319,488 shares of our Common Stock (the “Underwriter Warrants”), at an exercise price of $3.913. The Underwriter Warrants are exercisable at any time, and from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the Registration Statement.

Acquisition of Sound Concepts

On April 12, 2019, we completed our previously announced acquisition of Sound Concepts (the “Closing”) pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), by and among 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 “Shareholders”), the shareholders’ representative, and us. Pursuant to the Merger Agreement, we acquired Sound Concepts 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 ceased) 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 ceased and Merger Sub 2 continued its limited liability company existence under Utah law as the surviving entity and as our wholly-owned subsidiary under the name Verb Direct, LLC (“Verb Direct”). On the terms and subject to the conditions set forth in the Merger Agreement, at the Closing (the “Effective Time”), each share of Sound Concepts’ capital stock issued and outstanding immediately prior to the Effective Time (the “Sound Concepts Capital Stock”), was cancelled and converted into the right to receive a proportionate share of $25,000,000 of value, payable through a combination of a cash payment by us of an aggregate of $15,000,000 (the “Acquisition Cash Payment”), and the issuance of an aggregate of 3,194,888 restricted shares of our Common Stock, with a fair market value of $10,000,000. The Acquisition Cash Payment was paid using a portion of the net proceeds we received as a result of our Public Offering of Units that closed on April 9, 2019.

At the Closing, the Shareholders purchased an aggregate of $4,000,000 of unrestricted Units in our Public Offering at the same price and upon the same terms and conditions as all other investors who purchased Units in our Public Offering, such that our net cash outlay in connection with the Sound Concepts acquisition was approximately $11,000,000.

In connection with the Closing, we also issued warrants to purchase up to 163,739 shares of Common Stock as compensation to AGP for certain advisory services provided with respect to the Sound Concepts acquisition (the “Advisory Warrants”). The Advisory Warrants have an exercise price of $3.756. The estimated fair market value of the Advisory Warrants is $1,281,000.

We believe that Sound Concepts’ business is highly complementary to our own, and the combination of their technology, customer base, and human capital with our own, including the integration of our interactive video technology into Brightools, among other synergies and enhancements, will result in increased stockholder value.

The following proforma balance sheet reflects the Public Offering of shares and the acquisition of Sound Concepts as if these transactions occurred as of March 31, 2019.