UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-38834

Verb Technology Company, Inc.

(Exact name of registrant as specified in its charter)

Nevada

90-1118043

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

~~(I.R.S. Employer~~

Identification No.)

3401 North Thanksgiving Way, Suite 240, Lehi, Utah		84043
(Address of principal executive offices)		(Zip Code)

(855) 250-2300

(Registrant’s telephone number, including area code)

~~N/A~~

(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

Common Stock, $0.0001 par value

~~Common Stock Purchase Warrants~~

VERB

~~VERBW~~

The Nasdaq Stock Market LLC

Common Stock Purchase Warrants

VERBW

The Nasdaq Stock Market LLC

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.

Yes ☒ No ☐

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).

Yes ☒ No ☐

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	☐

Non-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 ☒ No

As of August ~~10, 2022,~~8, 2023, there were ~~102,425,699~~4,501,340 shares of common stock, $0.0001 par value per share, outstanding.

VERB TECHNOLOGY COMPANY, INC.

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the three months ended June 30, ~~2022 (this~~2023 (the “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 ~~be able to~~ achieve or maintain profitable operations;

● our ability to continue as a going concern;

● our ability to grow and compete in the future, ~~and~~which is dependent upon whether capital is available to ~~execute our business strategy;~~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 ~~and~~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 successfully launch new product platforms, including ~~MARKET,~~MARKET.live, the rate of adoption of these platforms and the revenue generated from these platforms;

● the novel coronavirus (“COVID-19”) pandemic, which has had a ~~negative~~sustained impact on our business, sales, results of operations and financial condition;

● our ability to deliver our services, as we depend on third party Internet providers;

● our ability to raise additional capital or borrow additional funds to fund our operations and execute our business strategy, and the impact of these transactions on our business and existing stockholders;

● our ability to attract and retain qualified management ~~personnel to lead our business;~~personnel;

● our ability to pay our debt obligations as they become due;

● our susceptibility to security breaches and other disruptions; and

● global economic, political, and social trends, including inflation, rising interest rates, and recessionary concerns.

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 ~~titled~~entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this Quarterly Report and in ~~the~~our Annual Report on Form 10-K for the year ended December 31, ~~2021, as filed with the Securities and Exchange Commission (the “SEC”) on March 31,~~ 2022 (the ~~“2021 Annual~~“Annual Report”), as well as in the other reports we file with the ~~SEC.~~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.

PART I — FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of June 30, ~~2022~~2023 (unaudited) and December 31, ~~2021~~2022	54

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 ~~and 2021~~ (unaudited)	65

Condensed Consolidated Statements of Stockholders’ Equity for the ~~three and~~ six months ended June 30, 2023 and 2022 ~~and 2021~~ (unaudited)	~~7-8~~6-7

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 ~~and 2021~~ (unaudited)	98

Notes to Condensed Consolidated Financial Statements (unaudited)	~~10-25~~9-25

VERB TECHNOLOGY COMPANY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
		(unaudited)					(unaudited)
ASSETS

Current assets
Cash	$	5,547		$	937		$	3,526		$	2,429
Accounts receivable, net		1,816			1,382
Assets held for sale - current								-			1,323
Prepaid expenses and other current assets		894			875			238			306
Total current assets		8,257			3,194			3,764			4,058

Capitalized software development costs		6,461			4,348
Assets held for sale – non-current								-			10,467
Capitalized software development costs, net								5,122			6,176
ERC receivable								1,528			1,528
Property and equipment, net		627			702			449			533
Operating lease right-of-use assets		1,673			2,177			1,220			1,354
Intangible assets, net		3,318			3,953			83			83
Goodwill		19,764			19,764
Other assets		306			293			294			293

Total assets	$	40,406		$	34,431		$	12,460		$	24,492

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Accounts payable	$	3,413		$	3,751		$	2,786		$	3,975
Liabilities related to assets held for sale								-			2,483
Liabilities of discontinued operations								898			1,641
Accrued expenses		1,780			3,500			1,433			1,287
Accrued officers’ salary		1,215			1,209			764			764
Advances on future receipts, net		554			4,181
Notes payable – related party, current								765			765
Notes payable, current		4,120			40			5,605			3,704
Deferred incentive compensation to officers, current		-			521
Convertible notes payable, current								-			1,334
Operating lease liabilities, current		471			592			482			355
Contract liabilities		1,614			986
Derivative liability		993			3,155			16			222

Total current liabilities		14,160			17,935			12,749			16,530

Long-term liabilities
Notes payable, non-current		875			875			150			1,215
Operating lease liabilities, non-current		1,841			2,299			1,379			1,581
Total liabilities		16,876			21,109			14,278			19,326
								-			-
Commitments and contingencies (Note 13)		-						-			-
								-			-
Stockholders’ equity
Preferred stock, $0.0001 par value, 15,000,000 shares authorized: Series A Convertible Preferred Stock, 6,000 shares authorized; 0 issued and outstanding as of June 30, 2022 and December 31, 2021		-			-
Class A units, 100 shares issued and authorized as of June 30, 2022 and December 31, 2021		-			-
Class B units, 2,642,159 shares authorized, 0 issued and outstanding as of June 30, 2022 and December 31, 2021		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized, 101,958,787 and 72,942,948 shares issued and outstanding as of June 30, 2022 and December 31, 2021		10			7
Common stock value		10			7
Series B Redeemable Preferred Stock
								-			-
Stockholders’ equity (deficit)
Class A units, 3 shares issued and authorized as of June 30, 2023 and December 31, 2022								-			-
Common stock, $0.0001 par value, 400,000,000 shares authorized, 4,317,561 and 2,918,017 shares issued and outstanding as of June 30, 2023 and December 31, 2022								1			1
Common stock, value								1			1

Additional paid-in capital		152,910			129,342			167,179			158,629
Accumulated deficit		(129,390	)		(116,027	)		(168,998	)		(153,464	)

Total stockholders’ equity		23,530			13,322
Total stockholders’ equity (deficit)								(1,818	)		5,166

Total liabilities and stockholders’ equity	$	40,406		$	34,431
Total liabilities and stockholders’ equity (deficit)							$	12,460		$	24,492

See accompanying notes to the condensed consolidated financial statements

VERB TECHNOLOGY COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022

Revenue													$	3		$	-		$	5		$	-
Digital revenue
SaaS recurring subscription revenue	$	1,975		$	1,601		$	3,978		$	3,062
Other digital revenue		186			209			333			549
Total digital revenue		2,161			1,810			4,311			3,611

Non-digital revenue		238			582			779			1,307

Total revenue		2,399			2,392			5,090			4,918

Cost of revenue														1			-			2			-
Digital		609			569			1,166			1,109
Non-digital		226			550			642			1,225
Total cost of revenue		835			1,119			1,808			2,334

Gross margin		1,564			1,273			3,282			2,584			2			-			3			-

Operating expenses
Research and development		1,382			3,213			2,962			6,097
Depreciation and amortization		395			400			804			814			583			44			1,166			86
General and administrative		6,562			6,542			13,598			13,885			2,685			4,760			6,230			9,893
Total operating expenses		8,339			10,155			17,364			20,796			3,268			4,804			7,396			9,979

Loss from operations		(6,775	)		(8,882	)		(14,082	)		(18,212	)
Operating loss from continuing operations														(3,266	)		(4,804	)		(7,393	)		(9,979	)

Other income (expense)
Other income (expense), net														831			19			780			(16	)
Financing costs														(1,239	)		-			(1,239	)		-
Interest expense		(642	)		(596	)		(1,398	)		(1,104	)		(299	)		(368	)		(770	)		(661	)
Change in fair value of derivative liability		1,024			(2,445	)		2,162			(1,945	)		198			1,024			206			2,162
Other income (expense), net		19			20			(45	)		74
Debt extinguishment, net		-			91			-			1,030
Total other income (expense), net		401			(2,930	)		719			(1,945	)		(510	)		675			(1,023	)		1,485

Net loss from continuing operations														(3,776	)		(4,129	)		(8,416	)		(8,494	)

Loss from discontinued operations, net of tax														(6,080	)		(2,245	)		(6,954	)		(4,869	)

Net loss	$	(6,374	)	$	(11,812	)	$	(13,363	)	$	(20,157	)		(9,856	)		(6,374	)		(15,370	)		(13,363	)

Deemed dividend due to warrant reset														-			-			(164	)		-
Net loss to common stockholders													$	(9,856	)	$	(6,374	)	$	(15,534	)	$	(13,363	)
Loss per share - basic and diluted	$	(0.07	)	$	(0.19	)	$	(0.15	)	$	(0.35	)	$	(2.45	)	$	(2.63	)	$	(4.09	)	$	(6.16	)
Loss per share - basic													$	(2.45	)	$	(2.63	)	$	(4.09	)	$	(6.16	)
Weighted average number of common shares outstanding - basic and diluted		96,953,254			63,147,880			86,762,287			57,627,324			4,022,947			2,423,831			3,801,599			2,169,057
Weighted average number of common shares outstanding - basic														4,022,947			2,423,831			3,801,599			2,169,057

See accompanying notes to the condensed consolidated financial statements

VERB TECHNOLOGY COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

(unaudited)

For the six months ended June 30, ~~2022:~~2023

Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Total
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, 2021 - $ - 100 $ - - $ - 72,942,948 $ 7 $ 129,342 $ (116,027 ) $ 13,322
Sale of common stock from public offering - - - - - - 25,844,250 3 20,147 - 20,150
Issuance of common stock for commitment fee related to equity line of credit agreement - - - - - - 607,287 - - - -
Issuance of common stock from option exercise - - - - - - 332,730 - 377 - 377
Fair value of common shares issued for services - - - - - - 1,291,300 - 1,126 - 1,126
Fair value of common shares issued to settle accrued expenses - - - - - - 477,038 - 450 - 450
Fair value of vested restricted stock awards, stock options and warrants - - - - - - 463,234 - 1,468 - 1,468
Net loss - - - - - - - - - (13,363 ) (13,363 )
Balance at June 30, 2022 - $ - 100 $ - - $ - 101,958,787 $ 10 $ 152,910 $ (129,390 ) $ 23,530

Additional
Class A Units Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
Balance at December 31, 2022 3 $ - 2,918,017 $ 1 $ 158,629 $ (153,464 ) $ 5,166

Sale of common stock from public offering - - 901,275 - 6,578 - 6,578
Fair value of vested restricted stock awards, stock options, and warrants - - 197,414 - 1,362 - 1,362
Deemed dividend due to warrant reset - - - - 164 (164 ) -
Issuance of shares for fractional adjustments related to reverse stock split - - 31,195 - - - -
Fair value of common shares issued to settle accrued expenses - - 93,190 - 146 - 146
Fair value of common shares issued as payment on notes payable - - 176,470 - 300 - 300
Net loss - - - - - (15,370 ) (15,370 )
Balance at June 30, 2023 3 $     - 4,317,561 $    1 $ 167,179 $ (168,998 ) $ (1,818 )
~~For the three months ended June 30, 2022:~~

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, 2022 - $ - 100 $ - - $ - 82,417,176 $ 8 $ 138,830 $ (123,016 ) $ 15,822
Sale of common stock from public offering - - - - - - 18,366,667 2 12,610 - 12,612
Fair value of common shares issued for services - - - - - - 979,362 - 690 - 690
Fair value of common shares issued to settle accrued expenses - - - - - - 189,394 - 100 - 100
Fair value of vested restricted stock awards, stock options and warrants - - - - - - 6,188 - 680 - 680
Net loss - - - - - - - - - (6,374 ) (6,374 )
Balance at June 30, 2022 - $ - 100 $ - - $ - 101,958,787 $ 10 $ 152,910 $ (129,390 ) $ 23,530
76

VERB TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share and per share data)
(unaudited)
For the six months ended June 30, ~~2021:~~2022

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 2,006 $ - 100 $ - 2,642,159 $ 3,065 47,795,009 $ 5 $ 89,216 $ (81,541 ) $ 10,745
Sale of common stock from public offering - - - - - - 9,375,000 1 14,128 - 14,129
Issuance of common stock from warrant exercise - - - - - - 1,036,600 - 1,103 - 1,103
Issuance of common stock from option exercise - - - - - - 332,730 - 377 - 377
Fair value of common shares issued to settle note payable – related party - - - - - - 194,175 - 200 - 200
Fair value of common shares issued to settle lawsuit - - - - - - 600,000 - 678 - 678
Conversion of Series A Preferred to common stock (300 ) - - - - - 272,728 - - - -
Fair value of common shares issued for services - - - - - - 1,117,467 - 1,769 - 1,769
Fair value of vested restricted stock awards - - - - - - 247,703 - 905 - 905
Fair value of vested stock options and warrants - - - - - - - - 870 - 870
Extinguishment of derivative liability upon exercise of warrants - - - - - - - - 2,300 - 2,300
Fair value of common shares issued to settle accrued expenses - - - - - - 182,397 - 281 - 281
Fair value of warrants issued to officer to modify note payable - - - - - - - - 287 - 287
Conversion of Class B Units to common shares - - - - (2,642,159 ) (3,065 ) 2,642,159 - 3,065 - -
Net loss - - - - - - - - - (20,157 ) (20,157 )
Balance at June 30, 2021 1,706 $ - 100 $ - - $ - 63,795,968 $ 6 $ 115,179 $ (101,698 ) $ 13,487
Additional
Class A Units Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
Balance at December 31, 2021 3 $ - 1,823,574 $ 1 $ 129,348 $ (116,027 ) $ 13,322

Sale of common stock from public offering - - 646,106 - 20,150 - 20,150
Issuance of common stock for commitment fee related to equity line of credit agreement - - 15,182 - - - -
Issuance of common stock from option exercise - - 8,318 - 377 - 377
Fair value of common shares issued for services - - 32,283 - 1,126 - 1,126
Fair value of common shares issued to settle accounts payable and accrued expenses - - 11,926 - 450 - 450
Fair value of vested restricted stock awards, stock options and warrants - - 11,581 - 1,468 - 1,468
Net loss -      - - - - (13,363 ) (13,363 )
Balance at June 30, 2022 3 $ - 2,548,970 $ 1 $ 152,919 $ (129,390 ) $ 23,530
~~For the three months ended 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 March 31, 2021 1,706 $ - 100 $ - - $ - 62,633,282 $ 6 $ 112,978 $ (89,886 ) $ 23,098
Fair value of common shares issued to settle note payable – related party - - - - - - 194,175 - 200 - 200
Fair value of common shares issued to settle lawsuit - - - - - - 600,000 - 678 - 678
Fair value of common shares issued for services - - - - - - 307,956 - 355 - 355
Fair value of vested restricted stock awards - - - - - - - - 458 - 458
Fair value of vested stock options and warrants - - - - - - - - 422 - 422
Extinguishment of derivative liability upon exercise of warrants - - - - - - - - 14 - 14
Fair value of common shares issued to settle accrued expenses - - - - - - 60,555 - 74 - 74
Net loss - - - - - - - - - (11,812 ) (11,812 )
Balance at June 30, 2021 1,706 $ - 100 $ - - $ - 63,795,968 $ 6 $ 115,179 $ (101,698 ) $ 13,487

See accompanying notes to the condensed consolidated financial statements
87
VERB TECHNOLOGY COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

Six Months Ended June 30, Six Months Ended June 30,
2022 2021 2023 2022

Operating Activities:
Net loss $ (13,363 ) $ (20,157 ) $ (15,370 ) $ (13,363 )
Adjustments to reconcile net loss to net cash used in operating activities:
Loss from discontinued operations, net of tax 6,954 4,869

Adjustments to reconcile net loss to net cash used in operating activities, net of discontinued operations:
Share-based compensation 2,618 3,666 1,402 2,618
Amortization of debt discount 908 1,040 163 171
Amortization of debt issuance costs 264 - 127 264
Change in fair value of derivative liability (2,162 ) 1,945 (206 ) (2,162 )
Debt extinguishment, net - (1,030 )
Depreciation and amortization 804 814 1,166 86
Loss on lease termination 22 -
Finance costs 1,239 -
Loss on disposal of property and equipment 10 (6 ) - 14
Allowance for doubtful accounts 378 249
Effect of changes in assets and liabilities:
Accounts receivable (812 ) (253 )
Effect of changes in assets and liabilities, net of discontinued operations:
Prepaid expenses and other current assets (4 ) (334 ) 66 (384 )
Operating lease right-of-use assets 172 281 134 127
Accounts payable, accrued expenses, and accrued interest 183 740 (285 ) 360
Contract liabilities 628 271
Deferred incentive compensation (377 ) (521 ) - (377 )
Operating lease liabilities (271 ) (325 ) (75 ) (177 )
Net cash used in operating activities (11,002 ) (13,620 )
Net cash used in operating activities attributable to continuing operations (4,685 ) (7,954 )
Net cash used in operating activities attributable to discontinued operations (1,855 ) (3,048 )

Investing Activities:
Proceeds from sale of property and equipment 3 11
Capitalized software development costs (4,108 ) - (239 ) (4,108 )
Purchases of property and equipment (24 ) - (5 ) (20 )
Purchases of intangible assets (82 ) - - (82 )
Net cash provided by (used in) investing activities (4,211 ) 11
Net cash used in investing activities attributable to continuing operations (244 ) (4,210 )
Net cash provided by (used in) investing activities attributable to discontinued operations 4,750 (1 )

Financing Activities:
Proceeds from sale of common stock 20,150 14,129 6,578 20,150
Proceeds from notes payable 6,000 -
Advances on future receipts - 7,368
Proceeds from warrant exercise - 1,103
Proceeds from convertible notes payable - 6,000
Payment of notes payable (1,896 ) - (375 ) (1,896 )
Payment of advances on future receipts (4,363 ) (4,734 )
Payment of convertible notes payable (1,350 ) -
Proceeds from option exercise 377 377 - 377
Payment for debt issuance costs (445 ) - - (445 )
Net cash provided by financing activities 19,823 18,243
Net cash provided by financing activities attributable to continuing operations 4,853 24,186
Net cash used in financing activities attributable to discontinued operations (1,722 ) (4,363 )

Net change in cash 4,610 4,634 1,097 4,610

Cash - beginning of period 937 1,815 2,429 937

Cash - end of period $ 5,547 $ 6,449 $ 3,526 $ 5,547

See accompanying notes to the condensed consolidated financial statements

98
VERB TECHNOLOGY COMPANY, INC.
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022
(in thousands, except share and per share data)
(unaudited)

1. DESCRIPTION OF BUSINESS

Our Business

References in this ~~Quarterly Report~~document to the “Company,” “Verb,” “we,” “us,” or “our” are intended to mean Verb Technology Company, Inc., ~~together~~individually, or as the context requires, collectively with its subsidiaries on a consolidated ~~subsidiaries unless~~basis.
As set forth more particularly below, through June 13, 2023 of the ~~context otherwise requires.~~six months ended June 30, 2023, the Company operated three distinct lines of business through separate wholly owned subsidiaries. The first was Verb Direct, LLC, a sales Software-as-a-Service (“SaaS”) platform for the direct sales industry; the second was Verb Acquisition Co., LLC, which was a sales SaaS platform for the Life Sciences industry and sports teams; and the third is verbMarketplace, LLC, which operates MARKET.live, a multivendor social shopping platform for retailers, brands, manufacturers, creators, influencers and entrepreneurs who seek to participate in an open market-style eco-system environment.
MARKET.live is akin to a virtual shopping mall, a centralized online destination where shoppers could explore hundreds, and over time thousands, of shoppable stores for their favorite brands, influencers, creators and celebrities, all of whom can host livestream shopping events from their virtual stores that can be seen by all shoppers at the virtual mall. Every store operator can host livestream events, even simultaneously, and over time we expect there will be thousands of such events, across numerous product and service categories, being hosted by people from all over the world, always on – 24/7 - where shoppers could communicate directly with the hosts in real time to comment or ask questions about products through an on-screen chat visible to all shoppers. Through the on-screen chat, shoppers can also communicate directly with each other in real time, invite their friends and family to join them at any of the live shopping events to share the experience, and then simply click on a non-intrusive - in-video overlay to place items in an on-screen shopping cart for purchase – all without interrupting the video. Shoppers can visit any number of other shoppable events to meet up and chat with friends, old and new, and together watch, shop and chat with the hosts, discover new products and services, and become part of an immersive entertaining social shopping experience. Throughout the experience, the shopping cart follows shoppers seamlessly from event to event, shoppable video to shoppable video, host to host, store to store and product to product.
Among the big differentiators for MARKET.live is that it allows anyone that streams on MARKET.live to simultaneously broadcast their stream (multi-cast or simulcast) over most popular social media sites to reach a substantially larger audience, which is especially attractive for creators and influencers that have large numbers of followers on other social media platforms.
A very compelling new feature recently developed for MARKET.live allows shoppers watching the stream on a popular social media site to stay on that site and actually check out through that site, eliminating the friction or reluctance to leave their favorite social site in order to check-out on MARKET.live. Currently in use by certain creators in beta, the Company expects this ~~Quarterly Report, we use~~new capability will enhance sales growth and be a meaningful revenue generator when fully launched later this summer.
Last fall the Company launched its “Creators on MARKET.live,” a program that allows creators to monetize their content through livestream shopping and personalized storefronts on MARKET.live. With more than 12 million products from brands like Athleta, Best Buy, Target, Container Store, Banana Republic, GAP, Saks Off 5th, SSENSE, LOFT, DERMSTORE, INTERMIX, UNCOMMON GOODS, and many more, participants can choose to feature their favorite products and promote and sell them to their fans, followers and customers.
The program has recently been restructured to be marketed not only to video content creators across multiple social media channels, but also to entrepreneurs eager to launch their own ecommerce store and drop-ship businesses on MARKET.live. Through this new program, creators, influencers, and entrepreneurs can quickly and easily establish their own storefronts, essentially their own website, and choose the products they love from hundreds of brands and retailers on MARKET.live to import into their storefront and offer their fans, followers, and would-be customers those products through livestream shopping events broadcast live on MARKET.live and simulcast on other social platforms.
Livestream events are also recorded and available to watch in their personally branded stores on MARKET.live for those fans, followers and customers to return 24/7 after the livestream events to browse and purchase any of the featured products, as the recorded livestream videos remain shoppable. Depending on the products chosen, participants in the program can earn between 5% and 20% of their gross sales at no cost and no risk to the Creators selected to participate in the Creator program. Entrepreneurs that participate in the dropship programs will pay a fixed monthly fee for access to the products in the program and to maintain their MARKET.live ecommerce storefronts.
On April 12, 2019, the Company acquired Sound Concepts Inc. (“Sound Concepts”) through a merger into the Company’s wholly owned subsidiary, Verb Direct, LLC (“Verb Direct”).
On September 4, 2020, the Company acquired Ascend Certification, LLC, dba SoloFire (“SoloFire”) through a merger into the Company’s wholly owned subsidiary, Verb Acquisition Co., LLC (“Verb Acquisition”).
On October 18, 2021, the Company established verbMarketplace, LLC (“Market LLC”), a Nevada limited liability company. Market LLC is a wholly owned subsidiary of the Company established to operate the MARKET.live platform.
On June 13, 2023, the Company disposed of all of its operating SaaS assets of Verb Direct and Verb Acquisition, (referred to collectively as the “SaaS business”) pursuant to an asset purchase agreement in consideration of the sum of $6,500, $4,750 of which was paid in cash by the buyer at the closing of the transaction. Additional payments of $1,750 will be paid by the buyer if certain profitability and revenue targets are met within the next two years as set forth more particularly in the asset purchase agreement.
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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, 2023, the Company incurred a net loss from continuing operations of $8,416 and used cash in continuing operations of $4,685. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the financial statements being issued. As a result, the Company’s continuation as a going concern is dependent on its ability to obtain additional financing until the Company can generate sufficient cash flows from operations to meet our obligations. The Company intends to continue to seek additional debt or equity financing to continue its operations.
As of June 30, 2023, the Company had cash of $3,526.
Equity financing:
On January 24, 2023, the Company issued 901,275 shares of the Company’s common stock which resulted in proceeds of $6,578, net of offering costs of $622.
Debt financing:
On January 12, 2022, the Company entered into a securities purchase agreement (the “January Note Purchase Agreement”) with three institutional investors (collectively, the “January Note Holders”) providing for the sale and issuance of an aggregate original principal amount of $6,300 in convertible notes due January 2023 (each, a “Note,” and, collectively, the “Notes,” and such financing, the “January Note Offering”). The Company and the January Note Holders also entered into a security agreement, dated January 12, 2022, in connection with the January Note Offering, pursuant to which the Company granted a security interest to the January Note Holders in substantially all of its assets. During the year ended December 31, 2022, the Company repaid $4,950 in principal payments and $357 of accrued interest to January Note Holders pursuant to the terms ~~“client”~~of the Notes. On January 26, 2023, the Company repaid the remaining principal balance of $1,350 and ~~“customer” interchangeably.~~$208 of accrued interest under the January Note Offering dated January 12, 2022.
In September 2022, the U.S. Small Business Administration approved a loan of $350, which, as of August 14, 2023, the Company has not received these funds.
On November 7, 2022, the Company entered into a note purchase agreement (the “November Note Purchase Agreement”) and promissory note with an institutional investor (the “November Note Holder”) providing for the sale and issuance of an unsecured, non-convertible promissory note in the original principal amount of $5,470, which has an original issue discount of $470, resulting in gross proceeds to the Company of approximately $5,000 (the “November Note,” and such financing, the “November Note Offering”). The November Note matures eighteen months following the date of issuance. Commencing six months from the date of issuance, the Company is required to make monthly cash redemption payments in an amount not to exceed $600. The November Note may be repaid in whole or in part prior to the maturity date for a 10% premium. The November Note requires the Company to use up to 20% of the gross proceeds raised from future equity or debt financings, or the sale of any subsidiary or material asset, to prepay the November Note, subject to a $2,000 cap on the aggregate prepayment amount. Until all obligations under the November Note have been paid in full, the Company is not permitted to grant a security interest in any of its assets, or to issue securities convertible into shares of common stock, subject in each case to certain exceptions. verbMarketplace, LLC entered into a guaranty, dated November 7, 2022, in connection with the November Note Offering, pursuant to which it guaranteed the obligations of the Company under the November Note in exchange for receiving a portion of the loan proceeds.
On May 16, 2023, the Company received a redemption notice under the terms of the November Note Purchase Agreement for $300. The Company missed two payments resulting in a Payment Failure Balance Increase of 10% on the outstanding principal balance per occurrence pursuant to the terms of the agreement totaling $1,205. These costs have been recorded as finance costs in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2023.
As of June 30, 2023 and December 31, 2022, the outstanding balance of the November Notes amounted to $6,375 and $5,544, respectively.
On February 16, 2023, the Company modified and combined the unpaid balances of the previous two advances on future receipts with a new advance from the same third party totaling $1,550 for the purchase of future receipts/revenues of $2,108, resulting in a debt discount of $558. As of June 30, 2023, the outstanding balance of the note was $915 and is being repaid by making daily payments of $10 on each banking day with a scheduled maturity date of November 7, 2023. The amounts related to this financing agreement have been reclassified to liabilities of discontinued operations for purposes of presenting discontinued operations.
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Other:

The Company, through its Professional Employer Organization, filed for federal government assistance for the second and third quarters of 2021 in the aggregate amount of $1,528 through Employee Retention Credit (“ERC”) provisions of the Consolidated Appropriations Act of 2021. The purpose of the ERC is to encourage employers to keep employees on the payroll, even if they are not working during the covered period due to the effects of the COVID-19 pandemic. As of June 30, 2023, and December 31, 2022, the Company had a ~~SaaS applications platform developer. Our platform~~receivable of $1,528 as the amended payroll tax returns have been filed with the IRS related to the quarterly periods ending June 2021 and September 2021. Due to the uncertain timing of the receipt of this receivable, it 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 offeredbeing classified as a fully integrated suite, as well as on a standalone basis, and include verbCRM, our Customer Relationship Management (“CRM”) application, verbLEARN, our Learning Management System application, verbLIVE, our Live Stream eCommerce application, verbPULSE, our business/augmented intelligence notification and sales coach application, and verbTEAMS, our self-onboarding video-based CRM and content management application for professional sports teams, small business and solopreneurs, with seamless synchronization with Salesforce, that also comes bundled with verbLIVE, and more recently, we introduced verbMAIL, our interactive video-based sales communication tool integrated into Microsoft Outlook. MARKET.live is our multi-vendor, multi-presenter, livestream social shopping platform that combines ecommerce and entertainment.long-term asset in the condensed consolidated balance sheet at June 30, 2023.

~~The~~In November 2022, a cost savings plan was approved and implemented to improve liquidity and preserve cash for operations (the “Cost Savings Plan”). This plan was expected to further reduce expenses moving forward through such actions as a reduction in force, elimination of certain services provided by various vendors, and a 25% reduction in cash compensation by senior management over a four-month period in exchange for shares of common stock. Subsequently, the Company ~~also provides certain non-digital services to some of its enterprise clients such as printing and fulfillment services.~~extended the Cost Savings Plan through April 30, 2023.
If the Company is unable to generate sufficient cash flow from operations to operate its business and pay its debt obligations as they become due, it will need to seek to raise additional capital, borrow additional funds, dispose of subsidiaries or assets, reduce or delay capital expenditures, or change its business strategy. However, in light of the restrictive covenants imposed by certain of the Company’s prior financing arrangements, in combination with the recent decline in the trading price of the common stock, the Company may be unable to raise additional capital in sufficient amounts when needed to operate its business, service its debt or execute on its strategic plans. Further, notwithstanding such restrictions, there can be no assurance that debt or equity financing will be available in the amounts, on terms, or at times deemed acceptable by the Company. The issuance of additional equity securities would result in significant dilution in the equity interests of the Company’s current stockholders and could include rights or preferences senior to those of the current stockholders. Borrowing additional funds would increase the Company’s liabilities and future cash commitments and potentially impose significant operational or financial restrictions and require the Company to further encumber its assets. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the Company may be unable to continue to operate its business or pay its obligations as they become due, and as a result may be required to curtail or cease operations, which may result in stockholders or noteholders losing some or all of their investment.
Economic Disruption

Our business is dependent in part on general economic conditions. Many jurisdictions in which our customers are located and our products are sold have experienced and could continue to experience unfavorable general economic conditions, such as inflation, increased interest rates and recessionary concerns, which could negatively affect demand for our products. Under difficult economic conditions, customers may seek to cease spending on our current products or fail to adopt our new products, which could negatively affect our financial performance. We cannot predict the timing or magnitude of an economic slowdown or the timing or strength of any economic recovery. These and other economic factors could have a material adverse effect on our business, financial condition, and results of operations.
~~COVID-19~~
As of the date of this filing, there continues to be concern regarding the ongoing impacts and disruptions caused by the COVID-19 pandemic in the regions in which the Company operates. Although the impacts of the pandemic on our business have not been material to date, a prolonged downturn in economic conditions as a result of the pandemic could have a material adverse effect on our customers and demand for our products. At this time, it is not possible for the Company to predict the duration or magnitude of the impacts of the pandemic, or other outbreaks of communicable diseases, on the Company’s business, financial condition and results of operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

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, ~~2021~~2022 filed with the SEC on ~~March 31, 2022~~April 17, 2023 (the ~~“2021~~“2022 Annual Report”). The condensed consolidated balance sheet as of December 31, ~~2021~~2022 included herein was derived from the audited consolidated financial statements as of that date.
On April 18, 2023, we implemented a 1-for-40 reverse stock split (the “Reverse Stock Split”) of our common stock, $0.0001 par value per share (the “Common Stock”). Our Common Stock commenced trading on a post Reverse Stock Split basis on April 19, 2023. As a result of the Reverse Stock Split, every forty (40) 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 forty and the exercise price of such securities increased by a factor of forty, as of April 18, 2023. All historical share and per-share amounts reflected throughout our condensed consolidated financial statements and other financial information in this Quarterly Report have been adjusted to reflect the Reverse Stock Split. The par value per share of our Common Stock was not affected by the Reverse Stock Split.
On June 10, 2023, the Board of Directors approved the sale of the SaaS Business assets to an unrelated third party, SW Direct Sales LLC (“SW Sales” or the “buyer”), for $6,500 with $4,750 cash proceeds paid by buyer upon closing of the transaction. Additional payments of $1,750 will be paid by the buyer if certain profitability and revenue targets are met within the next two years. The contingent payments were not recorded at the closing date of the sale, rather will be recognized as the cash is received and the contingency resolved pursuant to ASC 450-30.
Accordingly, the Company’s condensed consolidated financial statements are being presented pursuant to ASC 360-10-45-9 which requires that a disposal group be classified as held for sale in the period in which all of the held for sale criteria are met. Accordingly, the Company’s condensed consolidated balance sheet at December 31, 2022 has been reclassified to reflect held for sale accounting. In addition to held for sale accounting, the Company has also met the criterion pursuant to ASC 205-20, Discontinued Operations, as a strategic shift from operating and managing a SaaS business to operating and managing a live streaming shopping platform has occurred because of the sale. The Company’s condensed consolidated results of operations and statements of cash flows have been reclassified to reflect the presentation of discontinued operations. See Note 4 for details of the assets and liabilities related to the SaaS sale and discontinued operations.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.

11
Principles of Consolidation

The condensed consolidated financial statements have been prepared in accordance with GAAP and include the accounts of Verb, Verb Direct, LLC, Verb Acquisition Co., LLC, and verbMarketplace, LLC. All intercompany accounts have been eliminated in the consolidation.
10
~~Going Concern~~
~~The accompanying condensed consolidated financial statements~~ Certain prior period amounts 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 condensed consolidated financial statements, during the six months ended June 30, 2022, the Company incurred a net loss of $~~13,363~~ ~~and used cash in operations of $11,002. These factors raise substantial doubt about the Company’s ability~~reclassified to ~~continue as a going concern within one year after the date these financial statements were issued.~~
~~On January 12, 2022, the Company entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) with Tumim Stone Capital LLC (the “Investor”). Pursuant~~conform to the ~~agreement, the Company has the right, but not the obligation, to sell to the Investor, and the Investor is obligated to purchase, up to $50,000~~ ~~of newly issued shares (the “Total Commitment”) of the Company’s common stock, par value $0.0001~~ ~~per share (the “Common Stock”) from time to time during the term of the agreement, subject to certain limitations and conditions. The Total Commitment is inclusive of~~ ~~607,287~~ ~~shares of Common Stock (the “Commitment Shares”), issued to the Investor as consideration for its commitment to purchase shares of Common Stock under the Common Stock Purchase Agreement.~~
On January 12, 2022, the Company also entered into a securities purchase agreement with three institutional investors (collectively, the “Note Holders”) providing for the sale and issuance of an aggregate original principal amount of $~~6,300~~ in convertible notes due January 2023 (each, a “Note,” and, collectively, the “Notes,” and such financing, the “Note Offering”). The Company and the Note Holders also entered into a security agreement, dated January 12, 2022, in connection with the Note Offering, pursuant to which the Company granted a security interest to the Note Holders in substantially all of its assets.
~~On April 20, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”), which provides for the sale and issuance by the Company of an aggregate of (i)~~ ~~14,666,667~~ ~~shares of the Company’s common stock, $0.0001~~ ~~par value per share, at a purchase price of $0.75~~ ~~per share, and (ii) warrants to purchase~~ ~~14,666,667~~ ~~shares of the common stock at an exercise price of $0.75~~ ~~per share, for aggregate gross proceeds of $11,000~~ before deducting placement agent commissions and other offering expenses (the “Registered Direct Offering”). The Purchase Agreement, among other things, restricts us from selling shares of Common Stock pursuant to the Common Stock Purchase Agreement and pursuant to an “at-the-market” offering previously entered into with Truist Securities. As a result of this transaction, certain of our Series A warrants which previously had exercise prices ranging from $~~1.10~~ ~~to $2.10~~ ~~per share were repriced to $0.75~~ ~~per share. As a result of entering into the Purchase Agreement, the Company repaid $1,650~~ ~~in principal payments of the Notes issued pursuant to the Note Offering.~~
If the Company is unable to generate sufficient cash flow from operations to operate its business and pay its debt obligations as they become due, it may need to seek to raise additional capital, borrow additional funds, dispose of assets, reduce or delay capital expenditures, or change its business strategy. There can be no assurance that the Company will ever be profitable or that debt or equity financing will be available in the amounts, on terms, or at times deemed acceptable by the Company. The issuance of additional equity securities would result in significant dilution in the equity interests of our current stockholders and could include rights or preferences senior to those the current stockholders. Obtaining commercial loans would increase the Company’s liabilities and future cash commitments and potentially impose significant operational or financial restrictions. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the Company may be unable to continue its business, as planned, and as a result may be required to scale back or cease operations, which may result in the stockholders losing some or all of their investment.
~~For additional information, refer to Note 1 to~~year presentation within the condensed consolidated ~~financial statements,~~balance sheets as of June 30, 2023 and ~~the section titled “Risk Factors”, within the 2021 Annual Report.~~December 31, 2022.
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. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, and other factors that management believes to be reasonable. In addition, the Company has considered the potential impact of the pandemic, as well as certain macroeconomic factors, including inflation, rising interest rates, and recessionary concerns, on its business and operations.
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. ~~Some of those assumptions can be subjective and complex, and therefore, actual results~~Amounts could ~~differ~~ materially ~~from those estimates under different assumptions or conditions.~~change in the future.

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Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). ~~The Company derives its revenue~~Revenues during the six months ended June 30, 2023 were derived primarily from providing application services through the SaaS application, digital marketing and sales support services. During that period, the Company also derived revenue from the sale of customized print products and training materials, branded apparel, and digital tools, as demanded by its customers. As a result of the sale of the SaaS business, revenue that was recorded historically from the SaaS business has been reclassified as part of discontinued operations. See Note 4 for revenue disclosures related to the SaaS business.

A description of our principal revenue generating activities is as follows:

1. ~~Digital Revenue which is divided into two main categories:~~MARKET.live, launched at the end of July 2022, generates revenue through several sources as follows:

a. ~~SaaS recurring digital revenue based~~All sales run through our ecommerce facility on ~~contract-based subscriptions~~MARKET.live from which we deduct a platform fee that ranges from 10% to ~~verb app products~~20% of gross sales, with an average of approximately 15%, depending upon the pricing package the vendors select as well as the product category and ~~platform services which include verbCRM, verbLEARN, verbLIVE, verbTEAMS, and verbPULSE.~~profit margins associated with such categories. The revenue is ~~recognized straight-line over~~derived from sales generated during livestream events, from sales realized through views of previously recorded live events available in each vendor’s store, as well as from sales of product and merchandise displayed in the ~~subscription period.~~vendors’ online stores, all of which are shoppable 24/7.

b.
Produced events. MARKET.live offers fee-based services that range from full production of livestream events, to providing professional hosts and event consulting.
c. Drop ship programs. MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs.
b.d. ~~Non-SaaS, non-recurring digital revenue, which~~The MARKET.live site is ~~revenue generated by the use of app products and in-app purchases, such as sampling~~designed to incorporate sponsorships 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.advertising based on typical industry rates.
Subscription revenue from the application services is 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 mobile applications. These fees are accounted for as part of contract liabilities and amortized over the estimated life of the agreement. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the products or services to a customer.
2. Non-digital revenue, which is revenue generated from non-app, non-digital sources through ancillary services provided as an accommodation to clients and customers. These services, which are now outsourced to a strategic partner as part of a cost reduction plan instituted in 2020, include design, printing services, fulfillment and shipping services. The revenue is recognized upon completion and shipment of products or fulfillment to the customer. Effective April 1, 2022, the Company entered into a customer referral agreement with a third party for its cart site and printing business. Under the agreement, the Company will earn a certain percentage for customer referrals and merchandise sales as well as a cart site design fee, all of which will be recognized as non-digital revenue on a net basis.
The non-digital 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. 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 condensed consolidated statements of operations. Historically, we have not experienced any significant payment delays from customers. The Company allows returns within 30 days of purchase from end-users. Customers may return purchased products under certain circumstances. Returns from customers during the three and six months ended June 30, 2022 and 2021 were immaterial.
Revenues during the three and six months ended June 30, 2022 and 2021 were substantially all generated from clients and customers located within the United States of America, though some utilize the Company’s applications outside the United States of America.
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~~Cost of Revenue~~
Cost of revenue primarily consists of the salaries of certain employees and contractors, digital content costs, purchase price of consumer products, 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.
~~Contract Liabilities~~
Contract liabilities represent consideration received from customers under revenue contracts for which the Company has not yet delivered or completed its performance obligation to the customer. Contract liabilities are recognized over the contract period.

Capitalized Software Development Costs

The Company capitalizes internal and external costs directly associated with developing internal-use software, and hosting arrangements that include an internal-use software license, during the application development stage of its projects. The Company’s internal-use software is reported at cost less accumulated ~~depreciation. Depreciation~~amortization. Amortization begins once the project has been completed and is ready for its intended use. The Company will ~~depreciate~~amortize the asset on a straight-line basis over a period of three years, which is the estimated useful life. Software maintenance activities or minor upgrades are expensed in the period performed. ~~As of June 30, 2022 and December 31, 2021, the Company capitalized $6,461~~ ~~and $4,348, respectively, in software development costs and recorded as capitalized software development costs in the condensed consolidated balance sheets (see Note 3).~~

~~Depreciation~~Amortization expense related to capitalized software development costs are recorded in ~~cost of revenue~~depreciation and amortization in the condensed consolidated statements of operations. ~~There was~~ 0 depreciation expense related to capitalized software development costs for the three and six months ended June 30, 2022 and 2021 as the software had not been completed and utilized as of the balance sheet dates.

Intangible Assets
The Company had certain intangible assets that were initially recorded at their fair value at the time of acquisition. The finite-lived intangible assets consist of developed technology and customer contracts. Indefinite-lived intangible assets consist of domain names. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful life of five years.
The Company reviews 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, the Company recognizes an impairment loss for the excess carrying value over the fair value in our consolidated statements of operations.
In December 2022, the Company recorded an impairment loss of $440 on its indefinite-lived intangible assets that had been recognized as part of the Sound Concepts acquisition in 2019. The Company also recorded an impairment loss of $2 that had been recognized as part of the Solofire acquisition in 2020. As a result, the carrying amount of the Company’s indefinite-lived intangible assets was reduced to $0 as of December 31, 2022.
The Company did not record any impairment charges related to finite-lived intangible assets during the six months ended June 30, 2023.
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Goodwill
In accordance with FASB ASC 350, Intangibles-Goodwill and Other, the Company reviews goodwill and indefinite-lived intangible assets for impairment 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). Impairment of goodwill and indefinite-lived intangible assets is determined by comparing the fair value of the Company’s reporting unit to the carrying value of the underlying net assets in the reporting unit. If the fair value of the 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. 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 there is only one reporting unit.
The Company’s annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, the Company reviewed events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of goodwill. As a result of this qualitative assessment, the Company determined that a triggering event had occurred to necessitate performing the quantitative impairment test.
After performing the quantitative impairment test at December 31, 2022 in accordance with ASC 350-20-35-3C, the Company determined that goodwill was impaired by $10,183. As a result of the impairment losses recognized, the carrying amount of the Company’s goodwill was reduced to $9,581 as of December 31, 2022.
On June 13, 2023, the Company entered into a definitive agreement to sell all of the operating assets and liabilities of the SaaS business to SW Sales for $6,500, including $4,750 of cash paid upon closing. The operations of the SaaS business have been presented within discontinued operations. Upon completion of the sale of assets to SW Sales, in which the buyer assumed all liabilities related to the SaaS business, the Company recorded an impairment of $5,441 within loss from discontinued operations as the carrying amount of the net assets exceeded the sale price, less selling costs.
Series B Redeemable Preferred Stock
On February 17, 2023, the Company entered into a subscription agreement with Rory J. Cutaia, its Chief Executive Officer, pursuant to which the Company agreed to issue and sell one (1) share of the Company’s Series B Preferred Stock, par value $0.0001 per share, for $5 in cash. On April 20, 2023, the Company redeemed the Series B Preferred Stock for $5 in cash.
The Certificate of Designation setting for the rights and preferences of the Series B Preferred Stock provides that the holder of the Series B Preferred Stock will have 700,000,000 votes and will vote together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to any proposal to amend the Company’s Articles of Incorporation, as amended, to effect a reverse stock split of the Company’s common stock and to increase the number of authorized shares of common stock of the Company. The Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion, both For and Against, as the shares of common stock are voted. The Preferred Stock otherwise has no voting rights except as otherwise required by the Nevada Revised Statutes.
The Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Series B Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Series B Preferred Stock will not be entitled to receive dividends of any kind.
The outstanding share of Series B Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board of Directors in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the Certificate of Incorporation implementing a reverse stock split and the increase in authorized shares of common stock of the Company.
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.

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 of 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 ~~financial instruments.~~liabilities.

13
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 ~~condensed~~ 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 ~~condensed~~ consolidated 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.

Share-Based Compensation

The Company issues stock options and warrants, shares of common stock and restricted stock units as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation in accordance with FASB ASC 718, Compensation – Stock Compensation. Share-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock and is recognized as expense over the service period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for services.

Net Loss Per Share

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.~~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, ~~2022,~~2023, and ~~2021,~~2022, the Company had total outstanding options of ~~5,983,669~~1,099,523 and ~~5,875,190~~149,592, respectively, and warrants of ~~25,651,407~~951,804 and ~~12,389,228~~641,285, respectively, and outstanding restricted stock ~~units~~awards of ~~2,199,388~~21,535 and ~~2,751,508~~54,985, respectively, ~~and Convertible~~the Notes ~~Due 2023~~from the January Note Offering that ~~are~~were convertible into ~~1,495,289~~0 and 037,382 shares at ~~$3.00~~$120.00 per share, respectively, and convertible notes issued to a related party that were convertible into 21,874 and 19,657 shares at $41.20 per share, respectively, which were ~~all~~ excluded from the computation of net loss per share because they are anti-dilutive.

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 $250.

The ~~Company evaluates the~~Company’s concentration of credit risk ~~associated with~~includes its concentrations from key ~~customers. During~~customers and vendors. The details of these significant customers and vendors are presented in the ~~three and~~following table for the six months ended June 30, ~~2022~~2023 and ~~2021, we had no customers that accounted for~~ 10~~% of our revenues individually or in the aggregate.~~
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 credit worthiness of its customers.2022:
SCHEDULE OF CONCENTRATION RISK
~~As of June 30, 2022 and December 31, 2021, we had no customers that accounted for~~ 10~~% of our accounts receivable individually or in the aggregate.~~
~~The Company also evaluates the concentration of credit risk associated with key vendors~~. ~~For the three and six months ended June 30, 2022, we had one vendor that accounted for~~ 44~~% and~~ 41~~%, respectively, of our purchases individually and in the aggregate. For the three and six months ended June 30, 2021, we had one vendor that accounted for~~ 30~~% and~~ 28~~%, respectively, of our purchases individually and in the aggregate. As of June 30, 2022 and December 31, 2021, we had one vendor that accounted for~~ 41~~% and~~ 40~~%, respectively, of accounts payable individually and in the aggregate.~~
Six Months Ended June 30,
2023 2022
The Company’s largest customers are presented below as a percentage of the aggregate

Revenues and Accounts receivable No customers individually over 10% and in the aggregate No customers individually over 10% and in the aggregate

The Company’s largest vendors are presented below as a percentage of the aggregate

Purchases One vendor that accounted for 32% of its purchases individually and in the aggregate One vendor that accounted for 44% and 41%, respectively, of its purchases individually and in the aggregate

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Supplemental Cash Flow Information
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION
2023 2022

Six Months Ended June 30,
Six Months Ended June 30,

2022

2021
2023 2022
Supplemental disclosures of cash flow information:
Cash paid for interest $ 95 $ 34 $ 234 $ 95
Cash paid for income taxes 1 1 $ 2 $ 1

Supplemental disclosure of non-cash investing and financing activities:
Fair value of derivative liability extinguished - 2,300
Supplemental disclosure of non-cash investing and financing activities attributable to continuing operations:
Fair value of common shares issued to settle accrued expenses 450 281 $ 146 $ 450
Reclassification of Class B Units upon conversion to common stock - 3,065
Fair value of common stock issued to settle notes payable – related party - 200
Fair value of common shares issued as payment on notes payable 300 -
Fair value of common stock received in exchange for employee’s payroll taxes 6 130 - 6
Fair value of common stock issued for future services - 164
Discount recognized from advances on future receipts - 1,986
Fair value of common stock issued to settle lawsuit - 678
Accrued software development costs 105 - - 105
Discount recognized from notes payable 300 - - 300
Supplemental disclosure of non-cash investing and financing activities attributable to discontinued operations:
Discount recognized from advances on future receipts 558 -
Derecognition of operating lease right-of-use assets 543 - - 543
Derecognition of operating lease liabilities 521 - - 521
Recognition of operating lease right-of-use asset and related lease liability 212 - $ - $ 212

Recent Accounting Pronouncements

Recently Adopted 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. The adoption of this standard did not have any material impact on the Company’s financial statements.

In August 2020, the 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. Effective January 1, 2022, the Company early adopted ASU 2020-06 and that adoption did not have any material impact on the Company’s ~~consolidated~~ financial statements orand the related disclosures.

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. The Company adopted ASU 2021-04 effective January 1, 2022. The adoption of ASU 2021-04 did not have any material impact on the Company’s consolidated financial ~~statements~~statement presentation or ~~the related~~ disclosures.

15

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 will require companies to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination in accordance with ASC 606. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted this ASU as of January 1, 2022 on a prospective basis and the adoption impact of the new standard will depend on the magnitude of future acquisitions. The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832)—Disclosures by Business Entities about Government Assistance. ASU 2021-10 increases the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. The ASU is effective for fiscal years beginning after December 15, 2021. The Company adopted this ASU as of January 1, 2022 on a prospective basis. The adoption of this standard did not have any material impact on the Company’s ~~consolidated~~ financial ~~statements or the related disclosures.~~statements.

~~Recently Issued Accounting Pronouncements Not Yet Adopted~~
~~In June 2016,~~Other recent accounting pronouncements issued by the FASB, ~~issued ASU No. 2016-13,~~ ~~Credit Losses – Measurement~~including its Emerging Issues Task Force, the American Institute 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 a small business filer, ASU 2020-06 will be effective January 1, 2024, for the CompanyCertified Public Accountants, and the ~~provisions of this update can be adopted using either the modified retrospective method~~Securities and Exchange Commission (the “SEC”) did not or are not believed by management to have a ~~fully retrospective method. Management is currently assessing the~~material impact ~~of adopting this standard~~ on the Company’s present or future consolidated financial ~~statements or the related disclosures.~~statements.

3. CAPITALIZED SOFTWARE DEVELOPMENT COSTS

In 2020, the Company began developing ~~MARKET,~~MARKET.live, a livestream ecommerce platform, and has capitalized $~~6,461~~ 7,131and $~~4,348~~ 7,108of internal and external development costs as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. In October 2021, the Company entered into a 10-year license and services agreement with a third party (the “Primary Contractor”) to develop on a work-for-hire basis certain components of ~~MARKET.~~MARKET.live. The Primary Contractor’s fees for developing such components, including the license fee, is $5,750~~. As of June 30, 2022, the Company’s remaining software development obligation to the Primary Contractor was $105~~. The Primary Contractor was paid an additional $500bonus in April 2022 for services rendered pursuant to the license and service agreement. In addition, as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had paid or accrued $~~389~~ 605and $~~248~~604, respectively, of other capitalized software development costs.

~~There has been~~ 0 ~~amortization expense related to capitalized software development costs for~~For the three and six months ended June 30, 2023 and 2022, the Company amortized $539and ~~2021.~~$0, respectively, and $1,077 and $0, respectively.

16
Capitalized software development costs, net consisted of the following:
SCHEDULE OF CAPITALIZED SOFTWARE DEVELOPMENT COSTS
June 30, 2023 December 31, 2022

Beginning balance $ 6,176 $ 4,348

Additions 23 2,760
Amortization (1,077 ) (932 )
Ending balance $ 5,122 $ 6,176
The expected future amortization expense for capitalized software development costs as of June 30, 2023, is as follows:
SCHEDULE OF ESTIMATED AMORTIZTION EXPENSE
Year ending Amortization
2023 remaining $ 1,188
2024 2,377
2025 1,445
2026 112
Total amortization $ 5,122

Option to Acquire Primary Contractor
In August 2021, the Company entered into a term sheet that provided the Company the option to purchase the Primary Contractor ~~assuming~~provided certain conditions are met. In November 2021, the Company exercised this option. The Company and the Primary Contractor subsequently reached an agreement-in-principle on the terms for the Company’s acquisition of the Primary Contractor, the final consummation of which is subject to the execution of a share purchase agreement (the “SPA”) and the completion of an audit of the Primary Contractor that is satisfactory to the Company (the “Primary Contractor Audit”), as well as the fulfillment by the Primary Contractor of certain other conditions set forth in the term sheet. The term sheet stipulates that if the Company had entered into the SPA and the Primary Contractor ~~successfully completed~~had the Primary Contractor Audit successfully completed prior to May ~~15,~~22, 2022 (or a subsequent mutually agreed upon date) and the Company thereafter determines not to consummate the acquisition of the Primary Contractor, the Company would have been liable for a ~~$1,000~~$1,000 break-up fee payable to the Primary Contractor. However, as of ~~the date of the issuance of these financial statements,~~May 22, 2022, the SPA ~~has~~had not been executed and the Primary Contractor Audit ~~is ongoing.~~was not completed. The parties are still working together and in discussions regarding the transaction. Based on the term sheet, the purchase price for the Primary Contractor would behave been $12,000, which ~~can~~could be paid in cash and/or stock, although the final terms of the acquisition if pursued will be set forth in the final executed SPA. There can be no assurance that the acquisition will be completed on the terms set forth in the term sheet or at all.

16
4. ~~INTANGIBLE~~ ASSETS AND LIABILITIES HELD FOR SALE
On June 13, 2023, the Company entered into a definitive agreement to sell all of its SaaS operating assets and liabilities to SW Sales for $6,500, including $4,750 of cash due upon closing. The operations of the SaaS business have been presented within discontinued operations. Upon completion of the sale of assets to SW Sales, in which the buyer assumed all liabilities related to the SaaS business, the Company recorded an impairment of $5,441 within loss from discontinued operations as the carrying amount of the net assets exceeded the sale price, less selling costs.

~~Intangible~~The assets ~~net consisted~~and liabilities held for sale were as follows as of ~~the following:~~December 31, 2022
SCHEDULE OF ~~INTANGIBLE~~LONG LIVED ASSETS AND LIABILITIES HELD FOR SALE

June 30,
2022

December 31,
2021

Amortizable finite-lived intangible assets $ 7,399 $ 7,317
Accumulated amortization (4,523 ) (3,806 )
Finite-lived intangible assets, net 2,876 3,511

Indefinite-lived intangible assets 442 442

Intangible assets, net $ 3,318 $ 3,953
December 31, 2022
Assets:
Accounts receivable, net 1,024
Prepaids and other current assets 299
Goodwill
9,581

Other long-lived assets 886
Assets held for sale $ 11,790
Liabilities:
Accounts payable $ 663
Contract liabilities 1,340
Accrued liabilities 480
Liabilities related to assets held for sale $ 2,483

~~Amortizable finite-lived intangible assets are being amortized over a period~~The following information presents the net revenues and net loss of ~~three~~ to ~~five years. There were~~ 0 ~~impairment charges incurred in~~ the ~~periods presented. During~~SaaS business for the three and six months ended June 30, ~~2022~~2023 and ~~2021, the Company recorded amortization expense of $351~~ ~~and $355, respectively, and $717~~ ~~and $725, respectively.~~2022:

~~The expected future amortization expense for amortizable finite-lived intangible assets as of June 30, 2022, is as follows:~~
SCHEDULE OF ~~ESTIMATED AMORTIZATION EXPENSE~~NET REVENUES AND NET LOSS OF THE SAAS BUSINESS
2023 2022
Three Months Ended June 30,
2023 2022

Net revenues $ 1,601 $ 2,399

Net loss $ (6,080 ) $ (2,245 )

Year ending Amortization
2022 remaining $ 717
2023 1,386
2024 573
2025 200
Total amortization $ 2,876
2023 2022
Six Months Ended June 30,
2023 2022

Net revenues $ 3,814 $ 5,090

Net loss $ (6,954 ) $ (4,869 )

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5. OPERATING LEASES

On January 3, 2022, the Company terminated the lease agreements relating to our office and warehouse leases in American Fork, Utah. In accordance with ASC 842, Leases, the Company derecognized the right-of-use assets of $543and the corresponding lease liabilities of $521~~, resulting in a loss on lease termination of $~~22.

On April 26, 2022, the Company entered into an office space sub-lease ~~agreement.~~agreement in Lehi, Utah (the “Lehi lease”). The agreement ~~requires~~required us to pay $12$12 per month for an initial term of eighteen months, which ~~increases~~increased by 3% per annum after twelve months. In accordance with ASC 842, the Company recognized a right-of-use asset and the related lease liability of $212 ~~on the commencement date of the lease.~~.

17
On June 13, 2023, the Company derecognized the Lehi lease as part of the sale of SaaS assets to SW Sales. As a result of the sale, the Company has eliminated any lease-related information related to the SaaS business as part of its presentation of continuing operations. See Note 14 for Subsequent Events.

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
SCHEDULE OF LEASE COST
-
2023 2022
Six Months Ended June 30, Six Months Ended June 30,
2022 2021 2023 2022
Lease cost
Operating lease cost (included in general and administrative expenses in the Company’s condensed consolidated statements of operations) $ 241 $ 349
Operating lease cost (included in general and administrative expenses in the Company’s statement of operations) $ 170 $ 192

Other information
Cash paid for amounts included in the measurement of lease liabilities $ 308 $ 393 $ 113 $ 221
Weighted average remaining lease term – operating leases (in years) 4.15 4.26 3.92 4.92
Weighted average discount rate – operating leases 4.2 % 4.0 % 4.0 % 4.0 %
SCHEDULE OF OPERATING LEASES
June 30, 2022 December 31, 2021 June 30, 2023 December 31, 2022
Operating leases
Right-of-use assets $ 1,673 $ 2,177 $ 1,220 $ 1,354

Short-term operating lease liabilities $ 471 $ 592 $ 482 $ 355
Long-term operating lease liabilities 1,841 2,299 1,379 1,581
Total operating lease liabilities $ 2,312 $ 2,891 $ 1,861 $ 1,936

SCHEDULE OF PRESENT VALUE OF LEASE LIABILITIES
Year ending Operating Leases Operating Leases
2022 remaining $ 300
2023 583
2023 remaining $ 346
2024 472 472
2025 484 484
2026 and thereafter 705
2026 496
2027 and thereafter 209
Total lease payments 2,544 2,007
Less: Imputed interest/present value discount (232 ) (146 )
Present value of lease liabilities $ 2,312 $ 1,861

6. ADVANCES ON FUTURE RECEIPTS

As a result of the sale, the Company has eliminated any amounts related to advances on future receipts as part of its presentation of continuing operations The Company has the following advances on future receipts as of June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:
SCHEDULE OF ADVANCES ON FUTURE RECEIPTS
Note Issuance
Date Maturity
Date Interest
Rate Original Borrowing Balance at June 30,
2022 Balance at December 31, 2021
Issuance Date

Maturity Date

Interest
Rate

Original
Borrowing
Balance at June 30, 2023 Balance at December 31, 2022

Note 1 October 29, 2021 April 28, 2022 5 % $ 2,120 $ - $ 1,299 August 25, 2022 May 11, 2023 26 % $ 3,400 $ - $ 1,782
Note 2 October 29, 2021 July 25, 2022 28 % 3,808 589 2,993 October 25, 2022 April 26, 2023 30 % 322 - 207
Note 3 December 23, 2021 June 22, 2022 5 % 689 - 689 February 16, 2023 December 14, 2023 35 % 2,108 915 -
Total $ 6,617 589 4,981 $ 5,830 915 1,989
Debt discount (35 ) (800 ) (187 ) (311 )
Debt issuance costs (32 ) (37 )
Net $ 554 $ 4,181 $ 696 $ 1,641

18

Note 1

On ~~October 29, 2021,~~August 25, 2022, the Company received secured advances from an unaffiliated third party totaling $~~2,015~~ 2,500for the purchase of future receipts/revenues of $~~2,120~~3,400, resulting in a debt discount of $900. ~~During the six months ended June 30, 2022, the~~The Company also paid $~~1,270~~ 100 of debt issuance costs. The debt discount and debt issuance costs were being amortized $41 over the term of the ~~debt discount. The note was paid in full on April 28, 2022.~~secured advance using the effective interest rate method. As of ~~June 30,~~December 31, 2022, the outstanding balance of the note was $0 1,782and the unamortized balance of the debt discount ~~was~~and debt issuance costs were $0267. and $30, respectively. During the six months ended June 30, 2023, the Company paid $643 and amortized $155 and $17 of the debt discount and debt issuance costs, respectively. On February 16, 2023, the Company agreed to combine the unpaid balance with a new advance, see Note 3 below. The unamortized amounts of debt discount and debt issuance costs of $112 and $13, respectively, were written off as part of the accounting for loss from discontinued operations.

Note 2

On October ~~29, 2021,~~25, 2022, the Company received secured advances from an unaffiliated third party totaling $~~2,744~~225 for the purchase of future receipts/revenues of $~~3,808~~322, resulting in a debt discount of $97. ~~During the six months ended June 30, 2022, the~~The Company also paid $~~2,404~~ ~~and amortized $659~~16 of debt issuance costs. The debt discount and debt issuance costs were being amortized over the ~~debt discount.~~term of the secured advance using the effective interest rate method. As of ~~June 30,~~December 31, 2022, the outstanding balance of the note was $~~589~~207, and the unamortized balance of the debt discount ~~was~~and debt issuance costs were $3544~~. Subsequent to~~ and $7, respectively. During the six months ended June 30, ~~2022,~~2023, the ~~remaining~~Company paid $86 and amortized $28 and $4 of the debt discount and debt issuance costs, respectively. On February 16, 2023, the Company agreed to combine the unpaid balance ~~was paid in full.~~with a new advance, see Note 3 below. The unamortized amounts of debt discount and debt issuance costs of $16 and $3, respectively, were written off as part of the accounting for loss from discontinued operations.

Note 3

On ~~December 23, 2021,~~February 16, 2023, the Company ~~received secured~~modified and combined the unpaid balances of the previous two advances (see Notes 1 and 2 above) with a new advance from ~~an unaffiliated~~the same third party totaling $~~651~~ 1,550for the purchase of future receipts/revenues of $~~689~~2,108, resulting in a debt discount of $558. The Company received $.290 and paid $87 of debt issuance costs upon closing and an additional $3 on June 13, 2023. The debt discount and debt issuance costs are being amortized over the term of the secured advance using the effective interest rate method. During the six months ended June 30, ~~2022,~~2023, the Company paid $~~689~~ 1,193and amortized $36 371 and $58of the debt ~~discount. The note was paid in full on June 22, 2022.~~discount and debt issuance costs, respectively. As of June 30, ~~2022,~~2023, the outstanding balance of the note was $0 915and the unamortized balance of the debt discount ~~was~~and debt issuance costs were $0187. and $32 respectively.

7. CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

The Company has the following outstanding notes payable as of June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:
SCHEDULE OF NOTES PAYABLE RELATED PARTIES
Note Issuance
Date Maturity Date Interest
Rate
Original
Borrowing

Balance at
June 30,
2022

Balance at
December 31,
2021
Issuance Date Maturity Date Interest Rate
Original
Borrowing

Balance at
June 30,
2023

Balance at
December 31,
2022

Related party note payable (A) December 1, 2015 April 1, 2023 12.0 % $ 1,249 $ 725 $ 725 December 1, 2015 April 1, 2023 12.0 % $ 1,249 $ 725 $ 725
Related party note payable (B) April 4, 2016 June 4, 2021 12.0 % 343 40 40 April 4, 2016 June 4, 2021 12.0 % 343 40 40
Note payable (C) May 15, 2020 May 15, 2050 3.75 % 150 150 150 May 15, 2020 May 15, 2050 3.75 % 150 150 150
Convertible Notes Due 2023 (D) January 12, 2022 January 12, 2023 6.0 % $ 6,300 4,404 - January 12, 2022 January 12, 2023 6.0 % 6,300 - 1,350
Promissory note payable (E) November 7, 2022 May 7, 2024 9.0 % 5,470 6,034 5,470
Debt discount (128 ) - (246 ) (408 )
Debt issuance costs (196 ) - (183 ) (309 )
Total notes payable 4,995 915 6,520 7,018
Non-current (875 ) (875 ) (150 ) (1,215 )
Current $ 4,120 $ 40 $ 6,370 $ 5,803

(A) On December 1, 2015, the Company issued a convertible note payable to Mr. Cutaia, the Company’s Chief Executive Officer and a director, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. On May 19, 2021, the Company amended the note to allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which was the closing price of the common stock on the amendment date. On May 12, 2022, the maturity date of the note was extended to April 1, 2023. As of June 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the outstanding balance under the note was $854 and $~~725~~811, respectively. As of June 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents accrued interest was $129. and $86, respectively.

(B) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia, in the amount of $343, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. On May 19, 2021, the Company amended the note to allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which was the closing price of the common stock on the amendment date. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the outstanding balance under the note was $47 and $4045, respectively. As of June 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents accrued interest was $7. and $5, respectively.

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(C)
On May 15, 2020, the Company executed an unsecured loan with the ~~U.S. Small Business Administration (SBA)~~SBA under the Economic Injury Disaster Loan program in the amount of $150. Installment payments, including principal and interest, ~~will begin~~began on October ~~15,~~26, 2022. In September 2022, the SBA approved an additional loan of $350. As of August 14, 2023, the Company has not received these funds. As of June 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the outstanding balance ofunder the note ~~amounted to~~was $150~~, respectively.~~.

(D)
On January 12, 2022, the Company entered into a securities purchase agreement (the “January Note Purchase Agreement”) with three institutional investors (collectively, the “January Note ~~Offering, which provided~~Holders”) providing for the sale and issuance of an aggregate original principal amount of $6,300 in convertible notes due ~~2023.~~January 2023 (each, a “Note,” and, collectively, the “Notes,” and such financing, the “January Note Offering”). The Company and the January Note Holders also entered into a security agreement, dated January 12, 2022, in connection with the January Note Offering, pursuant to which the Company granted a security interest to the January Note Holders in substantially all of its assets. The January Note Purchase Agreement prohibits the Company from entering into an agreement to effect any issuance of common stock involving a Variable Rate Transaction (as defined therein) during the term of the agreement, subject to certain exceptions set forth therein. The January Note Purchase Agreement also gives the January Note Holders the right to require the Company to use up to 15% of the gross proceeds raised from future debt or equity financings to redeem the Notes, which redemptions have been elected by the January Note Holders. There are no financial covenants related to these notes payable.

The Company received $6,000 in gross proceeds from the sale of the Notes. The Notes bear interest of 6.0% per annum, have an original issue discount of 5.0%, mature 12 months from the closing date, and have an initial conversion price of $~~3.00~~120.00, subject to adjustment in certain circumstances as set forth in the Notes.

In connection with the January Note Offering, the Company ~~incurred~~paid $~~460~~461 of debt issuance costs. The debt issuance costs and the debt discount of $300 ~~are being~~were amortized over the term of the Notes using the effective interest rate method. ~~During the six months ended June 30, 2022, the Company amortized $172~~ ~~of debt discount and $264~~ ~~of debt issuance costs.~~ As of ~~June 30,~~December 31, 2022, the amount of unamortized debt discount and debt issuance costs was $~~128~~6 and $~~196, respectively.~~
~~As of June 30, 2022, and December 31, 2021, the outstanding balance of the Notes amounted to $4,404, and $~~010, respectively. During the six months ended June 30, 2023, the Company amortized the remaining amount of debt discount and debt issuance costs.
As of December 31, 2022, the outstanding principal balance of the Notes amounted to $1,350. On January 26, 2023, the Company repaid in full all outstanding obligations under the January Note Offering dated January 12, 2022.
(E)
On November 7, 2022, the Company ~~repaid $1,896~~entered into a note purchase agreement (the “November Note Purchase Agreement”) and promissory note with an institutional investor (the “November Note Holder”) providing for the sale and issuance of an unsecured, non-convertible promissory note in ~~principal payments pursuant to~~ the ~~Note Holders pursuant to the Notes.~~
~~Beginning on May 12, 2022, the Company was required to make nine monthly principal payments of $246, plus accrued interest, to the Note Holders, with the remaining~~original principal amount of $~~2,436~~5,470, ~~plus accrued interest, due on~~which has an original issue discount of $470, resulting in gross proceeds to the Company of approximately $5,000 (the “November Note,” and such financing, the “November Note Offering”). The November Note matures eighteen months following the date of issuance. Commencing six months from the date of issuance, the Company is required to make monthly cash redemption payments in an amount not to exceed $600.
The November Note may be repaid in whole or in part prior to the maturity ~~date.~~date for a 10% premium. The November Note ~~Holders agreed to allow~~requires the Company to ~~defer~~use up to 20% of the ~~payment originally due~~gross proceeds raised from future equity or debt financings, or the sale of any subsidiary or material asset, to prepay the November Note, subject to a $2,000 cap on ~~June 12,~~the aggregate prepayment amount. Until all obligations under the November Note have been paid in full, the Company is not permitted to grant a security interest in any of its assets, or to issue securities convertible into shares of common stock, subject in each case to certain exceptions. verbMarketplace, LLC entered into a guaranty, dated November 7, 2022, in connection with the November Note Offering, pursuant to which it guaranteed the obligations of the Company under the November Note in exchange for receiving a portion of the loan proceeds.
In connection with the November Note Offering, the Company incurred $335 of debt issuance costs. The debt issuance costs and ~~to instead increase~~the debt discount of $450 are being amortized over the term of the November Notes using the effective interest rate method. As of December 31, 2022, the amount of unamortized debt discount and debt issuance costs was $402 and $299, respectively. During the six months ended June 30, 2023, the Company paid $375 in cash and $300 in shares; amortized $156 of debt discount and $116 of debt issuance costs. As of June 30, 2023, the amount of unamortized debt discount and debt issuance costs was $246 and $183, respectively.
On May 16, 2023, the Company received a redemption notice under the terms of the November Note Purchase Agreement for $300. The Company missed two payments resulting in a Payment Failure Balance Increase of 10% on the outstanding principal ~~payments required~~balance per occurrence pursuant to ~~be made beginning on July 12,~~the terms of the agreement totaling $1,205. These costs have been recorded as finance costs in the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2023.
As of June 30, 2023 and December 31, 2022, the outstanding balance of the November Notes amounted to $~~281~~6,375 and $5,544, ~~with the remaining principal amount of $2,436~~respectively. See Note 14 for Subsequent Events.~~, plus accrued interest, due on the maturity date. There was no change in the aggregate amount of indebtedness as a result of this payment deferral.~~
The following table provides a breakdown of interest expense for the periods presented:
SCHEDULE OF INTEREST EXPENSE
2023 2022
Three Months Ended June 30, Three Months Ended June 30,
2022 2021 2023 2022

Interest expense – amortization of debt discount $ 372 $ 565 $ 77 $ 98
Interest expense – amortization of debt issuance costs 151 - 57 151
Interest expense – other 119 31 165 119

Total interest expense $ 642 $ 596 $ 299 $ 368

Total interest expense for notes payable to related parties (see Notes A and B above) was $23 and $2923 for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company paid $0 and $340 in interest to related parties for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.
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The following table provides a breakdown of interest expense for the periods presented:

2023 2022
Six Months Ended June 30, Six Months Ended June 30,
2022 2021 2023 2022

Interest expense – amortization of debt discount $ 908 $ 1,040 $ 163 $ 171
Interest expense – amortization of debt issuance costs 264 - 127 264
Interest expense – other 226 64 480 226

Total interest expense $ 1,398 $ 1,104 $ 770 $ 661
Total interest expense for notes payable to related parties (see Notes A and B above) was $46 and $6146 for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company paid $0 and $340 in interest to related parties for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

8. DERIVATIVE LIABILITY

Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments that do not have fixed settlement provisions are deemed to be derivative instruments. In prior years, the Company granted certain warrants that included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As a result, the fundamental transaction clause of these warrants isare accounted for as a derivative liability in accordance with ASC 815 and are being re-measured every reporting period with the change in value reported in the ~~Company’s condensed consolidated statements~~statement of operations.
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The derivative liabilities were valued using a Binomial pricing model with the following average assumptions:
SCHEDULE OF DERIVATIVE LIABILITY USING BINOMIAL PRICING MODEL ASSUMPTIONS
June 30, 2022 December 31, 2021 June 30, 2023 December 31, 2022
Stock Price $ 0.52 $ 1.24 $ 1.08 $ 6.40
Exercise Price $ 0.75 $ 1.11 $ 8.00 $ 13.60
Expected Life 2.47 2.97 1.50 1.98
Volatility 103 % 119 % 132 % 107 %
Dividend Yield 0 % 0 % 0 % 0 %
Risk-Free Interest Rate 2.96 % 0.97 % 5.07 % 4.41 %
Total Fair Value $ 993 $ 3,155 $ 16 $ 222

The expected life of the warrants was based on the remaining contractual term of the instruments. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected dividend yield was based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. The risk-free interest rate was based on rates established by the Federal Reserve Bank.

During the six months ended June 30, 2023 and 2022, the Company recorded a gain of $206 and $2,162 respectively to account for the changes in the fair value of these derivative liabilities during the period.
~~During the six months ended~~ At June 30, ~~2021, the Company recorded expense of $1,945~~ ~~to account for the changes in the fair value of these derivative liabilities during the period. In addition,~~ ~~1,094,246~~ ~~shares of the Series A warrants that were accounted for as a derivative liability were exercised. As result, the Company computed~~2023, the fair value of the ~~corresponding~~ derivative liability ~~one last time which~~ amounted to $~~2,300~~16 ~~and the extinguishment was accounted for as part of equity.~~.

The details of derivative liability transactions for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:
SCHEDULE OF DERIVATIVE LIABILITY ~~TRANSACTIONS~~TRANSACTION
2023 2022
Six Months Ended June 30, Six Months Ended June 30,
2022 2021 2023 2022
Beginning balance $ 3,155 $ 8,266 $ 222 $ 3,155
Change in fair value (2,162 ) 1,945 (206 ) (2,162 )
Extinguishment - (2,300 )
Ending balance $ 993 $ 7,911 $ 16 $ 993

9. COMMON STOCK

The Company’s common stock activity for the six months ended June 30, ~~2022, was~~2023 is as follows:
Common Stock
Shares Issued as Part of Public Offering
On January 24, 2023, the Company entered into an underwriting agreement with Aegis Capital Corp. (“Aegis”) as underwriter relating to the offering, issuance and sale of 901,275 shares of the Company’s common stock at a public offering price of $8.00 per share. The net proceeds for the offering were $6,578, after deducting discounts, commissions and estimated offering expenses. As a result of this transaction, certain warrants which previously had an exercise price of $13.60 per share, had the exercise price reduced to $8.00 per share.
Shares Issued for Services

During the six months ended June 30, ~~2022,~~2023, the Company issued ~~14,666,667~~195,489 shares of common stock ~~as part~~to officers and employees associated with the vesting of ~~a Registered Direct Offering,~~Restricted Stock Units.
Termination of Equity Line of Credit Agreement
On January 26, 2023, the Company terminated the January Purchase Agreement dated January 12, 2022, which ~~resulted in proceeds~~provided for the sale by the Company of up to $~~10,242~~50,000~~, net~~ of ~~offering costs~~newly issued shares.
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Issuances of $~~758~~.Stock Options

During the six months ended June 30, ~~2022,~~2023, the Company ~~issued~~granted stock options to board members to purchase a total of ~~11,096,683~~8,090 ~~shares of common~~ stock ~~pursuant~~options as replacement awards related to ~~the Common Stock Purchase Agreement, which resulted in proceeds~~forfeited restricted stock units. The options have an average exercise price of $~~9,836~~9.20~~, net of offering costs of $197. In addition,~~ per share, expire in five years, and vested on the ~~Company issued~~ ~~607,287~~ ~~shares of common stock as a commitment fee in connection with the consummation of the transactions contemplated by the Common Stock Purchase Agreement.~~
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~~During the six months ended June 30, 2022, the Company issued~~ ~~1,291,300~~ ~~shares of common stock to certain employees and vendors for services rendered and to be rendered with an aggregate~~grant date. The total grant date fair value of these options was $~~1,148~~66 based on the Black-Scholes option pricing model.
~~. These~~
On June 21, 2023, the Company granted stock options to board members to purchase a total of 997,595 stock options. The options have an average exercise price of $1.11 per share, expire in five years, and vest annually over 4 years. The total grant date fair value of these options was $953 based on the Black-Scholes option pricing model.
Reverse Stock Split
At a Special Meeting of Stockholders on April 10, 2023, the stockholders of the Company approved a Certificate of Amendment to the Articles of Incorporation of the Company to increase its authorized common stock from 200,000,000 shares to 400,000,000 shares and approved the grant of discretionary authority to the board of directors of the Company to effect a reverse stock split of its outstanding shares of common stock ~~were valued based~~at a specific ratio within a range of one-for-five (1-for-5) to a maximum of a one-for-forty (1-for-40) split. On April 18, 2023, the Company implemented the 1-for-40 reverse stock split (the “Reverse Stock Split”) of its common stock. The Company’s common stock commenced trading on a post- reverse stock split basis on April 19, 2023. As a result of the ~~closing price~~Reverse Stock Split, every forty (40) shares of the Company’s pre-Reverse Stock Split common stock onwere combined and reclassified into one share of common stock. The number of shares of common stock subject to outstanding options, warrants, and convertible securities were also reduced by a factor of forty and the ~~date~~exercise price of ~~the issuance or the date the Company entered into the agreement related to the issuance.~~such securities increased by a factor of forty effective as of April 18, 2023.

~~During~~Equity Incentive Plan
At the ~~six months ended June 30, 2022,~~Special Meeting of Stockholders, the stockholders of the Company ~~issued~~approved an amendment to the Company’s 2019 Incentive Compensation Plan to increase the number of shares authorized under the plan by ~~189,394~~15,000,000 shares of common stock to be authorized for awards granted under the ~~Company’s Chief Executive Officer in lieu of the cash payment of a bonus accrued in a prior year, with an aggregate grant date fair value of $100~~plan. ~~based on the closing price of the Company’s common stock on the date of issuance.~~
See Note 14 for Subsequent Events.

~~The Company also issued~~ ~~227,136~~ ~~shares of common stock to the Company’s former Chief Financial Officer as part of a separation agreement, with an aggregate grant date fair value of $277~~ ~~based on the closing price of the Company’s common stock on the date of issuance.~~
~~During the six months ended June 30, 2022, the Company issued~~ ~~463,234~~ ~~shares of common stock to certain officers, employees and directors associated with the vesting of restricted stock units.~~
10. RESTRICTED STOCK UNITS

A summary of restricted stock unit activity for the six months ended June 30, ~~2022,~~2023 is presented below.
SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY
Weighted-
Average
Grant Date
Shares Fair Value

Non-vested at January 1, 2022 1,821,833 $ 1.41
Granted 1,334,270 1.17
Vested/deemed vested (463,234 ) 1.66
Forfeitures and other (493,481 ) 1.33
Non-vested at June 30, 2022 2,199,388 $ 1.23
~~During the six months ended June 30, 2022, the Company granted~~ ~~1,334,270~~ ~~restricted stock units to certain officers, employees and directors.~~ ~~The restricted stock units vest on various dates from January 2023 through March 2026. These restricted stock units were valued based on the closing price of the Company’s common stock on the respective dates of issuance and had an aggregate grant date fair value of $1,561, which is being amortized as share-based compensation expense over the respective vesting terms.~~
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Weighted-
Average
Grant Date
Shares Fair Value

Non-vested at January 1, 2023 89,898 $ 29.04
Granted 147,775 1.11
Vested/deemed vested (195,489 ) 4.87
Forfeited (20,649 ) 40.49
Non-vested at June 30, 2023 21,535 $ 48.61

The total fair value of restricted stock units that vested or deemed vested during the ~~three and~~ six months ended June 30, ~~2022,~~2023 was $~~318~~952 ~~and~~. The total stock compensation expense recognized relating to the vesting of restricted stock units for the six months ended June 30, 2023 amounted to $~~565~~840~~, respectively.~~. As of June 30, ~~2022,~~2023 the ~~remaining share-based~~amount of unvested compensation ~~expense associated with previously issued~~related to issuances of restricted stock units was $~~2,051~~1,047 which will be recognized as an expense in future periods as the ~~units~~shares vest. When calculating basic net loss per share, these shares are included in weighted average common shares outstanding from the time they vest. When calculating diluted net loss per share, these shares are included in weighted average common shares outstanding as of their grant date.

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11. STOCK OPTIONS

A summary of option activity for the six months ended June 30, ~~2022,~~2023 is presented below.
SCHEDULE OF STOCK OPTION ACTIVITY
Weighted-
Weighted- Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Options Price Life (Years) Value

Outstanding at January 1, 2022 5,404,223 $ 1.72 2.24 $ 107
Granted 2,689,555 1.07 - -
Forfeited (1,777,379 ) 1.59 - -
Exercised (332,730 ) 1.13 - -
Outstanding at June 30, 2022 5,983,669 $ 1.45 1.83 $
26

Vested June 30, 2022 2,982,073 $ 1.86 $ -

Exercisable at June 30, 2022 1,741,272 $ 2.13 $ -
Weighted-
Weighted- Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Options Price Life (Years) Value

Outstanding at January 1, 2023 139,054 $ 52.11 3.37 $ -
Granted 1,005,685 1.18 - -
Forfeited (45,216 ) 48.11 - -
Exercised - - - -
Outstanding at June 30, 2023 1,099,523 $ 5.69 4.78 $ -

Vested June 30, 2023 77,304 $ 50.47 $ -

Exercisable at June 30, 2023 77,304 $ 50.47 $ -

At June 30, ~~2022,~~2023, the intrinsic value of the outstanding options was $260.

During the six months ended June 30, ~~2022,~~2023, the Company granted stock options to ~~certain employees and consultants~~board members to purchase a total of ~~2,689,555~~8,090 ~~shares of common~~ stock ~~for services rendered or~~options as replacement awards related to ~~be rendered.~~forfeited restricted stock units. The options have an average exercise price of $~~1.07~~9.20 per share, ~~terms between one~~expire in five years, and vested on the grant date. The total fair value of these options at grant date was $66 using the Black-Scholes Option Pricing model.
On June 21, 2023, the Company granted stock options to board members to purchase a total of 997,595 stock options. The options have an average exercise price of $1.11 per share, expire in five years, and vest ~~between zero and four years from the respective grant dates.~~annually over 4 years. The total grant date fair value of these options was ~~approximately~~ $~~2,596~~953 ~~using~~based on the Black-Scholes option pricing model.
The total ~~share-based~~stock compensation expense recognized relating to the vesting of stock options for the ~~three and~~ six months ended June 30, ~~2022, was~~2023 amounted to $~~374~~514 ~~and $905, respectively.~~. As of June 30, ~~2022,~~2023, the ~~remaining~~total unrecognized share-based compensation expense ~~associated with previously issued stock options~~ was $~~3,022~~2,665, which ~~will~~is expected to be recognized ~~in future periods~~ as ~~the options vest.~~
~~During the six months ended~~part of operating expense through June ~~30, 2022, a total of~~ ~~332,730~~ ~~stock options were exercised. As a result of the exercise of the option, the Company issued~~ ~~332,730~~ ~~shares of common stock and received cash of $377~~.2027.

The ~~grant date~~ fair value of share option ~~awards~~award is estimated using the Black-Scholes option pricing ~~model~~method based on the following weighted-average assumptions:
SCHEDULE OF FAIR VALUE ASSUMPTIONS USING BLACK-SCHOLES METHOD
Six Months Ended June 30,
2023 2022
Risk-free interest rate 3.95 % 1.24% - 3.01 %
Average expected term 5 years 5 years
Expected volatility 127.5 % 147.8-149.5 %
Expected dividend yield - -
Six Months Ended June 30,
2022 2021
Risk-free interest rate 1.24% - 3.01 % 0.10% - 0.92 %
Average expected term 5 years 5 years
Expected volatility 147.8 – 149.5 % 236.2 - 240.0 %
Expected dividend yield - -
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The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.

12. STOCK WARRANTS

The Company has the following warrants outstanding as of June 30, ~~2022:~~2023, all of which are exercisable:
SCHEDULE OF WARRANTS OUTSTANDING
Warrants Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value

Outstanding at January 1, 2022, all vested 10,984,740 $ 2.67 2.38 $ 507
Granted, unvested as of June 30, 2022 14,666,667 0.75 5.32 -
Forfeited - - - -
Exercised - - - -
Outstanding at June 30, 2022 25,651,407 $ 1.52 3.65 $ -
Warrants Weighted-
Average
Exercise
Price Weighted-
Average
Remaining
Contractual
Life (Years) Aggregate
Intrinsic
Value

Outstanding at January 1, 2023 952,638 $ 37.60 3.56 $         -
Granted - - - -
Forfeited (834 ) 13.60 - -
Exercised - - - -
Outstanding at June 30, 2023, all vested 951,804 32.80 2.68 $ -

~~In connection with the Registered Direct Offering, the Company issued~~ ~~14,666,667~~ ~~warrants to purchase common stock with a vesting period of~~ ~~six~~ ~~months and an exercise price of $0.75. As of a result of the Registered Direct Offering,~~ ~~3,704,826~~ ~~Series A warrants with exercise prices ranging from $1.10~~ ~~to $2.10~~ ~~per share were repriced to $0.75~~ ~~per share. The change in fair value of such warrants as a result of the new exercise price is approximately $200~~ ~~and the Company accounted for this change as part of the change in fair value of derivative liability (see Note 8). As of~~At June 30, ~~2022,~~2023 the intrinsic value of the outstanding warrants was $0.
On January 24, 2023, the Company entered into an underwriting agreement with Aegis relating to the January 2023 offering, issuance and sale of 901,275 shares of the Company’s common stock at a public offering price of $8.00 per share. As a result of this transaction, certain warrants which previously had an exercise price of $13.60 per share, had the exercise price reduced to $8.00 per share, which resulted in the Company recognizing a deemed dividend of $164.
23

13. COMMITMENTS AND CONTINGENCIES

Litigation

a. ~~Former Employee~~
a. Former Employee

The Company is currently in a dispute with a former employee of its predecessor bBooth, Inc. who has interposed a breach of contract claim in which he alleges that he is entitled to approximately $300 in unpaid bonus compensation from 2015. This former employee filed his complaint in the Superior Court of California for the County of Los Angeles on November 20, 2019, styled Meyerson v. Verb Technology Company, Inc., et al. (Case No. 19STCV41816). The Company does not believe the former employee’s claims have any merit as they are contradicted by documentary evidence, and barred by the applicable statute of limitations, and barred by a release. On February 9, 2021, the former employee’s counsel filed a motion for summary judgment, or in the alternative, summary adjudication against the Company. On October 13, 2021, the court issued an order (i) denying the former employee’s motion for summary judgment, (ii) partly granting the former employee’s motion for summary adjudication, and (iii) partly denying the former employee’s motion for summary adjudication. The court has set a trial date of ~~December~~August 28, ~~2022.~~2023. The Company believes the resolution of this matter will not have a material adverse effect on the Company or its operations.

b. ~~Legal Malpractice Action~~
b. Legal Malpractice Action

The Company ~~is currently~~was involved in a dispute with Baker Hostetler LLP (“BH”) relating to corporate legal services provided by BH to the Company. The Company filed ~~its~~a complaint in the Superior Court of California for the County of Los Angeles on May 17, 2021, styled Verb Technology Company, Inc. v. Baker Hostetler LLP, et al. (Case No. 21STCV18387). The Company’s complaint arises from BH’s alleged legal malpractice, breach of fiduciary duties owed to the Company, breach of contract, and violations of California’s Business and Professions Code Section 17200 et seq. The Company is seeking, amongst other things, compensatory damages from BH. On October 5, 2021, BH filed a cross-complaint against the Company alleging, amongst other things, that the Company owes it approximately $915 in legal fees. The Company disputes owing this amount to BH. The Company believes that the resolution of these matters will ~~not~~ have ano material ~~adverse~~ effect on the Company or its operations.On March 1, 2023, BH and the Company entered into an out of court settlement and the Company agreed to pay $25 on execution of the settlement agreement and $6.25 per month over a period of 12 months with a total settlement amount of $100. The total settlement amount was accrued by the Company as of June 30, 2023.

c. Dispute with Warrant Holder
c. ~~Dispute with Warrant Holder~~

The Company is currently in a dispute with Iroquois Capital Investment Group LLC and Iroquois Master Fund, Ltd (collectively, “Iroquois”) relating to a securities purchase agreement (the “SPA”) entered between the Company, Iroquois and certain other investors. The Company filed a complaint in the Supreme Court of New York for the County of New York on April 6, 2022, styled Verb Technology Company, Inc. v. Iroquois Capital Investment Group LLC, et ~~al.~~al. (Index No. 651708/2022). The Company’s complaint seeks a judicial declaration of its duties and obligations under the SPA. On May 5, 2022, Iroquois filed counterclaims against the Company for declaratory relief, breach of contract, and breach of the implied covenant of good faith and fair dealing relating to the SPA. Iroquois alleges damages of $1,500. The Company disputes Iroquois’ counterclaims and damages allegations. The Company intends to vigorously pursue its claims and to vigorously defend itself against the counterclaims. The Company believes that the resolution of these matters will not have a material adverse effect on the Company or its operations.

The Company knows of no material proceedings in which any of its directors, officers, or affiliates, or any registered or beneficial stockholder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.
The Company believes it has adequately reserved for all litigation within its financial statements.
Board of Directors
The Company has committed an aggregate of $292 in board fees to its five board members over the term of their appointment for services to be rendered. Board fees are accrued and paid monthly. The members will serve on the board until the annual meeting for the year in which their term expires or until their successors has been elected and qualified.
Total board fees expensed during the six months ended June 30, 2023 was $167. As of June 30, 2023, total board fees to be recognized in future period amounted to $125 and will be recognized once the service has been rendered.
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From time to time, the Company is involved in various other legal proceedings, disputes or claims arising from or related to the normal course of its business activities. Although the results of legal proceedings, disputes and other claims cannot be predicted with certainty, the Company believes it is not currently a party to any other legal proceedings, disputes or claims which, if determined adversely to the Company, would, individually or taken together, have a material adverse effect on the Company’s business, operating results, financial condition or cash flows. However, regardless of the merit of the claims raised or the outcome, legal proceedings may have an adverse impact on the Company as a result of defense and settlement costs, diversion of management time and resources, and other factors.

14. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through August ~~15, 2022,~~14, 2023, the date these ~~condensed consolidated~~ financial statements ~~were~~are available to be issued. ~~There~~The Company believes there were no material events or transactions discovered during this evaluation that ~~require~~requires recognition or disclosure in the financial statements other than the items discussed below.

~~Issuance~~Lease Termination
On July 3, 2023, the Company entered into a lease termination agreement with its landlord related to the office lease in Newport Beach, California. As part of the lease termination agreement, the Company agreed to vacate the property by August 15, 2023.
Issuances of Common Stock
On July 7, 2023, the Company issued 180,831 shares of its common stock pursuant to an Exchange Agreement in exchange for a reduction of $200 on the outstanding balance on the November Notes.

~~Subsequent to June 30, 2022,~~On July 29, 2023, the Company issued ~~342,799~~ ~~shares of common stock to vendors for services rendered with a grant date fair value of $189~~. These shares of common stock were valued based on the closing price of the Company’s common stock on the date of issuance or the date the Company entered into the agreement related to the issuance.
~~Subsequent to June 30, 2022, the Company issued~~ ~~124,113~~2,948 shares of common stock to ~~certain officers and employees~~Mr. Cutaia associated with the vesting of restricted stock units.
Execution of Lease Agreement
~~Issuances of Stock Options~~
~~Subsequent to June 30, 2022,~~On August 8, 2023, the Company ~~granted stock options~~entered into a corporate office lease agreement for its office in California. The agreement requires the Company to ~~certain employees to purchase a total of~~ ~~37,000~~ ~~stock options for services to be rendered. The options have an average exercise price of~~pay $~~0.56~~8 per ~~share, expire in~~ month for a term through September 30, 2026.
~~five years, and vest four years from grant date. The total grant date fair value of these options was $~~19 ~~based on the Black-Scholes option pricing model.~~

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion and analysis of the results of operations and financial condition of our company for the three and six month periods ended June 30, ~~2022~~2023 and ~~2021~~2022 should be read in conjunction with the financial statements and related notes and the other financial information that are included elsewhere this Quarterly Report on Form 10-Q. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical fact and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to business decisions, are subject to change. These uncertainties and contingencies can cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

~~References~~As used in this Quarterly Report toon Form 10-Q, the ~~“Company,” “Verb,”~~terms “we,” “us,” ~~or “our” are~~“our,” and “Verb” refer to Verb Technology Company, Inc. ~~together~~, a Nevada corporation, individually, or as the context requires, collectively with its subsidiaries, Verb Direct, LLC, or Verb Direct, Verb Acquisition Co., Inc., or Solofire, and verbMarketplace, LLC, or MARKET, on a consolidated ~~subsidiaries~~basis, unless ~~the context~~ otherwise ~~requires.~~specified.
Overview

~~We are~~
Through June 13, 2023 of the six months ended June 30, 2023, we operated three distinct lines of business through separate wholly owned subsidiaries. The first was Verb Direct, LLC, a sales Software-as-a-Service (“SaaS”) ~~applications~~ platform ~~developer. Our~~for the direct sales industry; the second was Verb Acquisition Co., LLC, which was a sales SaaS platform for the Life Sciences industry and sports teams; and the third is ~~comprised of~~verbMarketplace, LLC, which is 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 (“CRM”) application, verbLEARN, our Learning Management System application, verbLIVE, our Live Stream eCommerce application, verbPULSE, our business/augmented intelligence notification and sales coach application, and verbTEAMS, our self-onboarding video-based CRM and content management application for professional sports teams, small business and solopreneurs, with seamless synchronization with Salesforce, that also comes bundled with verbLIVE, and more recently, we introduced verbMAIL, our interactive video-based sales communication tool integrated into Microsoft Outlook. MARKET.live is our multi-vendor, multi-presenter, livestream social shopping platform known as MARKET.live that combines ecommerce and entertainment.
~~Our Technology~~We believe that by focusing all of our resources solely on the development and operation of MARKET.live, our livestream shopping platform, over time we could generate greater shareholder value than we could through the continued operation of our SaaS business platforms. Accordingly, after an extensive, thorough seven-month process to identify a buyer willing to pay the highest price on the most favorable terms for the assets of the SaaS business, managed by a prominent M&A advisory firm, on June 13, 2023 we disposed of all of the operating SaaS assets of Verb Direct, LLC and Verb Acquisition Co., LLC pursuant to an asset purchase agreement in consideration of the sum of $6,500, $4,750 of which was paid in cash by the buyer at the closing of the transaction. Additional payments of $1,750 will be paid by the buyer if certain profitability and revenue targets are met within the next two years as set forth more particularly in the asset purchase agreement.
~~Our suite~~During the seven-month period of ~~applications can be distinguished from other~~the sales ~~enablement applications because~~process, virtually all of our ~~applications utilize our proprietary interactive video technology as~~resources were dedicated to facilitating the ~~primary means of communication between~~sale process and all operating budgets were suspended, including sales and marketing ~~professionals~~budgets for MARKET.live, in order to preserve cash and ~~their customers~~minimize reliance on the capital markets until the asset sale process was complete. However, upon conclusion of the sales process at the end of June 2023, we completed development work on new MARKET.live capability that facilitates a deeper integration into certain social media platforms that could expose MARKET.live shoppable programming to billions of potential viewers/purchasers. Currently in use by certain creators in beta, this new integration allows viewers of MARKET.live content on this social media platform to purchase MARKET.live products on and ~~prospects.~~ through the social media platform, eliminating friction from the sale process. This feature is expected to formally launch broadly later this summer. In addition, we restructured our creator program for re-launch as a subscription-based drop ship program, which is also expected to formally launch this summer.
Moreover, we are actively pursuing an acquisition. On June 12, 2023, our Board approved the ~~proprietary data collection~~execution of a non-binding letter of intent (the “LOI”) to acquire certain assets of an ecommerce business (the “Target”) for our MARKET.live, livestream shopping platform (the “Acquisition”). The Target’s unaudited financial statements indicate that for the year-ended December 31, 2022, the Target generated transactions totaling approximately $9.5M in gross merchandise value (“GMV”) and ~~analytics capabilities~~was cash-flow positive. It was represented that the GMV was generated by the Target’s approximately 70,000 current active subscribers, each of whom receive daily auto-generated communications from the Target about the preferred brands and products the subscribers selected at sign-up, available for sale each day. Subject to the successful completion of the Acquisition, we intend to incorporate the Target’s technology and operations into MARKET.live, so that the transactions that comprise the Target’s GMV will be facilitated on and through our MARKET.live platform, potentially at higher margins. Potential corollary benefits of the transaction include the exposure of our ~~applications inform our users on their devices in real time, when~~MARKET.live shoppable entertainment programming to the Target’s 70,000 subscribers, possibly driving additional sales, among other benefits. If completed, consideration for the proposed Acquisition, will be a combination of cash and ~~for how long their prospects have watched~~stock, structured as a ~~video, how many times such prospects watched it,~~seller note payable over 24 months; and ~~what they clicked on, which allows our users~~the payments are subject to focus their time and efforts on ‘hot leads’ or interested prospects rather than on those that have not seen such video or otherwise expressed interest in such content. Users can create their hot lead listsactual cash receipts as represented by using familiar, intuitive ‘swipe left/swipe right’ on-screen navigation. Our clients report that these capabilities provide for a much more efficient and effective sales process, resulting in increased sales conversion rates. We developed the ~~proprietary patent-pending interactive video technology, as well as several other patent-issued and patent-pending technologies that serve as the unique foundation for all our platform applications.~~seller.

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~~Our Products~~

~~verbCRM~~ Our MARKET.live Business~~combines the capabilities of CRM lead-generation, content management,~~
MARKET.live is a multivendor social shopping platform for retailers, brands, manufacturers, creators, influencers and ~~in-video ecommerce capabilities~~entrepreneurs who seek to participate in an intuitive, yet powerful tool for both inexperienced as well as highly skilled sales professionals. verbCRM allows users to quickly and easily create, distribute, and post videos to which they can add a choice of on-screen clickable icons which, when clicked, allow viewers to respond to the user’s call-to-action in real-time, in the video, while the video is playing, without leaving or stopping the video. For example, our technology allows a prospect or customer to click on a product they see featured in a video and impulse buy it, or to click on a calendar icon in the video to make an appointment with a salesperson, among many other features and functionalities designed to eliminate or reduce friction from the sales process for our users. The verbCRM app is designed to be easy to use and navigate and takes little time and training for a user to begin using the app effectively. It usually takes less than four minutes for a novice user to create an interactive video from our app. Users can add interactive icons to pre-existing videos, as well as to newly created videos shot with practically any mobile device. verbCRM interactive videos can be distributed via email, text messaging, chat app, or posted to popular social media directly and easily from our app. No software download is required to view Verb interactive videos on virtually any mobile or desktop device, including smart TVs.
~~verbLEARN~~ is an interactive, video-based learning management system that incorporates all of the clickable in-video technology featured in our verbCRM application and adapts them for use by educators for video-based education. verbLEARN is used by enterprises seeking to educate a large sales team or a customer base about new products, or elicit feedback about existing products. It also incorporates Verb’s proprietary data collection and analytics capabilities that inform users in real time when and for how long the viewers watched the video, how many times they watched it, and what they clicked on, in addition to adding gamification features that enhance the learning aspects of the application.
~~verbLIVE~~ builds on popular video-based platforms such as Facebook Live, Zoom, WebEx, and Go2Meeting, among others, by adding Verb’s proprietary interactive in-video ecommerce capabilities – including an in-video Shopify shopping cart integrated for Shopify account holders – to our own live stream video broadcasting application. verbLIVE is a next-generation live-stream platform that allows hosts to utilize a variety of novel sales-driving features, including placing interactive icons on-screen that appear on the screens of all viewers, providing in-video click-to-purchase capabilities for products or services featured in the live video broadcast, in real-time, driving friction-free selling. verbLIVE also provides the host with real-time viewer engagement data and interaction analytics. verbLIVE is entirely browser-based, allowing it to function easily and effectively on all devices without requiring the host or the viewers to download software, and is secured through end-to-end encryption.
~~verbPULSE~~ is a business/augmented intelligence notification-based sales enablement platform feature set that tracks users’ interactions with current and prospective customers and then helps coach users by telling them what to do next in order to close the sale, virtually automating the selling process.
~~verbTEAMS~~ is our interactive, video-based CRM for professional sports teams, small-and medium-sized businesses and solopreneurs. verbTEAMS also incorporates verbLIVE as a bundled application. verbTEAMS features self-sign-up, self-onboarding, self-configuring, content management system capabilities, user level administrative capabilities, and high-quality analytics capabilities in both mobile and desktop platforms that sync with one another. It also has a built-in one-click sync capability with Salesforce.
~~MARKET~~ open market-style eco-system environment. MARKET.live is akin to a virtual shopping mall, a centralized online destination where shoppers could explore hundreds, and over time thousands, of shoppable stores for their favorite brands, influencers, creators and celebrities, all of whom can ~~and will~~ host livestream shopping events from their virtual stores that can be seen by all shoppers at the virtual mall. Every store operator can host livestream events, even simultaneously, and over time we expect there will be thousands of such events, across numerous product and service categories, being hosted by people from all over the world, always on – 24/7 - where shoppers could communicate directly with the hosts ~~and~~in real time to comment or ask questions about products ~~directly to the host in real-time~~ through an on-screen chat visible to all shoppers. ~~Shoppers~~Through the on-screen chat, shoppers can also communicate directly with each other in real time, invite their friends and family to join them at any of the live shopping events to share the experience, ~~- to communicate directly with each other in real time,~~ and then simply click on a non-intrusive - in-video overlay to place items in an on-screen shopping cart for purchase – all without interrupting the video. Shoppers can visit any number of other shoppable events to meet up and chat with friends, old and new, and together watch, shop and chat with the hosts, discover new products and services, and become part of an immersive entertaining social shopping experience. Throughout the experience, the shopping cart follows shoppers seamlessly from event to event, shoppable video to shoppable video, host to host, store to store and product to product.
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The ~~MARKET~~MARKET.live business model is a simple but next-level B to B play. It is a multi-vendor platform, with a single follow-me style unified shopping cart, and robust ecommerce capabilities with the tools for consumer brands, big box brick and mortar stores, boutiques, influencers and celebrities to connect with their clients, customers, ~~their~~ fans, followers, and prospects by providing a unique, interactive social shopping experience that we believe could keep them coming back and engaged for hours.
AAmong the big ~~differentiator~~differentiators for ~~MARKET~~MARKET.live is that it allows anyone that streams on MARKET.live to simultaneously broadcast their stream (multi-cast or simulcast) over most popular social media sites to reach a substantially larger audience, which is especially attractive for creators and influencers that have large number of followers on other social media platforms.
A very compelling new feature we recently developed for MARKET.live allows shoppers watching the stream on a popular social media site to stay on that site and actually check out through that site, eliminating the friction or reluctance to leave their favorite social site in order to check-out on MARKET.live. We expect this new capability will enhance sales growth and be a meaningful revenue generator when launched broadly later this summer.
MARKET.live also provides an online meeting place for friends and family to meet, chat, shop and enjoy a fun, immersive shopping experience in real time together from anywhere and everywhere in the world. ~~MARKET will provide~~MARKET.live provides vendors with extensive business building analytics capabilities not available on, and not shared by many operators of other social media sites who regard that information as valuable proprietary property. ~~All vendors on MARKET will retain this valuable intelligence for their own, unlimited use.~~
~~MARKET~~MARKET.live allows vendors an opportunity to reach not only the shoppers they invite to the site from their own client and contact lists, and those that view their MARKET.live multi-cast streams on other social media platforms, but also those shoppers who came to the site independently who will discover these vendors as they browse through the many other shoppable events hosted simultaneously on ~~MARKET~~MARKET.live 24/7, from around the world. We believe our revenue model will be attractive to vendors and will consist of SaaS recurring revenue as well as a share of revenue generated through sales on the platform.
~~MARKET~~MARKET.live is simply a platform; we hold no inventory, we take no inventory risk, and each vendor manages their own packing and fulfillment, as well as returns. Only vendors that have a demonstrated ability to manage inventory and fulfillment are selected to participate on ~~MARKET.~~MARKET.live.
As we continue onboarding vendors to the platform, we are seeing increased interest from product manufacturers seeking to embrace ~~MARKET’s~~MARKET.live’s direct-to-consumer selling capabilities, cutting-out distribution channel partners in order to reduce costs and increase profitability. As the economy tightens, we expect that trend to accelerate.
~~MARKET~~Last fall we launched our “Creators on MARKET.live,” a program that allows creators to monetize their content through livestream shopping and personalized storefronts on MARKET.live. With more than 12 million products from brands like Athleta, Best Buy, Target, Container Store, Banana Republic, GAP, Saks Off 5th, SSENSE, LOFT, DERMSTORE, INTERMIX, UNCOMMON GOODS, and many more, participants can choose to feature their favorite products and promote and sell them to their fans, followers and customers.
The program has recently been restructured to be marketed not only to video content creators across multiple social media channels, but also to entrepreneurs eager to launch their own ecommerce store and drop-ship business on MARKET.live. Through this new program, creators, influencers, and entrepreneurs can quickly and easily establish their own storefronts, essentially their own website, and choose the products they love from hundreds of brands and retailers on MARKET.live to import into their storefront and offer their fans, followers, and would-be customers those products through livestream shopping events broadcast live on MARKET.live and simulcast on other social platforms.
Livestream events are also recorded and available to watch in their personally branded stores on MARKET.live for those fans, followers and customers to return 24/7 after the livestream events to browse and purchase any of the featured products, as the recorded livestream videos remain shoppable. Depending on the products chosen, participants in the program can earn between 5% and 20% of their gross sales at no cost and no risk to the Creators selected to participate in the Creator program. Entrepreneurs interested in the dropship programs will pay a fixed monthly fee for access to the products in the program and to maintain their MARKET.live ecommerce storefronts.
verbTV will launch as a feature of our MARKET.live platform, serving to draw an audience of people seeking to consume video content that is also interactive and shoppable. We expect this additional audience will also ~~incorporate a modified version~~be exposed to and enhance the eco-system of our verbLIVE Attribution technology, allowing vendors who so choose, to leverage extremely powerful, built-in affiliate marketing capabilities. Non-vendor visitors to the site can search for those vendorsshoppers and retailers on MARKET.live. Over time it is anticipated that ~~have activated the Attribution~~verbTV will feature for their events and be compensated when people they referred to that vendor, purchase products or services during that vendor’s shopping event. We expect that this feature, unique to MARKET, will drive many more shoppers who will be referred from all over the world, producing a cross-pollination effect enhancing the revenue opportunities for all MARKET vendors, while also creating an attractive income generating opportunity for non-vendor MARKET patrons.
MARKET is an entirely new platform, built wholly independently and separate from our verbLIVE sales platform, representing what we believe is the state of the art of shoppable video technology. It will utilize an ultra-low latency private global CDN network that we control, allowing us to deliver a high-quality experience and platform performance capabilities. We also believe that MARKET will expose vendors to our entire suite of sales enablement products, such as verbMAIL, among others, that could drive new cross selling revenue opportunities.
~~verbTV~~ ~~is an online destination for shoppable entertainment. Whereas MARKET is a social shopping experience, verbTV is a destination for those seeking commercial-free television content, such as~~ concerts, game shows, sports, including e-sports, sitcoms, podcasts, special events, news, including live events, and other forms of video entertainment that is all interactive and shoppable. verbTV represents an entirely new distribution channel for all forms of content by a new generation of content creators looking for greater freedom to explore the creative possibilities that a native interactive video platform can provide for their audience. We believe content creators may also enjoy greater revenue opportunities through the native ecommerce capabilities the platform provides to sponsors and advertisers who will enjoy real-time monetization, data collection and analytics. Through verbTV, sponsors and advertisers will be able to accurately measure the ROI from their marketing spend, instead of relying on ~~decades-old,~~ imprecise viewership ~~information.~~
At launch, verbTV will feature interactive, shoppable programming, including the popular business pitch show “2 Minute Drill,” the non-shoppable version of which is currently shown on AppleTV. Each episode is a fast-paced reality show where 5-6 entrepreneurs competing for $50,000 in cashinformation traditionally offered to television sponsors and prizes, have 2 minutes to impress the judges with the best investor pitch. Our CEO is one of the judges on the show. verbTV viewers will be able to click on-screen and purchase the products and services of the contestants featured on the show, among other contemplated interactive features. Dave Meltzer, the creator of the show, and Co-founder of Sports 1 Marketing and the former CEO of the renowned Leigh Steinberg Sports & Entertainment agency, has signed-on with Verb to produce other interactive and shoppable entertainment for verbTV. Other such partnerships, as well as a creator program, are currently in progress.
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~~Verb Partnerships and Integrations~~advertisers.

~~verbMAIL for Microsoft Outlook~~ is a product of our partnership with Microsoft and is available as an add-in to Microsoft Outlook for Outlook and Office 365 subscribers. verbMAIL allows users to create interactive videos seamlessly within Outlook by clicking the verbMAIL icon in the Outlook toolbar. The videos are automatically added to an email and can be sent easily through Outlook using the user’s contacts they already have in Outlook. The application allows users to easily track viewer engagement and together with other features represents an effective sales tool available for all Outlook users worldwide.
~~Salesforce Integration.~~ We have completed and deployed the integration of verbLIVE into Salesforce and have launched a joint marketing campaign with Salesforce to introduce the verbLIVE plug-in functionality to current Salesforce users. We have also developed a verbCRM sync application for Salesforce users that is currently being utilized by at least one of our large enterprise clients and the verbLIVE plug-in is now being offered to all Salesforce users on a monthly subscription fee basis while we work to build adoption rates.
~~Popular Enterprise Back-Office System Integrations.~~ We have integrated verbCRM into systems offered by 19 of the most popular direct sales back-office system providers, such as Direct Scale, Exigo, By Design, Thatcher, Multisoft, Xennsoft, and Party Plan. Direct sales back-office systems provide many of the support functions required for direct sales operations, including payroll, customer genealogy management, statistics, rankings, and earnings, among other direct sales financial tracking capabilities. The integration into these back-office providers, facilitated through our own API development, allows single sign-on convenience for users, as well as enhanced data analytics and reporting capabilities for all users. Our experience confirms that our integration into these back-end platforms accelerates the adoption of verbCRM by large direct sales enterprises that rely on these systems and as such, we believe this represents a competitive advantage.
~~Non-Digital Products and Services~~
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. We also managed the fulfillment of our clients’ product sample packs that verbCRM users order through the app for automated delivery and tracking to their customers and prospects.
In May 2020, we executed a contract with Range Printing (“Range”), a company in the business of providing enterprise class printing, sample assembly, warehousing, packaging, shipping, and fulfillment services. Pursuant to the contract, through an automated process we have established for this purpose, Range receives orders for samples and merchandise from us as and when we receive them from our clients and users, and print, assemble, store, package and ship such samples and merchandise on our behalf. The Range contract provides for a service fee arrangement based upon the specific services to be provided by Range that is designed to maintain our relationship with our clients by continuing to service their non-digital needs, while eliminating the labor and overhead costs associated with the provision of such services by us. Effective April 1, 2022, we entered into a customer referral agreement with Range for our cart site and printing business. Under the agreement, we will earn 10% commission for customers referrals, 8% on merchandize sales and certain cart site design fee which will all be recognized as non-digital revenue. Prior to entering into such agreement, we were recognizing revenues and cost of revenues associated with such business in the condensed consolidated statements of operations.
~~Our Market~~
Historically, our client base consisted primarily of multi-national direct sales enterprises to whom we provide white-labeled, client-branded versions of our products. During the year ended December 31, 2021, our client base expanded to include large enterprises in the life sciences sector, professional sports franchises, educational institutions, and not-for-profit organizations, as well as clients in the entertainment industry, and the burgeoning CBD industry, among other business sectors. As of June 30, 2022, we provided subscription-based application services to approximately 150 enterprise clients for use in over 100 countries, in over 48 languages, which collectively account for a user base generated through more than 3.4 million downloads of our verbCRM application. Among the new business sectors targeted for this year are medical equipment and pharmaceutical sales, armed services and government institutions, small businesses and individual entrepreneurs.
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Revenue Generation

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, verbPULSE, and verbTeams. The revenue is recognized overMARKET.live, launched at the ~~subscription period.~~
b. ~~Non-SaaS, non-recurring digital revenue, which is revenue generated by the use~~end of 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 design, printing services, fulfillment and shipping services. The revenue is recognized upon completion and shipment of products or fulfillment to customers. Effective April 1,July 2022, the Company entered into a customer referral agreement with a third party for its cart site and printing business. Under the agreement, the Company will earn certain percentage for customer referrals and merchandize sales as well as a cart site design fee, all of which will be recognized as non-digital revenue on a net basis.
3. ~~MARKET will generate~~generates revenue through several sources as follows:

a. All sales run through our ecommerce facility on ~~MARKET~~MARKET.live from which we deduct a platform fee that ranges from 10% to ~~35%~~20% of gross sales, with an average of ~~between 15-20%~~approximately 15%, depending upon the pricing package the vendors select as well as the product category and profit margins associated with such categories. The revenue is derived from sales generated during livestream events, from ~~viewers~~sales realized through views of previously recorded live events available in each vendor’s store, as well as from sales of product and merchandise ~~done through~~displayed in the vendors’ online stores, all of which are ~~available~~shoppable 24/7.
b. Produced events. ~~MARKET will offer~~MARKET.live offers fee-based services that range from full production of a livestream ~~event,~~events, to providing professional hosts and event consulting.
c. Drop ship programs, MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs.
c.d. The ~~MARKET~~MARKET.live site is designed to incorporate sponsorships and other advertising based on typical industry rates.

Economic Disruption ~~and the COVID-19 Pandemic~~

Our business is dependent in part on general economic conditions. Many jurisdictions in which our customers are located and our products are sold have experienced and could continue to experience unfavorable general economic conditions, such as inflation, increased interest rates and recessionary concerns, which could negatively affect demand for our products. Under difficult economic conditions, customers may seek to cease spending on our current products or fail to adopt our new products. We cannot predict the timing or impact of an economic slowdown, or the timing or strength of any economic recovery. These and other economic factors could have a material adverse effect on our business, financial condition, and results of operations.
Governments and businesses around the world continue to take actions to mitigate the spread of COVID-19 and its variants. Uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets.
Despite increased vaccine distribution programs and loosening of COVID-19 related restrictions in the regions in which we operate during the three and six months ended June 30, 2022, both the pandemic and ongoing containment and mitigation measures have had, and are likely to continue to have, an adverse impact on the global and U.S. economies, the severity and duration of which are uncertain. As such, our business, operations and financial condition has been, and we anticipate will continue to be, adversely impacted by reduced demand for our applications and non-digital services, as well as reduced access to capital. To mitigate the adverse impact COVID-19 may have on our business and operations, we implemented a number of measures to strengthen our financial position, including eliminating, reducing, or deferring non-essential expenditures. However, the extent to which the COVID-19 pandemic will impact our business, financial conditions, and results of operations in the future remains uncertain and will be affected by a number of factors, including the duration and extent of the pandemic, the emergence of variants to COVID-19 the duration and extent of imposed or recommended containment and mitigation measures, the extent, duration, and effective execution of government stabilization and recovery efforts, including those from the successful distribution of effective vaccines.
The COVID-19 pandemic may have long-term effects on the nature of the office environment and remote working. This may present operational and workplace culture challenges that may adversely affect our business. Throughout the three and six months ended June 30, 2022, we have encouraged safe practices designed to stem the infection and spread of COVID-19 within our workforce and beyond and to maintain the mental health and well-being of our employees.
We continue to actively communicate with and listen to our customers to ensure we are responding to their needs in the current environment with innovative solutions that will not only be beneficial now but also over the long-term. We monitor developments related to COVID-19 and remain flexible in our response to the challenges presented by the pandemic.

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Recent Developments
On June 13, 2023, the Companydisposed of all of its operating SaaS assets of Verb Direct and SoloFire and received sales proceeds of $4.8 million.

Results of Operations

Three Months Ended June 30, ~~2022~~2023 as Compared to the Three Months Ended June 30, ~~2021~~2022

The following is a comparison of our results of continuing operations for the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

Three Months Ended June 30,
2022 2021 Change

Revenue
Digital revenue
SaaS recurring subscription revenue $ 1,975 $ 1,601 $ 374
Other digital revenue 186 209 (23 )
Total digital revenue 2,161 1,810 351

Non-digital revenue 238 582 (344 )

Total revenue 2,399 2,392 7

Cost of revenue
Digital 609 569 40
Non-digital 226 550 (324 )
Total cost of revenue 835 1,119 (284 )

Gross margin 1,564 1,273 291

Operating expenses
Research and development 1,382 3,213 (1,831 )
Depreciation and amortization 395 400 (5 )
General and administrative 6,562 6,542 20
Total operating expenses 8,339 10,155 (1,816 )

Loss from operations (6,775 ) (8,882 ) 2,107

Other income (expense)
Interest expense (642 ) (596 ) (46 )
Change in fair value of derivative liability 1,024 (2,445 ) 3,469
Other income (expense) 19 20 (1 )
Debt extinguishment, net - 91 (91 )
Total other income, net 401 (2,930 ) 3,331

Net loss $ (6,374 ) $ (11,812 ) $ 5,438
Three Months Ended June 30,
2023 2022 Change

Revenue $ 3 $ - $ 3

Cost of Revenue 1 - 1

Gross margin 2 - 2

Operating expenses
Depreciation and amortization 583 44 539
General and administrative 2,685 4,760 (2,075 )
Total operating expenses 3,308 4,804 (1,536 )

Operating loss from continuing operations (3,266 ) (4,804 ) 1,538

Other income (expense)
Other income, net
831
19
812
Financing costs
(1,239
) - (1,239 )
Interest expense (299 ) (368 ) 69
Change in fair value of derivative liability 198 1,024 (826 )
Total other income (expense), net (510 ) 675 (1,185 )

Net loss from continuing operations $ (3,776 ) $ (4,129 ) $ 353
29

Revenue

Our ~~SaaS recurring subscription revenues continue to grow year over year, which~~primary focus is ~~a reflection~~on the growth of our ~~systematic investment in our~~ MARKET.live business. ~~SaaS recurring subscription revenue as a percentage of total revenue for~~Currently, the ~~three months ended June 30, 2022, was 82%, compared to 67% for the three months ended June 30, 2021.~~
For the three months ended June 30, 2022, our total digital revenue was 90% of total revenue compared with 76% for the three months ended June 30, 2021. Total digital revenue for the three months ended June 30, 2022 was $2.2 million, an increase of 19% compared to $1.8 million for the three months ended June 30, 2021. The increase was primarily driven from SaaS recurring subscription-based revenue associated with our verbCRM, verbLIVE, verbTEAMS, verbLEARN, and verbPULSE applications totaling $2.0 million, an increase of 23% compared to $1.6 million reported for the three months ended June 30, 2021.
31
~~Total non-digital revenue for the three months ended June 30, 2022, was $0.2 million, a decrease of 59% compared to $0.6 million reported for the three months ended June 30, 2021, which~~business is ~~consistent with the Company’s strategy to exit the low margin printing, fulfillment, and shipping aspects of the legacy business to focus on digital revenue streams.~~
The table below sets forth our quarterly revenues from the three months ended June 30, 2020 through the three months ended June 30, 2022, which reflects the trend of revenue over the past nine fiscal quarters (in thousands):
2020 Quarterly Revenue 2021 Quarterly Revenue 2022
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
SaaS recurring subscription revenue $ 1,274 $ 1,478 $ 1,305 $ 1,461 $ 1,601 $ 1,846 $ 1,923 $ 2,003 $ 1,975
Other digital 406 360 218 340 209 510 288 147 186
Total digital revenue 1,680 1,838 1,523 1,801 1,810 2,356 2,211 2,150 2,161

Total non-digital revenue 972 1,022 576 725 582 544 495 541 238
��
Grand total $ 2,652 $ 2,860 $ 2,099 $ 2,526 $ 2,392 $ 2,900 $ 2,706 $ 2,691 $ 2,399
~~Cost of Revenue~~
Total cost of revenue for the three months ended June 30, 2022, was $0.8 million, compared to $1.1 million for the three months ended June 30, 2021, reflecting a 25% decline. The decrease in cost of revenue is primarily attributed to a decrease in non-digital costs partially offset by increased digital costs to support additional enterprise customers on the platform and increased users within our existing customer base.
~~Gross Margin~~
Total gross margin for the three months ended June 30, 2022, was $1.6 million, compared to $1.3 million for the three months ended June 30, 2021, representing a 23% improvement. Gross margins improved as a result of our strategy to focus on higher margin digital revenue and systematic reduction in non-digital revenue.generating minimal revenues.

Operating Expenses

~~Research~~Depreciation and ~~development~~amortization expenses were ~~$1.4~~$0.6 million for the three months ended June 30, ~~2022,~~2023, as compared to ~~$3.2~~$0.1 million for the three months ended June 30, 2021, reflecting a 57% reduction. Research and development expenses primarily consisted of fees paid to employees and vendors contracted to perform research projects and develop technology. As our products move from research and development mode to operating mode, we expect our research and development cost reductions to continue, as experienced during the three months ended June 30, 2022.
~~Depreciation and amortization expenses were $0.4 million for the three months ended June 30, 2022, and June 30, 2021.~~

General and administrative expenses for the three months ended June 30, ~~2022,~~2023 were ~~$6.6~~$2.7 million, as compared to ~~$6.5~~$4.8 million for the three months ended June 30, ~~2021, materially flat despite inflationary pressure. Our~~2022, reflecting a 44% cost reduction. The decrease in general and administrative expenses ~~remained flat~~is primarily increasing labor costs of $0.7 million, marketing and promotion of $0.2 million, and other expenses of $0.1 million to support future growth with anticipated product launches. These increases were offset by a decrease in professional services of $1.1 million due to ~~the completion of the implementation of NetSuite ERP system at the beginning of the year and a legal settlement that occurred in the comparable prior year period.~~decreased salary expense associated with headcount reduction.
Other Income (Expense), net

Other ~~income,~~expense, net, for the three months ended June 30, ~~2022,~~2023 was ~~$0.4~~$0.5 million, which was primarily attributable to interest expense of $(0.3) million and financing costs of $(1.2) million offset by a gain on legal settlement of $0.8 million and a change in ~~the~~ fair value of derivative liability of ~~$1.0 million, offset by interest expense of $0.6~~$0.2 million.

Six Months Ended June 30, ~~2022~~2023 as Compared to the Six Months Ended June 30, ~~2021~~2022

The following is a comparison of our results of continuing operations for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

Six Months Ended June 30,
2022 2021 Change

Revenue
Digital revenue
SaaS recurring subscription revenue $ 3,978 $ 3,062 $ 916
Other digital revenue 333 549 (216 )
Total digital revenue 4,311 3,611 700

Non-digital revenue 779 1,307 (528 )

Total revenue 5,090 4,918 172

Cost of revenue
Digital 1,166 1,109 57
Non-digital 642 1,225 (583 )
Total cost of revenue 1,808 2,334 (526 )

Gross margin 3,282 2,584 698

Operating expenses
Research and development 2,962 6,097 (3,135 )
Depreciation and amortization 804 814 (10 )
General and administrative 13,598 13,885 (287 )
Total operating expenses 17,364 20,796 (3,432 )

Loss from operations (14,082 ) (18,212 ) 4,130

Other income (expense)
Interest expense (1,398 ) (1,104 ) (294 )
Change in fair value of derivative liability 2,162 (1,945 ) 4,107
Other income (expense) (45 ) 74 (119 )
Debt extinguishment, net - 1,030 (1,030 )
Total other income, net 719 (1,945 ) 2,664

Net loss $ (13,363 ) $ (20,157 ) $ 6,794
32
Six Months Ended June 30,
2023 2022 Change

Revenue $ 5 $ - $ 5

Cost of Revenue 2 - 2

Gross margin 3 - 3

Operating expenses
Depreciation and amortization 1,166 86 1.080
General and administrative 6,230 9,893 (3,663 )
Total operating expenses 7,396 9,979 (2,583 )

Operating loss from continuing operations (7,393 ) (9,979 ) 2,586

Other income (expense)
Other income (expense), net 780 (16 ) 796
Financing costs (1,239 ) - (1,239 )
Interest expense (770 ) (661 ) (109 )
Change in fair value of derivative liability 206 2,162 (1,956 )
Total other income (expense), net (1,023 ) 1,485 (2,508 )

Net loss from continuing operations $ (8,416 ) $ (8,494 ) $ 78

Revenue

~~SaaS recurring subscription revenue as a percentage of total revenue for the six months ended June 30, 2022, was 78%, compared to 62% for the six months ended June 30, 2021.~~
For the six months ended June 30, 2022, our total digital revenue was 85% of total revenue compared with 73% for the six months ended June 30, 2021. Total digital revenue for the six months ended June 30, 2022 was $4.3 million, an increase of 19% compared to $3.6 million for the six months ended June 30, 2021. The increase was primarily driven from SaaS recurring subscription-based revenue associated with our verbCRM, verbLIVE, verbTEAMS, verbLEARN, and verbPULSE applications totaling $4.0 million, an increase of 30% compared to $3.1 million reported for the six months ended June 30, 2021.
~~Total non-digital revenue for the six months ended June 30, 2022, was $0.8 million compared to $1.3 million, a decrease of 40% reported for the six months ended June 30, 2021, which~~Our primary focus is ~~consistent with the Company’s strategy to exit the low margin printing, fulfillment, and shipping aspects of the legacy business to focus on digital revenue streams.~~
~~Cost of Revenue~~
Total cost of revenue for the six months ended June 30, 2022, was $1.8 million, compared to $2.3 million for the six months ended June 30, 2021, reflecting a 23% decrease. The decrease in cost of revenue is primarily attributed to a decrease in non-digital costs partially offset by increased digital costs to support additional enterprise customers on the ~~platform and increased users within our existing customer base.~~
~~Gross Margin~~
Total gross margin for the six months ended June 30, 2022, was $3.3 million, compared to $2.6 million for the six months ended June 30, 2021, representing a 27% improvement. Gross margins improved as a resultgrowth of our ~~strategy to focus on higher margin digital revenue and systematic reduction in non-digital revenue.~~Market business. Currently, the business is generating minimal revenues.

Operating Expenses

~~Research~~Depreciation and ~~development~~amortization expenses were ~~$3.0~~$1.2 million for the six months ended June 30, ~~2022,~~2023, as compared to ~~$6.1~~$0.1 million for the six months ended June 30, 2021, reflecting a 51% reduction. Research and development expenses primarily consisted of fees paid to employees and vendors contracted to perform research projects and develop technology. As our products move from research and development mode to operating mode, we expect our research and development cost reductions to continue, as experienced during the six months ended June 30, 2022.
~~Depreciation and amortization expenses were $0.8 million for the six months ended June 30, 2022, and June 30, 2021.~~

General and administrative expenses for the six months ended June 30, ~~2022,~~2023 were ~~$13.6~~$6.2 million, as compared to ~~$13.9~~$9.9 million for the ~~six~~three months ended June 30, ~~2021, representing~~2022, reflecting a ~~2% decrease despite inflationary pressure.~~37% cost reduction. The decrease in general and administrative expenses is primarily due to ~~lower spending on marketing and promotion of $0.2 million, a decrease of $0.8 million in professional services and other, combined~~decreased salary expense associated with ~~a decrease in share-based compensation of $1.1 million, offset by an increase in labor costs of $1.8 million to support future growth with anticipated product launches.~~headcount reduction.
Other Income (Expense), net

Other ~~income,~~expense, net, for the six months ended June 30, ~~2022,~~2023 was ~~$0.7~~$1.0 million, which was primarily attributable to interest expense of $(0.8) million and financing costs of $(1.2) million, offset by a gain on legal settlement of $0.8 million and a change in ~~the~~ fair value of derivative liability of ~~$2.1 million, offset by interest expense of $1.4~~$0.2 million.

3330

Use of Non-GAAP Measures – Modified EBITDA

In addition to our results under generally accepted accounting principles (“GAAP”), we present Modified EBITDA as a supplemental measure of our performance. However, Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of liquidity. We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, share-based compensation, financing costs, ~~and~~ changes in fair value of derivative ~~liability.~~liability, and loss from discontinued operations, net of tax.

Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit generating operations that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Modified EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Modified EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021 2023 2022 2023 2022

Net loss $ (6,374 ) $ (11,812 ) $ (13,363 ) $ (20,157 ) $ (9,856 ) $ (6,374 ) $ (15,370 ) $ (13,363 )

Adjustments:
Depreciation and amortization 395 400 804 814 583 44 1,166 86
Share-based compensation 1,317 1,264 2,618 3,666 430 1,317 1,402 2,618
Other (income) expense, net
(831
)
(19
)
(780
)
16

Financing costs
1,239
-
1,239
-
Interest expense 642 596 1,398 1,104 299 368 770 661
Change in fair value of derivative liability (1,024 ) 2,445 (2,162 ) 1,945 (198 ) (1,024 ) (206 ) (2,162 )
Other (income)/ expense (19 ) (20 ) 45 (74 )
Debt extinguishment, net - (91 ) - (1,030 )
Other non-recurring - - 126 -
Loss from discontinued operations, net of tax 6,080 2,245 6,954 4,869
Other non-recurring costs (a) - - 185 126

Total EBITDA adjustments 1,311 4,594 2,829 6,425 7,603 2,931 10,730 6,214
Modified EBITDA $ (5,063 ) $ (7,218 ) $ (10,534 ) $ (13,732 ) $ (2,253 ) $ (3,443 ) $ (4,640 ) $ (7,149 )
(a) Represents severance costs.

The ~~$2.2~~$1.2 million ~~increase~~improvement in Modified EBITDA for the three months ended June 30, ~~2022,~~2023, compared to the same period in ~~2021,~~2022, resulted from ~~increased revenues, decreases in cost of revenue, research and development, and professional services offset by an increase in labor related costs to support future growth.~~decreased operating expenses.

The ~~$3.2~~$2.5 million ~~increase~~improvement in Modified EBITDA for the six months ended June 30, ~~2022,~~2023, compared to the same period in ~~2021,~~2022, resulted from ~~increased revenues, decreases in cost of revenue, research and development, professional services, and marketing and promotion, offset by an increase in labor related costs to support future growth.~~decreased operating expenses.

We present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Modified EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; and in making compensation decisions and in communications with our board of directors concerning our financial performance. Modified EBITDA has limitations as an analytical tool, which includes, among others, the following:

● Modified EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

● Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

● Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and
34
● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

31
Liquidity and Capital Resources

Going Concern

We have incurred operating losses and negative cash flows from operations since inception. We incurred a net loss from continuing operations of ~~$13.4~~$8.4 million during the six months ended June 30, ~~2022.~~2023. We also utilized cash in operations from continuing operations of ~~$11.0~~$4.7 million during the six months ended June 30, ~~2022.~~2023. As a result, 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.
Equity financing:
On January 24, 2023, we entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp. (“Aegis”) as underwriter (the “Underwriter”), relating to the offering, issuance and sale of 901,275 shares of our common stock at a public offering price of $8.00 per share. The net proceeds to us were approximately $6.6 million, after deducting discounts, commissions and estimated offering expenses. Aegis acted as the sole underwriter for the offering and received 6% of the gross proceeds as commission for the offering. They were also reimbursed by us for certain expenses, in an amount of up to $75 thousand, including legal fees. As a result of this transaction, certain warrants which previously had an exercise price of $13.60 per share, had the exercise price reduced to $8.00 per share.
Debt financing:
On January 12, 2022, we entered into a ~~common stock~~securities purchase agreement with Tumim Stone Capital LLC. Pursuant to the agreement, the Company has the right, but not the obligation, to sell to the Investor, and the Investor is obligated to purchase, up to $50.0 million of newly issued shares of our common stock, par value $0.0001 per share from time to time during the term of the agreement, subject to certain limitations and conditions. The Total Commitment is inclusive of 607,287 shares of common stock issued to the Investor as consideration for its commitment to purchase shares of common stock under the Common Stock(the “January Note Purchase ~~Agreement.~~
~~On January 12, 2022, we also entered into a securities purchase agreement~~Agreement”) with three institutional investors (collectively, the “January Note Holders”) providing for the sale and issuance of an aggregate original principal amount of $6.3 million in ~~convertible notes due 2023. We~~Convertible Notes Due 2023 (each, a “Note,” and, collectively, the “Notes,” and such financing, the “January Note Offering”). The Company and the January Note Holders also entered into a security agreement, ~~with the Note Holders,~~ dated January 12, 2022, in connection with the January Note Offering, pursuant to which wethe Company granted a security interest to the January Note Holders in substantially all of its assets. The January Note Purchase Agreement prohibits us from entering into an agreement to effect any issuance of common stock involving a Variable Rate Transaction (as defined therein) during the term of the agreement, subject to certain exceptions set forth therein. The January Note Purchase Agreement also gives the January Note Holders the right to require the Company to use up to 15% of the gross proceeds raised from future debt or equity financings to redeem the Notes, which redemptions have been elected by the January Note Holders. On January 26, 2023, we repaid in full all outstanding obligations under the January Note Offering dated January 12, 2022.
In September, 2022, the U.S. Small Business Administration (“SBA”) approved an additional loan of $0.35 million. As of August 14, 2023, we have not received these funds.

On ~~April 20,~~November 7, 2022, ~~the Company~~we entered into a ~~securities~~note purchase agreement (the ~~“Purchase~~“November Note Purchase Agreement”)~~, which provides~~ and promissory note with an institutional investor providing for the sale and issuance ~~by the Company~~ of an ~~aggregate~~unsecured, non-convertible promissory in the original principal amount of ~~(i) 14,666,667 shares~~$5.5 million, which has an original issue discount of the Company’s common stock, $0.0001 par value per share, at a purchase price of $0.75 per share, and (ii) warrants to purchase 14,666,667 shares of the common stock at an exercise price of $0.75 per share, for aggregate$0.5 million, resulting in gross proceeds to us of ~~$11,000 before deducting placement agent commissions~~approximately $5.0 million (the “November Note,” and ~~other offering expenses (the “Registered Direct~~such financing, the “November Note Offering”). The ~~Purchase Agreement, among other things, restricts~~November Note matures eighteen months following the date of issuance. Commencing six months from the date of issuance, we are required to make monthly cash redemption payments in an amount not to exceed $0.6 million. The November Note may be repaid in whole or in part prior to the maturity date for a 10% premium. The November Note requires us to use 20% of the gross proceeds raised from ~~selling~~future equity or debt financings, or the sale of any subsidiary or material asset, to prepay the November Note, subject to a cap on the aggregate prepayment amount. Until all obligations under the November Note have been paid in full, we are not permitted to grant a security interest in any of its assets, or to issue securities convertible into shares of ~~Common Stock~~common stock, subject in each case to certain exceptions. Our wholly owned subsidiary verbMarketplace, LLC entered into a guaranty, dated November 7, 2022, in connection with the November Note Offering, pursuant to which it guaranteed the ~~Common Stock Purchase Agreement and pursuant to an “at-the-market” offering previously entered into with Truist Securities. As~~obligations on our behalf under the November Note in exchange for receiving a result of this transaction, certain of our Series A warrants which previously had exercise prices ranging from $1.10 to $2.10 per share were repriced to $0.75 per share. As a result of entering into the Purchase Agreement, the Company repaid $1.6 million in principal paymentsportion of the ~~Notes issued pursuant to~~loan proceeds. At a special meeting of stockholders on April 10, 2023, our shareholders approved for purposes of Nasdaq Listing Rule 5635, the ~~Note Offering.~~ issuance of shares of common stock in partial or full satisfaction of the November Note.

IfOther:
We, through our Professional Employer Organization, filed for federal government assistance for the second and third quarters of 2021 in the aggregate amount of approximately $1.5 million through ERC provisions of the Consolidated Appropriations Act of 2021. As of June 30, 2023 and December 31, 2022, we had a long-term receivable of $1.5 million.
In November 2022, a cost savings plan was approved and implemented to improve liquidity and preserve cash for operations (the “Cost Savings Plan”). This plan is expected to further reduce expenses moving forward through such actions as a reduction in force, elimination of certain services provided by various vendors, and a 25% reduction in cash compensation by senior management over a four-month period in exchange for shares of common stock. Subsequently, the Company extended the Cost Savings Plan through April 30, 2023.
Our consolidated financial statements have been prepared on a going concern basis, which implies we may not continue to meet our obligations and continue our operations for the next twelve months. Our continuation as a going concern is ~~unable~~dependent upon our ability to ~~generate sufficient~~obtain necessary debt or equity financing to continue operations until we begin generating positive cash flow from operations to operate its business and pay its debt obligations as they become due, it may need to seek to raise additional capital, borrow additional funds, dispose of assets, reduce or delay capital expenditures, or change its business strategy. flow.
32
There ~~can be~~is no assurance that ~~the Company~~we will ever be profitable or that debt or equity financing will be available to us in the amounts, on terms, orand at times deemed acceptable ~~by the Company.~~to us, if at all. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current ~~stockholders and could include rights or preferences senior to those the current~~ stockholders. Obtaining commercial loans, assuming those loans would be available, would increase ~~the Company’s~~our liabilities and future cash ~~commitments and potentially impose significant operational or financial restrictions.~~commitments. If ~~the Company is~~we are unable to obtain financing in the amounts and on terms deemed acceptable ~~the Company~~to us, we may be unable to continue ~~its~~our business, as planned, and as a result may be required to scale back or cease operations for our business, the results of which ~~may result in the~~would be that our stockholders ~~losing~~would lose some or all of their investment.
~~For additional information, refer to Note 1 to the condensed~~ The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the ~~section titled “Risk Factors”, within the 2021 Annual Report.~~
amounts and classifications of liabilities that may result should we be unable to continue as a going concern.
35

Overview

As of June 30, ~~2022,~~2023, we had cash of ~~$5.5~~$3.5 million. We estimate our operating expenses for the next twelve months may continue to exceed any revenue we generate, and we may need to raise capital through either debt or equity offerings to continue operations. Due to market conditions and the early stage of our operations, there is considerable risk that we will not be able to raise such financings at all, or on terms that are not dilutive to our existing stockholders. We can offer no assurance that we will be able to raise such funds. If we are unable to raise the funds we require for all of our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and we may be forced to reduce or discontinue operations.

The following is a summary of our cash flows from operating, investing, and financing activities for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

Six Months Ended June 30,
2022 2021
Cash used in operating activities $ (11,002 ) $ (13,620 )
Cash (used in) / provided by investing activities (4,211 ) 11
Cash provided by financing activities 19,823 18,243
Increase in cash $ 4,610 $ 4,634
Six Months Ended June 30,
2023 2022
Cash used in operating activities – continuing operations $ (4,685 ) $ (7,954 )
Cash used in operating activities – discontinued operations (1,855 ) (3,048 )
Cash used in investing activities – continuing operations (244 ) (4,210 )
Cash provided by (used in) investing activities – discontinued operations 4,750 (1 )
Cash provided by financing activities – continuing operations 4,853 24,186
Cash used in financing activities – discontinued operations (1,722 ) (4,363 )
Increase in cash $ 1,097 $ 4,610

Cash Flows – Operating

For the six months ended June 30, ~~2022,~~2023, our cash flows used in operating activities for continuing operations amounted to ~~$11.0~~$4.7 million, compared to cash flows used for the six months ended June 30, ~~2021,~~2022 of ~~$13.6~~$8.0 million. We generated ~~$2.6~~$3.3 million additional cash from operations primarily due to ~~higher revenues, decreases~~cost savings in ~~research~~personnel expenses and ~~development expenses, both offset by an increase in labor related costs to support future growth.~~reduced general and administrative expenses.

Cash Flows – Investing

For the six months ended June 30, ~~2022,~~2023, our cash flows ~~used in~~provided by investing activities amounted to ~~$4.2~~$4.5 million, primarily due to $4.8 million of proceeds received from the sale of SaaS assets slightly offset by our investment in capitalized software development costs related to MARKET.

Cash Flows – Financing

Our cash provided by financing activities for continuing operations during the six months ended June 30, ~~2022~~2023 amounted to ~~$19.8~~$4.8 million, which represented ~~$20.1~~$6.6 million of net proceeds from the issuance of shares of our common stock, ~~$6.0 million of gross proceeds from the issuance of notes payable, and proceeds from option exercises of $0.4 million, all~~ offset by ~~$4.4~~the repayment of convertible notes of $(1.4) million and repayment of ~~payments on advances on future receipts, $1.9 million~~our November notes of ~~payments on notes payable and payments for debt issuance costs of $0.4~~$(0.4) million.

3633
Advances on Future Receipts

~~Advances on Future Receipts~~
On ~~October 29, 2021, we received secured~~February 16, 2023, the Company modified and combined the unpaid balances of the previous two advances with a new advance from ~~an unaffiliated~~the same third party totaling ~~$2.7~~$1.6 million for the purchase of future receipts/revenues of ~~$3.8~~$2.1 million, resulting in a debt discount of $0.5 million. As of June 30, ~~2022,~~2023, the outstanding balance of the note was ~~$0.6~~$0.9 million. ~~Subsequent to June 30, 2022, the remaining balance was paid in full.~~

Convertible Notes Payable and Notes Payable

We have the following outstanding notes payable as of June 30, ~~2022~~2023 (in thousands):

Balance at
Issuance Maturity Interest Original June 30,
Note Issuance Date Maturity Date Interest Rate Original
Borrowing Balance at
June 30,
2022 Date Date Rate Borrowing 2023

Related party note payable (A) December 1, 2015 April 1, 2023 12.0 % $ 1,249 $ 725 December 1, 2015 April 1, 2023 12.0 % $ 1,249 $ 725
Related party note payable (B) April 4, 2016 June 4, 2021 12.0 % 343 40 April 4, 2016 June 4, 2021 12.0 % 343 40
Note payable (C) May 15, 2020 May 15, 2050 3.75 % 150 150 May 15, 2020 May 15, 2050 3.75 % 150 150
Convertible Notes Due 2023 (D) January 12, 2022 January 12, 2023 6.0 % $ 6,300 4,404
Promissory note payable (D) November 7, 2022 May 7, 2024 9.0 % 5,470 6,034
Debt discount (128 ) (246 )
Debt issuance costs (196 ) (183 )
Total notes payable 4,995 6,520
Non-current (875 ) (150 )
Current $ 4,120 $ 6,370

(A) On December 1, 2015, we issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer, ~~and a director,~~ to consolidate all loans and advances made by Mr. Cutaia to us as of that date. On May 19, 2021, we amended the note to allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which was the closing price of the common stock on the amendment date. On May 12, 2022, the maturity date of the note was extended to April 1, 2023. As of June 30, ~~2022,~~2023, the outstanding balance ~~under~~of the note ~~was $0.7~~amounted to $0.8 million.

37
(B) On April 4, 2016, we issued a convertible note to Mr. Cutaia, in the amount of $0.3 million, to consolidate all advances made by Mr. Cutaia to us during the period December 2015 through March 2016. On May 19, 2021, we amended the note to allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which was the closing price of the common stock on the amendment date. As of June 30, ~~2022,~~2023, the outstanding balance ~~under~~of the note ~~was~~amounted to less than $0.1 million.
(C)
On May 15, 2020, we executed an unsecured loan with the U.S. Small Business Administration (SBA) under the Economic Injury Disaster Loan program in the amount of $0.15 million. Installment payments, including principal and interest, ~~will begin on~~began October ~~15,~~26, 2022. In September 2022, the SBA approved an additional loan of $0.35 million. As of August 14, 2023, we have not received these funds. As of June 30, ~~2022,~~2023, the outstanding balance of the note amounted to $0.15 million.

(D)
On ~~January 12,~~November 7, 2022, we entered into the November Note Offering, which provided for the sale and issuance of an aggregate original principal amount of ~~$6.3~~$5.5 million in convertible notes due 2023. We also entered into a security agreement, dated January 12, 2022, in connection with the Note Offering, pursuant to which the Company granted a security interest to the Note Holders in substantially all of its assets. There are no financial covenants related to these notes payable.November Notes.

We received ~~$6.0~~$5.0 million in gross proceeds from the sale of the November Notes. The November Notes bear interest of ~~6.0%~~9.0% per annum, have an original issue discount of ~~5.0%~~8.6%, and mature 1218 months from the closing ~~date, and have an initial conversion price of $3.00, subject to adjustment in certain circumstances as set forth in the Notes.~~date.

In connection with the November Note Offering, we incurred ~~$0.5~~$0.3 million of debt issuance costs. The debt issuance costs and the debt discount of ~~$0.3~~$0.5 million are being amortized over the term of the November Notes using the effective interest rate method. As of June 30, ~~2022,~~2023, the amount of unamortized debt discount and debt issuance costs was ~~$0.1~~$0.2 million and $0.2 million, respectively.

On May 16, 2023, the Company received a redemption notice of $0.3 million under the terms of the November Note Purchase Agreement. The Company missed two payments resulting in a Payment Failure Balance Increase of 10% on the outstanding principal balance per occurrence pursuant to the terms of the agreement totaling $1.2 million. During the six months ended June 30, 2023, the Company paid $0.4 million in cash and $0.3 million in shares. As of June 30, ~~2022,~~2023, the outstanding balance of the ~~Note~~Notes amounted to ~~$4.4~~$6.4 million. ~~We have repaid $1.9 million in principal and $0.1 million of accrued interest.~~
Beginning on May 12, 2022, we were required to make nine monthly principal payments of $0.2 million, plus accrued interest, to the Note Holders, with the remaining principal amount of $2.4 million, plus accrued interest, due on the maturity date. The Note Holders agreed to allow us to defer the payment originally due on June 12, 2022 and to instead increase the amount of the principal payments required to be made beginning on July 12, 2022, to $0.3 million with the remaining principal amount of $2.4 million, plus accrued interest, due on the maturity date. There was no change in the aggregate amount of indebtedness as a result of this payment deferral.
34

Critical Accounting Policies

~~The condensed consolidated~~Our financial statements have been prepared in accordance with GAAP, which require that we make certain assumptions and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period.

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 revenues and expenses during the reported periods. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, and other factors that management believes to be reasonable. In addition, the Company has considered the potential impact of the pandemic, as well as certain macroeconomic factors, including inflation, rising interest rates, and recessionary concerns, on its business and operations.
Significant estimates include assumptions made for reserves of uncollectible accounts receivable, assumptions made in valuing assets acquired in business combinations, impairment testing of goodwill and other long-lived assets, the valuation allowance for deferred tax assets, assumptions used in valuing derivative liabilities, assumptions used in valuing share-based compensation, and accruals for potential liabilities. ~~Some of those assumptions can be subjective and complex, and therefore, actual results~~Amounts could ~~differ~~ materially ~~from those estimates under different assumptions or conditions~~change in the future.

38
Revenue Recognition
~~The Company derives its revenue primarily from providing application services through the SaaS application, digital marketing and sales support services.~~

The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). 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.

A description of our principal revenue generating activities is as follows:

1. ~~Digital Revenue, which is divided into two main categories:~~MARKET.live, launched at the end of July 2022, generates revenue through several sources as follows:
a. ~~SaaS recurring digital revenue based~~All sales run through our ecommerce facility on ~~contract-based subscriptions~~MARKET.live from which we deduct a platform fee that ranges from 10% to ~~our verb app products~~20% of gross sales, with an average of approximately 15%, depending upon the pricing package the vendors select as well as the product category and ~~platform services which include verbCRM, verbLEARN, verbLIVE, verbTEAMS, and verbPULSE.~~profit margins associated with such categories. The revenue is ~~recognized straight-line over~~derived from sales generated during livestream events, from sales realized through views of previously recorded live events available in each vendor’s store, as well as from sales of product and merchandise displayed in the ~~subscription period.~~vendors’ online stores, all of which are shoppable 24/7.
b.
Produced events. MARKET.live offers fee-based services that range from full production of livestream events, to providing professional hosts and event consulting.
c. Drop ship programs. MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs.

b.d. ~~Non-SaaS, non-recurring digital revenue, which~~The MARKET.live site is ~~revenue generated by the use of our app products and in-app purchases, such as sampling~~designed to incorporate sponsorships 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.advertising based on typical industry rates.
Capitalized Software Development Costs

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, includes design, printing services, fulfillment and shipping services. The revenue is recognized upon completion and shipment of products or fulfillment to the customer. Effective April 1, 2022, the Company entered into a customer referral agreement with a third party for its cart site and printing business. Under the agreement, the Company will earn certain percentage for customer referrals, and merchandise sales as well as earn a cart site design fee, all of which will be recognized as non-digital revenue on a net basis.
The Company capitalizes internal and external costs directly associated with developing internal-use software, and hosting arrangements that include an internal-use software license, during the application development stage of its projects. The Company’s internal-use software is reported at cost less accumulated amortization. Amortization begins once the project has been completed and is ready for its intended use. The Company will amortize the asset on a straight-line basis over a period of three years, which is the estimated useful life. Software maintenance activities or minor upgrades are expensed in the period performed.

Amortization expense related to capitalized software development costs are recorded in depreciation and amortization in the condensed consolidated statements of operations.
Derivative Financial Instruments

We evaluate our 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 ~~condensed~~ 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 ~~condensed consolidated~~ balance ~~sheets~~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.

We use Level 2 inputs for our valuation methodology for the derivative liabilities as their fair values were determined by using a Binomial pricing model. Our 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 adjustments to fair value of derivatives.

Share-Based Compensation

The Company issues stock options and warrants, shares of common stock and restricted stock units as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation in accordance with FASB ASC 718, Compensation – Stock Compensation. Share-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock and is recognized as expense over the service period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for services.

3935

Goodwill

In accordance with FASB ASC 350, Intangibles-Goodwill and Other, we review goodwill and ~~indefinite lived~~indefinite-lived intangible assets for impairment at least annually or whenever events or circumstances indicate a potential impairment. Our impairment testing is performed annually at December 31 (our fiscal year end). Impairment of goodwill and ~~indefinite lived~~indefinite-lived intangible assets is determined by comparing the fair value of our reporting units 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.

Intangible Assets

We have certain intangible assets that were initially recorded at their fair value at the time of acquisition. The finite-lived intangible assets consist of developed technology and customer contracts. Indefinite-lived intangible assets consist of domain names. 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.

Recently Issued Accounting Pronouncements

For a summary of our recent accounting policies, refer to Note 2 - Summary of Significant Accounting Policies, toof our unaudited condensed consolidated financial ~~statements.~~statements included under Item 1 – Financial Statements in this Form 10-Q.
~~Off-Balance Sheet Arrangements~~
~~As of June 30, 2022, we did not have any off-balance sheet arrangements.~~

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial ~~and accounting~~ officer, as appropriate, to allow timely decisions regarding required disclosure.

4036

We carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial ~~and accounting~~ officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d- 15(e) under the Exchange Act) as of June 30, ~~2022.~~2023. Based on this evaluation, our principal executive officer and principal financial ~~and accounting~~ officer concluded that our disclosure controls and procedures were effective as of June 30, ~~2022 at the reasonable assurance level.~~2023.

Changes in Internal Control Over Financial Reporting

There were no additional changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

4137

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

~~From time to time, the Company is involved in various~~For information regarding legal proceedings, disputes or claims arising from or related to the normal course of its business activities. Although the results of legal proceedings, disputes and other claims cannot be predicted with certainty, the Company believes it is not currently a party to any other legal proceedings, disputes or claims which, if determined adversely to the Company, would, individually or taken together, have a material adverse effect on the Company’s business, operating results, financial condition or cash flows. However, regardless of the merit of the claims raised or the outcome, legal proceedings may have an adverse impact on the Company as a result of defense and settlement costs, diversion of management time and resources, and other factors.
~~For additional information,~~ refer to Note 13 - Commitments and Contingencies of the Notes to ~~the condensed consolidated financial statements.~~our Condensed Consolidated Financial Statements, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

~~An investment~~Our business, results of operations, and financial condition are subject to various risks. These risks are described elsewhere in our common stock and warrants involves risks. Before making an investment decision, you should carefully consider the information in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in the condensed consolidated financial statements and the related notes contained within this Quarterly ~~Report. In addition, you should carefully consider the risks~~Report on Form 10-Q and ~~uncertainties described in the section titled “Risk Factors” in the 2021 Annual Report, as well as in~~ our other ~~public~~ filings with the ~~SEC. If~~SEC, including the 2022 Form 10-K filed on April 17, 2023. The risk factors identified in our 2022 Form 10-K have not changed in any of the identified risks are realized, our business, operating results, financial condition and cash flows could be materially and adversely affected. In that case, the trading price of our common stock and the value of our warrants may decline, and you could lose all or part of your investment. In addition, other risks of which we are currently unaware, or which we do not currently view as material ~~could have a material adverse effect on our business, operating results, financial condition and cash flows.~~respect.
~~During the three months ended June 30, 2022, there were no material changes to the risks and uncertainties described in the section titled “Risk Factors” in the 2021 Annual Report.~~
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 - MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 - OTHER INFORMATION

Not applicable.
~~None.~~

ITEM 6 - EXHIBITS

Reference is made to the exhibits listed on the Index to Exhibits.

4238
INDEX TO EXHIBITS

Exhibit Number Description
~~4.1~~10.1 ~~Form of Common Stock~~Asset Purchase ~~Warrant (incorporated~~Agreement dated June 13, 2023, between Verb Technology Company, Inc. and SW Direct Sales, LLC.(incorporated by reference to Exhibit ~~4.1~~10.1 to the Company’s Current Report on Form 8-K filed ~~April 22, 2022)~~
~~10.1~~ ~~Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Current Report~~with the SEC on ~~Form 8-K filed April 22, 2022)~~June 20, 2023).
31.1* Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** Certification of Principal Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
32.2** Certification of Principal Financial Officer and Principal Accounting Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB Inline XBRL Taxonomy Extension Label Linkbase
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.

4339

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VERB TECHNOLOGY COMPANY, INC.

Date: August ~~15, 2022~~14, 2023 By: /s/ Rory J. Cutaia
Rory J. Cutaia
President, Chief Executive Officer,
Secretary, and Director
(Principal Executive Officer)

Date: August ~~15, 2022~~14, 2023 By: /s/ ~~Salman H. Khan~~Bill J. Rivard
~~Salman H. Khan~~Bill J. Rivard
Interim Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

4440

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS	32
PART I - FINANCIAL INFORMATION	43
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)	43
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4036
ITEM 4 - CONTROLS AND PROCEDURES	4036
PART II - OTHER INFORMATION	4238
ITEM 1 - LEGAL PROCEEDINGS	4238
ITEM 1A - RISK FACTORS	4238
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4238
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES	4238
ITEM 4 - MINE SAFETY DISCLOSURES	4238
ITEM 5 - OTHER INFORMATION	4238
ITEM 6 - EXHIBITS	4238
SIGNATURES	4440

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Total
	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, 2021		-	$	-		100	$	-		-	$	-		72,942,948	$	7	$	129,342	$	(116,027	)	$	13,322
Sale of common stock from public offering		-		-		-		-		-		-		25,844,250		3		20,147		-			20,150
Issuance of common stock for commitment fee related to equity line of credit agreement		-		-		-		-		-		-		607,287		-		-		-			-
Issuance of common stock from option exercise		-		-		-		-		-		-		332,730		-		377		-			377
Fair value of common shares issued for services		-		-		-		-		-		-		1,291,300		-		1,126		-			1,126
Fair value of common shares issued to settle accrued expenses		-		-		-		-		-		-		477,038		-		450		-			450
Fair value of vested restricted stock awards, stock options and warrants		-		-		-		-		-		-		463,234		-		1,468		-			1,468
Net loss		-		-		-		-		-		-		-		-		-		(13,363	)		(13,363	)
Balance at June 30, 2022		-	$	-		100	$	-		-	$	-		101,958,787	$	10	$	152,910	$	(129,390	)	$	23,530


									Additional
	Class A Units				Common Stock				Paid-in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at December 31, 2022		3	$	-		2,918,017	$	1	$	158,629	$	(153,464	)	$	5,166

Sale of common stock from public offering		-		-		901,275		-		6,578		-			6,578
Fair value of vested restricted stock awards, stock options, and warrants		-		-		197,414		-		1,362		-			1,362
Deemed dividend due to warrant reset		-		-		-		-		164		(164	)		-
Issuance of shares for fractional adjustments related to reverse stock split		-		-		31,195		-		-		-			-
Fair value of common shares issued to settle accrued expenses		-		-		93,190		-		146		-			146
Fair value of common shares issued as payment on notes payable		-		-		176,470		-		300		-			300
Net loss		-		-		-		-		-		(15,370	)		(15,370	)
Balance at June 30, 2023		3	$	-		4,317,561	$	1	$	167,179	$	(168,998	)	$	(1,818	)

Produced events. MARKET.live offers fee-based services that range from full production of livestream events, to providing professional hosts and event consulting.

	c.	Drop ship programs. MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs.

	b.d.	~~Non-SaaS, non-recurring digital revenue, which~~The MARKET.live site is ~~revenue generated by the use of app products and in-app purchases, such as sampling~~designed to incorporate sponsorships 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.advertising based on typical industry rates.

	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.

	Six Months Ended June 30,
	2023	2022
The Company’s largest customers are presented below as a percentage of the aggregate

Revenues and Accounts receivable	No customers individually over 10% and in the aggregate	No customers individually over 10% and in the aggregate

The Company’s largest vendors are presented below as a percentage of the aggregate

Purchases	One vendor that accounted for 32% of its purchases individually and in the aggregate	One vendor that accounted for 44% and 41%, respectively, of its purchases individually and in the aggregate

	June 30, 2023			December 31, 2022

Beginning balance	$	6,176		$	4,348

Additions		23			2,760
Amortization		(1,077	)		(932	)
Ending balance	$	5,122		$	6,176

Year ending	Amortization
2023 remaining	$	1,188
2024		2,377
2025		1,445
2026		112
Total amortization	$	5,122

	June 30, 2022			December 31, 2021

Amortizable finite-lived intangible assets	$	7,399		$	7,317
Accumulated amortization		(4,523	)		(3,806	)
Finite-lived intangible assets, net		2,876			3,511

Indefinite-lived intangible assets		442			442

Intangible assets, net	$	3,318		$	3,953

	December 31, 2022
Assets:
Accounts receivable, net		1,024
Prepaids and other current assets		299
Goodwill		9,581
Other long-lived assets		886
Assets held for sale	$	11,790
Liabilities:
Accounts payable	$	663
Contract liabilities		1,340
Accrued liabilities		480
Liabilities related to assets held for sale	$	2,483


Year ending	Amortization
2022 remaining	$	717
2023		1,386
2024		573
2025		200
Total amortization	$	2,876

Year ending	Operating Leases			Operating Leases
2022 remaining	$	300
2023		583
2023 remaining				$	346
2024		472			472
2025		484			484
2026 and thereafter		705
2026					496
2027 and thereafter					209
Total lease payments		2,544			2,007
Less: Imputed interest/present value discount		(232	)		(146	)
Present value of lease liabilities	$	2,312		$	1,861

Note	Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at June 30, 2022			Balance at December 31, 2021			Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at June 30, 2023			Balance at December 31, 2022

Note 1	October 29, 2021	April 28, 2022		5	%	$	2,120	$	-		$	1,299		August 25, 2022	May 11, 2023		26	%	$	3,400	$	-		$	1,782
Note 2	October 29, 2021	July 25, 2022		28	%		3,808		589			2,993		October 25, 2022	April 26, 2023		30	%		322		-			207
Note 3	December 23, 2021	June 22, 2022		5	%		689		-			689		February 16, 2023	December 14, 2023		35	%		2,108		915			-
Total						$	6,617		589			4,981							$	5,830		915			1,989
Debt discount									(35	)		(800	)									(187	)		(311	)
Debt issuance costs																						(32	)		(37	)
Net								$	554		$	4,181									$	696		$	1,641

Note	Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at June 30, 2022			Balance at December 31, 2021			Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at June 30, 2023			Balance at December 31, 2022
Related party note payable (A)	December 1, 2015	April 1, 2023		12.0	%	$	1,249	$	725		$	725		December 1, 2015	April 1, 2023		12.0	%	$	1,249	$	725		$	725
Related party note payable (B)	April 4, 2016	June 4, 2021		12.0	%		343		40			40		April 4, 2016	June 4, 2021		12.0	%		343		40			40
Note payable (C)	May 15, 2020	May 15, 2050		3.75	%		150		150			150		May 15, 2020	May 15, 2050		3.75	%		150		150			150
Convertible Notes Due 2023 (D)	January 12, 2022	January 12, 2023		6.0	%	$	6,300		4,404			-		January 12, 2022	January 12, 2023		6.0	%		6,300		-			1,350
Promissory note payable (E)														November 7, 2022	May 7, 2024		9.0	%		5,470		6,034			5,470
Debt discount									(128	)		-										(246	)		(408	)
Debt issuance costs									(196	)		-										(183	)		(309	)
Total notes payable									4,995			915										6,520			7,018
Non-current									(875	)		(875	)									(150	)		(1,215	)
Current								$	4,120		$	40									$	6,370		$	5,803

	(A)	On December 1, 2015, the Company issued a convertible note payable to Mr. Cutaia, the Company’s Chief Executive Officer and a director, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. On May 19, 2021, the Company amended the note to allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which was the closing price of the common stock on the amendment date. On May 12, 2022, the maturity date of the note was extended to April 1, 2023. As of June 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the outstanding balance under the note was $854 and $~~725~~811, respectively. As of June 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents accrued interest was $129. and $86, respectively.

	(B)	On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia, in the amount of $343, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. On May 19, 2021, the Company amended the note to allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which was the closing price of the common stock on the amendment date. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the outstanding balance under the note was $47 and $4045, respectively. As of June 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents accrued interest was $7. and $5, respectively.

	(C)	On May 15, 2020, the Company executed an unsecured loan with the ~~U.S. Small Business Administration (SBA)~~SBA under the Economic Injury Disaster Loan program in the amount of $150. Installment payments, including principal and interest, ~~will begin~~began on October ~~15,~~26, 2022. In September 2022, the SBA approved an additional loan of $350. As of August 14, 2023, the Company has not received these funds. As of June 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the outstanding balance ofunder the note ~~amounted to~~was $150~~, respectively.~~.

	(D)	On January 12, 2022, the Company entered into a securities purchase agreement (the “January Note Purchase Agreement”) with three institutional investors (collectively, the “January Note ~~Offering, which provided~~Holders”) providing for the sale and issuance of an aggregate original principal amount of $6,300 in convertible notes due ~~2023.~~January 2023 (each, a “Note,” and, collectively, the “Notes,” and such financing, the “January Note Offering”). The Company and the January Note Holders also entered into a security agreement, dated January 12, 2022, in connection with the January Note Offering, pursuant to which the Company granted a security interest to the January Note Holders in substantially all of its assets. The January Note Purchase Agreement prohibits the Company from entering into an agreement to effect any issuance of common stock involving a Variable Rate Transaction (as defined therein) during the term of the agreement, subject to certain exceptions set forth therein. The January Note Purchase Agreement also gives the January Note Holders the right to require the Company to use up to 15% of the gross proceeds raised from future debt or equity financings to redeem the Notes, which redemptions have been elected by the January Note Holders. There are no financial covenants related to these notes payable.

		The Company received $6,000 in gross proceeds from the sale of the Notes. The Notes bear interest of 6.0% per annum, have an original issue discount of 5.0%, mature 12 months from the closing date, and have an initial conversion price of $~~3.00~~120.00, subject to adjustment in certain circumstances as set forth in the Notes.

		In connection with the January Note Offering, the Company ~~incurred~~paid $~~460~~461 of debt issuance costs. The debt issuance costs and the debt discount of $300 ~~are being~~were amortized over the term of the Notes using the effective interest rate method. ~~During the six months ended June 30, 2022, the Company amortized $172~~ ~~of debt discount and $264~~ ~~of debt issuance costs.~~ As of ~~June 30,~~December 31, 2022, the amount of unamortized debt discount and debt issuance costs was $~~128~~6 and $~~196, respectively.~~ ~~As of June 30, 2022, and December 31, 2021, the outstanding balance of the Notes amounted to $4,404, and $~~010, respectively. During the six months ended June 30, 2023, the Company amortized the remaining amount of debt discount and debt issuance costs.

		As of December 31, 2022, the outstanding principal balance of the Notes amounted to $1,350. On January 26, 2023, the Company repaid in full all outstanding obligations under the January Note Offering dated January 12, 2022.

	(E)	On November 7, 2022, the Company ~~repaid $1,896~~entered into a note purchase agreement (the “November Note Purchase Agreement”) and promissory note with an institutional investor (the “November Note Holder”) providing for the sale and issuance of an unsecured, non-convertible promissory note in ~~principal payments pursuant to~~ the ~~Note Holders pursuant to the Notes.~~ ~~Beginning on May 12, 2022, the Company was required to make nine monthly principal payments of $246, plus accrued interest, to the Note Holders, with the remaining~~original principal amount of $~~2,436~~5,470, ~~plus accrued interest, due on~~which has an original issue discount of $470, resulting in gross proceeds to the Company of approximately $5,000 (the “November Note,” and such financing, the “November Note Offering”). The November Note matures eighteen months following the date of issuance. Commencing six months from the date of issuance, the Company is required to make monthly cash redemption payments in an amount not to exceed $600. The November Note may be repaid in whole or in part prior to the maturity ~~date.~~date for a 10% premium. The November Note ~~Holders agreed to allow~~requires the Company to ~~defer~~use up to 20% of the ~~payment originally due~~gross proceeds raised from future equity or debt financings, or the sale of any subsidiary or material asset, to prepay the November Note, subject to a $2,000 cap on ~~June 12,~~the aggregate prepayment amount. Until all obligations under the November Note have been paid in full, the Company is not permitted to grant a security interest in any of its assets, or to issue securities convertible into shares of common stock, subject in each case to certain exceptions. verbMarketplace, LLC entered into a guaranty, dated November 7, 2022, in connection with the November Note Offering, pursuant to which it guaranteed the obligations of the Company under the November Note in exchange for receiving a portion of the loan proceeds.

		In connection with the November Note Offering, the Company incurred $335 of debt issuance costs. The debt issuance costs and ~~to instead increase~~the debt discount of $450 are being amortized over the term of the November Notes using the effective interest rate method. As of December 31, 2022, the amount of unamortized debt discount and debt issuance costs was $402 and $299, respectively. During the six months ended June 30, 2023, the Company paid $375 in cash and $300 in shares; amortized $156 of debt discount and $116 of debt issuance costs. As of June 30, 2023, the amount of unamortized debt discount and debt issuance costs was $246 and $183, respectively.

		On May 16, 2023, the Company received a redemption notice under the terms of the November Note Purchase Agreement for $300. The Company missed two payments resulting in a Payment Failure Balance Increase of 10% on the outstanding principal ~~payments required~~balance per occurrence pursuant to ~~be made beginning on July 12,~~the terms of the agreement totaling $1,205. These costs have been recorded as finance costs in the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2023.

		As of June 30, 2023 and December 31, 2022, the outstanding balance of the November Notes amounted to $~~281~~6,375 and $5,544, ~~with the remaining principal amount of $2,436~~respectively. See Note 14 for Subsequent Events.~~, plus accrued interest, due on the maturity date. There was no change in the aggregate amount of indebtedness as a result of this payment deferral.~~

				Weighted-
				Average
				Grant Date
	Shares			Fair Value

Non-vested at January 1, 2022		1,821,833		$	1.41
Granted		1,334,270			1.17
Vested/deemed vested		(463,234	)		1.66
Forfeitures and other		(493,481	)		1.33
Non-vested at June 30, 2022		2,199,388		$	1.23

	Six Months Ended June 30,
	2022			2021
Risk-free interest rate		1.24% - 3.01	%		0.10% - 0.92	%
Average expected term		5 years			5 years
Expected volatility		147.8 – 149.5	%		236.2 - 240.0	%
Expected dividend yield		-			-

	Warrants		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value

Outstanding at January 1, 2022, all vested		10,984,740	$	2.67		2.38	$	507
Granted, unvested as of June 30, 2022		14,666,667		0.75		5.32		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Outstanding at June 30, 2022		25,651,407	$	1.52		3.65	$	-

	Warrants			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value

Outstanding at January 1, 2023		952,638		$	37.60		3.56	$	-
Granted		-			-		-		-
Forfeited		(834	)		13.60		-		-
Exercised		-			-		-		-
Outstanding at June 30, 2023, all vested		951,804			32.80		2.68	$	-

	a.	SaaS recurring digital revenue based on contract-based subscriptions to our verb app products and platform services which include verbCRM, verbLEARN, verbLIVE, verbPULSE, and verbTeams. The revenue is recognized overMARKET.live, launched at the ~~subscription period.~~

	b.	~~Non-SaaS, non-recurring digital revenue, which is revenue generated by the use~~end of 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 design, printing services, fulfillment and shipping services. The revenue is recognized upon completion and shipment of products or fulfillment to customers. Effective April 1,July 2022, the Company entered into a customer referral agreement with a third party for its cart site and printing business. Under the agreement, the Company will earn certain percentage for customer referrals and merchandize sales as well as a cart site design fee, all of which will be recognized as non-digital revenue on a net basis.

	3.	~~MARKET will generate~~generates revenue through several sources as follows:


	b.	Produced events. ~~MARKET will offer~~MARKET.live offers fee-based services that range from full production of a livestream ~~event,~~events, to providing professional hosts and event consulting.


	c.	Drop ship programs, MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs.

	c.d.	The ~~MARKET~~MARKET.live site is designed to incorporate sponsorships and other advertising based on typical industry rates.

	2020 Quarterly Revenue							2021 Quarterly Revenue								2022
	Q2		Q3		Q4			Q1		Q2		Q3		Q4		Q1		Q2
SaaS recurring subscription revenue	$	1,274	$	1,478	$	1,305		$	1,461	$	1,601	$	1,846	$	1,923	$	2,003	$	1,975
Other digital		406		360		218			340		209		510		288		147		186
Total digital revenue		1,680		1,838		1,523			1,801		1,810		2,356		2,211		2,150		2,161

Total non-digital revenue		972		1,022		576			725		582		544		495		541		238
							��
Grand total	$	2,652	$	2,860	$	2,099		$	2,526	$	2,392	$	2,900	$	2,706	$	2,691	$	2,399

	●	Modified EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

	●	Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

	●	Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and

																		Balance at
											Issuance	Maturity	Interest			Original		June 30,
Note	Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at June 30, 2022			Date	Date	Rate			Borrowing		2023

Related party note payable (A)	December 1, 2015	April 1, 2023		12.0	%	$	1,249	$	725		December 1, 2015	April 1, 2023		12.0	%	$	1,249	$	725
Related party note payable (B)	April 4, 2016	June 4, 2021		12.0	%		343		40		April 4, 2016	June 4, 2021		12.0	%		343		40
Note payable (C)	May 15, 2020	May 15, 2050		3.75	%		150		150		May 15, 2020	May 15, 2050		3.75	%		150		150
Convertible Notes Due 2023 (D)	January 12, 2022	January 12, 2023		6.0	%	$	6,300		4,404
Promissory note payable (D)											November 7, 2022	May 7, 2024		9.0	%		5,470		6,034
Debt discount									(128	)									(246	)
Debt issuance costs									(196	)									(183	)
Total notes payable									4,995										6,520
Non-current									(875	)									(150	)
Current								$	4,120									$	6,370


	(C)	On May 15, 2020, we executed an unsecured loan with the U.S. Small Business Administration (SBA) under the Economic Injury Disaster Loan program in the amount of $0.15 million. Installment payments, including principal and interest, ~~will begin on~~began October ~~15,~~26, 2022. In September 2022, the SBA approved an additional loan of $0.35 million. As of August 14, 2023, we have not received these funds. As of June 30, ~~2022,~~2023, the outstanding balance of the note amounted to $0.15 million.

	(D)	On ~~January 12,~~November 7, 2022, we entered into the November Note Offering, which provided for the sale and issuance of an aggregate original principal amount of ~~$6.3~~$5.5 million in convertible notes due 2023. We also entered into a security agreement, dated January 12, 2022, in connection with the Note Offering, pursuant to which the Company granted a security interest to the Note Holders in substantially all of its assets. There are no financial covenants related to these notes payable.November Notes. We received ~~$6.0~~$5.0 million in gross proceeds from the sale of the November Notes. The November Notes bear interest of ~~6.0%~~9.0% per annum, have an original issue discount of ~~5.0%~~8.6%, and mature 1218 months from the closing ~~date, and have an initial conversion price of $3.00, subject to adjustment in certain circumstances as set forth in the Notes.~~date. In connection with the November Note Offering, we incurred ~~$0.5~~$0.3 million of debt issuance costs. The debt issuance costs and the debt discount of ~~$0.3~~$0.5 million are being amortized over the term of the November Notes using the effective interest rate method. As of June 30, ~~2022,~~2023, the amount of unamortized debt discount and debt issuance costs was ~~$0.1~~$0.2 million and $0.2 million, respectively. On May 16, 2023, the Company received a redemption notice of $0.3 million under the terms of the November Note Purchase Agreement. The Company missed two payments resulting in a Payment Failure Balance Increase of 10% on the outstanding principal balance per occurrence pursuant to the terms of the agreement totaling $1.2 million. During the six months ended June 30, 2023, the Company paid $0.4 million in cash and $0.3 million in shares. As of June 30, ~~2022,~~2023, the outstanding balance of the ~~Note~~Notes amounted to ~~$4.4~~$6.4 million. ~~We have repaid $1.9 million in principal and $0.1 million of accrued interest.~~ Beginning on May 12, 2022, we were required to make nine monthly principal payments of $0.2 million, plus accrued interest, to the Note Holders, with the remaining principal amount of $2.4 million, plus accrued interest, due on the maturity date. The Note Holders agreed to allow us to defer the payment originally due on June 12, 2022 and to instead increase the amount of the principal payments required to be made beginning on July 12, 2022, to $0.3 million with the remaining principal amount of $2.4 million, plus accrued interest, due on the maturity date. There was no change in the aggregate amount of indebtedness as a result of this payment deferral.

	a.	~~SaaS recurring digital revenue based~~All sales run through our ecommerce facility on ~~contract-based subscriptions~~MARKET.live from which we deduct a platform fee that ranges from 10% to ~~our verb app products~~20% of gross sales, with an average of approximately 15%, depending upon the pricing package the vendors select as well as the product category and ~~platform services which include verbCRM, verbLEARN, verbLIVE, verbTEAMS, and verbPULSE.~~profit margins associated with such categories. The revenue is ~~recognized straight-line over~~derived from sales generated during livestream events, from sales realized through views of previously recorded live events available in each vendor’s store, as well as from sales of product and merchandise displayed in the ~~subscription period.~~vendors’ online stores, all of which are shoppable 24/7.

	b.	Produced events. MARKET.live offers fee-based services that range from full production of livestream events, to providing professional hosts and event consulting.

	c.	Drop ship programs. MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs.

	b.d.	~~Non-SaaS, non-recurring digital revenue, which~~The MARKET.live site is ~~revenue generated by the use of our app products and in-app purchases, such as sampling~~designed to incorporate sponsorships 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.advertising based on typical industry rates.