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 September 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

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~3401 North Thanksgiving Way~~2700 S. Las Vegas Blvd., Suite ~~240~~, ~~Lehi~~, ~~Utah~~2301

Las Vegas, Nevada

~~84043~~89109

(Address of principal executive offices)

(Zip Code)

(855) 250-2300

(Registrant’s telephone number, including area code)

Former Address:

~~N/A~~3401 North Thanksgiving Way, Suite 240, Lehi, Utah84043

~~(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

VERB

The Nasdaq Stock Market LLC

Common Stock Purchase Warrants

~~VERB~~

VERBW

The Nasdaq Stock Market LLC

~~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 November 10, ~~2022,~~2023, there were ~~116,166,300~~ 16,408,287shares of common stock, $0.0001 par value per share, outstanding.

VERB TECHNOLOGY COMPANY, INC.

TABLE OF CONTENTS

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,AND ISSUER PURCHASES OF EQUITY SECURITIES	4338
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES	4338
ITEM 4 - MINE SAFETY DISCLOSURES	4338
ITEM 5 - OTHER INFORMATION	4438
ITEM 6 - EXHIBITS	4438
SIGNATURES	4540

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the three months ended September 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.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, ~~in light of our dependency~~as we depend on ~~third-party~~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;

● 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 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 September 30, ~~2022~~2023 (unaudited) and December 31, ~~2021~~2022	54

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

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

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 (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)

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

Current assets
Cash	$	921		$	937		$	918		$	2,429
Accounts receivable, net		1,438			1,382
Assets held for sale - current								-			1,323
Prepaid expenses and other current assets		738			875			400			306
Total current assets		3,097			3,194			1,318			4,058

Assets held for sale – non-current								-			10,467
Capitalized software development costs, net		6,444			4,348			4,584			6,176
ERC receivable								1,528			1,528
Property and equipment, net		582			702			39			533
Operating lease right-of-use assets		1,624			2,177			243			1,354
Intangible assets, net		2,966			3,953			97			83
Goodwill		19,764			19,764
Other assets		306			293			259			293

Total assets	$	34,783		$	34,431		$	8,068		$	24,492

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

Current liabilities
Accounts payable	$	3,833		$	3,751		$	2,706		$	3,975
Liabilities related to assets held for sale								-			2,483
Liabilities of discontinued operations								219			1,641
Accrued expenses		2,096			3,500			2,080			1,287
Accrued officers’ compensation		1,274			1,209
Advances on future receipts, net		2,197			4,181
Accrued officers’ salary								764			764
Notes payable – related party, current								725			765
Notes payable, current								1,886			3,704
Convertible notes payable, current		4,171			40			-			1,334
Deferred incentive compensation to officers, current		-			521
Operating lease liabilities, current		481			592			65			355
Contract liabilities		1,549			986
Derivative liability		795			3,155			12			222

Total current liabilities		16,396			17,935			8,457			16,530

Long-term liabilities
Notes payable, non-current		150			875			142			1,215
Operating lease liabilities, non-current		1,705			2,299			184			1,581
Total liabilities		18,251			21,109			8,783			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 September 30, 2022 and December 31, 2021		-			-
Class A units, 100 shares issued and authorized as of September 30, 2022 and December 31, 2021		-			-
Class B units, 2,642,159 shares authorized, 0 issued and outstanding as of September 30, 2022 and December 31, 2021		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized, 102,604,851 and 72,942,948 shares issued and outstanding as of September 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 September 30, 2023 and December 31, 2022								-			-
Common stock, $0.0001 par value, 400,000,000 shares authorized, 7,868,774 and 2,918,017 shares issued and outstanding as of September 30, 2023 and December 31, 2022								1			1
Common stock, value								1			1

Additional paid-in capital		153,940			129,342			171,991			158,629
Accumulated deficit		(137,418	)		(116,027	)		(172,707	)		(153,464	)

Total stockholders’ equity		16,532			13,322
Total stockholders’ equity (deficit)								(715	)		5,166

Total liabilities and stockholders’ equity	$	34,783		$	34,431
Total liabilities and stockholders’ equity (deficit)							$	8,068		$	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)

	2022			2021			2022			2021
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2023			2022			2023			2022

Revenue													$	29		$	3		$	34		$	3
Digital revenue
SaaS recurring subscription revenue	$	1,851		$	1,846		$	5,829		$	4,908
Other digital revenue		165			510			498			1,059
Total digital revenue		2,016			2,356			6,327			5,967

Non-digital revenue		171			544			950			1,851

Total revenue		2,187			2,900			7,277			7,818

Cost of revenue														5			1			7			1
Digital		580			542			1,746			1,651
Non-digital		156			544			798			1,769
Total cost of revenue		736			1,086			2,544			3,420

Gross margin		1,451			1,814			4,733			4,398			24			2			27			2

Operating expenses
Research and development		1,372			3,513			4,334			9,610
Depreciation and amortization		790			400			1,594			1,214			564			438			1,730			524
General and administrative		6,965			6,130			20,563			20,018			2,850			5,126			9,080			15,019
Total operating expenses		9,127			10,043			26,491			30,842			3,414			5,564			10,810			15,543

Loss from operations		(7,676	)		(8,229	)		(21,758	)		(26,444	)
Operating loss from continuing operations														(3,390	)		(5,562	)		(10,783	)		(15,541	)

Other income (expense)
Other income (expense), net														64			-			844			(16	)
Financing costs														-			-			(1,239	)		-
Interest expense		(550	)		(525	)		(1,948	)		(1,629	)		(219	)		(289	)		(989	)		(950	)
Change in fair value of derivative liability		198			(141	)		2,360			(2,086	)		4			198			210			2,360
Other income (expense), net		-			8			(45	)		85
Debt extinguishment, net		-			82			-			1,112
Total other income (expense), net		(352	)		(576	)		367			(2,518	)		(151	)		(91	)		(1,174	)		1,394

Net loss from continuing operations														(3,541	)		(5,653	)		(11,957	)		(14,147	)

Loss from discontinued operations, net of tax														(168	)		(2,375	)		(7,122	)		(7,244	)

Net loss	$	(8,028	)	$	(8,805	)	$	(21,391	)	$	(28,962	)		(3,709	)		(8,028	)		(19,079	)		(21,391	)

Deemed dividends to Series A stockholders		-			(348	)		-			(348	)
Deemed dividend due to warrant reset														-			-			(164	)		-

Net loss to common stockholders		(8,028	)		(9,153	)		(21,391	)		(29,310	)	$	(3,709	)	$	(8,028	)	$	(19,243	)	$	(21,391	)

Loss per share - basic and diluted	$	(0.08	)	$	(0.14	)	$	(0.23	)	$	(0.48	)	$	(0.68	)	$	(3.14	)	$	(4.10	)	$	(9.30	)
Weighted average number of common shares outstanding - basic and diluted		102,110,182			66,760,177			92,040,783			60,705,062			5,420,884			2,552,755			4,690,744			2,301,020

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 nine months ended September 30, 2023

	Shares		Amount		Shares		Amount		Capital		Deficit			Total
	Class A Units				Common Stock				Additional 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 offerings		-		-		1,006,575		-		6,628		-			6,628
Fair value of vested restricted stock awards, stock options, and warrants		-		-		200,362		-		1,932		-			1,932
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 for services		-		-		128,204		-		200		-			200
Fair value of common shares issued for settlement of accrued expenses and litigation		-		-		276,676		-		346		-			346
Fair value of common shares issued as payment on notes payable		-		-		3,307,745		-		4,092		-			4,092
Net loss		-		-		-		-		-		(19,079	)		(19,079	)
Balance at September 30, 2023		3	$	-		7,868,774	$	1	$	171,991	$	(172,707	)	$	(715	)

VERB TECHNOLOGY COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

(unaudited)

For the nine months ended September 30, ~~2022:~~2022

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Total			Class A Units				Common Stock				Additional Paid-in		Accumulated
	Preferred Stock				Class A Units				Class B Units				Common Stock				Additional 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
Balance																										3	$	-		1,823,574	$	1	$	129,348	$	(116,027	)	$	13,322
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance as of 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			-		-		646,106		-		20,150		-			20,150
Issuance of common stock for commitment fee related to equity line of credit agreement		-		-		-		-		-		-		607,287		-		-		-			-			-		-		15,182		-		-		-			-
Issuance of common stock from option exercise		-		-		-		-		-		-		332,730		-		377		-			377			-		-		8,318		-		377		-			377
Fair value of common shares issued for services		-		-		-		-		-		-		1,813,251		-		1,461		-			1,461			-		-		45,331		-		1,461		-			1,461
Fair value of common shares issued to settle accrued expenses		-		-		-		-		-		-		477,038		-		450		-			450			-		-		11,926		-		450		-			450
Fair value of vested restricted stock awards, stock options and warrants		-		-		-		-		-		-		587,347		-		2,163		-			2,163			-		-		14,684		-		2,163		-			2,163
Net loss		-		-		-		-		-		-		-		-		-		(21,391	)		(21,391	)		-		-		-		-		-		(21,391	)		(21,391	)
Balance as of September 30, 2022		-	$	-		100	$	-		-	$	-		102,604,851	$	10	$	153,940	$	(137,418	)	$	16,532
Balance at September 30, 2022																										3	$	-		2,565,121	$	1	$	153,949	$	(137,418	)	$	16,532
Balance																										3	$	-		2,565,121	$	1	$	153,949	$	(137,418	)	$	16,532

~~For~~See accompanying notes to the ~~three months ended September 30, 2022:~~condensed consolidated financial statements

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 as of June 30, 2022 - $ - 100 $ - - $ - 101,958,787 $ 10 $ 152,910 $ (129,390 ) $ 23,530
Fair value of common shares issued for services - - - - - - 521,951 - 335 - 335
Fair value of vested restricted stock awards, stock options and warrants - - - - - - 124,113 - 695 - 695
Net loss - - - - - - - - - (8,028 ) (8,028 )
Balance as of September 30, 2022 - $ - 100 $ - - $ - 102,604,851 $ 10 $ 153,940 $ (137,418 ) $ 16,532

~~For the nine months ended September 30, 2021:~~VERB TECHNOLOGY COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

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 as of 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 - - - - - - 11,915,000 2 18,849 - 18,851
Issuance of common stock from warrant exercise - - - - - - 2,254,411 - 2,784 - 2,784
Issuance of common stock from option exercise - - - - - - 509,465 - 569 - 569
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 (2,006 ) - - - - - 1,978,728 - 348 - 348
Fair value of warrants issued to Series A preferred stockholders – deemed dividend - - - - - - - - (348 ) - (348 )
Fair value of common shares issued for services - - - - - - 1,198,610 - 1,926 - 1,926
Fair value of common shares issued to settle accounts payable - - - - - - 10,500 - 19 - 19
Fair value of vested restricted stock awards - - - - - - 889,212 - 1,285 - 1,285
Fair value of vested stock options and warrants - - - - - - - - 1,234 - 1,234
Extinguishment of derivative liability upon exercise of warrants - - - - - - - - 4,513 - 4,513
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 - - - - - - - - - (28,962 ) (28,962 )
Balance as of September 30, 2021 - $ - 100 $ - - $ - 70,169,666 $ 7 $ 124,906 $ (110,503 ) $ 14,410

~~For the three months ended September 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 as of June 30, 2021 1,706 $ - 100 $ - - $ - 63,795,968 $ 6 $ 115,179 $ (101,698 ) $ 13,487
Sale of common stock from public offering - - - - - - 2,540,000 1 4,721 - 4,722
Issuance of common stock from warrant exercise - - - - - - 1,217,811 - 1,681 - 1,681
Conversion of Series A Preferred to common stock (1,706 ) - - - - - 1,706,000 - 348 - 348
Fair value of warrants issued to Series A preferred stockholders – deemed dividend - - - - - - - - (348 ) - (348 )
Fair value of common shares issued for services - - - - - - 81,143 - 157 - 157
Fair value of common shares issued to settle accounts payable - - - - - - 10,500 - 19 - 19
Fair value of vested restricted stock awards - - - - - - 641,509 - 380 - 380
Fair value of vested stock options and warrants - - - - - - - - 364 - 364
Extinguishment of derivative liability upon exercise of warrants - - - - - - - - 2,213 - 2,213
Fair value of common shares from option exercise - - - - - - 176,735 - 192 - 192
Issuance of common stock from option exercise - - - - - - 176,735 - 192 - 192
Net loss - - - - - - - - - (8,805 ) (8,805 )
Balance as of September 30, 2021 - $ - 100 $ - - $ - 70,169,666 $ 7 $ 124,906 $ (110,503 ) $ 14,410

	2023			2022
	Nine Months Ended September 30,
	2023			2022

Operating Activities:
Net loss	$	(19,079	)	$	(21,391	)
Loss from discontinued operations, net of tax		7,122			7,244

Adjustments to reconcile net loss to net cash used in operating activities, net of discontinued operations:
Share-based compensation		1,985			3,668
Amortization of debt discount		238			238
Amortization of debt issuance costs		182			367
Change in fair value of derivative liability		(210	)		(2,360	)
Depreciation and amortization		1,730			524
Finance costs		1,239			-
Gain on lease termination		(263	)		-
Loss on disposal of property and equipment		-			14
Effect of changes in assets and liabilities, net of discontinued operations:
Prepaid expenses and other current assets		52			(161	)
Operating lease right-of-use assets		170			191
Other assets		13			-
Accounts payable, accrued expenses, and accrued interest		265			1,089
Deferred incentive compensation		-			(377	)
Operating lease liabilities		(63	)		(269	)
Net cash used in operating activities attributable to continuing operations		(6,619	)		(11,223	)
Net cash used in operating activities attributable to discontinued operations		(1,855	)		(4,752	)

Investing Activities:
Capitalized software development costs		(239	)		(4,299	)
Purchases of property and equipment		(22	)		(20	)
Purchases of intangible assets		(14	)		(82	)
Net cash used in investing activities attributable to continuing operations		(275	)		(4,401	)
Net cash provided by (used in) investing activities attributable to discontinued operations		4,750			(1	)

Financing Activities:
Proceeds from sale of common stock		6,628			20,150
Proceeds from convertible notes payable		-			6,000
Payment of convertible note payable – related party		(40	)		-
Payment of notes payable		(383	)		-
Payment of convertible notes payable		(1,350	)		(2,740	)
Proceeds from option exercise		-			377
Payment for debt issuance costs		-			(445	)
Net cash provided by financing activities attributable to continuing operations		4,855			23,342
Net cash used in financing activities attributable to discontinued operations		(2,367	)		(2,981	)

Net change in cash		(1,511	)		(16	)

Cash - beginning of period		2,429			937

Cash - end of period	$	918		$	921

See accompanying notes to the condensed consolidated financial statements

VERB TECHNOLOGY COMPANY, INC.

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

~~(unaudited)~~

2022 2021
Nine Months Ended September 30,
2022 2021

Operating Activities:
Net loss $ (21,391 ) $ (28,962 )
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation 3,668 4,652
Amortization of debt discount 1,214 1,537
Amortization of debt issuance costs 390 -
Change in fair value of derivative liability (2,360 ) 2,086
Debt extinguishment, net - (1,112 )
Depreciation and amortization 1,594 1,214
Loss on lease termination 22 -
(Gain)/loss on disposal of property and equipment 10 (6 )
Allowance for doubtful accounts 405 151
Effect of changes in assets and liabilities:
Accounts receivable (461 ) (721 )
Prepaid expenses and other current assets 146 (301 )
Operating lease right-of-use assets 222 424
Other assets (13 ) -
Accounts payable, accrued expenses, and accrued interest 790 910
Contract liabilities 563 631
Deferred incentive compensation (377 ) (521 )
Operating lease liabilities (397 ) (493 )
Net cash used in operating activities (15,975 ) (20,511 )

Investing Activities:
Proceeds from sale of property and equipment 3 11
Capitalized software development costs (4,299 ) (41 )
Purchases of property and equipment (24 ) (26 )
Purchases of intangible assets (82 ) -
Net cash used in investing activities (4,402 ) (56 )

Financing Activities:
Proceeds from sale of common stock 20,150 18,851
Proceeds from convertible notes payable 6,000 -
Advances on future receipts 2,500 7,368
Proceeds from warrant exercise - 2,784
Payments of convertible notes payable (2,740 ) -
Payments of advances on future receipts (5,381 ) (7,162 )
Proceeds from option exercise 377 569
Payments for debt issuance costs (545 ) -
Net cash provided by financing activities 20,361 22,410

Net change in cash (16 ) 1,843

Cash - beginning of period 937 1,815

Cash - end of period $ 921 $ 3,658

~~See accompanying notes to the condensed consolidated financial statements~~

~~VERB TECHNOLOGY COMPANY, INC.~~

Notes to Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 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.

Through June 13, 2023 of the ~~context otherwise requires.~~nine months ended September 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.

Background

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 Assets”) 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. The sale of the SaaS Assets was undertaken to allow the Company to focus its resources on its burgeoning MARKET.live business unit which it expects over time will create greater shareholder value.

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 featured in the livestream 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 ~~this Quarterly Report,~~ the ~~terms “client”~~experience, the shopping cart follows shoppers seamlessly from event to event, shoppable video to shoppable video, host to host, store to store and ~~“customer” are used interchangeably.~~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 TikTok to stay on that site and actually check out through that site, eliminating the friction or reluctance of users to leave their TikTok feed in order to complete their purchase on MARKET.live. Our technology integration allows the purchase data to flow back through MARKET.live and to the individual vendors and stores on MARKET.live seamlessly for fulfillment of the orders.

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. This program is only open to those individuals with a large, verifiable social media following. Participants selected for the Creators on MARKET.live program can choose to feature their favorite products from MARKET.live stores and promote and sell them to their fans, followers and customers. The Company has recently launched a similar program on TikTok for TikTok creators and influencers.

The Company ishas also recently launched a ~~SaaS applications platform developer. Our platform is comprised of a suite of interactive video-based sales enablement business software products marketed~~drop ship program on MARKET.live, offered on a subscription ~~basis. Our applications, available~~basis, designed specifically for those individuals interested in ~~both mobile~~starting their own ecommerce business, who do not yet have a large base of fans or followers. Through this new program, entrepreneurs can quickly and ~~desktop versions, are offered as~~easily establish their own storefronts, essentially their own website, by choosing the products they love from a ~~fully integrated suite, as well as~~carefully curated list of products by category (based on their selected subscription package). They can easily import the products into their storefront and launch their own ecommerce business through livestream shopping events broadcast live on MARKET.live and simulcast on other social platforms. Subscribers do not have to purchase inventory and product fulfillment is handled for them for no additional cost. This program represents 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 applicationvery low cost, low risk option for professional sports teams, small business and solopreneurs, with seamless synchronization with Salesforce, that also comes bundled with verbLIVE, and verbMAIL, our interactive video-based sales communication tool integrated into Microsoft Outlook. MARKET.livethose who want to start their own ecommerce business. The Company is ~~our multi-vendor, multi-presenter, livestream social shopping platform that combines ecommerce and entertainment.~~planning a national television commercial campaign to promote this new program.

~~The Company~~All livestream events are recorded and available to watch in each vendors’ personally branded stores on MARKET.live for those fans, followers and customers to return after the livestream events, 24/7, to browse and purchase any of the featured products. All the recorded livestream videos are indexed for easy browsing and remain shoppable. Depending on the products chosen, participants in the Creator 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 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 and will also ~~provides certain non-digital services to some~~earn a percentage of ~~its enterprise clients such as printing and fulfillment services.~~the sales they generate, which varies based on the subscription package.

~~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~~Going Concern

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 filed with the SEC on March 31, 2022 (the “2021 Annual Report”). The consolidated balance sheet as of December 31, 2021 included herein was derived from the audited consolidated financial statements as of that date.

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.

~~Principles of Consolidation~~

~~Going Concern~~

~~The accompanying condensed~~ 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 ~~condensed~~ consolidated financial statements, during the nine months ended September 30, ~~2022,~~2023, the Company incurred a net loss from continuing operations of $~~21,391~~11,957 and used cash in continuing operations of $~~15,975~~6,619. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date ~~these~~of the financial statements ~~were~~being issued. ~~The Company’s independent registered public accounting firm, in its report on~~As a result, the Company’s ~~consolidated financial statements for the year ended December 31, 2021, has also expressed substantial doubt about the Company’s ability to continue~~continuation as a going ~~concern.~~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 September 30, 2023, the Company had cash of $918.

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.

During September 2023, the Company restarted its’ at-the-market (“ATM”) issuance sales agreements with Truist Securities, Inc. pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-252167). As of September 30, 2023, the Company has issued 105,300 shares of the Company’s common stock pursuant to this agreement, resulting in proceeds of $50, net of offering costs of $27. Subsequent to September 30, 2023, the Company issued 6,498,591 shares of its common stock and received $2,086 of net proceeds associated with ATM issuances.

Debt financing:

On January 12, 2022, the Company entered into a common stock purchase agreement (the “January Purchase Agreement”) with Tumim Stone Capital LLC (the “Investor”). 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 $~~50,000~~ ~~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 issued to the Investor as consideration for its commitment to purchase shares of Common Stock under the January Purchase Agreement. In connection with the January Purchase Agreement, the Company is restricted 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.

~~On January 12, 2022, the Company also~~ 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. ~~The~~During the year ended December 31, 2022, the Company repaid $4,950 in principal payments and $357 of accrued interest to January Note ~~Purchase Agreement prohibits~~Holders pursuant to the terms of the Notes. On January 26, 2023, the Company ~~from entering into an agreement to effect any issuance~~repaid the remaining principal balance of ~~Common Stock involving a Variable Rate Transaction (as defined therein) during the term~~$1,350 and $208 of ~~the agreement, subject to certain exceptions set forth therein.~~ ~~The January Note Purchase Agreement also gives~~accrued interest under 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~~Offering dated January ~~Note Holders as described below.~~12, 2022.

~~On April 20, 2022, the Company entered into a securities purchase agreement, which provides for the sale and issuance by the Company of an aggregate of (i)~~ ~~14,666,667~~ ~~shares of Common Stock, 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 “April Registered Direct Offering”). As a result of this transaction, certain of the Company’s Series A warrants which previously had exercise prices ranging from $~~1.10~~ ~~to $2.10~~ ~~per share had the exercise prices reduced to $0.75~~ ~~per share. The Company used a portion of the proceeds from the April Registered Direct Offering to repay $1,650~~ ~~in principal amount of the Notes issued pursuant to the January Note Offering.~~

~~As of~~In September ~~30, 2022, the Company had cash of $921~~.

~~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 approximately $1,500~~ 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 September 30, 2022, the Company has yet to receive the funds and accordingly, the condensed consolidated financial statements do not reflect the effect of this credit.

~~Prior to September 30,~~ 2022, the U.S. Small Business Administration ~~(“SBA”)~~ approved ~~an additional~~a loan of $350, which, as of November 10, 2023, the Company ~~expects to receive before the end of 2022.~~

~~On October 25, 2022, the Company entered into a securities purchase agreement (the “October Purchase Agreement”), which provides for the sale and issuance by the Company of an aggregate of (i)~~ ~~12,500,000~~ ~~shares of Common Stock, at a purchase price of $0.32~~ ~~per share, and (ii) warrants to purchase~~ ~~12,500,000~~ ~~shares of the common stock at an exercise price of $0.34~~ ~~per share, for aggregate gross proceeds of $4,000~~ before deducting placement agent commissions and other offering expenses (the “October Registered Direct Offering”). As a result of this transaction, certain warrants which previously had an exercise price of $~~0.75~~ ~~per share, had the exercise price reduced to $0.34~~ per share. Further, in connection with the October Purchase Agreement, the Company is restricted from (i) issuing or filing any registration statement to offer the sale of any Common Stock or securities convertible into or exercisable for shares of Common Stock until 75 days after the date thereof; and (ii) 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. As a result of this transaction, the Company paid $~~1,172~~ ~~towards principal and accrued interest on the Notes. The Company and the January Note Holders also agreed to interest only payments with a final principal payment of $2,545~~ ~~due on the maturity date.~~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~~Nine 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.~~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,~~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 nine months ended September 30, 2023.

During the nine months ended September 30, 2023, the Company paid $375 in cash and $4,092 in shares of its common stock. As of September 30, 2023 and December 31, 2022, the outstanding balance of the November Notes amounted to $2,647 and $5,544, respectively. Subsequent to September 30, 2023, the Company issued 2,040,922 shares of its common stock pursuant to an exchange agreement in exchange for a reduction of $655 on the outstanding balance of the November Notes.

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 September 30, 2023, the outstanding balance of the note was $269 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. Subsequent to September 30, 2023, the Company repaid all of the advances on future receipts.

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 September 30, 2023, and December 31, 2022, the Company had a 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 being classified as a long-term asset in the condensed consolidated balance sheet at September 30, 2023.

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 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,~~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.

~~For additional~~Economic Disruption

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 ~~refer~~and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to ~~Note 1~~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, 2022 filed with the SEC on April 17, 2023. The condensed consolidated balance sheet as of December 31, 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 ~~section titled “Risk Factors,”~~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 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 ~~2021 Annual Report.~~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.

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. Certain prior period amounts have been reclassified to conform to the current year presentation within the condensed consolidated balance sheets as of September 30, 2023 and 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.

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 nine months ended September 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:

~~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 and Creator programs. MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs and its Creator program.

	d.	The Company’s recently launched TikTok store and affiliate program.

	b.e.	~~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, collectability is reasonably assured, 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.

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 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 earns a certain percentage for customer referrals and merchandise sales as well as cart site design fees, 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. 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 nine months ended September 30, 2022 and 2021 were immaterial.

Revenue during the three and nine months ended September 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.

~~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 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.

~~Goodwill and~~ Intangible Assets

~~Management~~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 nine months ended September 30, 2023.

Goodwill

In accordance with FASB ASC 350, Intangibles-Goodwill and Other, the Company reviews goodwill and ~~indefinite lived~~indefinite-lived intangible assets for impairment at least annually or whenever events or circumstances indicate a potential impairment. ~~Management reviews all finite lived~~The Company’s impairment testing is performed annually at December 31 (its fiscal year end). Impairment of goodwill and indefinite-lived intangible assets ~~for impairment when circumstances indicate that their carrying values may not be recoverable.~~

Asis determined by comparing the fair value of ~~September 30, 2022, management concluded that there were no impairment indicators. If economic uncertainty increases and/or the global economy worsens,~~ the Company’s ~~business, financial condition and results~~reporting unit to the carrying value of ~~operations may be sufficiently impacted to result in future impairment charges~~the underlying net assets in the ~~short-term. Management will continue~~reporting unit. If the fair value of the reporting unit is determined to ~~monitor~~be less than the ~~effects that macroeconomic conditions have on~~carrying value of its ~~business~~net assets, goodwill is deemed impaired and ~~operations and will review~~an impairment ~~indicators~~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 ~~upcoming months.~~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.

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 ~~or conversion.~~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 September 30, ~~2022,~~2023, and ~~2021,~~2022, the Company had total outstanding options of ~~5,252,119~~2,056,882 and ~~5,528,405~~131,303, respectively, ~~outstanding~~and warrants of ~~25,651,407~~919,664 and ~~11,008,302~~641,285, respectively, and outstanding restricted stock ~~units~~awards of ~~2,071,849~~155,572 and ~~2,109,999~~51,796, respectively, the Notes from the January Note Offering that ~~are~~were convertible into ~~1,209,610~~0 and 030,240 shares at $~~3.00~~120.00 per share, respectively, and convertible notes issued to a related party that ~~are~~were convertible into ~~808,900~~21,265 and ~~742,278~~20,223 shares at $~~1.03~~41.20 per share, respectively, which were ~~all~~ excluded from the computation of net loss per share because they are ~~anti-dilutive due to the Company’s net loss position during the reported periods.~~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 the three months ended September 30, 2022, we had one customer that accounted for~~ 11~~% of our revenues. During the three months ended September 30, 2021, we had no customers that accounted for~~ ~~10%~~ ~~of our revenues. During the nine months ended September 30, 2022 and 2021, we had no customers that accounted for~~ 10~~% of our revenues.~~

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~~vendors. The details of these significant customers 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.

~~As of September 30, 2022 and December 31, 2021, we had no customers that accounted for~~ 10~~% of our accounts receivable.~~

~~The Company also evaluates the concentration of risk associated with key vendors. For the three and nine months ended September 30, 2022, we had two~~ vendors ~~that accounted for~~ 54~~% and~~ 45~~% and~~ 11~~% and~~ 16~~%, respectively, of our purchases individually and~~ 65~~% and~~ 61%are presented in the ~~aggregate. For the three and nine months ended September 30, 2021, we had two vendors that accounted for~~ 17~~% and~~ 31~~% and~~ 16~~% and~~ 20~~%, respectively, of our purchases individually and~~ 48~~% and~~ 36~~% in the aggregate. As of September 30, 2022 and December 31, 2021, we had one vendor that accounted for~~ 42~~% and~~ 40~~%, respectively, of accounts payable.~~

~~Reclassification Adjustment~~

~~The Company reclassified $2,288~~ ~~from net cash used in investing activities to net cash used in operating activities~~following table for the nine months ended September 30, ~~2021. This amount is now reported as accrued software development costs in the supplemental non-cash investing~~2023 and ~~financing activities as part of the supplemental cash flow information.~~2022:

SCHEDULE OF CONCENTRATION RISK

	Nine Months Ended September 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 28% of its purchases individually and in the aggregate	Two vendors that accounted for 27% and 61%, respectively, of its purchases individually and in the aggregate

Supplemental Cash Flow Information

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION

	2022		2021		2023		2022
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2023		2022
Supplemental disclosures of cash flow information:
Cash paid for interest	$	203	$	112	$	242	$	203
Cash paid for income taxes		1		1	$	2	$	1

Supplemental disclosure of non-cash investing and financing activities:
Fair value of derivative liability extinguished		-		4,513
Fair value of common shares issued to settle accounts payable		-		19
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	$	346	$	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						4,092		-
Fair value of common stock received in exchange for employee’s payroll taxes		8		130		-		8
Fair value of common stock issued for future services		-		164
Accrued software development costs						-		291
Discount recognized from notes payable						-		300
Derecognition of operating lease right-of-use assets						1,186		-
Derecognition of operating lease liabilities						1,870		-
Derecognition of other assets and liabilities related to lease termination						421		-
Recognition of operating lease right-of-use asset and related lease liability						245		-
Supplemental disclosure of non-cash investing and financing activities attributable to discontinued operations:
Discount recognized from advances on future receipts		900		2,484		558		900
Fair value of debt forgiveness		-		1,400
Fair value of warrants issued to Series A preferred stockholders – deemed dividend		-		348
Fair value of common stock issued to settle lawsuit		-		678
Accrued software development costs		291		2,288
Discount recognized from convertible notes payable		300		-
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.

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 ~~2021-08 effective~~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.live, a livestream ecommerce platform, and has capitalized $~~6,838~~7,131 and $~~4,348~~7,108 of internal and external development costs as of September 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.live. The Primary Contractor’s fees for developing such components, including the license fee, is $5,750. The Primary Contractor was paid an additional $500 bonus in April 2022 for services rendered pursuant to the license and service agreement. In addition, as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had paid or accrued $~~524~~605 and $~~248~~604, respectively, of other capitalized software development costs.

For the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the Company amortized $~~394~~538 and $0394, respectively, and $~~394~~1,615 and $0394, respectively.

Capitalized software development costs, net consisted of the following:

SCHEDULE OF CAPITALIZED SOFTWARE DEVELOPMENT COSTS

	September 30, 2022			December 31, 2021		September 30, 2023			December 31, 2022

Beginning balance	$	4,348		$	-	$	6,176		$	4,348

Additions		2,490			4,348		23			2,760
Amortization		(394	)		-		(1,615	)		(932	)
Ending balance	$	6,444		$	4,348	$	4,584		$	6,176

The expected future amortization expense for capitalized software development costs as of September 30, 2023, is as follows:

SCHEDULE OF ESTIMATED AMORTIZATION EXPENSE

Year ending	Amortization
2023 remaining	$	594
2024		2,377
2025		1,445
2026		168
Total amortization	$	4,584

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 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 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 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 ~~SPA.~~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.

4. ~~INTANGIBLE~~ ASSETS AND LIABILITIES HELD FOR SALE

~~Intangible~~On June 13, 2023, the Company entered into a definitive agreement to sell all of its SaaS operating assets ~~net consisted~~and liabilities to SW Sales for $6,500, including $4,750 of cash due upon closing. The operations of the ~~following:~~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.

~~SCHEDULE OF INTANGIBLE ASSETS~~

September 30,
2022

December 31,
2021

Amortizable finite-lived intangible assets $ 7,399 $ 7,317
Accumulated amortization (4,875 ) (3,806 )
Finite-lived intangible assets, net 2,524 3,511

Indefinite-lived intangible assets 442 442

Intangible assets, net $ 2,966 $ 3,953

~~Amortizable finite-lived intangible~~The assets ~~are being amortized over a period~~and liabilities held for sale were as follows as of December 31, 2022

~~three~~SCHEDULE OF ASSETS AND LIABILITIES HELD FOR SALE

	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

~~five years. There were~~ no ~~impairment charges incurred in~~The following information presents the ~~periods presented. During~~net revenues and net loss of the SaaS business for the three and nine months ended September 30, ~~2022~~2023 and ~~2021, the Company recorded amortization expense of $352~~ ~~and $355, respectively, and $1,069~~ ~~and $1,080, respectively.~~2022:

~~The expected future amortization expense for amortizable finite-lived intangible assets as of September 30, 2022, is as follows:~~

SCHEDULE OF ~~ESTIMATED AMORTIZATION EXPENSE~~NET REVENUES AND NET LOSS OF THE SAAS BUSINESS

	2023			2022
	Three Months Ended September 30,
	2023			2022

Net revenues	$	-		$	2,184

Net loss	$	(168	)	$	(2,375	)

Year ending Amortization
2022 remaining $ 354
2023 1,386
2024 573
2025 211
Total amortization $ 2,524

	2023			2022
	Nine Months Ended September 30,
	2023			2022

Net revenues	$	3,814		$	7,274

Net loss	$	(7,122	)	$	(7,244	)

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 $543 and 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~~.

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.

On July 3, 2023, the Company entered into a lease termination agreement with its landlord related to the office lease in Newport Beach, California. Pursuant to terms of the lease termination agreement, the Company vacated the property by August 15, 2023. A gain on lease termination of $263 was recorded within other income (expense), net in the condensed consolidated statement of operations for the three and nine months ended September 30, 2023.

On August 8, 2023, the Company entered into a studio office lease agreement for its office in California. The agreement requires the Company to pay $8 per month for a term through September 30, 2026. In accordance with ASC 842, the Company recognized a right-of-use asset and the related lease liability of $245.

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
	Nine Months Ended September 30,
	2023			2022
Lease cost
Operating lease cost (included in general and administrative expenses in the Company’s statement of operations)	$	227		$	285

Other information
Cash paid for amounts included in the measurement of lease liabilities	$	121		$	334
Weighted average remaining lease term – operating leases (in years)		3.00			4.67
Weighted average discount rate – operating leases		9.0	%		4.0	%

2022 2021
Nine Months Ended September 30,
2022 2021
Lease cost
Operating lease cost (included in general and administrative expenses in the Company’s condensed consolidated statements of operations) $ 373 $ 524

Other information
Cash paid for amounts included in the measurement of lease liabilities $ 458 $ 593
Weighted average remaining lease term – operating leases (in years) 3.99 4.15
Weighted average discount rate – operating leases 4.2 % 4.0 %

SCHEDULE OF OPERATING LEASES ASSETS AND LIABILITIES

	September 30, 2023		December 31, 2022
Operating leases
Right-of-use assets	$	243	$	1,354

Short-term operating lease liabilities	$	65	$	355
Long-term operating lease liabilities		184		1,581
Total operating lease liabilities	$	249	$	1,936

September 30, 2022 December 31, 2021
Operating leases
Right-of-use assets $ 1,624 $ 2,177

Short-term operating lease liabilities $ 481 $ 592
Long-term operating lease liabilities 1,705 2,299
Total operating lease liabilities $ 2,186 $ 2,891

SCHEDULE OF PRESENT VALUE OF LEASE LIABILITIES

Year ending	Operating Leases			Operating Leases
2022 remaining	$	150
2023		583
2023 remaining				$	23
2024		472			92
2025		484			96
2026 and thereafter		705
2026					75
2027 and thereafter					-
Total lease payments		2,394			286
Less: Imputed interest/present value discount		(208	)		(37	)
Present value of lease liabilities	$	2,186		$	249

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 September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

SCHEDULE OF ADVANCES ON FUTURE RECEIPTS

Note	Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance as of September 30, 2022			Balance as of December 31, 2021			Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at September 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		-			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		269			-
Note 4	August 25, 2022	May 11, 2023		26	%		3,400		2,971			-
Total						$	10,017		2,971			4,981							$	5,830		269			1,989
Debt discount									(697	)		(800	)									(41	)		(311	)
Debt issuance costs									(77	)		-										(9	)		(37	)
Net								$	2,197		$	4,181									$	219		$	1,641

~~Note 1~~

~~On October 29, 2021, the Company received secured advances from an unaffiliated third party totaling $2,015~~ ~~for the purchase of future receipts/revenues of $2,120. During the nine months ended September 30, 2022, the Company paid $1,270~~ ~~and amortized $~~41 ~~of the debt discount. The note was paid in full on April 28, 2022. As of September 30, 2022, the outstanding balance of the note was $~~0 ~~and the unamortized balance of the debt discount was $~~0.

Note 2

~~On October 29, 2021, the Company received secured advances from an unaffiliated third party totaling $2,744~~ ~~for the purchase of future receipts/revenues of $3,808. During the nine months ended September 30, 2022, the Company paid $2,993~~ ~~and amortized $694~~ ~~of the debt discount. The note was paid in full on August 17, 2022. As of September 30, 2022, the outstanding balance of the note was $~~0 ~~and the unamortized balance of the debt discount was $~~0.

~~Note 3~~

~~On December 23, 2021, the Company received secured advances from an unaffiliated third party totaling $651~~ ~~for the purchase of future receipts/revenues of $689. During the nine months ended September 30, 2022, the Company paid $689~~ ~~and amortized $~~36 ~~of the debt discount. The note was paid in full on June 22, 2022. As of September 30, 2022, the outstanding balance of the note was $~~0 ~~and the unamortized balance of the debt discount was $~~0.

~~Note 4~~1

On August 25, 2022, the Company received secured advances from an unaffiliated third party totaling $2,500 for the purchase of future receipts/revenues of $3,400, resulting in a debt discount of $900. ~~In connection with the secured advance, the~~The Company also paid $100 of debt issuance costs. The debt discount and debt issuance costs ~~which will be~~were being amortized over the term of the secured advance using the effective interest rate method. ~~During the nine months ended September 30, 2022, the Company paid $429~~ ~~and amortized $203~~ ~~and $~~23 ~~of the debt discount and debt issuance costs, respectively.~~ As of ~~September 30,~~December 31, 2022, the outstanding balance of the note was $~~2,971~~1,782 and the unamortized balance of the debt discount and debt issuance costs were $~~697~~267 and $7730, respectively. During the nine months ended September 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 25, 2022, the Company received secured advances from an unaffiliated third party totaling $225 for the purchase of future receipts/revenues of $322, resulting in a debt discount of $97. The Company also paid $16 of debt issuance costs. The debt discount and debt issuance costs were being amortized over the term of the secured advance using the effective interest rate method. As of December 31, 2022, the outstanding balance of the note was $207 and the unamortized balance of the debt discount and debt issuance costs were $44 and $7, respectively. During the nine months ended September 30, 2023, the 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 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 February 16, 2023, the Company modified and combined the unpaid balances of the previous two advances (see Notes 1 and 2 above) 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. 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 nine months ended September 30, 2023, the Company paid $1,839 and amortized $517 and $81 of the debt discount and debt issuance costs, respectively. As of September 30, 2023, the outstanding balance of the note was $269, and the unamortized balance of the debt discount and debt issuance costs were $41 and $9 respectively.

See Note 14 for Subsequent Events.

7. CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

The Company has the following outstanding notes payable as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

SCHEDULE OF CONVERTIBLE NOTES PAYABLE ~~RELATED PARTIES~~AND NOTES PAYABLE

Note	Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance as of September 30, 2022			Balance as of December 31, 2021			Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at September 30, 2023			Balance at December 31, 2022
Related party convertible note payable (A)	December 1, 2015	April 1, 2023		12.0	%	$	1,249	$	725		$	725
Related party convertible note payable (B)	April 4, 2016	June 4, 2021		12.0	%		343		40			40
Related party note payable (A)														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
Note payable (C)	May 15, 2020	May 15, 2050		3.75	%		150		150			150		May 15, 2020	May 15, 2050		3.75	%		150		142			150
Convertible Notes Due 2023 (D)	January 12, 2022	January 12, 2023		6.0	%	$	6,300		3,560			-		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		2,184			5,470
Debt discount									(61	)		-										(171	)		(408	)
Debt issuance costs									(93	)		-										(127	)		(309	)
Total notes payable									4,321			915										2,753			7,018
Non-current									(150	)		(875	)									(142	)		(1,215	)
Current								$	4,171		$	40									$	2,611		$	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 $~~1.03~~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 September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the outstanding balance under the note was $876 and $~~725~~811, respectively. As of September 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents accrued interest was $151. and $86, respectively. See Note 14 for Subsequent Events.

	(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 $~~1.03~~41.20, which was the closing price of the common stock on the amendment date. On September 20, 2023, the Company repaid all of the outstanding principal and accrued interest amounting to $48. As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the outstanding balance under the note was $0 and $4045, respectively. As of September 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents accrued interest was $0. and $5, respectively.

	(C)	On May 15, 2020, the Company executed an unsecured loan with the SBA under the Economic Injury Disaster Loan program in the amount of $150. Installment payments, including principal and interest, began on October 26, 2022. ~~Prior to~~In September ~~30,~~ 2022, the SBA approved an additional loan of $350 ~~which is expected to be~~. As of November 10, 2023, the Company has not received ~~before the end of 2022.~~these funds. As of September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the outstanding balance ofunder the note ~~amounted to~~was $142 and $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~~“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.~~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. 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 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 nine months ended September 30, 2022, the Company amortized $239~~ ~~of debt discount and $367~~ ~~of debt issuance costs.~~ As of ~~September 30,~~December 31, 2022, the amount of unamortized debt discount and debt issuance costs was $616 and $9310, respectively. During the nine months ended September 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 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 nine 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.

		In connection with the November Note Offering, the Company incurred $335 of debt issuance costs. The debt issuance costs and 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 nine months ended September 30, 2023, the Company paid $375 in cash and $4,092 in shares; amortized $231 of debt discount and $172 of debt issuance costs. As of September 30, 2023, the amount of unamortized debt discount and debt issuance costs was $171 and $127, 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 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 statement of operations for the nine months ended September 30, 2023.

		As of September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the outstanding balance of the November Notes amounted to $~~3,560~~2,647, and $05,544, respectively. ~~During the nine months ended September 30, 2022, the Company repaid $2,740~~ ~~in principal payments to January Note Holders pursuant to the terms of the Notes.~~

		~~On October 28, 2022, the Company paid $~~
~~1,172~~ ~~towards principal and accrued interest on the Notes. The Company and January~~		See Note ~~Holders agreed to interest only payments with a final principal payment of $2,545~~ ~~due on the maturity date.~~14 for Subsequent Events.

The following table provides a breakdown of interest expense for the periods presented:

SCHEDULE OF INTEREST EXPENSE

	2022		2021		2023		2022
	Three Months Ended September 30,				Three Months Ended September 30,
	2022		2021		2023		2022

Interest expense – amortization of debt discount	$	306	$	497	$	75	$	67
Interest expense – amortization of debt issuance costs		126		-		55		103
Interest expense – other		118		28		89		119

Total interest expense	$	550	$	525	$	219	$	289

Total interest expense for notes payable to related parties (see Notes A and B above) was $23 and $2723 for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company paid $08 and $780 in interest to related parties for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

The following table provides a breakdown of interest expense for the periods presented:

	2022		2021		2023		2022
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2023		2022

Interest expense – amortization of debt discount	$	1,214	$	1,537	$	238	$	238
Interest expense – amortization of debt issuance costs		390		-		182		367
Interest expense – other		344		92		569		345

Total interest expense	$	1,948	$	1,629	$	989	$	950

Total interest expense for notes payable to related parties (see Notes A and B above) was $69 and $8869 for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company paid $08 and $~~112~~0 in interest to related parties for the nine months ended September 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.

The derivative liabilities were valued using a Binomial pricing model with the following average assumptions:

SCHEDULE OF DERIVATIVE LIABILITY USING BINOMIAL PRICING MODEL ASSUMPTIONS

	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022
Stock Price	$	0.47		$	1.24		$	0.70		$	6.40
Exercise Price	$	0.75		$	1.11		$	8.00		$	13.60
Expected Life		2.23			2.97			1.23			1.98
Volatility		101	%		119	%		203	%		107	%
Dividend Yield		0	%		0	%		0	%		0	%
Risk-Free Interest Rate		4.23	%		0.97	%		5.46	%		4.41	%
Total Fair Value	$	795		$	3,155		$	12		$	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 nine months ended September 30, 2023 and 2022, the Company recorded a gain of $210 and $2,360 respectively to account for the changes in the fair value of these derivative ~~liabilities.~~

~~During~~liabilities during the ~~nine months ended~~period. At September 30, ~~2021, the Company recorded expense of $2,086~~ ~~to account for the changes in the fair value of these derivative liabilities. In addition,~~ ~~1,829,190~~ ~~shares of the Series A warrants that were accounted for as a derivative liability were exercised and~~ ~~33,334~~ ~~shares were forfeited. As a result, the Company computed~~2023, the fair value of the ~~corresponding~~ derivative liability ~~one last time which~~ amounted to $~~4,513~~12 ~~and the extinguishment was accounted for as part of equity.~~.

The details of derivative liability transactions for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 are as follows:

SCHEDULE OF DERIVATIVE LIABILITY TRANSACTIONS

	2022			2021			2023			2022
	Nine Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2023			2022
Beginning balance	$	3,155		$	8,266		$	222		$	3,155
Change in fair value		(2,360	)		2,086			(210	)		(2,360	)
Extinguishment		-			(4,513	)
Ending balance	$	795		$	5,839		$	12		$	795

9. COMMON STOCK

The Company’s common stock activity for the nine months ended September 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 as Part of ATM Agreement

In August 2021 and November 2021, the Company entered into two separate ATM issuance sales agreements (the “August 2021 ATM” and the “November 2021 ATM”, respectively) with Truist Securities, Inc., pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-252167). The August 2021 ATM was terminated in October 2021. In January 2022, the aggregate offering price of the shares of the Company’s common stock that may be sold under the November 2021 ATM was reduced from $30,000 to $7,300. In an ATM offering, the Company sells newly issued shares into the trading market through our designated sales agent at prevailing market prices.

During September 2023, the Company sold 105,300 shares and received net proceeds of $50.

Shares Issued for Services

During the nine months ended September 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 ~~the April Registered Direct Offering, which resulted in proceeds of $10,242, net of offering costs of $758~~.restricted stock units.

During the nine months ended September 30, ~~2022,~~2023, the Company issued ~~11,096,683~~1,925 shares of common stock ~~pursuant~~ to ~~the January Purchase Agreement, which resulted in proceeds of $~~employees associated with a special incentive program.

~~9,836, net of offering costs of $~~

~~197. In addition,~~On July 29, 2023, the Company issued ~~607,287~~2,948 shares of common stock ~~as a commitment fee in connection~~to Mr. Cutaia associated with the ~~consummation~~vesting of ~~the transactions contemplated by the January Purchase Agreement.~~restricted stock units.

~~During the nine months ended~~On September ~~30, 2022,~~5, 2023, the Company issued ~~1,813,251~~128,204 shares of common stock to certain ~~employees and~~ vendors for services rendered and to be rendered with an aggregate grant date fair value of $~~1,461~~200. These shares of common stock were valued based on the closing price of the Company’s common stock on the date of the issuance or the date the Company entered into the agreement related to the issuance.

Shares Issued for Settlements of Accrued Expenses

During the nine months ended September 30, ~~2022,~~2023, the Company issued ~~189,394~~93,190 shares of common stock to settle accrued expenses. The fair market value of the shares issued was based on the closing price of the Company’s ~~Chief Executive Officer in lieu~~common stock on the dates of each settlement, which amounted to $146.

Shares Issued for Settlement of Litigation

On September 19, 2023, the Company issued 183,486 shares to certain other investors to settle litigation, see Note 13. The fair market value of the ~~cash payment of a bonus accrued in a prior year, with an aggregate grant date fair value of $100~~shares issued was based on the closing price of the Company’s common stock on the date of ~~issuance.~~the settlement, which amounted to $200. A loss of $(200) was recorded within other income (expense), net in the condensed consolidated statement of operations for the three and nine months ended September 30, 2023. In exchange for the shares, 32,140 warrants were cancelled as part of the settlement agreement.

Shares Issued as Payment on Notes Payable

During the nine months ended September ~~30, 2022,~~2023, the Company issued ~~227,136~~3,307,745 shares to Streeterville in exchange for a reduction on the Company’s note payable outstanding balance with Streeterville amounting to $4,092.

Termination of Equity Line of Credit Agreement

On January 26, 2023, the Company terminated the January Purchase Agreement dated January 12, 2022, which provided for the sale by the Company of up to $50,000 of newly issued shares.

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 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 Reverse Stock Split, every forty (40) shares of the Company’s pre-Reverse Stock Split common stock were combined and reclassified into one share of common stock. Any fractional shares were rounded up to a whole share which resulted in the issuance of 31,195 shares 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 exercise price of such securities increased by a factor of forty effective as of April 18, 2023.

Equity Incentive Plan

At the Special Meeting of Stockholders, the stockholders of the Company approved an amendment to the Company’s 2019 Incentive Compensation Plan to increase the number of shares authorized under the plan by 15,000,000 shares of common stock to be authorized for awards granted under 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.~~plan.

~~During the nine months ended September 30, 2022, the Company issued~~ ~~587,347~~ ~~shares of common stock to certain officers, employees and directors associated with the vesting of restricted stock units.~~See Note 14 for Subsequent Events.

10. RESTRICTED STOCK UNITS

A summary of restricted stock unit activity for the nine months ended September 30, ~~2022,~~2023 is presented below.

SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY

Weighted-
Average
Grant Date
Shares Fair Value

Non-vested as of January 1, 2022 1,821,833 $ 1.41
Granted 1,334,270 1.17
Vested/deemed vested (587,347 ) 1.54
Forfeitures and other (496,907 ) 1.33
Non-vested as of September 30, 2022 2,071,849 $ 1.24

	Shares			Weighted- Average Grant Date Fair Value

Non-vested at January 1, 2023		89,898		$	29.04
Granted		284,761			0.93
Vested/deemed vested		(198,437	)		5.43
Forfeited		(20,650	)		40.49
Non-vested at September 30, 2023		155,572		$	6.57

~~During the nine months ended~~On September ~~30, 2022,~~28, 2023, the Company granted ~~1,334,270~~136,986 restricted stock units to ~~certain officers, employees and directors.~~ its interim Chief Financial Officer. The restricted stock units vest ~~on various dates from January 2023~~annually through ~~March 2026~~.September 28, 2027. These restricted stock units were valued based on the closing price of the Company’s common stock on the ~~respective dates~~date of issuance and had an aggregate grant date fair value of $~~1,561~~100, which is being amortized as share-based compensation expense over the ~~respective~~ vesting ~~terms.~~term.

The total fair value of restricted stock units that vested or deemed vested during the nine months ended September 30, 2023 was $1,077. The share-based compensation expense recognized relating to the vesting of restricted stock units for the three and nine months ended September 30, ~~2022, was~~2023 amounted to $~~311~~130 and $~~876~~970, respectively. As of September 30, ~~2022,~~2023 the ~~remaining share-based~~amount of unvested compensation ~~expense associated with previously issued~~related to issuances of restricted stock units was $~~1,741~~718 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.

11. STOCK OPTIONS

A summary of option activity for the nine months ended September 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 as of January 1, 2022 5,404,223 $ 1.72 2.24 $ 107
Granted 2,741,555 1.06 - -
Forfeited (2,560,929 ) 1.70 - -
Exercised (332,730 ) 1.13 - -
Outstanding as of September 30, 2022 5,252,119 $ 1.55 2.00 $ 19

Vested as of September 30, 2022 2,707,084 $ 1.81 $ -

Exercisable as of September 30, 2022 1,686,439 $ 2.22 $ -

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

Outstanding at January 1, 2023		139,054		$	52.11		3.37	$	-
Granted		2,028,425			0.95		-		-
Forfeited		(110,597	)		60.48		-		-
Exercised		-			-		-		-
Outstanding at September 30, 2023		2,056,882		$	1.21		4.85	$	-

Vested September 30, 2023		319,434		$	1.99			$	-

Exercisable at September 30, 2023		319,434		$	1.99			$	-

~~As of~~At September 30, ~~2022,~~2023, the intrinsic value of the outstanding options was $190.

During the nine months ended September 30, ~~2022,~~2023, the Company granted stock options to ~~certain employees and consultants~~board members to purchase a total of ~~2,741,555~~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 $~~1.06~~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~~ $~~2,622~~953 ~~using~~based on the Black-Scholes option pricing model.

On September 28, 2023, the Company granted stock options to employees and a board member to purchase a total of 1,022,740 stock options. The options have an average exercise price of $0.73 per share, expire in five years, and vest annually over 4 years. The total grant date fair value of these options was $676 based on the Black-Scholes option pricing model.

The share-based compensation expense recognized relating to the vesting of stock options for the three and nine months ended September 30, ~~2022, was~~2023 amounted to $~~387~~440 and $~~1,292~~954, respectively. As of September 30, ~~2022,~~2023, the ~~remaining~~total unrecognized share-based compensation expense ~~associated with previously issued stock options~~ was $~~2,793~~1,795, which ~~will~~is expected to be recognized ~~in future periods~~ as ~~the options vest.~~

~~During the nine months ended~~part of operating expense through September ~~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

Nine Months Ended September 30,
2022 2021
Risk-free interest rate 1.24% - 3.37 % 0.10% - 0.92 %
Average expected term 5 years 5 years
Expected volatility 143.6 – 149.5 % 232.8 - 240.0 %
Expected dividend yield - -

	Nine Months Ended September 30,
	2023			2022
Risk-free interest rate		4.29	%		1.24% - 3.37	%
Average expected term		5 years			5 years
Expected volatility		136.2	%		143.6-149.5	%
Expected dividend yield		-			-

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 September 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 as of January 1, 2022, all vested 10,984,740 $ 2.67 2.38 $ 507
Granted, unvested as of September 30, 2022 14,666,667 0.75 5.07 -
Forfeited - - - -
Exercised - - - -
Outstanding as of September 30, 2022 25,651,407 $ 1.52 3.52 $ -

	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		(32,974	)		8.14		-		-
Exercised		-			-		-		-
Outstanding at September 30, 2023, all vested		919,664		$	33.76		2.83	$	-

~~In connection with~~At September 30, 2023 the ~~April Registered Direct Offering on April 20, 2022, 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 a result~~intrinsic value of the ~~April Registered Direct Offering,~~ ~~3,704,826~~outstanding warrants ~~outstanding as of~~was $0.

On January ~~1, 2022, with exercise prices ranging from $1.10~~ ~~to $2.10~~ ~~per share, had the exercise prices reduced 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). In October 2022,~~24, 2023, the Company entered into an underwriting agreement with Aegis relating to the ~~October Purchase Agreement~~January 2023 offering, issuance and assale 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 $~~0.75~~13.60 per share, had the exercise price reduced to $~~0.34~~8.00 per share, ~~(see~~which resulted in the Company recognizing a deemed dividend of $164.

On September 19, 2023, the Company issued 183,486 shares of its common stock to certain other investors to settle litigation, see Note ~~14). As of September 30, 2022,~~13. In exchange for the ~~intrinsic value~~shares, 32,140 warrants were cancelled as part of the ~~outstanding warrants was $~~0.settlement agreement.

13. COMMITMENTS AND CONTINGENCIES

Litigation

~~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, in which the court dismissed certain of the Company’s affirmative defenses; and (iii) partly denying the former employee’s motion for summary adjudication. The court ~~has~~had set a trial date of ~~December~~August 28, ~~2022.~~2023. On August 29, 2023 after a bench trial, the court found in favor of the plaintiff on his breach of contract claim. The ~~Company believes the resolution of this matter will~~court has not ~~have a material adverse effect on~~yet entered an order for judgement. Once entered, the Company ~~or its operations.~~intends to file an appeal, reinstating the Company’s affirmative defenses and vacating the trial court’s decision and order.

~~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 remaining unpaid settlement amount of $50 was accrued by the Company as of September 30, 2023.

~~Dispute with Warrant Holder~~

c. Dispute with Warrant Holder

The Company ~~is currently~~was involved 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. (Index No. 651708/2022). The Company’s complaint ~~seeks~~sought 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~~alleged damages of $1,500. The Company ~~disputes~~disputed Iroquois’ counterclaims and damages allegations. On September 19, 2023, the Company and Iroquois agreed to a settlement of the matter and an exchange of general releases. Pursuant to the settlement, the Company issued 183,486 shares to Iroquois and certain other investors. The fair market value of the shares issued was based on the closing price of the Company’s common stock on the date of the settlement, which amounted to $200. In exchange for the shares, 32,140 warrants were cancelled as part of the settlement agreement.

The Company ~~intends~~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 ~~vigorously pursue~~the Company or any of its ~~claims and~~subsidiaries or has a material interest adverse to ~~vigorously defend itself against~~ the ~~counterclaims.~~ Company or any of its subsidiaries.

The Company believes ~~that~~it has adequately reserved for all litigation within its financial statements.

Board of Directors

The Company has committed an aggregate of $312 in board fees to its five board members over the ~~resolution~~term of ~~these matters~~their appointment for services to be rendered. Board fees are accrued and paid monthly. The members will ~~not have a material adverse effect~~serve on the ~~Company~~board until the annual meeting for the year in which their term expires or ~~its operations.~~until their successors has been elected and qualified.

Total board fees expensed during the nine months ended September 30, 2023 was $250. As of September 30, 2023, total board fees to be recognized in future period amounted to $62 and will be recognized once the service has been rendered.

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 November 14, ~~2022,~~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.

Equity Financing

Subsequent to September 30, ~~2022,~~2023, the Company issued ~~867,741~~6,498,591 shares of its common stock and received $~~302~~2,086 of net proceeds associated with ~~at-the-market (“ATM”)~~ATM issuances.

Issuance of common shares as payment on notes payable

~~On October 25, 2022,~~Subsequent to September 30, 2023, the Company ~~entered into the October Purchase Agreement, which provides for the sale and issuance by the Company of an aggregate of (i)~~issued ~~12,500,000~~2,040,922 shares of ~~Common Stock, at~~its common stock pursuant to an exchange agreement in exchange for a ~~purchase price~~reduction of $~~0.32~~655 ~~per share, and (ii) warrants to purchase~~ ~~12,500,000~~ ~~shares~~on the outstanding balance of the ~~common stock at an exercise price of $0.34~~ ~~per share, for aggregate gross proceeds of $4,000~~ ~~before deducting placement agent commissions and other offering expenses. As a result of this transaction, certain warrants which previously had an exercise price of $0.75~~ ~~per share had the exercise price reduced to $0.34~~ ~~per share.~~November Notes.

~~In addition, the Company paid $1,172~~ ~~towards principal and accrued interest on the Notes. The Company and the January Note Holders also agreed to interest only payments with a final principal payment of $2,545~~ ~~due on the maturity date.~~

Debt Financing

~~Subsequent to September 30, 2022, the Company received secured advances from an unaffiliated third party totaling $225~~ ~~for the purchase of future receipts/revenues of $322. In connection with the secured advance, the Company paid $~~11 ~~of debt issuance costs which will be amortized over the term using the effective interest rate method.~~

On ~~November 7, 2022,~~October 11, 2023, the Company entered into ~~the November Note Purchase Agreement~~a note purchase agreement with ~~the November Note Holder providing for the sale and issuance of an unsecured, non-convertible~~Streeterville Capital, LLC (“Streeterville’) pursuant to which Streeterville purchased a promissory note (the “Note”) in the ~~original~~aggregate principal amount of $~~5,470~~1,005~~, which has an original issue discount of $470, resulting in gross proceeds to the Company of approximately $5,000~~ (the “Note Offering”). The ~~November~~ Note ~~matures eighteen months following the~~bears interest at 9.0% per annum compounded daily. The maturity date of ~~issuance. Commencing six~~the Note is 18 months from the date of ~~issuance,~~its issuance. In connection with 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 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 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.Offering, verbMarketplace, LLC, entered into a ~~guaranty,~~Guaranty, dated ~~November 7, 2022, in connection with the November Note Offering,~~October 11, 2023, pursuant to which it guaranteed the obligations of the Company under the ~~November~~ Note in exchange for receiving a portion of the ~~loan~~ proceeds.

~~Issuance~~Repayment of ~~Common Stock~~note payable – related party

~~Subsequent to September 30, 2022,~~On October 12, 2023, the Company ~~issued~~ ~~187,523~~ ~~shares of common stock to vendors for services rendered with a grant date fair value of $~~64~~. These shares of common stock were valued based on the closing price~~repaid all of the ~~Company’s common stock on the date of issuance or the date the Company entered into the agreement~~outstanding principal and accrued interest amounting to $879 from a December 2015 related ~~to the issuance.~~

~~Subsequent to September 30, 2022, the Company~~party note issued ~~6,185~~ ~~shares of common stock to certain employees associated with the vesting of restricted stock units.~~

~~Issuances of Stock Options~~

~~Subsequent to September 30, 2022, the Company granted stock options to certain employees to purchase a total of~~ ~~32,000~~ ~~stock options for services to be rendered. The options have an average exercise price of $0.38~~ ~~per share, expire in~~ ~~five years, and vest~~ ~~four yearsfrom grant date. The total grant date fair value of these options was $~~8 ~~based on the Black-Scholes option pricing model.~~by Mr. Cutaia.

~~Other~~Sublease agreement – related party

On November ~~9, 2022,~~1, 2023, the Company ~~received~~entered into a ~~written notification from the Nasdaq Stock Market Listing Qualifications Staff (the “Staff”) indicating that~~corporate office sublease agreement with Mr. Cutaia for its executive office in Las Vegas, Nevada.

Repayment of advance on future receipts

Subsequent to September 30, 2023, the Company ~~has been granted an additional 180-calendar-day period, or until May 8, 2023, to regain compliance with the $1.00~~ ~~minimum closing bid price requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rules (the “Minimum Bid Price Requirement”).~~

~~Nasdaq’s determination was based on (i) the Company having met the continued listing requirement for market value of publicly held shares and~~repaid all ~~other applicable requirements for initial listing on the Nasdaq Capital Market, with the sole exception~~ of the Minimum Bid Price Requirement, and (ii) the Company’s written notice to Nasdaq of its intention to cure the deficiency during the compliance period, including by potentially effecting a reverse stock split if necessary. If, at any time during this additional compliance period, the closing bid price of the Common Stock is at least $~~1.00~~ per share for a minimum of ten consecutive trading days, Nasdaq will provide written confirmation of compliance. If compliance cannot be demonstrated by May 8, 2023, the Staff will provide written notification that the Company’s securities will be delisted, provided that the Company may appeal the Staff’s determination to a Hearings Panel of Nasdaq at that time.

~~The Company will monitor the closing bid price of its Common Stock and will consider various options to regain compliance with the Minimum Bid Price Requirement before May 8, 2023.~~advances on future receipts.

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 nine month periods ended September 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 in 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 nine months ended September 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 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. During the seven-month period of the sales process, virtually all of our resources were dedicated to facilitating the sale process and all operating budgets were suspended, including sales and marketing budgets for MARKET.live, in order to preserve cash and minimize reliance on the capital markets until the asset sale process was complete.

Our suite of applications can be distinguished from other sales enablement applications because our applications utilize our proprietary interactive video technology as the primary means of communication between sales and marketing professionals and their customers and prospects. Moreover, the proprietary data collection and analytics capabilities of our applications inform our users on their devices in real time, when and for how long their prospects have watched a video, how many times such prospects watched it, and what they clicked on, which allows our users 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 lists 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.

Our ~~Products~~MARKET.live Business

~~verbCRM~~ combines the capabilities of CRM lead-generation, content management, and in-video ecommerce capabilities 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~~ is a next-generation interactive live-stream platform with in-video ecommerce capabilities for sales reps that allows them 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 sales reps 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 eliminating the lack of skill, training and experience among sales reps from 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.live is 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 ~~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.

The 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, 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.live is that it ~~also provides an online meeting place~~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 ~~friends~~creators 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.live will provide vendors with extensive business building analytics capabilities not availableinfluencers that have large number of followers on ~~and not shared by many operators of~~ other social media ~~sites who regard that information as valuable proprietary property. All vendors on MARKET.live will retain this valuable intelligence for their own, unlimited use.~~platforms.

We recently completed development work on new MARKET.live ~~allows vendors an opportunity~~capability that facilitated a deeper integration into the TikTok social media platform that could expose MARKET.live shoppable programming to reach not only the shoppers they invite to the site from their own client and contact lists, 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.live 24/7, from around the world. We believe our revenue model will be attractive to vendors and will consisttens of ~~SaaS recurring revenue as well as a share~~millions of ~~revenue generated through sales on the platform.~~potential viewers/purchasers.

This new capability allows shoppers watching a MARKET.live ~~is simply a platform; we hold no inventory, we take no inventory risk,~~stream on TikTok to stay on that site and ~~each vendor manages~~actually check out through that site, eliminating the friction or reluctance of TikTok users to leave their ~~own packing and fulfillment, as well as returns. Only vendors that have a demonstrated ability~~TikTok feed in order to ~~manage inventory and fulfillment are selected to participate~~complete their purchase on MARKET.live. Our technology integration allows the purchase data to flow back through MARKET.live and to the individual vendors and stores on MARKET.live seamlessly for fulfillment of the orders.

~~As we continue onboarding vendors to~~Last fall the platform, we are seeing increased interest from product manufacturers seeking to embrace 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.live will also incorporate a modified version 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 vendors that have activated the built-in affiliate marketing 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.live, 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.live vendors, while also creating an attractive income generating opportunity for non-vendor MARKET.live patrons.

MARKET.live 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. Whereas verbLIVE is a sales tool for sales reps that subscribe either directly or through their principal to verbCRM or verbTEAMS, MARKET.live is a multivendor social shopping platform for retailers, brands, manufacturers, creators and influencers who seek to participate in an open market-style eco-system environment. More recently, we are beginning to see interest from existing verbLIVE clients who see the value of MARKET.live as a corporate communications tool for use in sales, marketing, lead-generation, training and recruitment initiatives.

~~We recently~~Company launched ~~our~~its “Creators on ~~MARKET,~~MARKET.live,” a ~~new~~ program that allows creators to monetize their content through livestream shopping and personalized storefronts on MARKET.live. ~~The~~This program is ~~being marketed~~only open to ~~video content creators across multiple~~those individuals with a large, verifiable social media ~~channels.~~following. Participants selected for the Creators on MARKET.live program can choose to feature their favorite products from MARKET.live stores and promote and sell them to their fans, followers and customers. The Company has recently launched a similar program on TikTok for TikTok creators and influencers.

In the coming weeks, the Company expects to formally launch a new drop ship program on MARKET.live, offered on a subscription basis, designed specifically for those individuals interested in starting their own ecommerce business, who do not yet have a large base of fans or followers. Through this new program, ~~creators~~entrepreneurs can quickly and ~~influencers can choose~~easily establish their own storefronts, essentially their own website, by choosing the products they love from ~~hundreds~~a carefully curated list of ~~brands~~products by category (based on their selected subscription package). They can easily import the products into their storefront and ~~retailers on MARKET.live and offer~~launch their ~~fans and followers those products~~own ecommerce business through livestream shopping events broadcast live on MARKET.live and simulcast on ~~the creators’ existing~~other social platforms. ~~They can also offer~~Subscribers do not have to purchase inventory and product fulfillment is handled for them for no additional cost. This program represents a very low cost, low risk option for those who want to start their ~~favorite products through the Creators’~~own ecommerce business. The Company is planning a national television commercial campaign to promote this new program.

All livestream events are recorded and available to watch in each vendors’ personally branded ~~storefronts they can establish quickly~~stores on MARKET.live for those fans, followers and ~~easily on MARKET.live.~~customers to return after the livestream events, 24/7, to browse and purchase any of the featured products. All the recorded livestream videos are indexed for easy browsing and remain shoppable. Depending on the products chosen, ~~Creators~~participants in the Creator 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 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 and will also earn a percentage of the sales they generate, which varies based on the subscription package.

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, Creators can choose to feature their favorite products and promote and sell them to their fans and followers. All MARKET.live events are interactive so followers and fans can chat with the Creators in real time, as well as with one another, creating a more entertaining and engaging social shopping experience. When their interest level peaks, Creators’ fans and followers can click on the screen to buy the products. Creators accepted into the program are not required to make any investment in inventory, nor do they have the burden of managing fulfillment or shipping. The only requirement for them to remain in the program is for them to continue to create and promote the same videos they’re already doing on YouTube and elsewhere online. Livestream events are recorded and available to watch in the Creators’ personally branded stores on MARKET.live for those fans and followers to return 24/7 after the livestream events to browse and purchase the Creators’ featured products, as the recorded livestream videos remain shoppable.

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 be exposed to and enhance the eco-system of shoppers and retailers on MARKET.live. Over time it is anticipated that verbTV will feature 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 imprecise viewership information traditionally offered to television sponsors and advertisers.

~~Verb Partnerships and Integrations~~

~~verbMAIL for Microsoft Outlook and Saleforce Integration of verbLIVE and verbTEAMS.~~ verbMAIL 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. We have completed and deployed the integration of verbLIVE into Salesforce and have a verbTEAMS sync application for Salesforce users. To date, adoption of these products has been low due in large part to management’s decision to reduce and deploy development and marketing resources to other areas of the Company’s business that it believes can generate a greater return on investment.

~~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. Due to COVID-19, we experienced a marked decline in non-digital services and associated revenue, as reflected in our current and historical financial statements, as our clients reduced or eliminated in-person conferences and other events. This reduction in non-digital services was nevertheless consistent with management’s strategy to exit this area of our business due to the low margin, high costs and limited scalability of this component of our business.

In furtherance of the strategy, 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 expanded our relationship with Range when we entered into a customer referral agreement with them for our cart site and printing business. Under the agreement, we earn 10% commission for customers referrals, 8% on merchandise sales and certain cart site design fees 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 the non-digital business in the condensed consolidated statements of operations.

For these reasons, management has suggested that a more accurate measure of our performance is the historical growth of our SaaS and digital business and associated revenue, which has been the focus of our initiatives, while we have continued to exit the low margin, non-digital business. While the SaaS and digital business has grown year over year, that growth is not readily apparent when analyzing our top-line revenue because the total revenue represents the growing SaaS and digital business upon which we are focused, off-set by the declining non-digital business we are intentionally exiting.

~~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 September 30, 2022, we provided subscription-based application services to approximately 150 enterprise clients for use in over 100 countries and in over 48 languages. Since inception, we have had more than 3.4 million downloads of our verbCRM applications across all of the white-labelled versions created for clients on our platform.

Revenue Generation

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

~~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 over the subscription period.

	b.	Non-SaaS, non-recurring digital revenue, which is revenue generated by the use 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, collectability is reasonably assured, and the app is delivered to the customer.

	2.	Non-digital revenue, 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 include design, printing, fulfillment and shipping services. The revenue is recognized upon completion and shipment of products or fulfillment to customers. Effective April 1, 2022, we entered into a customer referral agreement with Range for our cart site and printing business. Under the agreement, we earn 10% commission for customer referrals and 8% on merchandize sales and certain cart site design fees, all of which are recognized as non-digital revenue on a net basis.

	3.	MARKET.live, launched at the end of July 2022, generates revenue through several sources as follows:

	a.	All sales run through our ecommerce facility on MARKET.live from which we deduct a platform fee that ranges from 10% to ~~35%~~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 profit margins associated with such categories. The revenue is 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 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 and Creator programs. MARKET.live is expected to generate recurring fee revenue from soon to be launched new drop ship programs for entrepreneurs and its Creator program.

	d.	The Company’s recently launched TikTok store and affiliate program.

	e.	The 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.

Recent Developments

~~Despite increased vaccine distribution programs and loosening of COVID-19 related restrictions in~~ATM Offering

On November 16, 2021, the regions in which we operate during the three and nine months ended September 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,Company entered into that certain at-the-market issuance sales agreement with Truist Securities, Inc., 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 extentsales agent (the “Agent”), pursuant to which the ~~COVID-19 pandemic will impact our business, financial conditions,~~Company could offer and ~~results~~sell, from time to time, through the Agent (the “ATM Offering”), up to approximately $7.3 million in shares of ~~operations~~the Company’s common stock pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-252167), as supplemented by a prospectus supplement. As of September 30, 2023, the Company received proceeds from the ATM Offering of approximately $0.0 million ($50,000), net of offering costs, on the sales of 105,300 shares of the Company’s common stock.

Subsequent to September 30, 2023, the Company issued 6,498,591 shares of its common stock and received $2.1 million of net proceeds associated with ATM issuances.

Issuance of common shares as payment on notes payable

Subsequent to September 30, 2023, the Company issued 2,040,922 shares of its common stock pursuant to an exchange agreement in exchange for a reduction of $0.7 million on the outstanding balance of the November Notes.

Debt Financing

On October 11, 2023, the Company entered into a note purchase agreement with Streeterville Capital, LLC (“Streeterville”) pursuant to which Streeterville purchased a promissory note (the “Note”) in the ~~future remains uncertain and will be affected by a number~~aggregate principal amount of ~~factors, including the duration and extent~~$1.0 million (the “Note Offering”). The Note bears interest at 9.0% per annum compounded daily. The maturity date 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 thoseNote is 18 months from the ~~successful distribution~~date of ~~effective vaccines.~~

~~The COVID-19 pandemic may have long-term effects on~~its issuance. In connection with the ~~nature~~Note Offering, verbMarketplace, LLC, a wholly-owned subsidiary of the ~~office environment~~Company, entered into a Guaranty, dated October 11, 2023, pursuant to which it guaranteed the obligations of the Company under the Note in exchange for receiving a portion of the proceeds.

Repayment of note payable – related party

On October 12, 2023, the Company repaid all of the outstanding principal and remote working. This may present operational and workplace culture challenges that may adversely affect our business. Throughout the three and nine months ended September 30, 2022, we have encouraged safe practices designedaccrued interest amounting 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$0.9 million from a December 2015 related ~~to COVID-19 and remain flexible in our response to the challenges presented~~party note issued by ~~the pandemic.~~Mr. Cutaia.

Results of Operations

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

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

Three Months Ended September 30,
2022 2021 Change

Revenue
Digital revenue
SaaS recurring subscription revenue $ 1,851 $ 1,846 $ 5
Other digital revenue 165 510 (345 )
Total digital revenue 2,016 2,356 (340 )

Non-digital revenue 171 544 (373 )

Total revenue 2,187 2,900 (713 )

Cost of revenue
Digital 580 542 38
Non-digital 156 544 (388 )
Total cost of revenue 736 1,086 (350 )

Gross margin 1,451 1,814 (363 )

Operating expenses
Research and development 1,372 3,513 (2,141 )
Depreciation and amortization 790 400 390
General and administrative 6,965 6,130 835
Total operating expenses 9,127 10,043 (916 )

Loss from operations (7,676 ) (8,229 ) 553

Other income (expense)
Interest expense (550 ) (525 ) (25 )
Change in fair value of derivative liability 198 (141 ) 339
Other income (expense) - 8 (8 )
Debt extinguishment, net - 82 (82 )
Total other income, net (352 ) (576 ) 224

Net loss (8,028 ) (8,805 ) 777

Deemed dividend to Series A preferred stockholders - (348 ) 348

Net loss to common stockholders $ (8,028 ) $ (9,153 ) $ 1,125

	Three Months Ended September 30,
	2023			2022			Change

Revenue	$	29		$	3		$	26

Cost of Revenue		5			1			4

Gross margin		24			2			22

Operating expenses
Depreciation and amortization		564			438			126
General and administrative		2,850			5,126			(2,276	)
Total operating expenses		3,414			5,564			(2,150	)

Operating loss from continuing operations		(3,390	)		(5,562	)		2,172

Other income (expense)
Other income (expense), net		64			-			64
Interest expense		(219	)		(289	)		70
Change in fair value of derivative liability		4			198			(194	)
Total other income (expense), net		(151	)		(91	)		(60	)

Net loss from continuing operations	$	(3,541	)	$	(5,653	)	$	2,112

Revenue

Our ~~SaaS recurring subscription revenue as a percentage of total revenue for the three months ended September 30, 2022, was 85%, compared to 64% for the three months ended September 30, 2021.~~

For the three months ended September 30, 2022, our total digital revenue was 92% of total revenue compared with 81% for the three months ended September 30, 2021. Total digital revenue for the three months ended September 30, 2022 was $2.0 million, a decrease of 14% compared to $2.4 million for the three months ended September 30, 2021. SaaS recurring subscription-based revenue associated with our verbCRM, verbLIVE, verbTEAMS, verbLEARN, and verbPULSE applications totaled $1.9 million, compared to $1.8 million reported for the three months ended September 30, 2021.

~~Total non-digital revenue for the three months ended September 30, 2022, was $0.2 million, a decrease of 69% compared to $0.5 million reported for the three months ended September 30, 2021, which~~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.~~

The table below sets forth our quarterly revenues from the three months ended September 30, 2020 through the three months ended September 30, 2022, which reflects the trend of revenue over the past nine fiscal quarters (in thousands):

2020 2021 2022
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
SaaS recurring subscription revenue $ 1,478 $ 1,305 $ 1,461 $ 1,601 $ 1,846 $ 1,923 $ 2,003 $ 1,975 $ 1,851
Other digital 360 218 340 209 510 288 147 186 165
Total digital revenue 1,838 1,523 1,801 1,810 2,356 2,211 2,150 2,161 2,016

Total non-digital revenue 1,022 576 725 582 544 495 541 238 171

Grand total $ 2,860 $ 2,099 $ 2,526 $ 2,392 $ 2,900 $ 2,706 $ 2,691 $ 2,399 $ 2,187

~~Cost of Revenue~~

Total cost of revenue for the three months ended September 30, 2022, was $0.7 million, compared to $1.1 million for the three months ended September 30, 2021, reflecting a 32% 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 September 30, 2022, was $1.5 million, compared to $1.8 million for the three months ended September 30, 2021, representing a decline in our other digital and non-digital revenues. For the three months ended September 30, 2022, our digital gross margin was 71% and non-digital gross margin was 9%. Gross margin as a percent of total revenue improved as a resultgrowth of our ~~strategy to focus on higher margin digital revenue and systematic reduction in non-digital revenue.~~MARKET.live business. Currently, the business is generating minimal revenues.

Operating Expenses

~~Research~~Depreciation and ~~development~~amortization expenses were ~~$1.4~~$0.5 million for the three months ended September 30, 2022, as compared to $3.5 million for the three months ended September 30, 2021, reflecting a 61% reduction. Research and development expenses primarily consisted of sums paid to employees and vendors contracted to perform research projects and develop technology. As our products move from research and development stage to operating stage, we expect our research and development cost reductions to continue, as experienced during the three months ended September 30, 2022.

~~Depreciation and amortization expenses were $0.8 million for the three months ended September 30, 2022,~~2023, as compared to $0.4 million for the three months ended September 30, ~~2021. The increase in depreciation and amortization is attributed to amortization of capitalized software development costs associated with our MARKET.live platform.~~2022.

General and administrative expenses for the three months ended September 30, ~~2022,~~2023 were ~~$7.0~~$2.9 million, as compared to ~~$6.1~~$5.1 million for the three months ended September 30, ~~2021. This increase~~2022, reflecting a 44% cost reduction. The decrease in general and administrative expenses is primarily due to MARKET.live costs of $1.1 million which includes $0.4 million for professional services, $0.4 million for other MARKET.live related cost, and $0.2 million for labor costs. Excluding MARKET.live costs, our general and administrative expenses decreased ~~by $0.3 million or 4% on a quarter over quarter basis.~~salary expense associated with headcount reduction.

Other Income (Expense), net

Other ~~expense,~~income (expense), net, for the three months ended September 30, ~~2022,~~2023 was ~~$0.4~~$(0.2) million, which was primarily attributable to interest expense of ~~$0.6 million, offset by a decrease in the change in the fair value of derivative liability of $0.2~~$(0.2) million.

Nine Months Ended September 30, ~~2022~~2023 as Compared to the Nine Months Ended September 30, ~~2021~~2022

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

Nine Months Ended September 30,
2022 2021 Change

Revenue
Digital revenue
SaaS recurring subscription revenue $ 5,829 $ 4,908 $ 921
Other digital revenue 498 1,059 (561 )
Total digital revenue 6,327 5,967 360

Non-digital revenue 950 1,851 (901 )

Total revenue 7,277 7,818 (541 )

Cost of revenue
Digital 1,746 1,651 95
Non-digital 798 1,769 (971 )
Total cost of revenue 2,544 3,420 (876 )

Gross margin 4,733 4,398 335

Operating expenses
Research and development 4,334 9,610 (5,276 )
Depreciation and amortization 1,594 1,214 380
General and administrative 20,563 20,018 545
Total operating expenses 26,491 30,842 (4,351 )

Loss from operations (21,758 ) (26,444 ) 4,686

Other income (expense)
Interest expense (1,948 ) (1,629 ) (319 )
Change in fair value of derivative liability 2,360 (2,086 ) 4,446
Other income (expense) (45 ) 85 (130 )
Debt extinguishment, net - 1,112 (1,112 )
Total other income, net 367 (2,518 ) 2,885

Net loss (21,391 ) (28,962 ) 7,571

Deemed dividend to Series A preferred stockholders - (348 ) 348

Net loss to common stockholders $ (21,391 ) $ (29,310 ) $ 7,919

	Nine Months Ended September 30,
	2023			2022			Change

Revenue	$	34		$	3		$	31

Cost of Revenue		7			1			6

Gross margin		27			2			25

Operating expenses
Depreciation and amortization		1,730			524			1,206
General and administrative		9,080			15,019			(5,939	)
Total operating expenses		10,810			15,543			(4,733	)

Operating loss from continuing operations		(10,783	)		(15,541	)		4,758

Other income (expense)
Other income (expense), net		844			(16	)		860
Financing costs		(1,239	)		-			(1,239	)
Interest expense		(989	)		(950	)		(39	)
Change in fair value of derivative liability		210			2,360			(2,150	)
Total other income (expense), net		(1,174	)		1,394			(2,568	)

Net loss from continuing operations	$	(11,957	)	$	(14,147	)	$	2,190

Revenue

~~SaaS recurring subscription revenue as a percentage of total revenue for the nine months ended September 30, 2022, was 80%, compared to 63% for the nine months ended September 30, 2021.~~

For the nine months ended September 30, 2022, our total digital revenue was 87% of total revenue compared with 76% for the nine months ended September 30, 2021. Total digital revenue for the nine months ended September 30, 2022 was $6.3 million, an increase of 6% compared to $6.0 million for the nine months ended September 30, 2021. The increase was primarily driven from SaaS recurring subscription-based revenue associated with our verbCRM, verbLIVE, verbTEAMS, verbLEARN, and verbPULSE applications totaling $5.8 million, an increase of 19% compared to $4.9 million reported for the nine months ended September 30, 2021.

~~Total non-digital revenue for the nine months ended September 30, 2022, was $1.0 million compared to $1.9 million, a decrease of 49% reported for the nine months ended September 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 nine months ended September 30, 2022, was $2.5 million, compared to $3.4 million for the nine months ended September 30, 2021, reflecting a 26% 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 nine months ended September 30, 2022, was $4.7 million, compared to $4.4 million for the nine months ended September 30, 2021, representing an 8% improvement. For the nine months ended September 30, 2022, our digital gross margin was 72% and non-digital gross margin was 16%. 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 ~~$4.3~~$1.7 million for the nine months ended September 30, ~~2022,~~2023, as compared to ~~$9.6~~$0.5 million for the nine months ended September 30, 2021, reflecting a 55% reduction. Research and development expenses primarily consisted of sums paid to employees and vendors contracted to perform research projects and develop technology. As our products move from research and development stage to operating stage, we expect our research and development cost reductions to continue, as experienced during the nine months ended September 30, 2022.

Depreciation and amortization expenses were $1.6 million for the nine months ended September 30, 2022, as compared to $1.2 million for the nine months ended September 30, 2021. The increase in depreciation and amortization is attributed to amortization of our capitalized software development costs associated with our MARKET.live platform.

General and administrative expenses for the nine months ended September 30, ~~2022,~~2023 were ~~$20.6~~$9.1 million, as compared to ~~$20.0~~$15.0 million for the ~~same period~~nine months ended September 30, 2022, reflecting a 40% cost reduction. The decrease in 2021, representing a 3% increase. This increase was primarily due to MARKET.live costs of $1.6 million, which includes $0.6 million of labor costs, $0.5 million for professional services, and $0.5 million of other MARKET.live related expenses. Excluding MARKET.live costs, our general and administrative expenses is primarily due to decreased ~~by $1.1 million year over year or 5%.~~salary expense associated with headcount reduction.

Other Income (Expense), net

Other income (expense), net, for the nine months ended September 30, ~~2022,~~2023 was ~~$0.4~~$(1.2) million, which was primarily attributable to interest expense of $(1.0) million and financing costs of $(1.2) million, offset by a gain on legal settlements of $0.6 million, a gain on lease termination of $0.3 million and a change in ~~the~~ fair value of derivative liability of ~~$2.4 million, offset by interest expense of $2.0~~$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, ~~expense,~~ share-based compensation, ~~expense, interest expense, change~~financing costs, changes in fair value of derivative liability, ~~other (income) expense, debt extinguishment costs,~~and loss from discontinued operations, net ~~MARKET.live startup costs, and other non-recurring charges.~~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 September 30, Nine Months Ended September 30,
(in thousands) 2022 2021 2022 2021

Net loss $ (8,028 ) $ (8,805 ) $ (21,391 ) $ (28,962 )

Adjustments:
Depreciation and amortization 790 400 1,594 1,214
Share-based compensation 1,050 986 3,668 4,652
Interest expense 550 525 1,948 1,629
Change in fair value of derivative liability (198 ) 141 (2,360 ) 2,086
Other (income)/ expense - (8 ) 45 (85 )
Debt extinguishment, net - (82 ) - (1,112 )
MARKET.live non-recurring startup costs* 683 - 736 -
Other non-recurring - - 126 -

Total EBITDA adjustments 2,875 1,962 5,757 8,384
Modified EBITDA $ (5,153 ) $ (6,843 ) $ (15,634 ) $ (20,578 )

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2023			2022			2023			2022

Net loss	$	(3,709	)	$	(8,028	)	$	(19,079	)	$	(21,391	)

Adjustments:
Depreciation and amortization		564			438			1,730			524
Share-based compensation		583			1,050			1,985			3,668
Other (income) expense, net		(64	)		-			(844	)		16
Financing costs		-			-			1,239			-
Interest expense		219			289			989			950
Change in fair value of derivative liability		(4	)		(198	)		(210	)		(2,360	)
Loss from discontinued operations, net of tax		168			2,375			7,122			7,244
Other non-recurring costs (a)		400			-			585			126

Total EBITDA adjustments		1,866			3,954			12,596			10,168
Modified EBITDA	$	(1,843	)	$	(4,074	)	$	(6,483	)	$	(11,223	)

* Includes general(a) Represents severance costs and ~~administrative and R&D expenses that are directly~~a litigation accrual related to the ~~launch of our MARKET.live platform and are not expected to be recurring in future periods.~~Meyerson matter.

The ~~$1.7~~$2.2 million or ~~25% increase~~55% improvement in Modified EBITDA for the three months ended September 30, ~~2022,~~2023, compared to the same period in ~~2021,~~2022, resulted from ~~decreases in cost of revenue and research and development costs, offset by an increase in labor related costs to support future growth.~~decreased operating expenses.

The ~~$4.9~~$4.7 million or ~~24% increase~~42% improvement in Modified EBITDA for the nine months ended September 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.

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


	●	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.

3431

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 ~~$21.4~~$12.0 million during the nine months ended September 30, ~~2022. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date these financial statements were issued.~~2023. We also utilized cash in operations from continuing operations of ~~$16.0~~$6.6 million during the nine months ended September 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. Our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended December 31, 2021, has also expressed substantial doubt about our ability to continue as a going concern. We intend to continue to seek additional debt or equity financing ~~as well as certain strategic opportunities~~ 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 purchase agreement (the “January Purchase Agreement”) with Tumim Stone Capital LLC (the “Investor”). Pursuant to the agreement, we have 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 (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 issued to the Investor as consideration for its commitment to purchase shares of Common Stock under the January Purchase Agreement. In connection with the January Purchase Agreement, we are restricted 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.

~~On January 12, 2022, we also~~ 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 $6.3 million in 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, 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 us from entering into an agreement to effect any issuance of ~~Common Stock~~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 as described below.~~Holders. On January 26, 2023, we repaid in full all outstanding obligations under the January Note Offering dated January 12, 2022.

On April 20, 2022, we entered into a securities purchase agreement, which provides for the sale and issuance by us of an aggregate of (i) 14,666,667 shares of Common Stock, and (ii) warrants to purchase 14,666,667 shares of Common Stock at an exercise price of $0.75 per share, for aggregate gross proceeds of $11.0 million before deducting placement agent commissions and other offering expenses (the “April Registered Direct Offering”). As a result of this transaction, certain warrants which previously had exercise prices ranging from $1.10 to $2.10 per share had the exercise price reduced to $0.75 per share. We used a portion of the proceeds from the April Registered Direct Offering to repay $1.6 million in principal amount of the Notes issued pursuant to the January Note Offering.

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 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 ofIn September, ~~30, 2022, we have yet to receive the funds and accordingly, our condensed consolidated financial statements do not reflect the effect of this credit.~~

~~Prior to September 30,~~ 2022, the U.S. Small Business Administration (“SBA”) approved an additional loan of $0.35 ~~million which~~million. As of November 10, 2023, we ~~expect to receive before the end of 2022.~~have not received these funds.

On October 25, 2022, we entered into a securities purchase agreement (the “October Purchase Agreement”), which provides for the sale and issuance by us of an aggregate of (i) 12,500,000 shares of Common Stock at a purchase price of $0.32 per share, and (ii) warrants to purchase 12,500,000 shares of Common Stock at an exercise price of $0.34 per share, for aggregate gross proceeds of $4.0 million before deducting placement agent commissions and other offering expenses (the “October Registered Direct Offering”). As a result of this transaction, certain warrants which previously had an exercise price of $0.75 per share had the exercise price reduced to $0.34 per share. Further, in connection with the October Purchase Agreement, we are restricted from (i) issuing or filing any registration statement to offer the sale of any Common Stock or securities convertible into or exercisable for shares of Common Stock until 75 days after the date thereof; and (ii) 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. As a result of this transaction, we paid $1.2 million towards principal and accrued interest on the Notes. We and the January Note Holders agreed to interest only payments with a final principal payment of $2.5 million due on the maturity date.

On November 7, 2022, we entered into a note purchase agreement (the “November Note Purchase Agreement”) and promissory note with an institutional investor providing for the sale and issuance of an unsecured, non-convertible promissory in the original principal amount of $5.5 million, which has an original issue discount of $0.5 million, resulting in gross proceeds to us of approximately $5.0 million (the “November Note,” and such financing, the “November Note Offering”). The November Note matures eighteen months following the date of issuance. Commencing ~~six~~nine 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 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 obligations on our behalf under the November Note in exchange for receiving a portion of the loan proceeds. At a special meeting of stockholders on April 10, 2023, our shareholders approved for purposes of Nasdaq Listing Rule 5635, the 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 September 30, 2023 and December 31, 2022, we ~~are unable~~had a long-term receivable of $1.5 million.

In November 2022, a cost savings plan was approved and implemented to ~~generate sufficient~~improve liquidity and preserve cash ~~flow from~~for operations (the “Cost Savings Plan”). This plan is expected to ~~operate~~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 ~~business~~obligations and ~~pay~~continue our operations for the next twelve months. Our continuation as a going concern is dependent upon our ability to obtain necessary debt ~~obligations as they become due,~~or equity financing to continue operations until we begin generating positive cash flow.

There is no assurance that we will ~~need to seek to raise additional capital, borrow additional funds, dispose of subsidiaries~~ever be profitable or assets, reduce or delay capital expenditures, or change our business strategy. However, in light of the restrictive covenants imposed by certain of our prior financings and the recent decline in the price of Common Stock, we may be unable to raise additional capital when needed to operate our business or service our debt. Further, notwithstanding such restrictions, there can be no assurance that debt or equity financing will be available to us in the amounts, on terms, orand at times deemed acceptable ~~by us.~~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 our liabilities and future cash ~~commitments and potentially impose significant operational or financial restrictions.~~commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue ~~to operate~~ our business, ~~or pay our obligations~~ as ~~they become due~~planned, and as a result may be required to ~~curtail~~scale back or cease operations for our business, the results of which ~~may result in~~would be that our stockholders ~~or noteholders losing~~would lose some or all of their investment.

~~For additional information, refer to Note 1, “Description of Business,” and Note 2, “Summary of Significant Accounting Policies and Supplemental Disclosures,” 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 our 2021 Annual Report.~~amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

Overview

As of September 30, ~~2022,~~2023, we had cash of $0.9 million. We estimate our operating expenses for the next twelve months ~~will~~may continue to exceed any revenue we generate, and we ~~will~~may need to ~~seek~~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 ~~additional capital, borrow additional~~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 ~~dispose~~we require for all of ~~subsidiaries or assets,~~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 ~~delay capital expenditures, or change our business strategy.~~discontinue operations.

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

Nine Months Ended September 30,
2022 2021
Cash used in operating activities $ (15,975 ) $ (20,511 )
Cash used in investing activities (4,402 ) (56 )
Cash provided by financing activities 20,361 22,410
Increase in cash $ (16 ) $ 1,843

	Nine Months Ended September 30,
	2023			2022
Cash used in operating activities – continuing operations	$	(6,619	)	$	(11,223	)
Cash used in operating activities – discontinued operations		(1,855	)		(4,752	)
Cash used in investing activities – continuing operations		(275	)		(4,401	)
Cash provided by (used in) investing activities – discontinued operations		4,750			(1	)
Cash provided by financing activities – continuing operations		4,855			23,342
Cash used in financing activities – discontinued operations		(2,367	)		(2,981	)
Decrease in cash	$	(1,511	)	$	(16	)

Cash Flows – Operating

For the nine months ended September 30, ~~2022,~~2023, our cash ~~flows~~ used in operating activities from continuing operations amounted to ~~$16.0~~$6.6 million, compared to cash used from continuing operations for the nine months ended September 30, ~~2021,~~2022 of ~~$20.5~~$11.2 million. We generated ~~$4.5~~$4.6 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 nine months ended September 30, ~~2022,~~2023, our cash ~~flows used in~~provided by investing activities amounted to ~~$4.4~~$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.live.~~MARKET.

Cash Flows – Financing

~~Our~~For the nine months ended September 30, 2023, our cash provided by financing activities for ~~the nine months ended September 30, 2022~~continuing operations amounted to ~~$20.4~~$4.9 million, ~~which represented $20.1~~primarily due to $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, $2.5 million of gross proceeds from advances on future receipts and proceeds from option exercises of $0.4 million, all~~ offset by ~~$5.4~~the repayment of convertible notes of $(1.4) million and repayment of ~~payments on advances on future receipts, $2.7 million~~our November notes of ~~payments on notes payable and payments for debt issuance costs of $0.5~~$(0.4) million.

3633

~~Advances~~Advance on Future Receipts

On ~~August 25, 2022, 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 ~~$2.5~~$1.6 million for the purchase of future receipts/revenues of ~~$3.4~~$2.1 million, resulting in a debt discount of $0.5 million. As of September 30, ~~2022,~~2023, the outstanding balance of the ~~note~~advance was ~~$3.0~~$0.3 million. On November 6, 2023, the Company repaid in full the unpaid amount of the advance on future receipts.

Convertible Note Payable and Notes Payable ~~and Note Payable~~

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

Note	Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance as of September 30, 2022			Issuance Date	Maturity Date	Interest Rate			Original Borrowing		Balance at September 30, 2023
Related party convertible note payable (A)	December 1, 2015	April 1, 2023		12.0	%	$	1,249	$	725
Related party convertible note payable (B)	April 4, 2016	June 4, 2021		12.0	%		343		40

Related party note payable (A)											December 1, 2015	April 1, 2023		12.0	%	$	1,249	$	725
Note payable ~~(C)~~(B)	May 15, 2020	May 15, 2050		3.75	%		150		150		May 15, 2020	May 15, 2050		3.75	%		150		142
Convertible Notes Due 2023 (D)	January 12, 2022	January 12, 2023		6.0	%	$	6,300		3,560
Promissory note payable (C)											November 7, 2022	May 7, 2024		9.0	%		5,470		2,184
Debt discount									(61	)									(171	)
Debt issuance costs									(93	)									(127	)
Total notes payable									4,321										2,753
Non-current									(150	)									(142	)
Current								$	4,171									$	2,611

(A)

On December 1, 2015, we issued a convertible note payable to Mr. Rory J. Cutaia, ~~our~~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 ~~$1.03,~~$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 September 30, ~~2022,~~2023, the outstanding balance ~~under~~of the note ~~was $0.7~~amounted to $0.9 million. On October 12, 2023, the Company repaid in full the outstanding balance of the note.

	(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 $1.03, which was the closing price of the common stock on the amendment date. As of September 30, 2022, the outstanding balance under the note was less than $0.1 million.

	~~(C)~~	On May 15, 2020, we executed an unsecured loan with the ~~SBA~~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, began on October 26, 2022. ~~Prior to~~In September ~~30,~~ 2022, the SBA approved an additional loan of $0.35 ~~million which is expected to be~~million. As of November 10, 2023, we have not received ~~before the end of 2022.~~these funds. As of September 30, ~~2022,~~2023, the outstanding balance of the note amounted to ~~$0.15~~$0.14 million.
	~~(D)~~
	(C)	On ~~January 12,~~November 7, 2022, we entered into the ~~January~~November Note Offering, which provided for the sale and issuance of an aggregate original principal amount of ~~$6.3~~$5.5 million ~~of the~~in November Notes. We 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. There are no financial covenants related to these notes payable. 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 ~~January~~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 September 30, ~~2022,~~2023, the amount of unamortized debt discount and debt issuance costs was ~~$0.1~~$0.2 million and $0.1 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 nine months ended September 30, 2023, the Company paid $0.4 million in cash and $4.1 million in shares. As of September 30, ~~2022,~~2023, the outstanding balance of the Notes amounted to ~~$3.6~~$2.6 million. ~~We have repaid $2.7~~Subsequent to September 30, 2023, the Company issued 2,040,922 shares of its common stock pursuant to an exchange agreement in exchange for a reduction of $0.7 million ~~in principal and $0.2 million~~on the outstanding balance of ~~accrued interest.~~the November Notes. On October ~~28, 2022,~~11, 2023, the Company ~~paid $1.2 million towards~~entered into a note purchase agreement with the same lender pursuant to which they purchased a promissory note in the aggregate principal ~~and accrued~~amount of $1.0 million. The note bears interest onat 9.0% per annum compounded daily. The maturity date of the ~~Notes. The Company and~~note is 18 months from the ~~January Note Holders agreed to interest only payments with a final principal payment~~date of ~~$2.5 million due on the maturity date.~~ its issuance.

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.

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:

~~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.	~~Non-SaaS, non-recurring digital~~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 ~~which~~from soon to be launched new drop ship programs for entrepreneurs.

	d.	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, collectability is reasonably assured, and the app is delivered to the customer.advertising based on typical industry rates.

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 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 earns a certain percentage for customer referrals and merchandise sales as well as earn cart site design fees, all of which are recognized as non-digital revenue on a net basis.

Capitalized Software Development Costs

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

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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 September 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),~~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 September 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 September 30, ~~2022 at the reasonable assurance level.~~2023.

Changes in Internal Control Over Financial Reporting

There were no 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 September 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.

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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~~Factors that could cause our actual results to differ materially from those 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~~Report are any of the risks ~~and uncertainties~~ described in ~~the section titled “Risk~~“Part I, Item 1A. Risk Factors” in the ~~2021~~ Annual ~~Report, as well as~~Report. Any of these factors could result in our other public filings with the SEC. If 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 alla significant 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 results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business ~~operating~~or results ~~financial condition and cash flows.~~of operations.

Except as set forth below, there were no material changes to the risks and uncertainties described in the section titled “Risk Factors” in the ~~2021~~ Annual Report during the three months ended September 30, ~~2022.~~2023.

~~Risks Related~~If we are not able to ~~Our Business~~

~~Our independent registered public accounting firm’s reports for~~comply with the ~~fiscal years ended December 31, 2021~~applicable continued listing requirements or standards of The NASDAQ Capital Market, The NASDAQ Capital Market could delist and ~~2020 have raised substantial doubt as to~~adversely affect the market price and liquidity of our ~~ability to continue as a going concern.~~common stock.

Our ~~independent registered public accounting firm indicated~~common stock is currently traded on The NASDAQ Capital Market under the symbol “VERB”. If we fail to meet any of the continued listing standards of The NASDAQ Capital Market, our common stock will be delisted from The NASDAQ Capital Market.

These continued listing standards include specifically enumerated criteria, such as a $1.00 minimum closing bid price. On November 2, 2023, we received a letter from The NASDAQ Stock Market advising that the Company did not meet the minimum $1.00 per share bid price requirement for continued inclusion on The NASDAQ Capital Market pursuant to NASDAQ Marketplace Listing Rule 5550(a)(2). To demonstrate compliance with this requirement, the closing bid price of our common stock needs to be at least $1.00 per share for a minimum of 10 consecutive business days before April 30, 2024. In order to satisfy this requirement, the Company intends to continue actively monitoring the bid price for its common stock between now and April 30, 2024 and will consider available options to resolve the deficiency and regain compliance with the minimum bid price requirement.

On August 18, 2023, we received a letter from The NASDAQ Stock Market indicating that the Company’s stockholders’ equity as reported in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (the “Form 10-Q”), did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1), which requires that a listed company’s stockholders’ equity be at least $2,500,000 (the “Stockholders’ Equity Requirement”). As reported in its ~~report on our audited consolidated financial statements~~Form 10-Q, the Company’s stockholders’ equity as of and for the years ended December 31, 2021 and 2020 that there is substantial doubt about our ability to continue as a going concern. A “going concern” opinion indicates that the financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. Therefore, you should not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors, and potentially be available for distribution to stockholders, in the event of liquidation.June 30, 2023 was ($1,818,000). The ~~ongoing presence of the going concern note to our financial statements may have an adverse~~Staff’s notice has no immediate impact on the ~~relationships we are developing and~~listing of the Company’s common stock on Nasdaq. In accordance with the Nasdaq Listing Rules, the Company had 45 calendar days, or until October 2, 2023, to submit its plan to ~~develop~~regain compliance with ~~third parties~~the Stockholders’ Equity Requirement, for the Staff’s consideration. The Company has submitted its plan of compliance to Nasdaq and as ~~we continue~~of the ~~commercialization~~date of ~~our products and could make it challenging and difficult for us~~this report has not yet received an indication from Nasdaq as to ~~raise additional financing, all~~whether the plan is acceptable. If the plan is accepted, the Staff may grant the Company an extension period of ~~which could have a material adverse impact on our business and prospects and result in a significant or complete loss~~up to 180 calendar days from the date of ~~your investment.~~the deficiency notice to regain compliance.

~~Our ability~~While we intend to ~~continue as a going concern ultimately is dependent upon our ability to achieve profitable operations, significantly reduce operating expenses, attain operating efficiencies,~~regain compliance with the minimum bid price rule and obtain additional financing. If we are unable to generate sufficient cash flow from operations to operate our business and pay our debt obligations as they become due, we may need to seek to raise additional capital, borrow additional funds, dispose of subsidiaries or assets, reduce or delay capital expenditures, or change our business strategy. Therethe Stockholders’ Equity Requirement, there can be no assurance that we will ~~ever~~ be ~~profitable~~able to maintain continued compliance with these rules or ~~that debt~~the other listing requirements of The NASDAQ Capital Market. If we were unable to meet these requirements, we would receive another delisting notice from the Nasdaq Capital Market for failure to comply with one or ~~equity financing will be available to us in the amounts, on terms, and at times deemed acceptable to us, if at all. For example, in light~~more of the ~~restrictive covenants imposed by certain of~~continued listing requirements. If our ~~prior financing arrangements, in combination with the recent significant decline in the market price~~common stock were to be delisted from The NASDAQ Capital Market, trading of our common stock ~~we may~~most likely will be unable to raise additional capital in sufficient amounts when needed to operate our business, service our debt, or executive on our strategic plans. Further, the issuance of additional equity securities would result in significant dilutionconducted in the ~~equity interests of our current stockholders and could include rights~~over-the-counter market on an electronic bulletin board established for unlisted securities such as the OTC Markets or preferences senior to those of the current stockholders. Borrowing additional funds would increase our liabilities and future cash commitments and potentially impose significant operational or financial restrictions and require us to further encumber our assets. If we are unable to obtain financing in the ~~amounts and on terms deemed acceptable, we~~“pink sheets.” Such a downgrading in our listing market may ~~be unable~~limit our ability to ~~continue to operate our business or pay our obligations as they become due, and as~~make a ~~result may be required to curtail or cease operations, which may result~~market in ~~stockholders or warrant holders losing some or all of their investment. For additional information, please refer to the section entitled “~~~~Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Going Concern~~~~,” as well as Note 2 to our consolidated financial statements included within this Quarterly Report.~~

~~The market price of~~ our common stock ~~has been,~~ and which may ~~continue to be, subject to substantial volatility.~~

~~The market price~~impact purchases or sales of our ~~common stock has experienced a significant recent decline, and may continue to fluctuate in response to numerous factors, many of which are beyond our control, including:~~

	●	~~volatility in the trading markets generally and in our particular industry or market segment;~~

	●	~~perceptions among current and prospective customers regarding our financial stability and ability to raise additional financing;~~

	●	~~perceptions among market participants regarding our ability to continue as a going concern;~~

	●	~~actual or anticipated fluctuations in our results of operations;~~

	●	~~the financial projections we may provide to the public, any changes in those projections, and our failure to meet those projections;~~

	●	~~announcements regarding our business or the business of our customers or competitors;~~

	●	~~changes in accounting standards, policies, guidelines, interpretations, or principles;~~

	●	~~actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;~~

	●	~~developments or disputes concerning our intellectual property or our offerings, or third-party proprietary rights;~~

	●	~~announced or completed acquisitions of businesses or technologies by us or our competitors;~~

	●	~~new laws or regulations or new interpretations of existing laws or regulations applicable to our business;~~

	●	~~any major change in our board of directors or management;~~

	●	~~sales of shares of our common stock by us or by our stockholders;~~

	●	~~lawsuits threatened or filed against us;~~

	●	~~macroeconomic factors, including those relating to recessionary concerns, increasing interest rates, rising inflation and changes in consumer confidence; and~~

	●	~~other events or factors, including those resulting from war, incidents of terrorism, pandemics (such as the COVID-19 pandemic) or responses to these events.~~

Statements of, or changes in, opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the markets in which we operate or expect to operate could have an adverse effect on the market price of our common stock. In addition, the stock market as a whole, as well as our particular market segment, has from time-to-time experienced extreme price and volume fluctuations, which may affect the market price for the securities of many companies, and which often have appeared unrelated to the operating performance of such companies. Any of these factors could negatively affect our stockholders’ ability to sell their shares of common stock at the time and price they desire.securities.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 - MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 - OTHER INFORMATION

~~Note Financing Transaction~~Not applicable.

~~On November 7, 2022, Verb Technology Company, Inc. (the “~~~~Company~~~~”) entered into a note purchase agreement (the “~~~~Purchase Agreement~~~~”) with Streeterville Capital, LLC (the “~~~~Investor~~~~”), pursuant to which the Investor purchased an unsecured, non-convertible promissory note (the “~~~~Note~~~~”) in the aggregate principal amount of $5,470,000 (the “~~~~Note Offering~~~~”).~~

~~The Note bears interest at 9.0% per annum compounded daily. The maturity date of the Note is 18 months from the date of its issuance (the “~~~~Maturity Date~~”). The Note carries an original issue discount of $450,000, which is included in the principal balance of the Note. If the Company elects to prepay the Note prior to the Maturity Date, it must pay to the Investor 110% of the portion of the outstanding balance the Company elects to prepay.

~~Commencing on the date that is six months after the issuance date of the Note, the Investor has the right to redeem up to $600,000 of the outstanding balance of the Note per month (“~~~~Redemption Amount~~~~”) by providing written notice to the Company (a “~~~~Redemption Notice~~”). Upon receipt of any Redemption Notice, the Company shall pay the applicable Redemption Amount in cash to the Investor within three (3) trading days of the Company’s receipt of such Redemption Notice. No prepayment premium shall be payable in respect of any Redemption Amount.

The Note requires the Company to use 20.0% of the gross proceeds raised from future equity or debt financings, or the sale of any subsidiary or material asset, to prepay the Note, subject to a maximum aggregate prepayment amount as described in the Note.

In connection with the Note Offering, verbMarketplace, LLC, a wholly-owned subsidiary of the Company, entered into a Guaranty, dated November 7, 2022, pursuant to which it guaranteed the obligations of the Company under the Note in exchange for receiving a portion of the proceeds.

The Purchase Agreement contains customary representations and warranties of the Company and the Investor. Also, until amounts due under the Note are paid in full, the Company agreed, among other things, to: (i) timely make all filings under the Securities Exchange Act of 1934, (ii) ensure the Company’s common stock (the “~~Common Stock~~”) continues to be listed on the Nasdaq Capital Market, (iii) ensure trading in the Common Stock will not be suspended or otherwise cease trading on the Company’s principal trading market, (iv) prohibit the Company from making any Restricted Issuance (as defined in the Note) without Investor’s prior written consent, (v) prohibit the Company from entering into any agreement or otherwise agree to any covenant, condition, or obligation that restricts it from entering into certain additional transactions with the Investor, and (vi) with the exception of any transaction involving Permitted Indebtedness (as defined in the Note), prohibit the Company from pledging or granting a security interest in any of its assets without Investor’s prior written consent.

~~Ascendiant Capital Markets, LLC served as the sole placement agent for the transaction and received $300,000 in the aggregate.~~

The foregoing descriptions of the Purchase Agreement and the Note are summaries, do not purport to be complete, and are qualified in their entirety by reference to the Purchase Agreement and the Note, which are filed as Exhibits 10.1 and 10.2, respectively, to this Quarterly Report.

~~Nasdaq Compliance Extension~~

~~On November 9, 2022, the Company received a written notification from the Nasdaq Stock Market Listing Qualifications Staff (the “~~~~Staff~~”) indicating that the Company has been granted an additional 180-calendar-day period, or until May 8, 2023, to regain compliance with the $1.00 minimum closing bid price requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rules (the “~~Minimum Bid Price Requirement~~~~”).~~

Nasdaq’s determination was based on (i) the Company having met the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market, with the sole exception of the Minimum Bid Price Requirement, and (ii) the Company’s written notice to Nasdaq of its intention to cure the deficiency during the compliance period, including by potentially effecting a reverse stock split if necessary. If, at any time during this additional compliance period, the closing bid price of the Common Stock is at least $1.00 per share for a minimum of ten consecutive trading days, Nasdaq will provide written confirmation of compliance. If compliance cannot be demonstrated by May 8, 2023, the Staff will provide written notification that the Company’s securities will be delisted, provided that the Company may appeal the Staff’s determination to a Hearings Panel of Nasdaq at that time.

~~The Company will monitor the closing bid price of its Common Stock and will consider various options to regain compliance with the Minimum Bid Price Requirement before May 8, 2023.~~

ITEM 6 - EXHIBITS

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

INDEX TO EXHIBITS

Exhibit Number		Description
10.1*10.1		Note Purchase Agreement dated ~~November 7, 2022,~~October 11, 2023, between Verb Technology Company, Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 17, 2023).
10.2*10.2		Promissory Note dated ~~November 7, 2022,~~October 11, 2023, issued by Verb Technology Company, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 17, 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.

4439

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

Date: November 14, ~~2022~~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)

4540

	September 30, 2022			December 31, 2021

Amortizable finite-lived intangible assets	$	7,399		$	7,317
Accumulated amortization		(4,875	)		(3,806	)
Finite-lived intangible assets, net		2,524			3,511

Indefinite-lived intangible assets		442			442

Intangible assets, net	$	2,966		$	3,953

				Weighted-
				Average
				Grant Date
	Shares			Fair Value

Non-vested as of January 1, 2022		1,821,833		$	1.41
Granted		1,334,270			1.17
Vested/deemed vested		(587,347	)		1.54
Forfeitures and other		(496,907	)		1.33
Non-vested as of September 30, 2022		2,071,849		$	1.24

	2020				2021								2022
	Q3		Q4		Q1		Q2		Q3		Q4		Q1		Q2		Q3
SaaS recurring subscription revenue	$	1,478	$	1,305	$	1,461	$	1,601	$	1,846	$	1,923	$	2,003	$	1,975	$	1,851
Other digital		360		218		340		209		510		288		147		186		165
Total digital revenue		1,838		1,523		1,801		1,810		2,356		2,211		2,150		2,161		2,016

Total non-digital revenue		1,022		576		725		582		544		495		541		238		171

Grand total	$	2,860	$	2,099	$	2,526	$	2,392	$	2,900	$	2,706	$	2,691	$	2,399	$	2,187