Verb(US:VERB)2020-08-14 20:22Financial Performance - Total revenue for Q2 2020 was $2.652 million, a decrease of 29% compared to $3.733 million in Q2 2019[16] - SaaS recurring subscription revenue increased to $1.274 million in Q2 2020, up 49% from $858,000 in Q2 2019[16] - Net loss for Q2 2020 was $3.424 million, compared to a net loss of $2.343 million in Q2 2019[16] - Total revenue for the six months ended June 30, 2020, was $5,006,000, with a gross margin of $2,808,000, resulting in a net loss of $9,321,000[77] - Net loss for the six months ended June 30, 2020, was $5,370,000, compared to a net loss of $5,351,000 for the same period in 2019[20] - Total revenue for the six months ended June 30, 2020 was $5.0 million, an increase of $1.3 million (34%) compared to $3.7 million for the same period in 2019[194] - Net loss for Q2 2020 was $3.4 million, compared to a net loss of $2.3 million in Q2 2019, reflecting an increase in losses of $1.1 million (47%)[182] Operating Expenses - Total operating expenses for Q2 2020 were $6.002 million, an increase of 16% from $5.164 million in Q2 2019[16] - Research and development expenses increased by $292,000 (22%) to $1.6 million in Q2 2020, primarily for the development of verbLIVE and enhancements to existing platforms[188] - General and administrative expenses increased by $757,000 (23%) to $4.0 million in Q2 2020, attributed to higher stock compensation and labor costs[190] - Total cost of revenue decreased by $907,000 (44%) to $1.1 million in Q2 2020, mainly due to lower non-digital revenue[185] - Research and development expenses rose to $2.9 million for the six months ended June 30, 2020, compared to $1.9 million for the same period in 2019[200] - General and administrative expenses increased to $7.5 million for the six months ended June 30, 2020, up from $5.5 million for the same period in 2019[202] Cash Flow and Liquidity - Cash and cash equivalents increased to $1.378 million as of June 30, 2020, from $983,000 at the end of 2019[13] - The company incurred a net loss of $5,370,000 and used cash in operations of $4,673,000 during the six months ended June 30, 2020, raising substantial doubt about its ability to continue as a going concern[34] - The company intends to seek additional debt or equity financing to sustain operations, with no assurance of future profitability[35] - The company raised $12.3 million in net proceeds from a public offering that closed on July 24, 2020, issuing 12,545,453 shares of Common Stock[139] - As of June 30, 2020, the company's cash increased from $1.378 million to a pro forma amount of $13.712 million following the public offering[141] - The company utilized cash in operations of $4.7 million during the six months ended June 30, 2020[209] Assets and Liabilities - Total assets as of June 30, 2020, were $28.375 million, slightly up from $28.359 million at the end of 2019[13] - Total liabilities increased to $18.928 million as of June 30, 2020, compared to $16.914 million at the end of 2019[13] - Stockholders' equity decreased to $9.447 million as of June 30, 2020, down from $11.445 million at the end of 2019[13] - The company reported a weighted average number of common shares outstanding of 27,905,680 for the six months ended June 30, 2020[77] Revenue Recognition and Business Model - Revenue is primarily derived from digital subscription-based SaaS recurring revenue, recognized over the subscription period, and digital non-subscription-based revenue, recognized upon completion and shipment[51][52] - The cost of revenue consists mainly of salaries, purchase price of consumer products, digital content costs, and shipping expenses[55] - The company recognizes revenue in accordance with ASC 606, which requires judgment in identifying contracts and performance obligations[45] - verbCRM was the primary source of subscription-based SaaS recurring digital revenue for the six months ended June 30, 2020[164] - verbLIVE is currently available to Salesforce users for a monthly subscription fee of $24.99 per user, allowing them to launch live stream ecommerce sessions directly from their Salesforce dashboard[177] Acquisitions and Investments - The company acquired a subsidiary, resulting in a cash outflow of $15,000,000 in the previous year[20] - Verb completed the acquisition of Verb Direct for a total consideration of $22,820,000, which included $15,000,000 in cash and 3,327,791 restricted shares valued at $7,820,000[71][72] - The acquisition resulted in recognized goodwill of $16,337,000 and intangible assets of $6,340,000, primarily due to anticipated future synergies[72][73] - The company has executed a letter of intent for a potential acquisition to expand into a new business vertical, with due diligence currently underway[179] Stock and Compensation - The Company awarded annual incentive compensation of $430,000 to CEO Rory Cutaia and $125,000 to CFO Jeff Clayborne, with payments deferred to January 10, 2021, and January 10, 2022[97] - The board approved an annual base salary of $490,000 for the CEO and $250,000 for the CFO, along with target cash bonuses of $490,000 and $125,000 respectively[149] - The Company granted stock options to employees to purchase a total of 346,637 shares of Common Stock with an average exercise price of $1.39 per share, totaling a fair value of approximately $463,000[118] - The total fair value of restricted stock awards that vested or were deemed vested during the six months ended June 30, 2020 was $1,209,000, included in selling, general and administrative expenses[113] Impact of COVID-19 - The company experienced significant disruptions to its business operations due to the COVID-19 pandemic, which negatively impacted sales and overall financial condition[135] - The Company implemented a COVID-19 Full Employment and Cash Preservation Plan, reducing cash compensation by 25% for directors and senior management, and 20% for other employees[112]