Letter to Shareholders emailed in the last hour.
Dear Verb Shareholders,
As you know, our Board recently approved a series of initiatives to address what we believed could be the illegal naked short selling of our shares. We announced the engagement of ShareIntel who began their investigative work several weeks ago. We also engaged other professionals, including Tom Ronk, the principal behind BuyIns.net. This is the team engaged by several other listed companies who also believe they are being victimized by illegal short selling activities.
This week we received our first comprehensive reports from the investigators, and the information appears to represent significant naked short selling of our shares, evidenced by ‘fails to deliver’ and ‘fails to receive’ imbalance data, among other data. Notably, this data appears to be conspicuously absent from the officially published short selling reports.
The effect of this activity is to create enormous numbers of phantom shares for sale. This places continuous pressure on the share price by disrupting the normal laws of supply and demand, which are the dynamics that should be the primary drivers of share price.
Our investigators’ reports also provide information identifying the firms at which this activity is taking place. We have been advised by the investigators that these are the same firms who have been identified by other public companies currently investigating illegal short selling activity.
It seems that their mission is to hold the share price below $1 so that our company is delisted from Nasdaq. If they succeed, they will never have to cover their legitimate short sale positions and the evidence of their illicit short sale activity will become more difficult to expose. As you know, we have a deadline of May 8 to trade above $1 during the preceding 10 trading days in order to avoid delisting.
Our Nasdaq listing is extremely valuable as the charters of most larger institutional investors prohibit investments in non-exchange listed companies and we currently have many large institutional holders. In addition, after a delisting we would lose access to our shelf registration making it more difficult to raise capital. To lose our Nasdaq listing because of the wrongful acts of these individuals would compound their illicit activities and the resultant damage to our company and our shareholders.
The investigative work is ongoing as we continue to analyze data and compile evidence. All of this information is being shared with counsel who will advise us on the appropriate next steps.
To help improve the share price and restore it to the levels before the naked short sellers manipulated our stock, we have put several initiatives into place. These include:
1. the launch of MARKET.live, a world class livestream shopping platform with enormous value creation capabilities;
2. we implemented a series of cost-cutting initiatives across the entire organization to reduce reliance on the capital markets, including reductions in the salaries of all senior executives, including myself, as well as all of our board members. For example, I have consistently deferred a large portion of my total compensation, and last fall, cut the cash portion of my compensation by 25% as part of a larger plan to reduce operating expenses;
3. we have reduced our burn by more than 65%, and over the past 3.5 months we have added $16 million in cash to our balance sheet opportunistically;
4. last month, we finished the pay-off of our $6 million senior secured debt;
5. last month, we cancelled our $50 million equity line of credit;
6. last fall, we engaged Alantra, an international strategic advisory firm to advise our board on market opportunities some of which are currently under consideration by our board;
7. to reward our shareholders and as part of a larger plan to combat the naked short selling identified by our investigators, our board is actively considering the issuance of a special dividend;
However, there are things that only you the shareholders can do to help ensure the company retains our Nasdaq listing. Those things include authorizing a share consolidation, which is really just a soft way of saying reverse split. I believe many of you know that I am not a fan of reverse stock splits unless employed to uplist to a national exchange. However, it is a powerful tool to combat the short sellers who are bent on seeing our company, your company, delisted to hide their manipulation of our stock. Many experts agree that the smaller the public float, the more difficult it is to short stock. We’ve seen a number of companies adopt this strategy as part of their plan to address illegal naked short selling.
It is my sincere hope that the initiatives discussed above that we have placed in motion, and on which we have worked very hard, will be sufficient to move the share price above the $1 Nasdaq threshold. But we must recognize that we are in a war battling those who appear willing to employ illegal activities to hold us down. Accordingly, we will take all steps necessary to preserve your rights to implement those solutions the majority of you determine to be necessary to protect and preserve your interests.
The Board and I recognize that these are challenging times. But we are fully committed to doing what is right, preserving what we believe is a company with exceptional products and potential, and to ensuring that we maintain the level of transparency that all investors deserve. We will continue to defend the company and our shareholders against the machinations of illegal short sellers and grow the company into what we know it can be.
Thank you for your consideration and commitment to Verb.
Verb Technology Company, Inc.
Rory J. Cutaia, Chairman & CEO
Dear Verb Shareholders,
As you know, our Board recently approved a series of initiatives to address what we believed could be the illegal naked short selling of our shares. We announced the engagement of ShareIntel who began their investigative work several weeks ago. We also engaged other professionals, including Tom Ronk, the principal behind BuyIns.net. This is the team engaged by several other listed companies who also believe they are being victimized by illegal short selling activities.
This week we received our first comprehensive reports from the investigators, and the information appears to represent significant naked short selling of our shares, evidenced by ‘fails to deliver’ and ‘fails to receive’ imbalance data, among other data. Notably, this data appears to be conspicuously absent from the officially published short selling reports.
The effect of this activity is to create enormous numbers of phantom shares for sale. This places continuous pressure on the share price by disrupting the normal laws of supply and demand, which are the dynamics that should be the primary drivers of share price.
Our investigators’ reports also provide information identifying the firms at which this activity is taking place. We have been advised by the investigators that these are the same firms who have been identified by other public companies currently investigating illegal short selling activity.
It seems that their mission is to hold the share price below $1 so that our company is delisted from Nasdaq. If they succeed, they will never have to cover their legitimate short sale positions and the evidence of their illicit short sale activity will become more difficult to expose. As you know, we have a deadline of May 8 to trade above $1 during the preceding 10 trading days in order to avoid delisting.
Our Nasdaq listing is extremely valuable as the charters of most larger institutional investors prohibit investments in non-exchange listed companies and we currently have many large institutional holders. In addition, after a delisting we would lose access to our shelf registration making it more difficult to raise capital. To lose our Nasdaq listing because of the wrongful acts of these individuals would compound their illicit activities and the resultant damage to our company and our shareholders.
The investigative work is ongoing as we continue to analyze data and compile evidence. All of this information is being shared with counsel who will advise us on the appropriate next steps.
To help improve the share price and restore it to the levels before the naked short sellers manipulated our stock, we have put several initiatives into place. These include:
1. the launch of MARKET.live, a world class livestream shopping platform with enormous value creation capabilities;
2. we implemented a series of cost-cutting initiatives across the entire organization to reduce reliance on the capital markets, including reductions in the salaries of all senior executives, including myself, as well as all of our board members. For example, I have consistently deferred a large portion of my total compensation, and last fall, cut the cash portion of my compensation by 25% as part of a larger plan to reduce operating expenses;
3. we have reduced our burn by more than 65%, and over the past 3.5 months we have added $16 million in cash to our balance sheet opportunistically;
4. last month, we finished the pay-off of our $6 million senior secured debt;
5. last month, we cancelled our $50 million equity line of credit;
6. last fall, we engaged Alantra, an international strategic advisory firm to advise our board on market opportunities some of which are currently under consideration by our board;
7. to reward our shareholders and as part of a larger plan to combat the naked short selling identified by our investigators, our board is actively considering the issuance of a special dividend;
However, there are things that only you the shareholders can do to help ensure the company retains our Nasdaq listing. Those things include authorizing a share consolidation, which is really just a soft way of saying reverse split. I believe many of you know that I am not a fan of reverse stock splits unless employed to uplist to a national exchange. However, it is a powerful tool to combat the short sellers who are bent on seeing our company, your company, delisted to hide their manipulation of our stock. Many experts agree that the smaller the public float, the more difficult it is to short stock. We’ve seen a number of companies adopt this strategy as part of their plan to address illegal naked short selling.
It is my sincere hope that the initiatives discussed above that we have placed in motion, and on which we have worked very hard, will be sufficient to move the share price above the $1 Nasdaq threshold. But we must recognize that we are in a war battling those who appear willing to employ illegal activities to hold us down. Accordingly, we will take all steps necessary to preserve your rights to implement those solutions the majority of you determine to be necessary to protect and preserve your interests.
The Board and I recognize that these are challenging times. But we are fully committed to doing what is right, preserving what we believe is a company with exceptional products and potential, and to ensuring that we maintain the level of transparency that all investors deserve. We will continue to defend the company and our shareholders against the machinations of illegal short sellers and grow the company into what we know it can be.
Thank you for your consideration and commitment to Verb.
Verb Technology Company, Inc.
Rory J. Cutaia, Chairman & CEO
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