Q4 2020 Verb Technology Company Inc Earnings Call

Good afternoon, and welcome to the fourth quarter 2020, and fiscal 2020 financial results conference call for verb technology company.

At this time all participants are in a listen only mode. Please be advised this call is being recorded at the company's request.

And on our call today are worried J, Katanga, CEO and Jeff Clayborne CFO.

Before we begin I'd like to remind everyone that statements made during this conference call will include forward looking statements.

Under the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially.

And we're looking statements speak only as of the day. They are made except as required by law as the underlying facts and circumstances may change.

Verb technology company disclaims any obligations to update these forward looking statements as well as those contained and the company's current and subsequent filings with the SEC.

I would now like to turn the call over to Rory Cutaia.

Oh.

Ward.

Thank you and I, thank everyone for joining.

And us today for our fourth quarter 2020, and fiscal 2020 financial results conference call on.

On today's call, we will bring everyone up to date on it.

And our progress over the past six months, specifically fourth quarter 2020, and because we're at the end of first quarter 2021.

And we'll provide.

Some on the oddity guidance on what we expect to report and our next form 10-Q filing for this period. We will also discuss full year 2020 results and compares to full year 2019 results.

I'll also talk a bit about what has to be charged up for 2020, one, which I believe will represent the year the.

Market will recognize the true value and this great company represented by that the sum of all the pieces, we've been creating and assembly and over the past three years, it's been a long long and arduous road, but as I've learned nothing.

And nothing good comes easy and.

Verb is certainly no exception.

You see we didn't just set out to build a better mousetrap, we we set out to build a better mouse to address a problem and a way that was different bold and innovative we set out to achieve something that had never been done before some refer to it as a blue Ocean strategy, we werent just redefining the category.

Gory, we were creating an entirely new category, there's no playbook for the execution of our business plan. We wrote it modify it as we went along and then we rewrote it.

But not not everyone has the stomach from that kind of journey, and just fraught with twist and turns and unexpected debt and.

And endless days nights and weekends.

But it also brings out the best and us drives us and ultimately yields the greatest returns and rewards for ourselves and our shareholders.

For those of you know on my background, you know I've done this before I've lived it I've walked it and our cockpit.

And.

And I know it just feels like when its so close you can taste it.

It's hard to believe that going into April 'twenty, 'twenty, one with still dealing with the impact and uncertainties associated with COVID-19.

I count myself, among those who one year ago believed that we would be true the crisis well.

And before the end of 2020.

To refer to 2020 is a difficult year is a gross understatement, especially as even now the losses, both personal and professional that has touched all of us and some way continue.

Continue to Mount.

And those of you who follow me and I'll listen to my conference presentations.

You've heard me say that it's out of these difficult periods of time and at the existing paradigm is challenged and opportunities present themselves.

You just need to know where to look.

I believe we will see the next Amazon, Google and ex Facebook or maybe the next Twitter emerge from this.

Period.

And for those of you, who do know where to look we are witnessing that unfold right now COVID-19, and the resulting social distancing and remote work environment has had a profound effect on many areas of our lives on many things we once took for granted.

The impact on.

On retail businesses has been particularly hard brick.

Brick and mortar retail was already dying on the buying due to the shift towards Amazon style convenience, which caused a massive surge and e-commerce over traditional retail.

But COVID-19.

And it's long lasting effects have changed retail assets.

As we know it and it's unlikely to return to its former self anytime soon.

So this is where we see the opportunity I referenced earlier and with that backdrop for.

And those new to our company.

Let me tell you about park.

We're a software company a SaaS based recovery.

Recurring revenue business model with what our customers say on the most effective sales tools on the market today, especially for remote selling and that's because our sales tools are based on our proprietary interactive video technology.

Technology that our clients report produces up to 600 to 12.

100% increases and sales conversion rates and up to 3300% increases and sales rep retention rates, we've had more than 1.9 million downloads of our products more than 25004 nine star ratings on the App stores.

We're in 60 countries 48 languages.

And our platform is comprised of a suite of products that include verb live verb CRM verb learn and verb teams and at the heart of all of these products is our interactive video sales and E Commerce technology.

So I want to start with <unk>.

<unk> live, which as I said, you've heard me say this many times I believe likely be the greatest value creative for our shareholders for years to come and and launched commercially this quarter.

And I talk about this difficult period of time, producing the next Amazon.

This technology is what I'm talking about.

True live stream in video E Commerce, it's a combination of zoom and shopify and a disruptive implications of this technology and value creation potential a verb.

Actually on limited.

And actually began over two years ago and China.

With a couple of small companies.

And he's that introduced livestream ecommerce assets and over the course of.

And 30 months.

It hit its tipping point and the market and adoption rates exploded.

And here in the U S. We are at the very beginning stages. So we're fortunate to be able to look at the data coming out of China.

And to help predict what may happen here and the U S.

And here's some of the data points, but what happened in China around live streaming e-commerce to help analyze the opportunity and for us validate our business strategy.

November 11th and China is that national holiday called Singles' day.

It's <unk>.

Somewhat analogous to our black Friday, and it's when everyone buys presence for their unmarried friends at least at least that's my understanding of it.

And so on November 11th 2019.

Singles' day, and China, One company, one person using a live stream.

Day, Commerce, App sold $145 million and merchandise and one live stream.

12 months later, Singles' day, 2020.

One person reached $37 million ly viewers and sold 400 and.

And $25 million and merchandise.

Combined sales conducted through live streams that day alone were 75 billion.

In 2020, 500 million people and China purchased products to and interactive live stream.

More than 136 billion.

Dollars.

And products were sold just in 2020 alone through live streaming E Commerce apps and China.

And it's just starting now.

And it was way ahead of the curve adoption is just beginning we.

We have not yet hit that tipping point as they did.

Did and China after 12 to 30 months.

But we believe.

It will be bigger here.

And we intend to lead it.

Let me explain.

Unlike and China U.

U S consumers are already conditions to livestream buying through decades on QVC and home shopping network TV.

Shopping.

Here's the evidence to suggest that livestream shopping is beginning to happen here and the U S.

Over the past two years and even more so over the past year.

Everyone. On this call has received e-mails inviting them to attend to webinar, where the host is trying to sell you something I probably.

We get eight to 10 per day.

Smart investors have begun to recognize that this is essentially and early form of livestream shopping.

And I've heard the term social selling.

Well verbalize and takes that to an entirely new level because it eliminates the friction from the selling.

Process.

Those of you who attend Webinars and know that the host makes his or her pitch and then directs the attendees to where you were out or a website that they put in the chat or comments section well.

Places it on screen to write down or maybe even a phone number to call.

That friction and.

Selling <unk> is the enemy of sales conversions.

With a verb live webinar attendees can click right on the screen during the live broadcast to purchase or otherwise respond to the house call to action.

We believe this will become the new paradigm for online purchasing just.

And Fred has in China.

And as an example.

Imagine you're watching a webinar with your favorite author are introducing his or her book or are struggling retail and pitching any other product and service and while you're watching a live stream broadcast the host places and interactive icon.

Like if at and on the screen.

Net says buy it now.

And that that button, and then appears on the screen of all viewers and potentially thousands of viewers.

And the host and and bikes the viewers to purchases book by clicking on that button on their screen right and the video viewers can even download the.

Or book right out of the live stream broadcast.

That is what I call, eliminating friction from the sales process and that's why our customers are getting amazing results from using our software.

Our technology Leverages that checkout counter at the supermarket mentality that.

And eight impulse buy propensity and all.

<unk>.

Or how about a small fashion retailers struggling with their store closed due to COVID-19 using a live stream to show off the latest fashions that they would've had on display and their store if it was open and.

And allowing viewers that they reach through their Facebook post to buy the <unk>.

Items right out of the livestream broadcast.

That verb life this quarter.

And we began offering it to our existing user base currently as I said, that's approximately $1 9 million people on a weighted 2 million.

Who have downloaded one of our older applications.

Our strategy.

As I've shared previously.

What's the just get people to try it as we believe the results may experience will drive subscriptions. So back in January when we launched commercially.

And we offered and extended free trial period.

I'm happy to say that strategy is beginning to pay off.

One of the first customers to whom we offered and extended free trial from verb lives has now become our largest subscriber yet that we expect will generate up to $1 million a year of SaaS recurring revenue.

Each of which much of which.

We will recognize and report this year.

Sure.

As we come to the end of the initial free trial period that began back in January.

Our sales team is reporting and a robust pipeline on.

Other large enterprise clients, who after their free trial periods are ready to commit to full price long term subscriptions.

And Q4, 2020.

And we completed and integration of Herbalife into sales force. We've also launched a joint marketing campaign with sales force promoting verb live to their existing client base and in fact, we won the sales force.

Dental Jam contest is the most productive sales force app, beating out Adobe among other big names.

Verb live is now being offered as an add on to their monthly sales force subscription.

To date adopt.

Adoption has been flow due primarily to lack of awareness, which we expect it will take some time to create just as it did and China look when people try it.

They want it.

Our job.

Job is to get people to try it.

So look this is expected with any truly new product and technology that represents a meaningful departure from the norm.

On the traditional way people communicate new business.

But then you hit that tipping point and it takes on a guy.

I've lived this when I launched and telecom.

Technology startup that challenge the way telecom carriers into connected with one another.

Carriers was slow to adapt and adopt and then after a period of time it took off and it became the de facto standard by which all telecom carriers and to connect with one another that I was almost 15 years ago and it remains that.

The facto standard today by the way that business was sold again, a few years ago for almost $2 billion.

Salesforce is a big believer and the technology has reached out to coordinate and awareness campaign, which over time should generate the awareness needed to hit that tipping point.

A broader adoption among the sales force customer ecosystem.

As many of you know, we also completed and integration of our interactive video technology and to Microsoft outlook.

Outlook users, who subscribe and we'll have a new button on the toolbar next to the outlook New mail button.

But this one says new verb now.

Clicking this allows users to create a quick video our video mountain right now look and then add interactive icons such as buy it now among many other interactive features and then send it out through outlook.

As we predicted several years ago video has.

Has become the preferred means of communication and now you no longer have to leave outlook.

And do it right in and true outlook.

The follow on releases will also integrate the feature throughout the Microsoft Office 365 suite of products and you will even be able to post directly to social.

Social media from within outlook, which alone is an amazing feature.

So I've been asked how this fits into the Microsoft ecosystem.

Well this is what I've been told by Microsoft.

They are keenly focused on their azure cloud services platform, where they anticipate.

And the greatest growth.

Add on applications native to their existing products that trigger a greater demand for Azure cloud services.

On the large enterprise.

Are the much sought after partnerships and few Microsoft application add ons and have a greater need for Azure cloud services.

And then video based apps such as ours.

Theirs.

And there's over 1 billion outlook users worldwide.

On it.

We will offer it as an add on to the monthly office 365 subscription.

We've now begun the public beta release of the application.

With some high quality beta testers, including a large telecom services provider.

We anticipate a 30 to 90 day beta period before the general release, although low.

And will likely begin and invitation only public release much sooner than that.

Look we want to we want to create that buzz and.

<unk> demand and awareness similar to the strategy adopted by clubhouse.

How many people do you think we'd like to click right and their outlook toolbar record and interactive video and send it out to outlook instead of typing and email.

But we have.

Protecting the IP behind our platform that we've worked on a free.

For years with patents issued and patents pending.

So on berm live is very new and we're focused on building adoption rates from CRM has been our bread and butter product over the past two years and comprises today the greatest part of our revenue from.

<unk> CRM offers the ability to add.

And black developments to any pre recorded and even one year record with your mobile device as opposed to a livestream video like Herbalife and.

And you could share whether my text E mail and posting directly to social media and the data.

From viewer engagement flows into the CRE.

And at interim and component of the application, making it easy from a sales person to create new leads and then separate hot leads from cold.

Focusing his time and effort.

Our newest product introduced just over two months ago is a verb teams, whereas verb CRM as.

<unk> labeled product aimed at large enterprises for.

<unk> teams is aimed at solar printers, and small businesses. It has some amazing nextgen features including self sign up self onboarding self configuration fantastic analytics, and it's extremely scalable and the self onboarding.

White celebrates our time to revenue recognition rather dramatically.

It also comes bundled with verb lie.

And has one click sync with sales force.

A feature that sales force users I Gotta love.

It's available now on our website I invite you to visit Burb Dot tech and sign up for a.

And free trial of a verb teams that has verbalize and built that.

Now.

I'd like to give you a preview of one of the newest products.

One of the things coming this year that our entire team and our partners are extremely excited about and entirely new livestream ecommerce.

<unk> platform that we believe represents the next evolution of the livestream experience.

We have tentatively called it marketplace and here's why.

As we discussed current livestream ecommerce technology contemplate attendees responding to and invite to a live stream event.

But imagine if you're a response to the invitation.

It took you to and online destination.

Where you can view not just one host live stream event, but scores of livestream events hosted by scores of retailers and consumer brands and influencers divided into categories from fashion to cause.

Medics to Homegoods, even food and wine where attendees can go in and out of numerous live streams purchase products interact with host and even interact with other attendees like a virtual shopping mall, but way better way cooler.

And then I suppose you saw and amazing items.

Items featured and wanted to live streams that you attended.

But you know you just didnt pull the trigger and buy it and the next day wished you had.

Well, you will be able to return to the website destination to the marketplace section and there you will find every items featured and.

And every livestream broadcast by every retailer you can search for your items and purchase it and even view a recording of the livestream broadcast and which Youre item was originally featured.

That is where we believe this new livestream ecommerce category is going and we intend to be there first.

While there is a subscription revenue component to reserve as a channel or a time slot to a retailer.

The majority of revenue to be derived from this new verb vertical is from a percentage of sales generated during the live stream as well as a percentage of sales generated through the marketplace.

Marketplace is the internal name that we've used.

But we'll announce the brand name that will use at launch and.

Marketplace is now built and we are actively beta testing with retailers.

But we've got more.

Much more value generating game changing.

That will disclose and we get into active beta testing for them later in the year.

And went out them too soon.

This represents one of the hyper growth initiatives I discussed on our last earning calls that I said I would repeal and 2021 on.

Another one is our attribution feature which you have heard me talk about.

Product and Thats scheduled for release and then next few weeks, let me talk about attribution because I think its blockbuster.

Suppose on I'm planning on hosting a verb live event to promote and sell my skin care products.

So I'll send a verb live and by all of my contacts and I'll post on social media to attract the largest Audi.

Cat.

On my list isn't that big nor is my social media following.

But some of my colleagues have massive followings and I'd like to leverage.

So with our new attribution feature I can call them and say Hey, sure My Burb live event with all of your followers and I'll pay you what percentage of sales.

Made to each of your followers that joins my borrowed live event and buys and if my products.

So think about that.

Think about that in the context of direct sales companies.

Corporate sponsored verb live events can now become massive profit centers where attendees.

And so low risk can get credit for and participate and the sales revenue income stream from products sold at the event.

That's our attribution feature as.

As big as we think that can be right out of the gate and direct sales just think about the implications of that feature outside and direct sales think of.

About how that can drive adoption and subscriptions for verb life and think about how that feature.

Drive participants to the marketplace.

Okay.

So with that background, let's get to our financial performance.

Okay.

And at once proud and.

And they are cautious.

Cautious to say that we have performed remarkably well during the pandemic. Indeed, as we will detail on today's call. We enjoyed truly extraordinary growth and 2020, culminating and literally explosive growth and third quarter of 2020. There was a year came to a close some of our clients were impacted by COVID-19.

And yet economic pandemic and as a result, we too experienced the impact of COVID-19, albeit modest and we will discussed we will discuss in more detail.

But as you can see.

We rebounded and a big way and Q1, 2021 and its onwards and upwards from here.

So let's turn.

The 2020 results.

As usual to provide a complete picture of the business I'm going to discuss and compare the 2020 annual and quarterly recurring revenue reflected and our current 10-K against prior periods.

And im going to share the number of new client contracts executed and disclose the total.

And two based contract value as well as the total annual recurring revenue, we expect to recognize from these new client contracts.

So starting with Q4 of 2019 and continuing through Q4 of 2020 is a quarter over quarter SaaS recurring revenue growth.

Total, but recognize by GAAP and reflected and our filed financials as a component of our digital revenue and.

And that was on that but that will become clearer as we as we proceed.

2019, Q4 was $995000 2020 Q1.

And $1.057 million 2020, Q2 was $1 million $274000 2020, Q3 was $1 million $478000 and our fourth quarter was $1.305 million and yes, Q4 was down slightly.

With Q3 and here's why.

We have a combination of clients impacted by COVID-19 that delayed or canceled schedule launches, which would have triggered revenue recognition for us we have clients that went out of business, presumably due to COVID-19 and.

And we had a client decided to save money and not renew and.

And they currently have no app for their salespeople and on another go to a far cheaper vanilla lacking all the features salespeople have come to rely on and our app.

But we assume these are all COVID-19 related and we expect some of the larger ones and are still and business will return as clients, especially drawn.

And by our new verb lives and that attribution feature that I spoke about a minute ago.

As we ended the year on December 31, 2020, we actually had 14 clients with executed agreements that were ready to launch that have a combined minimum contract value of $894000 and.

On line annual recurring revenue of $430000, a portion of which we might have recognized if they launched and we wouldn't be having this conversation.

But here's something analysts can dig their teeth and too.

The impact of the loss of revenue from these customers really.

Only impacted the last six weeks on the quarter.

So why is on important.

Because that means that loss at the entire three months of Q1, 2021 and yet we believe we finished with at least 10% higher and.

And Q4.

Base, which means sales in Q1 were that good we rebounded that strongly that we digested the loss for the entire three months not just the six weeks and Q4 and we still finished yet.

That's how our sales team rose to the challenge we faced in Q4 that we didn't see coming.

Looking at the full year 2020, we added 62, new clients with the base value of $3 million and projected annual recurring revenue of $1 $7 million for full year 2020, we're reporting total digital revenue of approximately $6 $5 million up 53% over.

Rubious year.

Total digital revenue has two components you've heard me talk about this before.

Digital revenue generated from use of the App and in App purchases, such as sampling and among others and digital revenue from the monthly recurring contract base subscription.

We referred to.

The SaaS recurring revenue we view this as the most important component of revenue and where we focus our initiatives for 2020, we're reporting SaaS recurring revenue of approximately $5 1 million up 82% over the previous year.

Notably.

<unk> and <unk>.

Recurring revenue as a percentage of total digital revenue was 79% compared with 66% for the previous year.

And that's consistent with management's plan to shift our revenue mix.

The higher margin SaaS business.

However.

Notably a pro forma basis, where we include our wholly owned subsidiary subsidiaries from direct and all our solar fire acquisition subsidiary.

Total SaaS revenue for the fiscal year ended 2020 was actually $6 $1 million up 31% on a pro forma basis from the $4 6 million over the same period.

However on a chip.

And I'm going to leave it to Jeff Claiborne, our CFO, who will provide a better explanation of the pro forma treatment of this additional revenue.

Non digital revenue is low margin revenue, we generate from non app non digital sources through ancillary services that we provide as and accommodate.

Last into our clients and customers. These include printing services among other services that we have intentionally deemphasize and.

And we know outsource to a strategic partner as part of our cost reduction plan, we instituted last year.

We're reporting total non digital revenue of approximately three.

<unk> $5 million and that's down 29% from the previous year.

Which is as I said consistent with our 2020 strategic objective to shift our revenue mix towards the high margin digital products.

In fact through these initiatives, we're now reporting that gross margins have.

<unk> increased 22% over the previous year.

Total combined GAAP revenue recognized revenue.

For 2020 was approximately $10 million up 10% over the previous year.

Cost of revenue was $4 8 million, representing a reduction of cost of goods.

And from $4 $9 million reported and the previous year.

And let's talk about the three months ended December 31 and 2020.

We added 15, new client contracts with a guaranteed base value of $617000 and 325000.

Annual.

Recurring revenue I'd say base value because based on your represents only the minimum monthly guaranteed over the life of the contract on minimum monthly guarantee over 12 months.

However, during the upcoming months and over the life of the contract we expect individual users will add additional services.

Annual interest such as <unk> block and.

And additional corresponding revenue is not reflected in these numbers.

Total digital revenue was $1 5 million and increase of 14% from the same quarter last year total SaaS recurring revenue again, a component of total digital revenue was one point.

$3 million and increase of 31% from the same period last year SaaS.

SaaS recurring revenue as a percentage of total digital revenue was 86% compared with 74%.

From the same period last year.

Total revenue was $2 1 million, 16% decline from say St. Pierre.

And 2019, but that was reflecting the companies.

2020 strategy to reduce our focus on the lower margin non digital products and the successful execution of our strategy to ensure a substantially higher percentage of total revenue being generated from our digital business.

Cost of revenue was $1.3 million in line with the same period last year.

And so now for Q1, 2021 and three months ending today March 31 and 2021.

But look I want to state clearly that these are unaudited projected number.

And they could vary material from the numbers that we ultimately report on our Q1 10-Q after the orders redo them and all the data is and can I want to be very clear about that.

Okay.

Total digital unordered projected revenue was $1.8 million and increase of 24.

And over the same period last year and already 20% over Q4 of 2020.

Total SaaS recurring unaudited projected revenue organic component of total digital revenue was $1 4 million and increase of more than 30% over the same period last year and already over.

4% of Q4 2020.

SaaS recurring unaudited projected revenue as a percentage of total digital revenue was 79% compared with 73% for the same period last year.

Total use of downloads on now at one point.

Attempt to nine 3 million up more than 250% over the 550000 reported and the same period last year and up approximately 1.5 dollars 6 million reported from the third quarter on 2020.

Finally.

As part of our continuing and grow.

Growing commitment to ESG initiatives environment, and social and government governance initiatives throughout 2020 and into 2020 one.

We launched several programs through on Bard for humanity Division and many of which were designed to help small businesses recover from the impact of the pandemic among many many.

Any other contributions that youll find featured.

On our website at <unk> Dot Tech.

Alright, I'd now like to turn the call over to Jeff Clayborne, Our Chief Financial Officer from more detailed review of our financial results. Thank.

Thank you Barry and good afternoon, everyone I'd like to review, our financial performance as reported and on.

Form 10-K filed on Wednesday March 31 for the annual period, ending December 31 and 2020.

The following period over period comparisons present, the company's pro forma results of operations after giving effect to the acquisition some concepts and so a buyer based on the historical financial statements of the company sound concepts and.

So low.

The unaudited pro forma results give us ex the acquisitions as if they occurred on January one 2019.

Total revenue for 2020 total $10 9 million a decrease of 23% from the $14 1 million reported in 2019.

Total digital revenue for 2020.

Total $7 4 million and increase of 18% from the $6 3 million reported in 2019.

Total SaaS revenue for 2020 totaled $6 1 million and increase of 31% from $4 6 million reported in 2019.

The cost of revenue for 2020 total five.

$5 million, a decrease of 32% from the $7 3 million reported in 2019 gross profit for 2020 total $5 9 million a decrease of 13% from the $6 8 million reported in 2019.

Research and development for 2020 totaled $7 nine.

$9 million and increase of 59% from the $5 million reported in 2019, the increase and research and development is attributed to research and development of Herbalife and enhancements to verb CRM.

And our core platform to facilitate native integrations with Salesforce, Microsoft and other channel partners.

General and administrative expenses for 2020 totaled 20.

And one 2 million and increase of 28% from $16 5 million reported in 2019, the increase and general and administrative expenses is primarily related to general and administrative expenses attributed to an increase and stock compensation expense of $1 9 million expenses from sulfide 700000, primarily driven by retention bonuses.

And plus increased costs and support growth driven by labor related costs of 700000 professional services of 630000 marketing and promotion of 490000 and increased facility costs associated with our California.

75000.

As of December 31, 2020.

Cash on hand, and total $1 8 million.

And total assets were $32 5 million total liabilities were $21 8 million and stockholders' equity was $10 7 million.

We had a couple of notable changes to our balance sheet and 2020, we added one 5 million and long term debt of which $1 2 million as a paycheck protection program loan that was.

Forgive and on January four 2021, 850000, economic injury disaster loan payable over 30 years and and additional Paycheck protection program loan at 90000, we inherited from the solar on our acquisition.

We've had a couple of classification changes as $1 1 million of long term related party.

<unk> debt and 521000 deferred incentive compensation is now classified as current.

Here are some of the financing initiatives that occurred in 2020.

On February five 2020, we initiated a private placement for the sale and issuance of up to 5 million restricted shares and our common stock at a per share price.

And so the dollar 20, which represented a 20% discount to the day current dollar 50 closing price of our common stock on the day, the offering was priced and memorialized by executed subscription agreements.

As a result of this private placement a total of 4 million 237833 shares of common stock price subscribed for.

And issued for the net proceeds of $4 4 million after direct cost on.

And April 17, 2020, we received loan proceeds and the amount of approximately $1 2 million from the Paycheck protection program or PPP. As previously mentioned on January four 2020, the entire note and accrued interest was forgiven and will be accounted for as.

The gain in fiscal 2021.

And January 2000, and for 2020, we closed our public offering and a company issued and sold 12 million and 545000 and 453 shares of common stock, which includes $1 636000, and 363 shares of common stock sold pursuant to the exercise by the underwriter.

Our writers have an overallotment option for gross proceeds of $13 8 million or net proceeds totaled $12 3 million after deducting the underwriting discounts commissions and offering expenses.

As of today, there are 62 million and 451830 shares of our common stock issued and outstanding.

On the total number of common shares issued and outstanding approximately five 4 million shares or approximately 9% are owned or controlled by management and our board of directors I'd like to turn the call back over to the operator for Q&A operator.

At this time.

Time will be conducting a question and answer session.

Like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is and the question. Thank you.

You May press star, two and if you'd like to remove your question from the queue and participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Okay.

And.

And our first question is from Bryan Keane.

And stronger with Alliance Global partners. Please proceed.

Hi, good evening guys.

Can you go on.

Yes.

Great.

And can you quantify the impact on revenue from the churn and you talked about as well as the companies going out of business on both the digital and the recurring side and I know you gave guidance for the first quarter. So that's pretty much done but.

Can you quantify the impact it had on revenue and the first quarter of 'twenty one.

Yes.

And the impact on the first quarter was about $125000 Brian.

And and what was the impact on the fourth quarter right.

About 140000.

So and then if I adjust for the 140000.

On sequential growth still would have been pretty flat. So I guess I'm wondering was the difficulty then and growing sequentially the verb.

CRM business the backlog.

Customers and couldn't be launched and based on your first quarter guidance and that is that issue behind us.

That's correct right and that's exactly that's exactly what happened and.

And yes, okay very.

And I was happy to report and then as you.

Yeah and.

And then as it relates to verbalize and you highlighted.

And the large win.

The enterprise is actually paying for the tools for the sales reps. How many users does this consist of when do you expect to generate and begin generating revenue and what has to happen between now and then from.

And it can move forward and whether a 60 day trial for that customer.

And the 60 day trial is is over.

We are now that they place their order and executed the agreement.

We're making certain customization to the application for them and remember verbs CRM is a white label product. This is an add on or this customer of her life.

And there's some customization that they like.

And they'd like to have and we're just about done with those upon completion and testing then it will watch.

How long is that going to be could be 45 days could be 60 days to be determined.

Great and then.

And.

You talked about and <unk>.

Conversion and hopefully at the end of the 60 day trial and know it's early but how many users are on a free trial actual users and separately. How many paid users are actually live with this and then finally, how many are like this large customer.

Our I call, it and backlog, where they are signed but they're not yet paying.

So.

This is probably a great opportunity for me to provide maybe a lot more detail into what's what's happening with verb lives and I think our shareholders would probably like to know so over the past six weeks, we opened up for a live.

Live free trials to.

Approximately 34000 potential users with more added each week as we begin to roll that out.

That number includes approximately 30 enterprise customers for whom those 34000 reps work.

However.

And each of those enterprises actually restricted access to verb live to smaller subsets of internal beta testers before they wanted to release it to their entire field of reps. So the actual number of reps that used it.

Among the 34000 universe of reps we authorize.

Arthroscopy use.

Was actually substantially smaller and of that smaller group.

We had 3200 reps sign up for subscriptions before the free trial period, even and which which we found encouraging.

However, the bigger takeaway from this is that.

Over the free trial period.

We generated 28 quotes or requests for contracts from the approximately 30 enterprise clients, who comprised that initial free trial release and.

And of those we've already executed five contracts, who intend to roll.

Cloud verb live to their entire field and then of those two theyre, making it mandatory that every rep sign up for it and use it.

And one of those is that million dollar a year contract that I referenced earlier.

But look we're still and the free trial period for many of the reps.

Reps that we've opened and it opens it up so far too and.

Look where we're pretty encouraged by this response and in fact, so far it's.

It's exceeding our expectations because it's a new technology, it's a new way of doing things we anticipated.

Somewhat slower adoption, we felt we needed to.

And in cases of exploded and we are.

But we see it picking up momentum.

And we're really we're really encouraged by the responses that we've gotten out from this limited period of time beta test.

A free trial and some great information and I have a follow up on and then.

One other and mandatory.

Enterprises, and mandating ex salespeople use it and you got equal size to your first customer and then I take it there's three other since you've said you executed five is those situations, where they are purchasing a corporate license, but then each user or salesperson has.

Cash to opt in and pay us a certain piece themselves is that what is that.

And if I described it rightly.

Youre correct.

It's a combination of those things dependent upon the particular user and we we customize those packages based upon the minimums that they are prepared to commit to and the agreement that's.

And that's based contract value that you heard me referred to and and we were going over our contracts executed last year and last quarter.

And the other mandatory one is that as large as and when you've already executed on.

You know im not.

Not sure on prepared.

Repair to commit to that.

I believe it could be larger, but I I I don't want to I don't want to commit to that just yet as we're refining some of their features and somebody other things. So let me, let me refrain and I'll comment on that.

When we put these things out and the press release.

When it gets launched and that'll be before.

For the next.

And one more question and then I'll get into Q and guessing now at this point are you sure you have other people are going to ask questions, but talk about the Microsoft integration and you said was in a public beta testing did I hear right that that is is a couple of months away from.

Maybe maybe a.

On a month or two.

Two or three away from a general launch which will start.

With just a couple of customers to create a buys and you just talk about when that how you expect the general launch to begin.

So.

We put out a press release, when we decided to.

And to go with a public beta now we've been and beta as you know probably for for an extended period of time.

We went with a public beta and we offered at first two companies that suffered through through Covid companies that were whose business was impacted by Covid and we wanted to give them a little bit of a leg up so.

So we announced that we had a.

Tunnel companies respond to that.

<unk> there were some big names and it I think I mentioned and the call and we have a large <unk>.

Telecom services provider. That's included in that so so that's now begun where we're rolling out and give them access they're distributing that access to the.

And the number of people and their and their respective organizations and.

And then you know.

How long will that last no I'm not sure on the low and it'll be 30 days on the high end and there'll be 90 days, but we're not going to wait until lets over before we begin releasing it to the general public.

Probably.

<unk> mentioned in the call and we wanted to do a sort of an invitation only program. We've been tracking companies that have used that as a marketing strategy and.

And most notably recently as clubhouse.

To get an invitation or be recommended by another user and that creates a buzz and.

As I think kind of.

Exclusivity that seems to drive demand and awareness.

The key to our business frankly is awareness because the products are great and as soon as people try them I mean look we openness.

And as beta per obliged to really.

And what I said 30 30 companies.

And that creative.

Have asked.

Ask for quotes and five of them have already executed contracts. That's over a really short period of time, so that that really confirms what I'm, saying, we just need awareness. So what we're focused on now going forward is creating awareness and doing some innovative things to generate.

And $20. So what I said about the clubhouse style approach to how we're going to release the outlook integration that's part of it.

Alright, Thanks, and I'll get back in the queue.

Yeah.

Alright. Thank.

The rate of women as a reminder, our where and the Q&A session.

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Ah Ah moment and as we poll for further questions.

Okay.

If you don't mind theirs.

And there's a couple of things that.

I wasn't asked.

Expect it to be asked and but I'd like to address anyway.

And <unk>.

We have.

A series of rules and policies that we live by especially as.

Their company.

We have a fiduciary obligation to.

To our shareholders.

And other stakeholders.

And we take it really seriously.

We create these rules we create these policies.

And some of them.

On.

Just zero tolerance policies, which means that if you violate the policy if you violate the rule.

And then.

It doesn't matter, whether it was intentional it doesn't matter if it was a mistake.

Zero tolerance means and if you violate it and we have to terminate.

Imminent.

It's not something that we are proud of doing but the fact that that we're a company that takes integrity.

To be one and most important things that we could provide.

To our stakeholders to our shareholders.

By holding to these kinds of policies.

And rules and regulations and enforcing them the way that we do.

It's for the protection of the company and all.

Shareholders.

So I'm, bringing this up because we're frankly getting inundated bye bye bye requests.

Through our Investor relations firm, and and emails and text messages, social media posts and and I wanted to address it directly.

Directly.

We had.

Two people and our organization to.

And to people that we valued.

That violated one of our policies.

It wasn't insider trading with which I see people talking about in the sense that.

They had.

Access to insight information material inside information, which neither of them did.

And then when and trade and to stock on the based on that information that wasn't what happened.

We have a rule that we call a blackout period and that means that you cannot trade the stock I don't care, where you are and the organization at what.

<unk>.

What your role is.

It's a very hard and fast rule during the blackout periods, you cannot trade stock.

We had unfortunately to peoples time.

And partnership to sugar.

I'm not sure what that is but what I'm, let me finish my thought.

And what love them.

We had a couple of people that trade and stopped during that period of time.

I don't believe it was intentional.

I'm sure that they should've been aware of the policy they violated and they were terminated and that's it that's all there is to it.

The company has moved on.

And here we had.

Fortunately procedures in place to.

And that no one was.

On the loss of any one particular or even a group of people would not impact our business. That's just the way we structure our company so and the story on.

And and I hope that our shareholders.

And other stakeholders recognize that.

And here is as Guardians of your investment and these policies are important and.

And unfortunately.

And when they when they were forced to use it.

Our results.

Okay, well. Thank you all for your time today.

I appreciate it.

We look forward to additional communications with you in fact, I'm going to see if I could start stepping up some of those communications that I haven't done quite a while and looking forward to re engaging with many of our shareholders and our stakeholders analysts and investors.

So thanks again for your time today.

Alright. Thank you everyone. This concludes.

Day, that's concrete and so you may disconnect. Your lines at this time and again. Thank you for your participation and have a great day.

Okay.

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