[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) Unaudited Q1 2025 statements show increased assets to $17.1 million and decreased liabilities to $2.5 million, with a net loss of $571 thousand [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $17.1 million and total liabilities fell to $2.5 million, boosting stockholders' equity to $14.6 million as of March 31, 2025 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $5,707 | $2,823 | | Accounts receivable, net | $955 | $2,636 | | TOTAL CURRENT ASSETS | $7,672 | $6,362 | | TOTAL ASSETS | $17,095 | $16,067 | | **Liabilities & Equity** | | | | TOTAL CURRENT LIABILITIES | $1,648 | $4,239 | | TOTAL LIABILITIES | $2,452 | $5,853 | | TOTAL STOCKHOLDERS' EQUITY | $14,643 | $10,214 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $17,095 | $16,067 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a Q1 2025 net loss of $571 thousand on revenues of $4.46 million, a slight increase in loss from the prior-year period Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | NET REVENUE | $4,455 | $5,759 | | GROSS PROFIT | $1,490 | $2,260 | | Total Operating expenses | $2,083 | $2,907 | | NET LOSS | $(571) | $(553) | | BASIC & DILUTED LOSS PER SHARE | $(0.05) | $(0.05) | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Financing activities provided $3.44 million in cash, offsetting operational and investing outflows and resulting in a net cash increase of $2.88 million Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(404) | $(60) | | Net cash used in investing activities | $(156) | $(110) | | Net cash provided by (used in) financing activities | $3,444 | $(106) | | **NET INCREASE(DECREASE) IN CASH** | **$2,884** | **$(277)** | - Financing activities were primarily driven by **$4.348 million in proceeds from warrant exercises**, offset by an **$875 thousand repayment of debt**[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail revenue disaggregation, the Trust Codes Global divestiture, significant equity transactions, debt repayment, and customer concentration risks - The company operates through two reportable segments: **Precision Logistics**, which accounts for nearly all revenue, and **Authentication**[26](index=26&type=chunk)[29](index=29&type=chunk) - On December 8, 2024, the Company **sold its Trust Codes Global business**, which was part of the Authentication segment[63](index=63&type=chunk) - In Q1 2025, **one customer represented 15% of revenues**, and **one vendor accounted for 99% of transportation costs** in the Precision Logistics segment[120](index=120&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 23% revenue decrease, lower gross margin, and a significantly improved liquidity position from a $4.3 million warrant inducement [Overview](index=31&type=section&id=Overview) The company operates through a primary Precision Logistics segment and a smaller Authentication segment, serving time and temperature-sensitive industries - The company's business is divided into two main segments: **Precision Logistics** (via PeriShip Global) and **Authentication**[131](index=131&type=chunk) - The Precision Logistics segment uses predictive analytics from sources like flight-tracking, weather, and traffic to manage sensitive shipments for industries such as **perishable healthcare and food**[131](index=131&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q1 2025 consolidated revenue decreased 23% to $4.46 million, with gross margin falling to 33% from 39% in the prior year Revenue by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Precision Logistics | $4,429 | $5,614 | | Authentication | $26 | $145 | | **Total Revenue** | **$4,455** | **$5,759** | - The decrease in consolidated revenue was primarily due to **decreased demand across several proactive customers**, a discontinued contract in Premium services, and the divestiture of the Trust Codes Global business[144](index=144&type=chunk) Gross Profit by Segment (in thousands) | Segment | Q1 2025 Gross Profit | Q1 2025 Margin | Q1 2024 Gross Profit | Q1 2024 Margin | | :--- | :--- | :--- | :--- | :--- | | Precision Logistics | $1,470 | 33% | $2,129 | 38% | | Authentication | $20 | 77% | $131 | 90% | | **Total Gross Profit** | **$1,490** | **33%** | **$2,260** | **39%** | - Operating expenses decreased across all categories: Segment management and technology (-$455k), General and administrative (-$265k), R&D (-$50k), and Sales and marketing (-$54k)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved significantly with $3.44 million from financing activities, enabling full repayment of its term note and ensuring sufficient cash for 12+ months - Cash from financing activities was **$3.44 million**, primarily from a warrant exercise that yielded **$4.3 million in net proceeds**[156](index=156&type=chunk)[157](index=157&type=chunk) - The company **fully paid off its $2 million Term Note** with PNC Bank on January 21, 2025[106](index=106&type=chunk)[163](index=163&type=chunk) - On March 6, 2025, the company entered into an **At-The-Market (ATM) sales agreement to sell up to $15.8 million** of its common stock, but no shares were sold as of the filing date[159](index=159&type=chunk)[161](index=161&type=chunk) - Management believes that current cash and cash equivalents will be **sufficient to fund operations beyond the next 12 months**[164](index=164&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company has indicated this item is not applicable for the reporting period - **Not Applicable**[168](index=168&type=chunk) [Controls and Procedures](index=37&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's **disclosure controls and procedures were effective**[169](index=169&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the first quarter of 2025[170](index=170&type=chunk) [PART II - OTHER INFORMATION](index=38&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=38&type=section&id=ITEM%201.%20Legal%20Proceedings) The company reported no legal proceedings for the period - **None**[173](index=173&type=chunk) [Risk Factors](index=38&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes were reported from the risk factors disclosed in the 2024 Annual Report on Form 10-K - **No material changes** from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued 60,000 shares for consulting services under a registration exemption - On March 31, 2025, the Company issued **60,000 shares of common stock** for consulting services, relying on a registration exemption under Section 4(a)(2) of the Securities Act[175](index=175&type=chunk) [Other Information](index=38&type=section&id=ITEM%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a **Rule 10b5-1 trading arrangement** during the three months ended March 31, 2025[178](index=178&type=chunk) [Exhibits](index=38&type=section&id=ITEM%206.%20Exhibits) The report includes exhibits such as warrant agreements, an ATM sales agreement, and officer certifications

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $4,500,000, a decrease of approximately 23% compared to $5,800,000 in Q1 2024, primarily due to the discontinuation of TrustCo's operations and a softening of customer shipments [4][12] - Gross profit decreased by $800,000 to $1,500,000 in Q1 2025 from $2,300,000 in Q1 2024, with gross margin at 33% in Q1 2025 compared to 39% in Q1 2024 [12][13] - Operating expenses were reduced by approximately 28% to $2,100,000 in Q1 2025 from $2,900,000 in Q1 2024 [5][13] - The net loss for the quarter was $600,000, or a loss of $0.05 per diluted share, consistent with Q1 2024 [13] Business Line Data and Key Metrics Changes - The decline in revenue was most pronounced in premium services, which were down 47% compared to the same quarter last year [4] - Improvements in gross margin were noted in proactive services within the Precision Logistics segment, indicating potential for organic growth [5] Market Data and Key Metrics Changes - The overall market for e-commerce is experiencing a softening, impacting customer confidence and spending, which in turn affects revenue from proactive customers [46][47] Company Strategy and Development Direction - The company is focusing on three elements for organic growth: optimizing direct customer marketing, developing relationships with additional freight carriers, and integrating with technology platforms related to e-commerce [7][9][10] - The company is exploring both transformative and tuck-in acquisitions to enhance shareholder value, with a strong balance sheet and cash flow supporting these initiatives [10][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the current macroeconomic environment but remains optimistic about the potential for growth through strategic initiatives and a strong cash position [5][58] - The company is not providing specific revenue guidance for the year but anticipates a challenging comparison in Q2 due to prior customer losses [37] Other Important Information - Nancy Meyers, CFO, announced her retirement, with Jennifer Colo set to take over the role, ensuring a smooth transition [16][19] - The company had a cash balance of $5,700,000 at the end of Q1 2025, an increase from $2,800,000 at the end of 2024, with no bank debt [6][14] Q&A Session Summary Question: Capital allocation priorities and organic vs external growth - Management indicated that investments for organic growth are funded by the business and do not require cash from reserves, focusing on integrating with e-commerce platforms [25][26] Question: Revenue generation for the authentication business - The revenue for the authentication business in the quarter was $26,000 [33] Question: Revenue expectations for the rest of the year - Management expects challenging revenue comparisons in Q2 but anticipates easier comparisons in the second half of the year, with a focus on proactive revenue [37][40] Question: Update on new customers and their performance - New customer additions have slowed, and while there is no significant loss of customers, overall softening is observed across the customer base [46][48] Question: Strategic discussions regarding the ink business - Management is open to synergistic acquisitions in the ink business but sees higher value potential in Precision Logistics [50][51] Question: Overall comfort with the company's position compared to a few months ago - Management feels optimistic about the company's opportunities, citing a strong balance sheet and a receptive market environment for new ideas [55][58]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $4.5 million, a decrease of approximately 23% compared to $5.8 million in Q1 2024, primarily due to the discontinuation of TrustCo's operations and a softening of customer shipments [4][12] - Gross profit decreased by $800,000 to $1.5 million in Q1 2025 from $2.3 million in Q1 2024, with gross margin at 33% compared to 39% in the prior year [12][13] - Operating expenses were reduced by approximately 28% to $2.1 million in Q1 2025 from $2.9 million in Q1 2024, helping to offset the decrease in gross margin [5][13] - The net loss for the quarter was $600,000, or a loss of $0.05 per diluted share, consistent with Q1 2024 [13] Business Line Data and Key Metrics Changes - The decline in revenue was most pronounced in premium services, which were down 47% compared to the same quarter last year [4] - Improvements in gross margin were noted in proactive services within the Precision Logistics segment, which is viewed as a key area for organic growth [5] Market Data and Key Metrics Changes - The overall market environment remains challenging, with a noted softening in customer demand across several proactive customers, particularly in e-commerce [46] - New customer additions have slowed down, and existing customers are experiencing a softening in demand, impacting overall revenue [45][46] Company Strategy and Development Direction - The company is focusing on three elements for organic growth: optimizing direct customer marketing and sales, developing relationships with additional freight carriers, and integrating with technology platforms related to e-commerce [7][9] - Strategic growth efforts include pursuing transformative and tuck-in acquisitions, leveraging the strong balance sheet and cash flow to create shareholder value [10][49] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macroeconomic challenges but remains optimistic about the company's ability to create shareholder value through strategic initiatives and a strong cash position [6][54] - The company is focused on maximizing upside opportunities in a changing logistics marketplace, which is becoming more receptive to new ideas and partnerships [55][56] Other Important Information - The company had a cash balance of $5.7 million at the end of Q1 2025, with no bank debt and only $800,000 remaining on convertible notes held by insiders [6][14] - Nancy Meyers, the CFO, announced her retirement, with Jennifer Colo set to take over the role [16][19] Q&A Session Summary Question: What are the capital allocation priorities moving forward? - The company is prioritizing organic growth investments funded by business operations, with a focus on integrating with e-commerce platforms and expanding customer relationships [24][26] Question: What is the revenue generation for the authentication business in the quarter? - The revenue for the authentication business was $26,000 [31] Question: Should revenue comparisons be expected to improve in the second half of the year? - Revenue comparisons are expected to remain challenging in Q2, with hopes for improvement in the second half of the year [35][38] Question: How are new customers performing and what is the outlook for existing customers? - New customer additions have slowed, and existing customers are experiencing a softening in demand, impacting overall revenue [45][46] Question: What is the latest update on the ink business and strategic discussions? - The company is exploring potential acquisitions that could synergize with its ink business, but the focus remains on opportunities within Precision Logistics [49]

[Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) VerifyMe's Q1 2025 revenue declined to **$4.5 million**, gross profit to **$1.5 million**, and gross margin to **33%** - CEO Adam Stedham highlighted ongoing technical improvements in the Precision Logistics Segment and enhanced sales efforts, noting the company's **operating cash flow** and **strong balance sheet** position it to create shareholder value[4](index=4&type=chunk) Q1 2025 vs Q1 2024 Key Financial Metrics | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | | :--- | :--- | :--- | | Revenue | 4.5 | 5.8 | | Gross Profit | 1.5 | 2.3 | | Gross Margin | 33% | 39% | | Net Loss | (0.6) | (0.6) | | Adjusted EBITDA | 0 | 0.1 | | Cash (as of quarter end) | 5.7 | N/A | [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) Q1 2025 revenue decreased to **$4.5 million** due to contract changes, impacting gross margin, but operating loss remained stable - The **$1.3 million** revenue decrease was attributed to reduced demand from proactive customers, a customer's shift in cold chain strategy, a discontinued premium services contract, and the divestiture of the Trust Codes Global business in December 2024[7](index=7&type=chunk) - Gross margin percentage decreased from **39%** to **33%** year-over-year, mainly due to the discontinued higher-margin contract in the Precision Logistics segment, while Proactive services gross margin improved[8](index=8&type=chunk) - Operating loss remained flat at **($0.6) million** for both Q1 2025 and Q1 2024, as the decrease in gross profit was fully offset by reduced operating expenses from cost-cutting measures and the Trust Codes divestiture[9](index=9&type=chunk) - As of March 31, 2025, the company had a cash balance of **$5.7 million**, working capital of **$6.0 million**, and **12,414,772** shares outstanding[11](index=11&type=chunk)[12](index=12&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents VerifyMe's unaudited Q1 2025 consolidated financial statements and non-GAAP EBITDA reconciliation [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, the balance sheet shows total assets of **$17.1 million**, total liabilities of **$2.5 million**, and cash at **$5.7 million** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $5,707 | $2,823 | | Total Current Assets | $7,672 | $6,362 | | Total Assets | $17,095 | $16,067 | | **Liabilities & Equity** | | | | Total Current Liabilities | $1,648 | $4,239 | | Total Liabilities | $2,452 | $5,853 | | Stockholders' Equity | $14,643 | $10,214 | | Total Liabilities and Stockholders' Equity | $17,095 | $16,067 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 net revenue was **$4.46 million**, down from **$5.76 million**, with gross profit at **$1.49 million**, and net loss at **($571) thousand** Consolidated Statement of Operations (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Revenue | $4,455 | $5,759 | | Gross Profit | $1,490 | $2,260 | | Total Operating Expenses | $2,083 | $2,907 | | Net Loss | $(571) | $(553) | | Loss Per Share (Basic & Diluted) | $(0.05) | $(0.05) | | Weighted Average Shares Outstanding (Basic) | 12,292,150 | 10,073,445 | [Non-GAAP Reconciliation (EBITDA & Adjusted EBITDA)](index=8&type=section&id=Non-GAAP%20Reconciliation) Q1 2025 GAAP Net Loss of **($571) thousand** reconciled to **$0** Adjusted EBITDA, compared to **$114 thousand** Adjusted EBITDA in Q1 2024 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Account | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Net loss (GAAP)** | **$(571)** | **$(553)** | | Interest (income) expense, net | (22) | 38 | | Amortization and depreciation | 286 | 299 | | **Total EBITDA (Non-GAAP)** | **$(307)** | **$(216)** | | Stock based compensation & services | 333 | 458 | | Severance expense | 57 | - | | Change in fair value of contingent consideration | - | (132) | | Gain on derecognized liability | (100) | - | | Other adjustments | 17 | 4 | | **Total Adjusted EBITDA (Non-GAAP)** | **$0** | **$114** | [Supplementary Information](index=2&type=section&id=Supplementary%20Information) This section includes earnings call details, company overview, forward-looking statements caution, and non-GAAP financial measures explanation - The company scheduled an earnings conference call and webcast for **11:00 a.m. ET on Tuesday, May 13, 2025**, to discuss financial and operational results[13](index=13&type=chunk) - The report includes a detailed 'Cautionary Note Regarding Forward-Looking Statements' outlining numerous risks and uncertainties that could cause actual results to differ from projections, including economic conditions, competition, and reliance on key partners[17](index=17&type=chunk) - VerifyMe uses non-GAAP measures like EBITDA and Adjusted EBITDA for internal planning and to help investors evaluate core operating performance by excluding non-operational items, defining Adjusted EBITDA as net loss before interest, taxes, depreciation, and amortization, further adjusted for items like stock compensation, severance, and one-time acquisition/divestiture expenses[19](index=19&type=chunk)[20](index=20&type=chunk)

Core Viewpoint - VerifyMe, Inc. reported a decline in revenue and gross profit for Q1 2025, primarily due to decreased demand from proactive customers and a shift in strategy from a key customer, while maintaining a stable cash position to support shareholder value creation [2][4][10]. Financial Performance - Revenue for Q1 2025 was $4.5 million, down from $5.8 million in Q1 2024, representing a decrease of approximately 22% [4][11]. - Gross profit decreased to $1.5 million in Q1 2025, with a gross margin of 33%, compared to $2.3 million and 39% in Q1 2024 [5][10]. - The net loss remained consistent at ($0.6) million for both Q1 2025 and Q1 2024, with a loss per diluted share of ($0.05) [6][11]. Operational Highlights - Adjusted EBITDA for Q1 2025 was $0.0 million, compared to $0.1 million in Q1 2024, indicating a slight decline in operational performance [7][10]. - The company had a cash balance of $5.7 million and working capital of $6.0 million as of March 31, 2025, providing a solid financial foundation [7][10]. Shareholder Information - As of March 31, 2025, the company had 12,665,892 shares issued and 12,414,772 shares outstanding [8][10].

Company Overview - VerifyMe, Inc. (NASDAQ: VRME) specializes in providing logistics for time and temperature sensitive products, as well as brand protection and enhancement solutions [3]. Financial Results Announcement - The company will release its financial results for the first quarter ended March 31, 2025, on May 13, 2025 [1]. - An investor conference call and webcast is scheduled for the same day at 11:00 a.m. Eastern Time, which will include prepared remarks followed by a Q&A session with the executive management team [1]. Accessing the Conference Call - The conference call can be accessed via a webcast link or by calling designated numbers for US and international participants [2]. - Presentation slides will be available on the Investors section of the VerifyMe website on the morning of the call, and the webcast will be archived for 90 days [2].

Financial Performance - Consolidated revenue for the year ended December 31, 2024, was $24,207 thousand, a 4% decrease from $25,313 thousand in 2023, primarily due to a discontinued contract in the Precision Logistics segment [154]. - Gross profit for the year ended December 31, 2024, was $8,662 thousand, resulting in a gross margin of 36%, up from 32% in 2023, attributed to process improvements in the Precision Logistics segment [155]. - The Precision Logistics segment generated revenue of $23,766 thousand in 2024, down from $24,652 thousand in 2023, reflecting challenges during the peak season [153]. - The Authentication segment's revenue decreased to $441 thousand in 2024 from $661 thousand in 2023, with no growth during the year [153]. - Net loss for the year ended December 31, 2024, was $3,824 thousand, compared to a net loss of $3,390 thousand in 2023, primarily due to impairment charges [163]. Expenses - Research and development expenses decreased to $70 thousand in 2024 from $107 thousand in 2023, mainly due to fewer projects in the Authentication segment [158]. - General and administrative expenses decreased by $564 thousand to $3,852 thousand in 2024, primarily due to lower deal costs related to the acquisition of Trust Codes Global [157]. - Segment management and technology expenses increased by $357 thousand to $5,454 thousand in 2024, primarily due to the acquisition of Trust Codes Global [156]. Shareholder Actions - The company repurchased 21,100 shares of common stock for $18 thousand under the share repurchase program during the year ended December 31, 2024 [168]. - The company has established a share repurchase program funded by cash and cash equivalents, along with proceeds from convertible notes [175]. Debt and Compliance - As of December 31, 2024, the company had short-term debt of $500 thousand and long-term debt of $375 thousand under a Term Note, with a total repayment of $500 thousand made during the year [171]. - The company is required to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year, but was not in compliance with all covenants as of December 31, 2024 [173]. Impairment and Valuation - A goodwill impairment charge of $1,351 thousand was recorded during the year ended December 31, 2024, due to the carrying value of the Authentication reporting unit exceeding its estimated fair value [185]. - The Trust Codes acquisition in March 2023 involved significant estimates and assumptions impacting the financial statements [177]. Future Outlook - The company expects to fund operations primarily through current financial resources and future revenue, with potential for additional debt or equity issuance [176]. - The company anticipates growth through key acquisitions and organic means, aiming to accelerate business growth [176]. Contractual and Billing Information - Unbilled amounts are generally billed and collected within 30 to 60 days, with no significant changes in contract assets as of December 31, 2024 [179]. Interest Rate Management - The company entered into an interest rate swap agreement effective October 17, 2022, fixing the interest rate on outstanding debt at 7.602%, which was terminated on January 21, 2025 [174]. Revenue Sources - Over 95% of the company's revenue is derived from logistics management for time and temperature-sensitive packages, with the remaining from brand protection solutions [178].

Financial Data and Key Metrics Changes - The annual revenue for 2024 was 4% below the revenue in 2023, with Q4 revenue at $7.7 million compared to $8.7 million in Q4 2023, a decrease of $1 million [7][15] - Gross profit decreased by $0.5 million to $2.4 million in Q4 2024 versus $2.9 million in Q4 2023, with a gross margin of 32% in Q4 2024 compared to 33% in Q4 2023 [16][17] - Full-year gross margin improved to 36% in 2024 from 32% in 2023 [17] - The net loss for Q4 was $0.5 million, or a loss of $0.05 per diluted share, compared to net income of less than $0.1 million in Q4 2023 [18] Business Line Data and Key Metrics Changes - In the Precision Logistics segment, the number of proactive customers increased by 6% over 2023, but shipments by existing customers in the proactive service line were down 6% in 2024 [11][12] - The Authentication segment experienced a divestiture of the Trust Codes Global business, which had an operating loss of $1.2 million in 2024 [13] Market Data and Key Metrics Changes - The overall market conditions appear to be down slightly, with a decrease in the total number of shipments [32] - The loss of one significant customer continues to impact performance, particularly in the Premium services [31][36] Company Strategy and Development Direction - The company is focusing on reducing investments in areas that do not yield desired returns and is working on strategic investments to enhance shareholder value [8][10] - There is an emphasis on optimizing sales strategies and exploring avenues for expansion in the Precision Logistics segment [23] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2024 was a transition year and expressed optimism about the foundation laid for future growth [45] - The company does not plan to provide guidance for 2025 due to unpredictable market conditions and the need to align costs with revenue changes [36][38] Other Important Information - The company completed a $4.7 million warrant inducement capital raise and retired its bank debt, reducing convertible debt from $1.1 million to $800,000 [8][9] - As of December 31, 2024, cash was $2.8 million, a decrease from $3.1 million on December 31, 2023 [19][20] Q&A Session Summary Question: Expected share count for Q1 - The expected share count for Q1 is about 12.5 million [29] Question: Commentary on logistics trends in Q1 - The loss of a significant customer will continue to impact Q1 and Q2, but the proactive business remains stable [31][32] Question: Guidance for 2025 - The company has not provided guidance for 2025 and does not plan to do so, citing stability in the business aside from the lost customer [36][38] Question: Modeling assumptions for Q1 and Q2 - It is reasonable to model a low double-digit decline on the topline through the first half due to the loss of the customer [39][40]

Offering and Sale of Shares - VerifyMe, Inc. has agreed to issue and sell shares of common stock with an aggregate offering price of up to $15,803,511[1] - The company has filed a registration statement on Form S-3 (File No. 333-284562) with the SEC, which includes a base prospectus for the Placement Shares[2] - The company will notify the agent of the number or dollar value of Placement Shares for each sale, specifying the time period and any limitations[3] - The agent will use commercially reasonable efforts to sell the Placement Shares as specified in the Placement Notice[5] - The settlement for sales of Placement Shares will occur on the first Trading Day following the date of sale, with net proceeds delivered to the company after deductions[10] - The company must not exceed the maximum amount of shares that can be sold under the agreement, which is subject to board authorization[12] - The Placement Shares will be duly authorized and validly issued, free of any encumbrances[28] - The Company will use the Net Proceeds from the offering as described in the Prospectus[76] - The Company will not offer or sell any Common Stock outside of the Placement Shares during the specified period without the Agent's consent[77] - The Company will disclose the amount of Placement Shares sold, Net Proceeds, and compensation payable to the Agent in its annual report on Form 10-K and quarterly reports on Form 10-Q[80] - The Company reported a gross proceeds commission of 3% on each sale of Placement Shares[154] - The Placement Shares will be sold at a minimum market price to be determined during the specified time period[151] Compliance and Legal Matters - The company represents that the registration statement and transactions comply with the conditions for the use of Form S-3 under the Securities Act[14] - The Company does not have any material liabilities or obligations not described in the Registration Statement or Prospectus[18] - The Company has not experienced any Material Adverse Effect since the dates of the financial information provided[24] - The Company possesses all necessary licenses and permits for its business operations, with no known issues regarding their renewal[35] - The Company has not defaulted on any indebtedness or rental payments that would have a Material Adverse Effect[36] - There are no ongoing legal actions or regulatory investigations that would materially affect the Company's obligations[33] - The Company is duly organized and in good standing under the laws of its jurisdiction[21] - The Company is not an ineligible issuer under the Securities Act, ensuring compliance during the offering of Placement Shares[63] - There are no conflicts arising from the execution of the Agreement or the issuance of Placement Shares that would have a material adverse effect[65] - The Company has filed all required federal, state, local, and foreign tax returns and paid all taxes shown thereon, with no tax deficiency determined adversely that would have a material adverse effect[42] - The Company is in compliance with all applicable environmental laws and has not received notice of any actual or potential liability that would have a material adverse effect[46] - The Company is not aware of any failures to comply with the Sarbanes-Oxley Act provisions by its directors or officers[48] - The Company has not made any unlawful contributions to political candidates or failed to disclose contributions as required by law[61] - The Company and its subsidiaries are conducting business in compliance with all applicable laws, rules, and regulations, with no material adverse effects reported[62] Financial Reporting and Internal Controls - The financial statements of the Company present fairly its financial position and results of operations, prepared in compliance with GAAP[18] - The Company has established effective internal controls over financial reporting and has not identified any material weaknesses[47] - The Company will maintain accurate books and records and internal accounting controls to ensure reliable financial reporting in accordance with GAAP[91] - The Company must provide a Representation Date Certificate within five Trading Days of filing its annual report on Form 10-K or quarterly report on Form 10-Q[82] - The Company is required to furnish Comfort Letters from its independent accountants within five Trading Days of each Representation Date[86] Agreement Terms and Conditions - The Agreement will automatically terminate upon the issuance and sale of all Placement Shares[119] - The Agreement remains in effect unless terminated by mutual agreement or under specified sections[120] - The Agent is entitled only to reimbursement of out-of-pocket expenses if the Agreement is terminated prior to the sale of any Placement Shares[122] - The Company acknowledges that no fiduciary relationship is created with the Agent in connection with the transactions[135] - The Company must comply with the requirements of Rule 433 for any Permitted Free Writing Prospectus[134] - The Company and the Agent may execute the Agreement in counterparts, each considered an original[140] - The Registration Statement must be effective and available for the sale of all Placement Shares contemplated by any Placement Notice[94] - The Company must ensure that no material adverse changes occur that could affect the offering of Placement Shares[97] - The Agent must receive the required legal opinion and Comfort Letter on or before their respective due dates[99] - Trading in the Common Stock must not be suspended on the Exchange, and the Common Stock must not be delisted[101] - The Company has filed an application for listing quotation of the Placement Shares on the Exchange prior to issuance[104] - The Agent is required to be duly registered as a broker-dealer under FINRA and applicable state regulations during the term of the Agreement[113] Indemnification and Liability - The Company agrees to indemnify the Agent against any losses arising from untrue statements or omissions in the Registration Statement[106] - The Agent may terminate the Agreement if there is a Material Adverse Effect or significant changes in financial markets[115] - The Company has the right to terminate the Agreement with five days' written notice at its discretion[117] - The indemnity and contribution agreements will survive regardless of any investigations or acceptance of the Placement Shares[114] - The Agent agrees to contribute to total losses in proportion to the benefits received from the sale of Placement Shares[111] - The Company must notify the Agent promptly of any actions against it for which indemnification is sought[109] - The Agent will not be liable for any settlement of claims without its written consent[111] Miscellaneous - The Accountant, MaloneBailey, LLP, is an independent registered public accounting firm in compliance with the Sarbanes-Oxley Act[31] - The issued and outstanding shares of capital stock are fully paid and non-assessable, with no preemptive rights[26] - The Company maintains good and valid title to all material real and personal property, free of liens and encumbrances, except those that do not materially interfere with its business[43] - The Company owns adequate enforceable rights to all necessary intellectual property for its business operations, with no known claims of infringement that would result in a material adverse effect[44]

Core Insights - VerifyMe, Inc. reported a decrease in revenue for Q4 2024, totaling $7.7 million, down from $8.7 million in Q4 2023, primarily due to a discontinued contract in its Precision Logistics segment [4][8][9] - The company achieved an 8% year-over-year increase in gross profit and more than doubled its annual adjusted EBITDA compared to 2023 [2] - The decision to divest an unprofitable operation is expected to enhance cash flow from operations in 2025, with the company having retired most of its debt [2][12] Financial Performance - Q4 2024 revenue was $7.7 million, a decrease of $1.0 million from Q4 2023 [4][8] - Gross profit for Q4 2024 was $2.4 million, resulting in a gross margin of 32%, compared to $2.9 million and 33% in Q4 2023 [5][9] - The operating loss for Q4 2024 was ($0.3) million, compared to an operating income of $0.1 million in Q4 2023 [6] - The net loss for Q4 2024 was ($0.5) million, or ($0.05) per diluted share, compared to net income of less than $0.1 million in Q4 2023 [7][9] - Annual revenue for 2024 was $24.2 million, down from $25.3 million in 2023, while annual gross profit increased to $8.7 million, or 36%, compared to $8.0 million, or 32%, in 2023 [8][9] Cash Flow and Liquidity - Cash flow from operations in Q4 2024 was $0.6 million, down from $0.9 million for the year ended December 31, 2024 [8][9] - As of February 28, 2025, the company had $5.7 million in cash and access to additional low-cost capital [2][12] - The company has retired all debt except for $0.8 million of convertible notes held by affiliates and Board members [2] Strategic Decisions - The divestiture of the Trust Codes Global business on December 8, 2024, was part of the company's strategy to focus on more profitable areas [4] - The company is finalizing its strategy to maximize shareholder returns and is optimistic about future opportunities [2][12]