VerifyMe(US:VRME)2023-05-11 20:02Revenue Performance - VerifyMe's revenue for the three months ended March 31, 2023, was $5,661,000, compared to $161,000 for the same period in 2022, indicating a significant increase in revenue[49] - Total revenue for the three months ended March 31, 2023, was $5,661,000, a significant increase from $161,000 in the same period of 2022[117] - PeriShip Global Solutions segment generated revenue of $5,414,000, while VerifyMe Solutions contributed $247,000[117] Segment Information - VerifyMe operates through two segments: PeriShip Global Solutions and VerifyMe Solutions, with the former being the primary revenue driver[25] - The company's Proactive services generated no revenue in Q1 2023, while Premium services contributed $910,000, and Brand protection services accounted for $247,000[49] Financial Position - The fair value of the company's equity investment decreased from $100,000 as of December 31, 2022, to $68,000 as of March 31, 2023, reflecting an unrealized loss of $32,000[47] - The company had total operating lease liabilities of $601,000 as of March 31, 2023, up from $474,000 at the end of 2022[109] - The weighted-average remaining lease term for operating leases was 3.7 years, with a weighted average discount rate of 6.4%[109] - Future lease payments are projected to total $701,000, with a present value of $601,000 after accounting for imputed interest[110] Expenses and Losses - Gross profit for the three months ended March 31, 2023, was $1,754,000, compared to $123,000 in the same period of 2022[117] - General and administrative expenses increased to $2,756,000 in Q1 2023 from $1,465,000 in Q1 2022[117] - The net loss for the three months ended March 31, 2023, was $1,580,000, compared to a net loss of $1,394,000 in the same period of 2022[117] - Amortization expense for intangible assets was $240 thousand for the three months ended March 31, 2023, compared to $19 thousand for the same period in 2022[65] Acquisition and Goodwill - The company acquired Trust Codes Limited for approximately $1.0 million, consisting of $0.36 million in cash and $0.65 million in stock, with contingent consideration estimated at $1.1 million[52] - As of March 31, 2023, the total purchase price allocation for the acquisition was $2.113 million, including $1.383 million in goodwill[54] - The goodwill recognized from the acquisition is due to expected synergies from combining operations, all of which is deductible for tax purposes[52] - The company acquired assets from Trust Codes Limited on March 1, 2023, establishing intangible assets of $701,000 and goodwill of $1,383,000[104] Stock and Debt - The company had 348,075 shares held in treasury valued at approximately $793 thousand as of March 31, 2023[72] - During the three months ended March 31, 2023, the company repurchased 6,201 shares of common stock for $10 thousand under its share repurchase program[74] - The company entered into a new debt facility with PNC Bank, including a $1 million revolving line of credit and a $2 million term note, with total long-term debt of $1.3 million as of March 31, 2023[94][97] - The Company made a repayment of $125,000 towards the principal of the outstanding term note during the three months ended March 31, 2023[97] Risk Factors and Compliance - The company has significant risks and uncertainties that could impact its financial performance, as noted in the "Risk Factors" section of the report[25] - The company follows ASC Topic 606 for revenue recognition, ensuring compliance with U.S. GAAP standards[36] - The interim financial statements are unaudited but include all necessary adjustments for fair presentation, as per management's opinion[26] Customer and Vendor Concentration - As of March 31, 2023, two customers accounted for 45% of accounts receivable, indicating a concentration risk[112] - One vendor represented 99% of transportation costs in the PeriShip Global Solutions segment during Q1 2023[113] Share-Based Compensation - As of March 31, 2023, total unrecognized share-based compensation cost related to unvested restricted stock units was $231,000, expected to be recognized over a weighted-average period of 1.42 years[89] - The Company adopted the 2020 Equity Incentive Plan, authorizing the issuance of up to 1,069,110 shares of common stock, which was approved by stockholders on September 30, 2020[77] - The First Amendment to the 2020 Plan increased the authorized shares to 2,069,100 and extended the term to June 9, 2032, approved by stockholders on June 9, 2022[78] - As of March 31, 2023, the Company had 337,471 stock options outstanding with a weighted average exercise price of $4.63[83] - The Company had 4,813,500 warrants outstanding as of March 31, 2023, with a weighted average exercise price of $4.17[93] Currency Operations - The foreign currency transaction losses for the three months ended March 31, 2023, were immaterial, indicating stable currency operations[28] Technology and Services - The company provides predictive analytics logistics management services, focusing on time and temperature-sensitive parcel management[25] - VerifyMe's technologies enable unit-level traceability and brand protection, enhancing consumer engagement and brand loyalty[25]