VerifyMe(US:VRME)2025-05-13 20:30PART I - FINANCIAL INFORMATION Financial Statements 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 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 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 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 debt20 Notes to Consolidated Financial Statements 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 Authentication2629 - On December 8, 2024, the Company sold its Trust Codes Global business, which was part of the Authentication segment63 - In Q1 2025, one customer represented 15% of revenues, and one vendor accounted for 99% of transportation costs in the Precision Logistics segment120 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 23% revenue decrease, lower gross margin, and a significantly improved liquidity position from a $4.3 million warrant inducement 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 Authentication131 - 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 food131 Results of Operations 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 business144 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)148149150151 Liquidity and Capital Resources 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 proceeds156157 - The company fully paid off its $2 million Term Note with PNC Bank on January 21, 2025106163 - 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 date159161 - Management believes that current cash and cash equivalents will be sufficient to fund operations beyond the next 12 months164 Quantitative and Qualitative Disclosures about Market Risk The company has indicated this item is not applicable for the reporting period - Not Applicable168 Controls and Procedures 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 effective169 - No material changes were made to the company's internal control over financial reporting during the first quarter of 2025170 PART II - OTHER INFORMATION Legal Proceedings The company reported no legal proceedings for the period - None173 Risk Factors 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, 2024174 Unregistered Sales of Equity Securities and Use of Proceeds 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 Act175 Other Information 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, 2025178 Exhibits The report includes exhibits such as warrant agreements, an ATM sales agreement, and officer certifications