10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

o      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-39332  

VERIFYME, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	23-3023677
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
801 International Parkway, Fifth Floor Lake Mary, FL	32746
(Address of Principal Executive Offices)	(Zip Code)
(585) 736-9400
(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which Registered
Common Stock, par value $0.001 per share	VRME	The Nasdaq Capital Market
Warrants to Purchase Common Stock	VRMEW	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes x     No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T  § 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company,” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o     No x 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 10,499,541 shares of common stock outstanding at November 4, 2024.

2

PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements	4
Consolidated Balance Sheets (Unaudited)		4
Consolidated Statements of Operations (Unaudited)		6
Consolidated Statements of Comprehensive Loss (Unaudited)		7
Consolidated Statements of Cash Flows (Unaudited)		8
Consolidated Statements of Stockholders' Equity (Unaudited)		10
Notes to Consolidated Financial Statements (Unaudited)		12
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	38
ITEM 4.	Controls and Procedures	38
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	39
ITEM 1A.	Risk Factors	39
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
ITEM 3.	Defaults Upon Senior Securities	40
ITEM 4.	Mine Safety Disclosures	40
ITEM 5.	Other Information	41
ITEM 6.	Exhibits	41
SIGNATURES		42

3

PART I - FINANCIAL STATEMENTS

ITEM 1. 

VerifyMe, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

	As of
	September 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents including restricted cash	$	2,610	$	3,095
Accounts receivable, net of allowance for credit loss reserve, $117 and $165 as of September 30, 2024 and December 31, 2023, respectively		1,200		3,017
Unbilled revenue		786		1,282
Prepaid expenses and other current assets		205		254
Inventory		19		38
TOTAL CURRENT ASSETS		4,820		7,686
PROPERTY AND EQUIPMENT, NET	$	159	$	240
RIGHT OF USE ASSET		339		468
INTANGIBLE ASSETS, NET		5,523		6,927
GOODWILL		3,988		5,384
TOTAL ASSETS	$	14,829	$	20,705
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Term note, current	$	500	$	500
Accounts payable		1,622		3,310
Other accrued expense		455		988
Lease liability- current		166		170
Contingent liability- current		22		173
TOTAL CURRENT LIABILITIES		2,765		5,141
LONG-TERM LIABILITIES
Contingent liability, non-current	$	-	$	751
Long-term lease liability		184		307
Term note		500		875
Convertible Note – related party		450		475
Convertible Note		650		625
TOTAL LIABILITIES	$	4,549	$	8,174
STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares authorized; 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		-		-
Series B Convertible Preferred Stock, $.001 par value; 85 shares authorized; 0.85 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		-		-

4

Common stock, $0.001 par value; 675,000,000 authorized; 10,715,065 and 10,453,315 issued, 10,444,698 and 10,123,964 shares outstanding as of September 30, 2024 and December 31, 2023, respectively		11			10
Additional paid in capital		95,991			95,031
Treasury stock at cost; 270,367 and 329,351 shares at September 30, 2024 and December 31, 2023, respectively		(464	)		(659	)
Accumulated deficit		(85,172	)		(81,849	)
Accumulated other comprehensive loss		(86	)		(2	)
STOCKHOLDERS' EQUITY		10,280			12,531
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,829		$	20,705

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

VerifyMe, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share data)

	Three Months Ended						Nine Months Ended
	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
NET REVENUE	$	5,435		$	5,604		$	16,546		$	16,600
COST OF REVENUE(a)		3,540			3,558			10,301			11,447
GROSS PROFIT		1,895			2,046			6,245			5,153
OPERATING EXPENSES
Segment management and Technology(a)		1,329			1,341			4,189			3,697
General and administrative (a)		778			1,178			2,780			3,393
Research and development		5			5			65			23
Sales and marketing (a)		401			377			999			1,403
Goodwill and Intangible asset impairment		2,252			-			2,265			34
Total Operating expenses		4,765			2,901			10,298			8,550
LOSS BEFORE OTHER INCOME (EXPENSE)		(2,870	)		(855	)		(4,053	)		(3,397	)
OTHER (EXPENSE) INCOME
Interest expenses, net		(29	)		(39	)		(109	)		(127	)
Unrealized loss on equity investment		-			-			-			(2	)
Change in fair value of contingent consideration		475			(36	)		839			136
Other expense, net		-			-			-			(2	)
TOTAL OTHER INCOME (EXPENSE), NET		446			(75	)		730			5
NET LOSS	$	(2,424	)	$	(930	)	$	(3,323	)	$	(3,392	)
LOSS PER SHARE
BASIC		(0.23	)		(0.09	)		(0.32	)		(0.35	)
DILUTED		(0.23	)		(0.09	)		(0.32	)		(0.35	)
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC		10,603,747			9,879,202			10,306,392			9,732,619
DILUTED		10,603,747			9,879,202			10,306,392			9,732,619

(a) Includes share-based compensation of $486 thousand and $1,183 thousand for the three and nine months ended September 30, 2024, respectively, and $498 thousand and $1,099 thousand for the three and nine months ended September 30, 2023, respectively.  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

VerifyMe, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)

	Three Months Ended						Nine Months Ended
	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
NET LOSS	$	(2,424	)	$	(930	)	$	(3,323	)	$	(3,392	)
Change in fair value of interest rate, Swap		2			3			7			4
Foreign currency translation adjustments		(42	)		(28	)		(91	)		(76	)
Total Comprehensive Loss	$	(2,464	)	$	(955	)	$	(3,407	)	$	(3,464	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

VerifyMe, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine months ended
	September 30, 2024			September 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,323	)	$	(3,392	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities :
Allowance for bad debt		8			49
Stock based compensation		174			46
Unrealized loss on equity investment		-			2
Change in fair value of contingent consideration		(836	)		(136	)
Fair value of restricted stock awards and restricted stock units issued in exchange for services		1,009			1,053
Loss on disposal of equipment		-			2
Goodwill and Intangible Impairment		2,261			34
Amortization and depreciation		905			835
Unrealized loss on foreign currency transactions		(45	)		16
Changes in operating assets and liabilities:
Accounts receivable		1,806			3,015
Unbilled revenue		495			300
Inventory		19			38
Prepaid expenses and other current assets		55			51
Accounts payable, other accrued expenses and net change in operating leases		(2,226	)		(2,512	)
Net cash provided by (used in) operating activities		302			(599	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of patents		(12	)		(51	)
Leasehold improvements		-			(8	)
Purchase of office equipment		(7	)		(24	)
Cash paid in business combination		-			(363	)
Deferred implementation costs		-			(58	)
Capitalized software costs		(334	)		(576	)
Net cash used in investing activities		(353	)		(1,080	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit		-			800
Proceeds from convertible debt		-			1,100
Proceeds from SPP Plan		21			80
Contingent consideration payments		(36	)		-
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered		(47	)		(18	)
Increase in treasury shares (share repurchase program)		(1	)		(10	)
Repayment of debt and line of credit		(375	)		(675	)
Net cash (used in) provided by financing activities		(438	)		1,277
Effect of exchange rate changes on cash		4			(2	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(485	)		(404	)
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- BEGINNING OF PERIOD		3,095			3,411
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- END OF PERIOD	$	2,610		$	3,007

8

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	160	$	129
Income taxes	$	-	$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Change in fair value of interest rate, swap	$	7	$	4

The accompanying notes are an integral part of these unaudited consolidated financial statements.

9

VerifyMe, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share data)

	Series A Convertible				Series B Convertible
	Preferred				Preferred				Common							Treasury
	Stock				Stock				Stock				Additional			Stock
	Number of				Number of				Number of				Paid-In			Number of						Accumulated Other			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Shares			Amount			Comprehensive Loss			Deficit			Total
Balance at June 30, 2023		-		-		0.85		-		9,842,765		10		94,111			347,668			(792	)		(50	)		(80,921	)		12,358
Restricted stock awards, net of shares withheld for employee tax		-		-		-		-		14,000		-		170			-			-			-			-			170
Restricted Stock Units, net of shares withheld for employee tax		-		-		-		-		65,967		-		308			-			-			-			-			308
Common stock issued in relation to Stock Purchase Plan		-		-		-		-		12,802		-		(26	)		(12,802	)		44			-			-			18
Accumulated Other Comprehensive Loss		-		-		-		-		-		-		-			-			-			(25	)		-			(25	)
Net loss		-		-		-		-		-		-		-			-			-			-			(930	)		(930	)
Balance at September 30, 2023		-		-		0.85		-		9,935,534		10		94,563			334,866			(748	)		(75	)		(81,851	)		11,899

	Series A Convertible				Series B Convertible
	Preferred				Preferred				Common						Treasury
	Stock				Stock				Stock				Additional		Stock
	Number of				Number of				Number of				Paid-In		Number of					Accumulated Other			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Shares		Amount			Comprehensive Loss			Deficit			Total
Balance at June 30, 2024		-		-		0.85		-		10,384,968		11		95,504		270,367		(464	)		(46	)		(82,748	)		12,257
Restricted stock awards		-		-		-		-		-		-		56		-		-			-			-			56
Restricted Stock Units, net of shares withheld for employee tax		-		-		-		-		-		-		345		-		-			-			-			345
Common stock issued for services		-		-		-		-		60,000		-		86													86
Accumulated Other Comprehensive Income		-		-		-		-		-		-		-		-		-			(40	)		-			(40	)
Net loss		-		-		-		-		-		-		-		-		-			-			(2,424	)		(2,424	)
Balance at September 30, 2024		-		-		0.85		-		10,444,698		11		95,991		270,367		(464	)		(86	)		(85,172	)		10,280

10

	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common								Treasury
	Stock				Stock				Stock					Additional			Stock						Accumulated Other
	Number of				Number of				Number of					Paid-In			Number of						Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount		Capital			Shares			Amount			Loss			Deficit			Total
Balance at December 31, 2022		-		-		0.85		-		8,951,035			10		92,987			389,967			(949	)		(3	)		(78,459	)		13,586
Restricted stock awards, net of shares withheld for employee tax		-		-		-		-		499,444			-		317			-			-			-			-			317
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		67,717			-		718			-			-			-			-			718
Common stock issued in relation to Stock Purchase Plan		-		-		-		-		70,047			-		(84	)		(61,302	)		211			-			-			127
Common stock issued in relation to Acquisition		-		-		-		-		353,492			-		625			-			-			-			-			625
Repurchase of common stock		-		-		-		-		(6,201	)		-		-			6,201			(10	)		-			-			(10	)
Accumulated other comprehensive loss		-		-		-		-		-			-		-			-			-			(72	)		-			(72	)
Net loss				-		-		-		-			-		-			-			-			-			(3,392	)		(3,392	)
Balance at September 30, 2023		-		-		0.85		-		9,935,534			10		94,563			334,866			(748	)		(75	)		(81,851	)		11,899

	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common								Treasury
	Stock				Stock				Stock					Additional			Stock						Accumulated Other
	Number of				Number of				Number of					Paid-In			Number of						Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount		Capital			Shares			Amount			Loss			Deficit			Total
Balance at December 31, 2023		-		-		0.85		-		10,123,964			10		95,031			329,351			(659	)		(2	)		(81,849	)		12,531
Restricted stock awards		-		-		-		-		140,000			1		331			-			-			-			-			332
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		39,845			-		505			(38,095	)		125			-			-			630
Common stock issued in relation to Stock Purchase Plan		-		-		-		-		21,889			-		(46	)		(21,889	)		71			-			-			25
Common stock issued for services		-		-		-		-		120,000			-		170			-			-			-			-			170
Repurchase of Common Stock		-		-		-		-		(1,000	)		-		-			1,000			(1	)		-			-			(1	)
Accumulated other comprehensive loss		-		-		-		-		-			-		-			-			-			(84	)		-			(84	)
Net loss				-		-		-		-			-		-			-			-			-			(3,323	)		(3,323	)
Balance at September 30, 2024		-		-		0.85		-		10,444,698			11		95,991			270,367			(464	)		(86	)		(85,172	)		10,280

The accompanying notes are an integral part of these unaudited consolidated financial statements.

11

VerifyMe, Inc.

Notes to the Consolidated Financial Statements (unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

VerifyMe, Inc. (“VerifyMe”) was incorporated in the State of Nevada on November 10, 1999. VerifyMe, together with its subsidiaries, including Trust Codes Global Limited (“Trust Codes Global”) and PeriShip Global LLC (“PeriShip Global”), (together the “Company,” “we,” “us,” or “our”) is based in Lake Mary, Florida and its common stock, par value $0.001 per share, and warrants to purchase common stock are traded on The Nasdaq Capital Market (“Nasdaq”) under the trading symbols “VRME” and “VRMEW,” respectively.

VerifyMe, is a traceability and customer support services provider using specialized software and process technology. The Company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions. Through our Precision Logistics segment, we provide a value-added service for sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as pre-shipment weather analysis, flight-tracking, sort volumes, and traffic, delivered to customers via a secure portal. The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center. Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones. The significant majority of VerifyMe revenue is within the Precision Logistics Segment. The Company’s activities are subject to significant risks and uncertainties. See the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report.

Reclassifications

Certain amounts presented for the three and nine months ended September 30, 2023, reflect reclassifications made to conform to the presentation in our current reporting period. These reclassifications had no effect on the previously reported net loss.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements (the “Interim Statements”) include the accounts of VerifyMe and its wholly owned subsidiaries PeriShip Global and Trust Codes Global. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The Interim Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2024.  The accompanying Interim Statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The interim results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future interim periods.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows (dollars in thousands):

	As of
	September 30, 2024		December 31, 2023
Cash and cash equivalents	$	2,610	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,610	$	3,095

The Company classifies cash and cash equivalents that are restricted from operating use for the next twelve months as restricted cash. No cash was subject to restriction as of September 30, 2024. As of December 31, 2023, the Company held $63 thousand subject to restrictions.

12

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method by which to allocate resources and assess performance. The Company has two reportable segments, namely, (i) Precision Logistics and (ii) Authentication. See Note 11 - Segment Reporting, for further discussion of the Company’s segment reporting structure. 

Foreign Currency Translation

The functional currency of our New Zealand operations is the local currency, New Zealand dollar (NZD). The translation of the foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the weighted average exchange rates prevailing during the year. The unrealized gains and losses resulting from such translation are included as a component of comprehensive income. Translation gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in “General and administrative” on our Consolidated Statements of Operations. The foreign currency transaction gains for the three and nine months ended September 30, 2024, was $67 thousand and 21 thousand, respectively. The foreign currency transaction losses for the three and nine months ended September 30, 2023, were $16 thousand and $30 thousand, respectively.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): “Improvements to Reportable Segment Disclosures”, which requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment's profit or loss to assess performance and decide how to allocate resources. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company adopted the new standard beginning January 1, 2024. Note 11 – Segment Reporting has been updated to reflect the new disclosure requirements and certain amounts have been reclassified in the Consolidated Statement of Operations. There is no other impact of adoption of this standard on the Company’s consolidated financial statements and disclosures.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, contingent consideration and long-term derivative assets or liabilities. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities.  The Company believes the carrying amount of its notes payable approximates fair value based on rates and other terms currently available to the Company for similar debt instruments.

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures,” and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

13

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2024, and December 31, 2023.

Amounts in Thousands ('000)

	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)
Balance as of December 31, 2023	$	4	$	(924	)
Change in fair value of Contingent Consideration		-		839
Payments		-		36
Currency		-		27
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		7		-
Balance at September 30, 2024	$	11	$	(22	)

Revenue Recognition

The Company accounts for revenues according to Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

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The Company applies the following five steps, separated by reportable segments, in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements.

· identify the contract with a customer;

· identify the performance obligations in the contract;

· determine the transaction price;

· allocate the transaction price to performance obligations in the contract; and

· recognize revenue as the performance obligation is satisfied.

For more detailed information about reportable segments, see Note 11 – Segment reporting. The Company generally considers completion of an agreement, or Statement of Work (“SOW”) and/or purchase order as a customer contract, provided collection is considered probable.

Precision Logistics

Our Precision Logistics segment consists of two service lines, Proactive and Premium. Under our Proactive service line, clients pay us directly for carrier service coupled with our Proactive logistics service. Terms typically range 7 days and no longer than 30 days. The Company has determined it is the principal and recognizes shipment fees in gross revenue. Under our Premium service line, we provide complete white-glove shipping monitoring and predictive analytics services. This service includes customer web portal access, weather monitoring, temperature control, full service center support and last mile resolution. Payment terms are typically 30-45 days.

Under both service lines in our Precision Logistics segment, our performance obligation is met, and revenue is recognized when the packages are delivered. The transaction fees consist of fixed consideration made up of amounts contractually billed to the customer. There are no variable considerations in the transaction fee, in either service line.

Authentication

Our Authentication segment primarily consists of our brand protection service line which consists of a custom suite of products that offer clients traceability and brand solutions. Terms typically range between 30 and 90 days. Our performance obligation is met, and revenue is recognized, when our products are shipped or delivered depending on the specific agreement with the customer. The transaction fee is made up of fixed consideration based on the related purchase order or agreement. Warranties and other variable considerations are analyzed by the Company, in terms of historical warranties, current economic trends, and changes in customer demand, and have been determined to be insignificant in the three and nine months ended September 30, 2024.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assesses qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test. The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

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Basic and Diluted Net Loss per Share of Common Stock

The Company follows FASB ASC 260, “Earnings Per Share,” when reporting earnings per share resulting in the presentation of basic and diluted earnings per share.  Because the Company reported a net loss for each of the periods presented, common stock equivalents, including preferred stock, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same. 

For the three and nine months ended September 30, 2024, and 2023, there were shares potentially issuable, that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. For the three and nine months ended September 30, 2024, there were approximately 8,256,000 anti-dilutive shares consisting of 2,305,000 unvested performance restricted stock units, restricted stock units, and restricted stock awards, 221,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three and nine months ended September 30, 2023, there were approximately 8,385,000 anti-dilutive shares consisting of 2,348,000 unvested performance restricted stock units, restricted stock units, restricted stock awards and options under the stock purchase plan, 307,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock.

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Stock-Based Compensation

We account for stock-based compensation under the provisions of FASB ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock options on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model include risk-free interest rates, expected volatility and expected life of the stock options. Changes in these assumptions can materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line method. For performance restricted stock units with stock price appreciation targets (see Note 6 – Stock Options, Restricted Stock and Warrants), we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal based on actual achievement during the period.

We account for stock-based compensation awards to non-employees in accordance with ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, “Equity – Equity-Based Payments to Non-Employees”.  

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity-based payments are recorded as an expense over the service period, as if we had paid cash for the services. At the end of each financial reporting period, prior to vesting or prior to the completion of the services, the fair value of the equity-based payments will be re-measured, and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity-based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity-based payments are fully vested or the service completed. 

NOTE 2 – REVENUE

Revenue by Category

The following series of tables present our revenue disaggregated by various categories (dollars in thousands).

	Authentication				Precision Logistics				Consolidated
Revenue	Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,
	2024		2023		2024		2023		2024		2023
Proactive services	$	-	$	-	$	4,417	$	4,038	$	4,417	$	4,038
Premium services		-		-		886		1,419		886		1,419
Brand protection services		132		147		-		-		132		147
	$	132	$	147	$	5,303	$	5,457	$	5,435	$	5,604

	Authentication				Precision Logistics				Consolidated
Revenue	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023		2024		2023
Proactive services	$	-	$	-	$	12,587	$	12,742	$	12,587	$	12,742
Premium services		-		-		3,574		3,343		3,574		3,343
Brand protection services		385		515		-		-		385		515
	$	385	$	515	$	16,161	$	16,085	$	16,546	$	16,600

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Contract Balances 

The timing of revenue recognition, billings and cash collections results in unbilled revenue (contract assets) and deferred revenue (contract liabilities) on the consolidated balance sheets. Amounts charged to our clients become billable according to the contract terms, which usually consider the delivery completion. Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within twelve months. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the nine-month period ended September 30, 2024, were not materially impacted by any other factors.

Applying the practical expedient in ASC Topic 606, we recognize the incremental costs of obtaining contracts (i.e. sales commissions) as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. As of September 30, 2024, we did not have any capitalized sales commissions.

For all periods presented, contract liabilities were not significant. 

The following table provides information about contract assets from contracts with customers: 

	Contract Asset
	September 30,
In Thousands	2024			2023
Beginning balance, January 1	$	1,282		$	1,185
Contract asset additions		6,464			5,394
Reclassification to accounts receivable, billed to customers		(6,960	)		(5,694	)
Ending balance (1)	$	786		$	885

______________

(1) Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

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NOTE 3 – BUSINESS COMBINATIONS

Trust Codes Global Limited

On March 1, 2023, we acquired, through Trust Codes Global, the business and certain assets of Trust Codes Limited (“Trust Codes”), specializing in brand protection, anti-counterfeiting, and consumer engagement technology with an expertise in the food and agriculture industry. Trust Codes Global uses unique QR codes or IoT, coupled with GS1 standards to deliver cloud-based brand protection based on a unique per-item digital identity to protect brand and product authenticity, increase data visualization of a product through the end-to-end supply chain, and creates a data-drive engine to inform and educate consumers of the product. The Company accounted for the transaction as an acquisition of a business under ASC 805 – Business Combination. The purchase price was approximately $1.0 million which consisted of $0.36 million in cash paid at closing and 353,492 shares of common stock of the Company, representing $0.65 million in stock consideration. In addition, the purchase agreement requires consideration contingent upon the achievement of earnings targets during a five-year period subsequent to the closing of the acquisition. The earn-out consideration is estimated at $1.1 million at the acquisition date, however the maximum amount of the payment is unlimited. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. All of the goodwill recorded for financial statement purposes is deductible for tax purposes. The Company incurred $278 thousand in relation to acquisition related costs which have been included in General and administrative in the nine months ended September 30, 2023, in the accompanying Consolidated Statements of Operations. Trust Codes Global is included in the Authentication segment and the results of its operations have been included in the consolidated financial statements beginning March 1, 2023. The pro-forma financial information for Trust Codes is immaterial to our results of operations and impractical to provide.

The following table summarizes the purchase price allocation for the acquisition (dollars in thousands).

Cash	$	363
Fair value of contingent consideration		1,125
Stock (issuance of 353,492 shares of common stock) (a)		625
Total purchase price	$	2,113
				Amortization
				Period
Purchase price allocation:
Prepaid expenses	$	25
Property and Equipment, net		18
ROU Asset		171
Developed Technology		485		8 years
Trade Names/Trademarks		148		18 years
Customer Relationships		68		10 years
Goodwill		1,383
Accounts payable and other accrued expenses		(14	)
Current lease liability		(63	)
Long term lease liability		(108	)
	$	2,113

(a) Stock issued was calculated based on the 15-day volume-weighted average price (“VWAP”) through February 28, 2023, calculated at $1.8388.

Contingent Consideration

ASC Topic 805 requires that contingent consideration to be recognized at fair value on the acquisition date and be re-measured each reporting period with subsequent adjustments recognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to, and volatility in, our results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.

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As of September 30, 2024, contingent consideration presented as current liability totaled $22 thousand. As of September 30, 2024, we had no long term contingent consideration related to the acquisition of Trust Codes on the consolidated balance sheets. On May 15, 2024, a payment of $36 thousand was paid for contingent consideration.

NOTE 4 – INTANGIBLE ASSETS AND GOODWILL

Goodwill

Goodwill represents costs in excess of values assigned to the underlying net assets of acquired businesses. Intangible assets acquired are recorded at estimated fair value. Goodwill is deemed to have an indefinite life and is not amortized but is tested for impairment annually, and at any time when events suggest an impairment more likely than not has occurred. We test goodwill at the reporting unit level.

ASC Topic 350, “Intangibles - Goodwill and Other” (“ASC Topic 350”), permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.  Under ASC Topic 350, an entity is not required to perform a quantitative goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying amount. A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S. GAAP.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The timing and frequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. On September 24, 2024, Paul Ryan, Executive Vice President, Authentication Segment, notified us of his resignation effective December 24, 2024. On October 4, 2024, we placed Mr. Ryan on garden leave, meaning he remains employed by us but is only working for us upon request. During the quarter, we have identified concerns relating to the commercial viability of this segment and we are evaluating a number of strategic alternatives for our Authentication segment. As a result, the Company made revisions to our internal forecasts and concluded that in accordance with ASC 350 a triggering event occurred indicating that potential impairment exists, which required the Company to conduct an interim test of the fair value of the goodwill for the Authentication segment. We performed a quantitative goodwill impairment test and determined the fair value of our reporting units using a combination of an equity approach and a market approach, employing a guideline public company approach. The results of our goodwill impairment test indicated that the carrying value of the Authentication reporting unit exceeded its estimated fair value. As a result, the Company recorded a goodwill impairment charge of $1,351 thousand during the three and nine months ended September 30, 2024, within goodwill and intangible asset impairment on the consolidated statement of operations. We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present.

Each of our two reportable segments represents an operating segment under ASC Topic 280, Segment Reporting. We test our goodwill at the reporting unit level, or one level below an operating segment, under ASC Topic 350, “Intangibles - Goodwill and Other”. We determined that we have two reporting units for purposes of goodwill impairment testing, which represent our two reportable business segments, as discussed below.

Changes in the carrying amount of goodwill by reportable business segment for the nine months ended September 30, 2024, were as follows (in thousands):

	Authentication			Precision Logistics		Total
Net book value at
January 1, 2024	$	1,396		$	3,988	$	5,384
2024 Activity
Goodwill impairment charge		(1,351	)		-		(1,351	)
Foreign currency translation		(45	)		-		(45	)
Net book value at
September 30, 2024	$	-		$	3,988	$	3,988

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Intangible Assets Subject to Amortization

Our intangible assets include amounts recognized in connection with patents and trademarks, capitalized software and acquisitions, including customer relationships, tradenames, developed technology and non-compete agreements. Intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Amortization is recognized on a straight-line basis over the estimated useful life of the intangible assets. Intangible assets with definite lives are reviewed for impairment if indicators of impairment arise. Except for goodwill, we do not have any intangible assets with indefinite useful lives.

The revisions to our internal forecasts resulted in an interim triggering event for the three months ending September 30, 2024, indicating the carrying value of our long-lived assets including patents and trademarks, customer relationships, and developed technology may not be recoverable. Accordingly, the Company performed an interim impairment test and assessed the recoverability of the related intangible assets by using level 3 inputs and comparing the carrying value to the net undiscounted cashflow expected to be generated. The analysis indicated that certain intangible assets were impaired. The Company further concluded as of September 30, 2024 the carrying value exceeded its estimated fair value, which resulted in an impairment charge. The Company recorded an intangible impairment charge of $901 and $914 thousand during the three and nine months ended September 30, 2024 respectively, within goodwill and intangible asset impairment on the consolidated statement of operations.

Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and their respective balances were as follows (in thousands):

September 30, 2024	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,112	$	(209	)	$	903		11
Customer Relationships		1,839		(449	)		1,390		8
Developed Technology		3,143		(1,280	)		1,863		4
Internally Used Software		1,247		(138	)		1,109		6
Non-Compete Agreement		191		(93	)		98		3
Deferred Implementation		198		(38	)		160		9
Total Intangible Assets	$	7,730	$	(2,207	)	$	5,523
December 31, 2023
Patents and Trademarks	$	2,002	$	(564	)	$	1,438		13
Capitalized Software		161		(109	)		52		2
Customer Relationships		1,908		(317	)		1,591		9
Developed Technology		3,632		(938	)		2,694		5
Internally Used Software		914		(62	)		852		6
Non-Compete Agreement		191		(65	)		126		3
Deferred Implementation		198		(24	)		174		9
Total Intangible Assets	$	9,006	$	(2,079	)	$	6,927

Amortization expense for intangible assets was $277 thousand and $266 thousand for the three months ended September 30, 2024, and 2023, respectively, and $817 thousand and $761 thousand for the nine months ended September 30, 2024, and 2023, respectively. During the nine months ended September 30, 2024, the Company impaired certain assets by $914 thousand, to bring the gross carrying amount related to these assets to zero as a result of the impairment analysis of long lived assets under ASC 360.

Patents and Trademarks

As of September 30, 2024, our current patent and trademark portfolios consist of nine granted U.S. patents and two granted European patents (one validated in four countries of France, Germany, United Kingdom, and Italy and one validated in three countries of France, Germany and United Kingdom), two pending U.S. and foreign patent applications, twenty-three registered U.S. trademarks, two EU trademark registrations, one Colombian trademark registration, one Australian trademark registration, one Japanese trademark registration, one Mexican trademark registration, one Singaporean trademark registration, two UK trademark registrations, seven NZ trademark registration, one OAPI (African Intellectual Property Organization) trademark registration, and one pending US and one foreign trademark application in Nigeria. The Company abandoned one patent during the nine months ended September 30, 2024.

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The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands):

Fiscal Year ending December 31,
2024 (three months remaining)	$	257
2025		1,023
2026		1,023
2027		996
2028		622
Thereafter		1,602
Total	$	5,523

NOTE 5 – STOCKHOLDERS’ EQUITY

The Company expensed $56 thousand and $331 thousand related to restricted stock awards for the three and nine months ended September 30, 2024, respectively. The Company expensed $177 thousand and $325 thousand related to restricted stock awards for the three and nine months ended September 30, 2023, respectively.

The Company expensed $345 thousand and $678 thousand related to restricted stock units for the three and nine months ended September 30, 2024, and $316 thousand and $728 thousand related to restricted stock units for the three and nine months ended September 30, 2023.

During the nine months ended September 30, 2024, the Company issued 1,750 shares of common stock upon vesting of restricted stock units, and 38,095 shares of common stock from treasury shares, net of common stock withheld for taxes.

On March 31, 2024, the Company issued 30,000 of restricted common stock, vesting immediately, with a value of $42 thousand, for consulting services. On June 30, 2024, the Company issued an additional 30,000 of restricted common stock, vesting immediately, with a value of $42 thousand, for consulting services. On September 30, 2024, the Company issued an additional 60,000 of restricted common stock, vesting immediately, with a value of $86 thousand, for consulting services.

Non-Qualified Stock Purchase Plan

On June 10, 2021, the stockholders of the Company approved a non-qualified stock purchase plan (the “2021 Plan”). The 2021 Plan provides eligible participants, including employees, directors and consultants of the Company, the opportunity to purchase shares of the Company’s common stock thereby increasing their interest in the Company’s continued success. The maximum number of common stock reserved and available for issuance under the 2021 Plan is 500,000 shares. The purchase price of shares of common stock acquired pursuant to the exercise of an option will be the lesser of 85% of the fair market value of a share (a) on the enrollment date, and (b) on the exercise date. The 2021 Plan is not intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company applied FASB ASC 718, “Compensation-Stock Compensation” and estimated the fair value using the Black-Scholes model, as the 2021 Plan is considered compensatory. In relation to the 2021 Plan the Company expensed $0 and $4 thousand for the three and nine months ended September 30, 2024, respectively. During the nine months ended September 30, 2024, the Company received $21 thousand in proceeds related to the 2021 Plan. The Company has currently suspended new offering periods under the 2021 Plan.

Shares Held in Treasury

As of September 30, 2024, and December 31, 2023, the Company had 270,367 and 329,351 shares, respectively, held in treasury with a value of approximately $464 thousand and $659 thousand, respectively.  

On February 29, 2024, seven participants exercised their option under the Company’s non-qualified stock purchase plan, and as a result, 21,889 shares were issued from treasury, with an exercise price of $0.97 per share.

Shares Repurchase Program

In December 2023, the Company’s Board of Directors approved a new share repurchase program to allow the Company to spend up to $0.5 million to repurchase shares of its common stock so long as the price per share does not exceed $1.00 until December 14, 2024. During the nine months ended September 30, 2024, the Company repurchased 1,000 shares of common stock for $1 thousand under the Company’s current program. 

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NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

During 2013, the Company adopted the 2013 Omnibus Equity Compensation Plan (the “2013 Plan”). Under the 2013 Plan, the Company is authorized to grant awards of stock options, restricted stock, restricted stock units and other stock-based awards up to an aggregate of 400,000 shares of common stock.  The 2013 Plan is intended to permit certain stock options granted to employees under the 2013 Plan to qualify as incentive stock options.  All options granted under the 2013 Plan, which are not intended to qualify as incentive stock options are deemed to be non-qualified stock options.  

On November 14, 2017, the Executive Committee of the Company’s Board of Directors adopted the 2017 Equity Incentive Plan (the “2017 Plan”) which covered the potential issuance of 260,000 shares of common stock. The 2017 Plan provided that directors, officers, employees, and consultants of the Company were eligible to receive equity incentives under the 2017 Plan at the discretion of the Board or the Board’s Compensation Committee.

On August 10, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”), subject to stockholder approval, which authorizes the potential issuance of up to 1,069,110 shares of common stock. On September 30, 2020, the Company’s stockholders approved the 2020 Plan, and upon such approval the 2020 Plan became effective and the 2017 Plan was terminated. Shares of common stock underlying existing awards under the 2017 Plan may become available for issuance pursuant to the terms of the 2020 Plan under certain circumstances. Employees and non-employee directors of the Company or its affiliates, and other individuals who perform services for the Company or any of its affiliates, are eligible to receive awards under the 2020 Plan at the discretion of the Board of Directors or the Board’s Compensation Committee.

On March 28, 2022, the Company’s Board of Directors adopted the First Amendment to the 2020 Plan, subject to stockholder approval, which increased the shares authorized for potential issuance under the 2020 Plan to 2,069,100 shares of common stock and extended the term of the 2020 Plan to June 9, 2032. On June 9, 2022, the Company’s stockholders approved the First Amendment to the 2020 Plan. On April 17, 2023, the Company’s Board of Directors adopted the Second Amendment to the 2020 Plan, subject to stockholder approval, which increased the shares authorized for potential issuance under the 2020 Plan to 3,069,100 shares of common stock and extended the term of the 2020 Plan to June 6, 2033. On June 6, 2023, the Company’s stockholders approved the Second Amendment to the 2020 Plan. On March 18, 2024, the Company’s Board of Directors adopted the Third Amendment to the 2020 Plan, subject to stockholder approval, which increased the shares authorized for potential issuance under the 2020 Plan to 4,069,100 shares of common stock and extended the term of the 2020 Plan to June 4, 2034. On June 4, 2024, the Company’s stockholders approved the Third Amendment to the 2020 Plan.

The 2020 Plan, as amended, is administered by the Compensation Committee which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

In connection with incentive stock options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock with respect to which incentive stock options are exercisable for the first time by any individual during any calendar year (under all plans of the Company and its affiliates) shall not exceed $100 thousand, and the options in excess of $100 thousand shall be deemed to be non-qualified stock options, including prices, duration, transferability and limitations on exercise. The maximum number of shares of common stock that may be issued under the 2020 Plan pursuant to incentive stock options may not exceed, in the aggregate, 1,000,000.

The Company has issued non-qualified stock options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgements.

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Stock Options

The following table summarizes the activities for the Company’s stock options as of September 30, 2024:

	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in thousands)(1)
Balance as of December 31, 2023		301,471		$	4.56
Granted		-			-
Forfeited/Cancelled/Expired		(80,471	)	$	7.27
Balance as of September 30, 2024		221,000		$	3.57
Exercisable as of September 30, 2024		221,000		$	3.57		0.7	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period. 

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As of September 30, 2024, the Company had no unvested stock options.

During the nine months ended September 30, 2024, and 2023, the Company expensed $0 thousand, with respect to options.

As of September 30, 2024, there was $0 unrecognized compensation cost related to outstanding stock options.

Restricted Stock Awards and Restricted Stock Units

The following table summarizes the unvested restricted stock awards as of September 30, 2024:

				Weighted -
				Average
	Number of			Grant
	Award Shares			Date Fair Value
Unvested at December 31, 2023		416,669			1.44
Granted		140,000			1.60
Vested		(416,669	)		1.44
Balance at September 30, 2024		140,000		$	1.60

As of September 30, 2024, total unrecognized share-based compensation cost related to unvested restricted stock awards is $152 thousand, which is expected to be recognized over a weighted-average period of less than one year.

The following table summarizes the unvested time-based restricted stock units as of September 30, 2024: 

				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2023		371,253			1.32
Granted		88,011			1.46
Vested		(70,527	)		1.33
Forfeited		(25,334	)		1.23
Balance at September 30, 2024		363,403		$	1.35

As of September 30, 2024, total unrecognized share-based compensation cost related to unvested time-based restricted stock units was $198 thousand, which is expected to be recognized over a weighted-average period of less than one year.

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The following table summarizes the unvested performance based restricted stock units as of September 30, 2024:

				Weighted -
				Average
	Number of			Number of
	Unit Shares			Unit Shares
Unvested at December 31, 2023		1,438,760			1.51
Granted		555,000			1.08
Forfeited/Cancelled		(192,100	)		1.78
Balance at September 30, 2024		1,801,660		$	1.35

For restricted stock units with stock price appreciation targets, we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value of each grant was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the derived service period and there is no ongoing adjustment or reversal based on actual achievement during the period.

As of September 30, 2024, total unrecognized share-based compensation cost related to unvested performance based restricted stock units was $960 thousand, which is expected to be recognized over a weighted-average period of 1.2 years.

Warrants

The following table summarizes the activities for the Company’s warrants as of September 30, 2024:

	Number of Warrant Shares		Weighted- Average Exercise Price		Weighted - Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)(1)
Balance as of December 31, 2023		4,628,586	$	4.13
Granted		-		-
Expired		-		-
Balance as of September 30, 2024		4,628,586	$	4.13		1.5
Exercisable as of September 30, 2024		4,628,586	$	4.13		1.5	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.43 for our common stock on September 30, 2024.

NOTE 7—DEBT

PeriShip Global is a party to a debt facility with PNC Bank, National Association (the “PNC Facility”). The PNC Facility includes a $1 million revolving line of credit (the “RLOC”) with a term of one-year which was scheduled to expire in September 2024. On August 14, 2024, the Company signed a waiver and amendment which provided a waiver for a certain event of default and extended the line of credit to September 30, 2025. The RLOC has no scheduled payments of principal until maturity, and bears interest per annum at a rate equal to the sum of Daily SOFR plus 2.85% with monthly interest payments. The PNC Facility also includes a four-year term note (the “Term Note”) for $2 million which matures in September of 2026 and requires equal quarterly payments of principal and interest. The Term Note incurs interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%.  The RLOC and Term Note are guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe.

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The PNC Facility includes a number of affirmative and restrictive covenants applicable to PeriShip Global, including, among others, a financial covenant to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year, affirmative covenants regarding delivery of financial statements, payment of taxes, and establishing primary depository accounts with PNC Bank, and restrictive covenants regarding dispositions of property, acquisitions, incurrence of additional indebtedness or liens, investments and transactions with affiliates. PeriShip Global is also restricted from paying dividends or making other distributions or payments on its capital stock if an event of default (as defined in the PNC Facility) has occurred or would occur upon such declaration of dividend. PeriShip Global was in compliance with all affirmative and restrictive covenants under the PNC Facility at September 30, 2024.

As of September 30, 2024, our short-term debt outstanding under the Term Note was $0.5 million and total long-term debt outstanding under the Term Note was $0.5 million. During the nine months ended September 30, 2024, the Company made a repayment of $375 thousand towards the principal of the outstanding Term Note.

As of September 30, 2024, $0 was outstanding on the RLOC.

Effective October 17, 2022, the Company entered into an interest rate swap agreement, with a notional amount of $1,958 thousand, effectively fixing the interest rate on the Company’s outstanding debt at 7.602%. The Company has designated the intertest rate swap, expiring September 2026, as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset and liability associated with the interest rate swap are not significant as of September 30, 2024, and as of December 31, 2023, respectively.

Convertible Debt

On August 25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory notes for the aggregate principal amount of $1,100 thousand of which $475 thousand was purchased by related parties including certain members of management and the Board of Directors. As of September 30, 2024, $450 thousand is held by related parties after one member of management left the Company. The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024. The notes will mature on August 25, 2026, unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock. The Company may not redeem the notes prior to the maturity date. For the nine months ended September 30, 2024, interest expense related to the convertible debt was $66 thousand. As of September 30, 2024, the principal amount outstanding on the convertible debt was $1,100 thousand and is included in Convertible debt and Convertible debt-related party on the accompanying Consolidated Balance Sheets.

NOTE 8—INCOME TAXES

There are no taxes payable as of September 30, 2024, or December 31, 2023.

Some of the federal tax carry forwards will expire at various dates through 2037. Generally, these can be carried forward and applied against future taxable income at the tax rate applicable at that time. We are currently using an effective income tax rate of 21% for our projected available net operating loss carry-forward. No tax benefit has been recognized in the nine months ending September 30, 2024, due to the uncertainty surrounding the realizability of the benefit.

Utilization of the net operating losses (NOL) carryforwards may be subject to a substantial annual limitation as required by Section 382 of the IRC, due to ownership changes of the company that could occur in the future, as well as similar state provisions. In general, an “ownership change” as defined by Section 382 results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income.

In accordance with FASB ASC 740 “Income Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all, of the deferred tax assets may or will not be realized. The Company did not utilize any NOL deductions for the nine months ended September 30, 2024.

NOTE 9– LEASES

The Company accounts for its leases under Accounting Standard Codification (“ASC”) Topic 842, “Leases”. The Company determines at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. We have elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. Our current long-term leases include an option to extend the term of the lease prior to the end of the initial term. It is not reasonably certain that we will exercise the option and have not included the impact of the option in the lease term for purposes of determining total future lease payments. As our lease agreement does not explicitly state the discount rate implicit in the lease, we use our promissory note borrowing rate to calculate the present value of future payments.

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In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred.

We have operating leases for office facilities. We do not have any finance leases.

Lease expenses are included in General & administrative expenses on the accompanying Consolidated Statements of Operations. The components of lease expense were as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	50	$	47	$	145	$	132
Short-term lease cost		4		5		13		23
Total lease costs	$	54	$	52	$	158	$	155

Supplemental information related to leases was as follows (dollars in thousands):

	September 30, 2024			December 31, 2023
Operating Lease right-of-use asset	$	339		$	468
Current portion of operating lease liabilities	$	166		$	170
Non-current portion of operating lease liabilities		184			307
Total operating lease liabilities	$	350		$	477
Cash paid for amounts included in the measurement of operating lease liabilities	$	144		$	177
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-
Weighted-average remaining lease term for operating leases (years)		2.3
Weighted average discount rate for operating leases		6.4	%

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of September 30, 2024 (in thousands):

Year ending December 31,
2024 (three months remaining)	$	48
2025		196
2026		139
2027		45
Total future lease payments		428
Less: imputed interest		(78	)
Present value of future lease payments		350
Less: current portion of lease liabilities		(166	)
Long-term lease liabilities	$	184

NOTE 10– CONCENTRATIONS

For the three months ended September 30, 2024, one customer represented 14% of revenues and one customer represented 23% of revenues for the three months ended September 30, 2023. For the nine months ended September 30, 2024, one customer represented 19% of revenues and one customer represented 18% of revenues for the nine months ended September 30, 2023.

As of September 30, 2024, two customers made up 38% of accounts receivable.

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During the three and nine months ended September 30, 2024, one vendor accounted for 99% of transportation cost, in our Precision Logistics segment. 

NOTE 11 – SEGMENT REPORTING

As of September 30, 2024, we operated through two reportable business segments: (i) Precision Logistics and (ii) Authentication.

Precision Logistics:

This segment offers a value-added service provider for time and temperature sensitive parcel management. Through logistics management from a sophisticated IT platform with proprietary databases, package and flight-tracking software, weather, traffic, as well as dynamic dashboards with real-time visibility into shipment transit and last-mile events that are managed by a service center we provide our clients an end-to-end vertical approach for their most critical service delivery needs. Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

Authentication:

This segment specializes in solutions that connect brands with consumers through their products. Consumers can authenticate products with their smart phone prior to usage, and brand owners have the ability to gather business intelligence while engaging directly with their consumers. Our Authentication segment also provides brand protection and supply chain functions such as counterfeit prevention.

We do not allocate the following items to the segments: general & administrative expenses, research and development and other income (expense).

The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated loss before income tax expense (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue:
Precision Logistics	$	5,303		$	5,457		$	16,161		$	16,085
Authentication		132			147			385			515
Total Revenue	$	5,435		$	5,604		$	16,546		$	16,600
Gross Profit:
Precision Logistics	$	1,777		$	1,909		$	5,903		$	4,748
Authentication		118			137			342			405
Total Gross Profit		1,895			2,046			6,245			5,153
Segment Management and Technology - Precision Logistics		1,013			1,029			3,259			2,895
Segment Management and Technology - Authentication		316			312			930			802
Sales and marketing - Precision Logistics		262			181			599			733
Sales and marketing - Authentication		139			196			400			670
General and administrative		778			1,178			2,780			3,393
Research and development		5			5			65			23
Goodwill and Intangible asset impairment		2,252			-			2,265			34
LOSS BEFORE OTHER INCOME (EXPENSE)		(2,870	)		(855	)		(4,053	)		(3,397	)
OTHER INCOME (EXPENSE)		446			(75	)		730			5
NET LOSS	$	(2,424	)	$	(930	)	$	(3,323	)	$	(3,392	)

NOTE 12 – SUBSEQUENT EVENTS 

On November 4, 2024, the Company issued 54,843 shares of common stock upon vesting of 69,667 restricted stock units, net of 14,824 withheld for taxes related to a stock grant on November 2, 2022.

On November 8, 2024, the Board of Directors approved closing the Trust Codes Global business by the end of November 2024, unless the Company can find a purchaser for the Trust Codes Global business prior to the end of November 2024.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 

The information in this Management’s Discussion and Analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and notes.

Cautionary Note Regarding Forward-Looking Statements

This report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,” “estimate,” “continue,” “intended,” “plan,” “could,” “target,” “potential,” “will,” “expect” and similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts contained in this report, including among others, our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements.

Our actual results and financial condition may differ materially from those expressed or implied in such forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and our other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements in this report are made only as of the date hereof or as indicated and represent our views as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise, except as required by law.

Overview

VerifyMe, Inc. (“VerifyMe”) together with its subsidiaries, including Trust Codes Global Limited (“Trust Codes Global”) and PeriShip Global, LLC (“PeriShip Global”), (together the “Company,” “we,” “us,” or “our”), is a traceability and customer support services provider using specialized software and process technology. The company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions. Through our Precision Logistics segment, we provide a value-added service for sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as pre-shipment weather analysis, flight-tracking, sort volumes, and traffic, delivered to customers via a secure portal. The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center. Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones. Further information regarding our business segments is discussed below:

Precision Logistics: The Precision Logistics segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive perishable products. We manage complex industry-specific shipping logistic processes that require critical time, temperature control and handling to prevent spoilage and extreme delivery times and brand impairment. Utilizing predictive analytics from multiple data sources including flight-tracking, weather, traffic, major carrier feeds, and time of day data, we provide our clients an end-to-end vertical approach for their most critical service delivery needs. Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, as well as delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

Through our proprietary PeriTrack ® customer dashboard, we provide an integrated tool that gives our customers an in-depth look at their shipping activities and allows them access to critical information in support of the specific needs of the supply chain stakeholders. We offer post-delivery services such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.

Precision Logistics generates revenue from two business service models.

· ProActive Service – clients pay us directly for carrier service coupled with our proactive logistics assistance.

· Premium Service – clients pay us directly or through our carrier partner for our complete white-glove shipping monitoring and predictive analytics service. This service includes customer web portal access, weather monitoring, temperature control, full-service center support and last mile resolution.

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Products: The Precision Logistics segment includes the following bundled services as part of our service offerings to our customers:

· PeriTrack ®: Our proprietary PeriTrack® customer dashboard was developed utilizing our extensive logistics operational knowledge. This integrated web portal tool gives our customers an in-depth look at their shipping activities based on real-time data. The PeriTrack® dashboard was designed to provide critical information in support of the specific needs of supply chain stakeholders and gives our customer resolution specialists a 360° view of shipping activity. PeriTrack® features tools tailored for shippers of perishable goods, which includes the In-Transit Shipment Tracker. This tool provides details on the unique shipper’s in-transit shipments, with the ability to select and analyze data on individual shipments.

· Service Center: We have assembled a team of customer resolution specialists based in the U.S. This service team resolves shipping problems on behalf of our customers. The service center acts as a help desk and monitors shipping to delivery for our customers.

· Pre-Transit Service: We help clients prepare their products for shipments by advising clients on packaging requirements for various types of perishable products. Each product type requires its own particular packaging to protect it during shipment, and we utilize our extensive knowledge and research to provide our customers with packaging recommendations to meet their unique needs.

· Post-Delivery: We provide customized reporting for trend analysis, system performance reports, power outage maps, and many other reports to help our customers improve their processes and customer service outcomes.

· Weather/Traffic Service: We have full-time meteorologists on staff to monitor weather. A package may experience a variety of weather conditions between the origin and destination, and our team actively monitors these conditions to maximize the number of timely and safely transmitted shipments. Similarly, traffic and construction also create unpredictable delays which our team works diligently to mitigate. If delays or other issues occur, we inform clients and work with them to proactively resolve such shipment issues. 

Authentication: The Authentication segment specializes in traceability to connect brands with consumers through their product. This is critical in the current landscape of increased regulations, as well as increased counterfeit activity and product diversion. The ability to detect fraud or abnormal behavior while tracing an item’s journey from production through to the consumer’s hands provides consumers and brands the assurance they require. VerifyMe has custom software, patented technologies, and a cloud environment that combines machine learning and data science to meet the needs of consumers and brands. In addition, the personalized consumer experience with the brand creates a connection that increases brand perception and loyalty.

Products: We have a custom suite of products that offer clients traceability and brand solutions. These products are combined with “software as a service” or “SaaS” which is stored in the cloud and accessed through the internet.

· VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packaging and products

· VerifyMe Track & Trace™ for unit level traceability and supply chain control

Opportunities

Precision Logistics: Traditionally, most shipping businesses utilize the carrier’s data platform for tracking which generally informs the shipping enterprise, and their customers, when a package is in transit, when a package has been delivered, and some level of detail of the path which a package traveled. We believe taking the data feeds from a carrier and adding real-time visibility with predictive analytics and the human intervention factor of our service center gives us a competitive advantage against other third-party platforms that solely rely on the carrier’s data feeds. We utilize a variety of input sources beyond the carrier’s data feed. Our proprietary “Predictive Analytics” technology is fed real-time meteorology data, traffic and road construction data, and power grid information to help predict issues before they happen. If an alert is created the shipper and our service center will work to address the issue and save the perishable product from spoiling, saving the shipper significant costs and reducing the need to replace products that are no longer viable. We have meteorologists on staff that track world-wide weather patterns to address predicted issues before they happen. We believe the company has two significant areas of opportunity. First, our services are specifically designed to address the needs of small and medium size agriculture, food and beverage companies. Second, the pharmaceutical and healthcare industries represent significant opportunities due to the enhanced tracking and customer service associated with distribution of these products. We are focusing our sales emphasis on those industries.

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Building logistics infrastructure is a capital-intensive process as the investment is locked in for a considerably long period. Due to the current economic environment, and our cost competitive offering, we believe companies may opt to outsource their precision logistics services to reduce their operational costs. The outsourcing of supply chain related and other logistics operations to service providers such as ours allows companies to improve the efficiency of their businesses by focusing their resources on core competencies. We believe outsourcing this function to our Precision Logistics segment provides the ideal solution for all parties involved.

Authentication: On September 24, 2024, Paul Ryan, Executive Vice President, Authentication Segment, notified us of his resignation effective December 24, 2024. On October 4, 2024, we placed Mr. Ryan on garden leave, meaning he remains employed by us but is only working for us upon request. On November 8, 2024, our Board of Directors approved closing the Trust Codes Global business by the end of November 2024 unless we can find a purchaser for the Trust Codes Global business prior to the end of November 2024. We made this decision in order to deploy the cash generated by our Precision Logistics segment to pursue potential acquisitions to fund growth and further invest in our Precision Logistics segment.

Partnerships:

Precision Logistics has a direct partnership with a major global carrier company and has data feeds directly from the carrier into our proprietary logistics optimization software which provides shippers much more detailed information and predictive analytics on their shipment versus a standard shipping code look up which is provided by the carrier. In addition to relying on this strategic partner for shipping services we have a service agreement pursuant to which this strategic partner resells our services to its customers under a “white label” arrangement. Under this arrangement we provide our logistics services to our strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Our strategic partner has begun to provide its own service offerings to its customers and while we will continue to offer our Premium services, we expect our partner will prefer to offer their solution to customers as the primary recommendation and our solution will be offered as a secondary solution. This does not affect our proactive services, and we expect to see growth under that service offering as we focus on providing proactive services to customers directly.

Our Authentication segment has a contract with HP Indigo, and a strategic partnership with INX, the third largest producer of inks in North America. We believe these partnerships can be used to enable brand owners to securely prevent counterfeiting, prevent product diversion and authenticate labels, packaging and products alleviating liability from counterfeit products that harm consumers.

Current Economic Environment

In response to market conditions and lower demand some carriers have implemented strategies to address a potential global recession. In April 2023, the major carrier that PeriShip Global partners with laid out steps it was taking to slash $4 billion in permanent costs by the end of its 2025 fiscal year in response to these market conditions and lower demand. In June 2023, the major carrier stated that due to ongoing demand, it plans to ground 29 more aircraft in its fiscal year that started in June 2024. In mid-December 2023, the carrier forecasted a low single digit percentage decline in revenue year over year for 2024.

We have seen a softening in demand for some services related to high-end perishable items which seem to be impacted by reduced discretionary spending by U.S. consumers. While a recession, whether global or more localized to the U.S., may decrease the demand for our services that are more discretionary in nature, we believe that the internal cost cutting measures, if implemented by the major global carrier may benefit out-sourced service providers. We are working with this major global carrier to address their small and medium-sized business clients, which we believe is an underserved market and presents growth opportunities for our Precision Logistics segment. However, we can provide no assurances that a decline in discretionary consumer spending will not have a negative impact on our revenues and results of operations.

Seasonality

We experience seasonal fluctuations in our net revenues from sales in our Precision Logistics segment. Revenues from sales are generally higher in the fourth quarter than in other quarters due to increased holiday shipments. The seasonality of our business may cause fluctuations in our quarterly operating results.

Results of Operations

Comparison of the three months ended September 30, 2024, and 2023

The following discussion analyzes our results of operations for the three months ended September 30, 2024, and 2023.

Revenue	Three Months Ended September 30,
	2024		2023
Precision Logistics	$	5,303	$	5,457
Authentication		132		147
Total Revenue	$	5,435	$	5,604

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Consolidated revenue decreased by $169 thousand during the third quarter of 2024 compared to the third quarter of 2023. The growth in the Authentication segment has not materialized, and while the growth in the Precision Logistics segment Proactive services increased, this was more than offset by the previously disclosed discontinued contract with one customer in our Premium services . The Proactive services revenue grew 9% in Q3 2024 compared to Q3 2023. The Precision Logistics segment accounted for 98% of the revenue for the quarter.

Gross Profit	Three Months Ended September 30,
	2024					2023
			% of Revenue					% of Revenue
Precision Logistics	$	1,777		34	%	$	1,909		35	%
Authentication		118		89	%		137		94	%
Total Gross Profit	$	1,895		35	%	$	2,046		37	%

Gross profit for the three months ended September 30, 2024, was $1,895 thousand, compared to $2,046 thousand for the three months ended September 30, 2023. The resulting gross margin was 35% for the three months ended September 30, 2024, compared to 37% for the three months ended September 30, 2023. The decrease in gross margin was principally due to the discontinued contract in Premium services in the Precision Logistics segment which has higher margins. The Proactive services revenue gross margin percentage improved in Q3 2024 compared to Q3, 2023.  

Segment Management and Technology

Segment management and technology expenses decreased by $12 thousand to $1,329 thousand for the three months ended September 30, 2024, compared to $1,341 thousand for the three months ended September 30, 2023.  The decrease relates primarily to a reduction in salaries with reduction in management. Amortization and depreciation expense was $306 thousand for the three months ended September 30, 2024, compared to $295 thousand for the three months ended September 30, 2023.

General and Administrative Expenses

General and administrative expenses decreased by $400 thousand to $778 thousand for the three months ended September 30, 2024, compared to $1,178 for the three months ended September 30, 2023. The decrease primarily relates to the $247 thousand severance expense in 2023 that did not recur in 2024. Stock compensation expense was $334 thousand for the three months ended September 30, 2024, compared to $452 thousand for the three months ended September 30, 2023, primarily due to reduction in Director compensation.

Research and Development

Research and development expenses were $5 thousand for the three months ended September 30, 2024, and 2023.

Sales and Marketing

Sales and marketing expenses increased by $24 thousand to $401 thousand for the three months ended September 30, 2024, compared to $377 thousand for the three months ended September 30, 2023. The increase is primarily related to increased salaries and marketing expenses in the Precision Logistics segment, partially offset by a reduction in salaries and travel in the Authentication segment.

Goodwill and Intangible Asset Impairment

As a result of a long-lived asset and goodwill asset impairment assessments performed in the third quarter of 2024, an intangible asset impairment charge of $901 thousand and a goodwill impairment charge of $1,351 thousand was recorded for the three months ended September 30, 2024, which represents the amount by which the net carrying value in the Authentication segment exceeded the fair value of the segment, primary due to changes to the forecasted cashflows of the segment.

Interest Expense, net

Interest expense, net was $29 thousand for the three months ended September 30, 2024, compared to $39 thousand for the three months ended September 30, 2023.

Net Loss

Consolidated net loss for the three months ended September 30, 2024, and 2023 was $2,424 thousand and $930 thousand, respectively. The decreased loss was primarily related to the goodwill and intangible asset impairment noted above partially offset by a gain in contingent consideration of $475 thousand. The resulting consolidated loss per share for the three months ended September 30, 2024, and three months ended September 30, 2023, was $0.23 and $0.09 per diluted share, respectively. 

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Comparison of the nine months ended September 30, 2024, and 2023

The following discussion analyzes our results of operations for the nine months ended September 30, 2024, and 2023.

Revenue	Nine Months Ended September 30,
	2024		2023
Precision Logistics	$	16,161	$	16,085
Authentication		385		515
Total Revenue	$	16,546	$	16,600

Consolidated revenue decreased $54 thousand for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease is primarily due to a decrease in our Authentication segment related to a project in 2023 that did not recur partially offset by an increase in Precision Logistics.

Gross Profit	Nine Months Ended September 30,
	2024					2023
			% of Revenue					% of Revenue
Precision Logistics	$	5,903		37	%	$	4,748		30	%
Authentication		342		89	%		405		79	%
Total Gross Profit	$	6,245		38	%	$	5,153		31	%

Gross profit for the nine months ended September 30, 2024, was $6,245 thousand, compared to $5,153 thousand for the nine months ended September 30, 2023. The resulting gross margin was 38% for the nine months ended September 30, 2024, compared to 31% for the nine months ended September 30, 2023. The gross profit increase relates to the increased Premium services revenue which has higher margins as well as process improvements to increase Proactive services margins in the Precision Logistics segment.

Segment Management and Technology

Segment management and technology expenses increased by $492 thousand to $4,189 thousand for the nine months ended September 30, 2024, compared to $3,697 thousand for the nine months ended September 30, 2023. The increase relates primarily to the acquisition of Trust Codes Global in March 2023, lower capitalized labor costs and severance expense of $129 thousand. Amortization and depreciation expense of $905 thousand for the nine months ended September 30, 2024, compared to $835 thousand for the nine months ended September 2023.

General and Administrative Expenses

General and administrative expenses decreased by $613 thousand to $2,780 thousand for the nine months ended September 30, 2024, compared to $3,393 thousand for the nine months ended September 30, 2023. The decrease relates primarily to the deal costs related to the acquisition of the Trust Codes Global business of $278 thousand, as well as severance expense in 2023.

Research and Development

Research and development expenses were $65 thousand and $23 thousand for the nine months ended September 30, 2024, and 2023, respectively primarily due to additional projects in the Authentication segment.

Sales and Marketing

Sales and marketing expenses decreased by $404 thousand to $999 thousand for the nine months ended September 30, 2024, compared to $1,403 thousand for the nine months ended September 30, 2023. The decrease is primarily related to a reduction in employees and consultants in the Authentication segment, a reduction in stock compensation in Precision Logistics, partially offset by an increase in employees in Precision Logistics.

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Goodwill and Intangible Asset Impairment

As a result of a long-lived asset and goodwill asset impairment assessments performed in the third quarter of 2024, an intangible asset impairment charge of $914 thousand and a goodwill impairment charge of $1,351 thousand was recorded for the nine months ended September 30, 2024, which represents the amount by which the net carrying value in the Authentication segment exceeded the fair value of the segment, primary due to changes to the forecasted cashflows of the segment.

Interest Expense

Interest expense was $109 thousand for the nine months ended September 30, 2024, compared to interest expense of $127 thousand for the nine months ended September 30, 2023.

Net Loss

Consolidated net loss for the nine months ended September 30, 2024, and 2023 was $3,323 thousand and $3,392 thousand, respectively. The decreased loss was primarily related to an improvement in gross profit and a gain relating to the change in the fair value of the contingent consideration related to the acquisition of Trust Codes Global, offset by the goodwill and intangible asset impairment charge in 2024. The resulting consolidated loss per share for the nine months ended September 30, 2024, and nine months ended September 30, 2023, was $0.32 and $0.35 per diluted share, respectively.

Liquidity and Capital Resources

Cash provided by operating activities was $302 thousand during the nine months ended September 30, 2024, compared to cash used by operating activities of $599 thousand during the comparable period in 2023. The increase in cash is primarily due to the non-cash add backs to net loss.

Cash used in investing activities was $353 thousand during the nine months ended September 30, 2024, compared to $1,080 thousand during the nine months ended September 30, 2023. The decrease in spending in investing activities related to a decrease in capitalized software costs and a decrease in acquisition costs. The acquisition of the Trust Codes Global business was in March 2023.

Cash used in financing activities during the nine months ended September 30, 2024, was $438 thousand compared to cash provided by financing activities during the nine months ended September 30, 2023, of $1,277 thousand. The decrease relates mainly to the proceeds from the line of credit of $800 thousand and convertible debt of $1,100 thousand that occurred in the nine months ended September 30, 2023.

On August 25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory notes for the aggregate principal amount of $1,100 thousand of which $475 thousand was purchased by relating parties including certain members of management and the Board of Directors. As of September 30, 2024, $450 thousand is held by related parties after one member of management left the Company. The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024. The notes will mature on August 25, 2026 unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock. The Company may not redeem the notes prior to the maturity date. As of September 30, 2024, the amount outstanding on the convertible debt was $1,100 thousand and included in Convertible Note, and Convertible Note – related party on the accompanying Consolidated Balance Sheets. The Company has accrued interest expense of $9 thousand as of September 30, 2024.

On September 22, 2022, PeriShip Global became a party to the PNC Facility with PNC Bank, National Association. The PNC Facility includes a $1 million RLOC with a term of one-year, which was extended to December 14, 2023. We also entered into an amended and restated loan agreement with PNC effective October 31, 2023, which provided amendments to a number of affirmative and restrictive covenants applicable to PeriShip Global and extended the RLOC to September 30, 2024. We entered into a waiver and amendment on August 14, 2024 which provided a waiver for a certain event of default and extended the RLOC to September 30, 2025. The RLOC has no scheduled payments of principal until maturity, and bears interest per annum at a rate equal to the sum of Daily SOFR plus 2.85% with monthly interest payments. As of September 30, 2024, we had no borrowings under the RLOC.

The PNC Facility also includes a four-year Term Note for $2 million which matures in September of 2026 and requires equal quarterly payments of principal and interest. The Term Note incurs interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%. The RLOC and Term Note are guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe.

The PNC Facility includes a number of affirmative and restrictive covenants applicable to PeriShip Global, including, among others, a financial covenant to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year, affirmative covenants regarding delivery of financial statements, payment of taxes, and establishing primary depository accounts with PNC Bank, and restrictive covenants regarding dispositions of property, acquisitions, incurrence of additional indebtedness or liens, investments and transactions with affiliates. PeriShip Global is also restricted from paying dividends or making other distributions or payments on its capital stock if an event of default (as defined in the PNC Facility) has occurred or would occur upon such declaration of dividend.

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Of the proceeds of $2.0 million from the Term Note, we used $1.8 million to settle debt outstanding issued in connection with the PeriShip Global acquisition, including the redemption of 61,000 shares of our common stock. As of September 30, 2024, our short-term debt outstanding under the Term Note was $0.5 million and total long-term debt outstanding under the Term Note was $0.5 million.

Effective October 17, 2022, we entered into an interest rate swap agreement, with a notional amount of $1,958 thousand, effectively fixing the interest rate on our outstanding debt at 7.602%.

In December 2023, the Company’s Board of Directors approved a new share repurchase program to allow the Company to spend up to $0.5 million to repurchase shares of its common stock so long as the price per share does not exceed $1.00 until December 14, 2024. During the nine months ended September 30, 2024, the Company repurchased 1,000 shares of common stock for $1 thousand under the Company’s current program.  

We believe that our cash and cash equivalents will fund our operations for the next 12 months. We may issue additional debt or equity as we grow our business which we expect to grow organically, and if the opportunity arises, through key acquisitions that will help accelerate the growth of our business.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial position, results of operations or cash flows.

Revenue Recognition

Our revenue transactions include logistics management for time and temperature sensitive packages, sales of our ink canisters, software, licensing, pre-printed labels, integrated solutions, and leasing of our equipment. We recognize revenue based on the principals established in ASC Topic 606, “Revenue from Contracts with Customers.” Revenue recognition is made when our performance obligation is satisfied. Our terms vary based on the solutions we offer and are examined on a case-by-case basis. For licensing our VerifyInk^TM technology we depend on the integrity of our clients’ reporting.

Goodwill

We have recorded goodwill as part of our acquisitions, which represents the excess of purchase price over the fair value of net assets acquired in the business combinations. Pursuant to ASC 350, the Company will test goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test. The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

On September 24, 2024, Paul Ryan, Executive Vice President, Authentication Segment, notified us of his resignation effective December 24, 2024. On October 4, 2024, we placed Mr. Ryan on garden leave, meaning he remains employed by us but is only working for us upon request. During the quarter, we have identified concerns relating to the commercial viability of this segment and we are evaluating a number of strategic alternatives for our Authentication segment. As a result, the Company made revisions to our internal forecasts and concluded that in accordance with ASC 350 a triggering event occurred indicating that potential impairment exists, which required the Company to conduct an interim test of the fair value of the goodwill for the Authentication segment. We performed a quantitative goodwill impairment test and determined the fair value of our reporting units using a combination of an income approach, employing a discounted cashflow model, and a market approach, employing a guideline public company approach. The results of our goodwill impairment test indicated that the carrying value of the Authentication reporting unit exceeded its estimated fair value. As a result, the Company recorded a goodwill impairment charge of $1,351 thousand during the three and nine months ended September 30, 2024, within goodwill and intangible asset impairment on the consolidated statement of operations.

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Intangibles

We review long-lived assets for impairment when performance expectations, events, or changes in circumstances indicate that the asset’s carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiable cashflows by comparing the carrying value of the asset to the undiscounted cashflow. If the evaluation indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.

As a result, of the revised internal forecasts, the Company concluded that this change was an interim triggering event for the three months ended September 30, 2024, indicating the carrying value of our long-lived assets including patents and trademarks, customer relationships, and developed technology may not be recoverable. Accordingly, the Company performed an interim impairment test and assessed the recoverability of the related intangible assets by using level 3 inputs and comparing the carrying value to the net undiscounted cashflow expected to be generated. The analysis indicated that certain intangible assets were impaired. The Company recorded an intangible impairment charge of $901 thousand during the three months ended September 30, 2024, within goodwill and intangible asset impairment on the consolidated statement of operations.

Stock-based Compensation

We account for stock-based compensation under the provisions of FASB ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model include risk-free interest rates, expected volatility and expected life of the stock options. Changes in these assumptions can materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line method.

For restricted stock units with stock price appreciation targets, we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal based on actual achievement during the period.

We account for stock-based compensation awards to non-employees in accordance with ASU No. 2018-07, which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, “Equity – Equity-Based Payments to Non-Employees”.

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity-based payments are recorded as an expense over the service period, as if we had paid cash for the services. At the end of each financial reporting period, prior to vesting or prior to the completion of the services, the fair value of the equity-based payments will be re-measured, and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity-based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity-based payments are fully vested or the service completed. 

Recently Adopted Accounting Pronouncements 

Recently adopted accounting pronouncements are discussed in Note 1 – Summary of Significant Accounting Policies in the notes accompanying the financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s Chief Executive Officer, our principal executive officer, and Chief Financial Officer, our principal financial officer, have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2024, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2024, our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There have been no other changes in our internal controls over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None. 

ITEM 1A. RISK FACTORS.

For a discussion of the Company’s potential risks or uncertainties, please see “Part I—Item 1A—Risk Factors” and “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC, and “Part I—Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein. There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent Quarterly Reports on Form 10-Q, except as noted herein.

Our Precision Logistics segment relies on one key strategic partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues.

Our business is dependent, and we believe that it will continue to depend on our relationship with one strategic partner. PeriShip Global partners with one major global carrier for all its customers’ shipping needs. While we work closely with this key strategic partner and have transportation services and pricing agreements in place covering the shipping services they provide to our customers, such agreements are subject to termination or modification from time to time. If our strategic partner is unwilling or unable to supply to us the shipping services we market and sell on acceptable terms, or at all, or otherwise elects to terminate its business relationship with us, we may not be able to obtain alternative shipping services from other providers on acceptable terms, in a timely manner, or at all, and our business may be materially and adversely impacted. We do not currently have any alternative shipping service suppliers from which we can obtain the shipping services we currently receive from our strategic partner. Establishing the necessary information technology infrastructure and business relationship with another shipping services provider would be costly and time consuming and may ultimately not be successful or cost-effective. Further, any increase in the prices charged by our single strategic partner or failure to perform by our strategic partner could cause our costs to increase or could cause us to experience short-term unavailability of shipping services on which our business relies.

In particular, delays and other shipping disruptions at our strategic partner significantly negatively impact our business. Our business involves the shipment of time and temperature sensitive goods, so our customers are significantly negatively impacted by delays and other shipping disruptions that cause product loss, spoilage and reputational harm. An increase in delays and other shipping disruptions on the part of our strategic partner could cause our clients to seek shipping solutions from our competitors who use alternative shipping service providers. If these events occur, it may reduce our profitability or may cause us to increase our prices. In addition, any material interruptions in shipping services by this strategic partner may result in significant cost increases and reduce sales, which could harm our business, financial condition and results of operations and may have a material adverse impact on our business.

In addition to relying on this strategic partner for shipping services, a material portion of our revenue has been generated through a service agreement pursuant to which this strategic partner resells our services to its customers under a “white label” arrangement. Under this arrangement we provide our logistics services to our strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Sales through our strategic partner accounted for approximately 17% of revenue of our Precision Logistics segment for the year ended December 31, 2023, and 20% for the nine months ended September 30, 2024. Our strategic partner has begun to provide its own service offerings to its customers, and we expect revenue from our Premium Services in our Precision Logistics segment will begin to decrease as we experience a reduction in business for these services. If we fail to offset a reduction in business for our Premium Services in our Precision Logistics segment through our ProActive Services or other service offerings, our business, financial condition and results of operations could be materially adversely affected.

The Company has significant goodwill and other intangible assets, and future impairment of these assets could have a material adverse impact on the Company's financial results.

The Company has recorded significant goodwill and other identifiable intangible assets on its balance sheet as a result of its acquisition of the PeriShip business in 2022 and Trust Codes business in 2023. A number of factors may result in impairments to goodwill and other intangible assets, including significant negative industry or economic trends, disruptions to our business, increased competition and significant changes in the use of the assets.

39

On September 24, 2024, Paul Ryan, Executive Vice President, Authentication Segment, notified us of his resignation effective December 24, 2024. On October 4, 2024, we placed Mr. Ryan on garden leave, meaning he remains employed by us but is only working for us upon request. During the quarter, we have identified concerns relating to the commercial viability of this segment and on November 8, 2024 the Company made the decision to close Trust Codes Global by the end of November 2024 unless we can find a buyer for this business. As a result, the Company made revisions to our internal forecasts and concluded that in accordance with ASC 350 a triggering event occurred indicating that potential impairment exists, which required the Company to conduct an interim test of the fair value of the goodwill for the Authentication segment. The results of our goodwill impairment test indicated that the carrying value of the Authentication reporting unit exceeded its estimated fair value. As a result, the Company recorded a goodwill impairment charge of $1,351 thousand during the three and nine months ended September 30, 2024, within goodwill impairment charge on the consolidated statement of operations.

As a result of the revised internal forecasts, the Company concluded that this change was an interim triggering event for the three months ended September 30, 2024, indicating the carrying value of our long-lived assets including patents and trademarks, customer relationships, and developed technology may not be recoverable. Accordingly, the Company performed an interim impairment test and assessed the recoverability of the related intangible assets by using level 3 inputs and comparing the carrying value to the fair value. The analysis indicated that certain intangible assets were impaired. The Company recorded an intangible impairment charge of $901 thousand during the three months ended September 30, 2024, within impairment loss on intangibles on the consolidated statement of operations.

Impairment charges could adversely affect the Company's financial condition or results of operations in the periods recognized. 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On September 30, 2024, the Company issued 60,000 shares of common stock for services rendered to the Company pursuant to a Consulting Agreement between the Company and Pentant LLC, effective November 15, 2023, as amended June 30, 2024 (the “Consulting Agreement”). The securities issued pursuant to the Consulting Agreement were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.

Share Repurchase Plan

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares (or Units)  Purchased	Average Price Paid per Share (or Units)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1 (In thousands)
07/01/2024-07/31/2024	-	-	-	-
08/01/2024-08/31/2024	-	-	-	-
09/01/2024-09/30/2024	-	-	-	-
Total	-	-	-	$499

(1) Purchases made pursuant to the Company’s share repurchase program announced on December 8, 2023, pursuant to which the Company is authorized to purchase up to $0.5 million worth of shares of its common stock so long as the price per share does not exceed $1.00. Under the repurchase program, shares of the Company’s common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of shares repurchased depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be suspended or discontinued at any time until it expires on December 14, 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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ITEM 5. OTHER INFORMATION.

During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS

Exhibit No.	Description
10.1#	Form of Salary Reduction Agreement (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 5, 2024).
10.2#	Form of RSU Award Agreement (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 5, 2024).
10.3*	Waiver and Amendment to Loan Documents between PeriShip Global LLC and PNC Bank National Association effective August 7, 2024
31.1*	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Filed herewith

**Furnished herewith

# Denotes management compensation plan or contract

41

SIGNATURES 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VERIFYME, INC.
Date: November 12, 2024	By: /s/ Adam Stedham
	Adam Stedham
	Chief Executive Officer and President (Principal Executive Officer)
Date: November 12, 2024	By: /s/ Nancy Meyers
	Nancy Meyers Executive Vice President and
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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EX-10.3

Exhibit 10.3

Waiver and Amendment to Loan Documents

THIS WAIVER AND AMENDMENT TO LOAN DOCUMENTS (this “Amendment”) is made as of August 07, 2024, by and between PERISHIP GLOBAL LLC (the “Borrower”), and PNC BANK, NATIONAL ASSOCIATION (the “Bank”).

BACKGROUND

A.       The Borrower or another obligor has executed and delivered to the Bank (or a predecessor which is now known by the Bank’s name as set forth above), one or more promissory notes, letter agreements, loan agreements, security agreements, mortgages, pledge agreements, collateral assignments, and other agreements, instruments, certificates and documents, some or all of which are more fully described on attached Exhibit A, which is made a part of this Amendment (collectively as amended from time to time, the “Loan Documents”) which evidence or secure some or all of the indebtedness and other obligations of the Borrower to the Bank for one or more loans or other extensions of credit (as used herein, collectively, together with the Obligations, if and as defined in the Loan Documents, the “Obligations”). Any initially capitalized terms used in this Amendment without definition shall have the meanings assigned to those terms in the Loan Documents.

B.       The Borrower and the Bank desire to amend the Loan Documents, and to waive certain defaults thereunder, as provided for in this Amendment.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

1.       Certain of the Loan Documents are amended, and certain defaults under the Loan Documents are waived, as set forth in Exhibit A. Any and all references to any Loan Document in any other Loan Document shall be deemed to refer to such Loan Document as amended by this Amendment. This Amendment is deemed incorporated into each of the Loan Documents. To the extent that any term or provision of this Amendment is or may be inconsistent with any term or provision in any Loan Document, the terms and provisions of this Amendment shall control.

2.       The Borrower hereby certifies that: (a) all of its representations and warranties in the Loan Documents, as amended by this Amendment, are, except as may otherwise be stated in this Amendment: (i) true and correct as of the date of this Amendment, (ii) ratified and confirmed without condition as if made anew, and (iii) incorporated into this Amendment by reference, (b) no Event of Default or event which, with the passage of time or the giving of notice or both, would constitute an Event of Default, exists under any Loan Document which will not be cured by the execution and effectiveness of this Amendment, (c) no consent, approval, order or authorization of, or registration or filing with, any third party is required in connection with the execution, delivery and carrying out of this Amendment or, if required, has been obtained, and (d) this Amendment has been duly authorized, executed and delivered so that it constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms. The Borrower confirms that the Obligations remain outstanding without defense, set off, counterclaim, discount or charge of any kind as of the date of this Amendment.

3.       The Borrower hereby confirms that any collateral for the Obligations, including liens, security interests, mortgages, and pledges granted by the Borrower or third parties (if applicable), shall continue unimpaired and in full force and effect, and shall cover and secure all of the Borrower’s existing and future Obligations to the Bank, as modified by this Amendment.

4.       As a condition precedent to the effectiveness of this Amendment, the Borrower shall comply with the terms and conditions (if any) specified in Exhibit A.

5.       To induce the Bank to enter into this Amendment, the Borrower waives and releases and forever discharges the Bank and its officers, directors, attorneys, agents, and employees from any liability, damage, claim, loss or expense of any kind that it may have against the Bank or any of them arising out of or relating to the Obligations. The Borrower further agrees to indemnify and hold the Bank and its officers, directors, attorneys, agents and employees harmless from any loss, damage, judgment, liability or expense (including attorneys’ fees) suffered by or rendered against the Bank or any of them on account of any claims arising out of or relating to the Obligations. The Borrower further states that it has carefully read the foregoing release and indemnity, knows the contents thereof and grants the same as its own free act and deed.

6.       This Amendment may be signed in any number of counterpart copies and by the parties to this Amendment on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart. Upon written request by the other party (which may be made by electronic mail), any party so executing this Amendment by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

7.       Notwithstanding any other provision herein or in the other Loan Documents, the Borrower agrees that this Amendment, the Loan Documents, any other amendments thereto and any other information, notice, signature card, agreement or authorization related thereto (each, a “Communication”) may, at the Bank’s option, be in the form of an electronic record. Any Communication may, at the Bank’s option, be signed or executed using electronic signatures. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Bank of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format) for transmission, delivery and/or retention. The Borrower and the Bank acknowledge and agree that the methods for delivering Communications, including notices, under the Loan Documents include electronic transmittal to any electronic address provided by either party to the other party from time to time.

8.       The Bank may modify this Amendment for the purposes of completing missing content or correcting erroneous content, without the need for a written amendment, provided that the Bank shall send a copy of any such modification to the Borrower (which notice may be given by electronic mail).

9.       This Amendment will be binding upon and inure to the benefit of the Borrower and the Bank and their respective heirs, executors, administrators, successors and assigns.

10.       This Amendment will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the State identified in and governing the Loan Documents that are being amended hereby (the “State”), excluding its conflict of laws rules, including without limitation the Electronic Transactions Act (or equivalent) in such State (or, to the extent controlling, the laws of the United States of America, including without limitation the Electronic Signatures in Global and National Commerce Act). This Amendment has been delivered to and accepted by the Bank and will be deemed to be made in the State.

11.       Except as amended hereby, the terms and provisions of the Loan Documents remain unchanged, are and shall remain in full force and effect unless and until modified or amended in writing in accordance with their terms, and are hereby ratified and confirmed. Except as expressly provided herein, this Amendment shall not constitute an amendment, waiver, consent or release with respect to any provision of any Loan Document, a waiver of any default or Event of Default under any Loan Document, or a waiver or release of any of the Bank’s rights and remedies (all of which are hereby reserved). The Borrower expressly ratifies and confirms the confession of judgment (if applicable) and dispute resolution, waiver of jury trial or arbitration provisions, as applicable, contained in the Loan Documents, all of which are incorporated herein by reference.

- 2 -

12.       The Borrower hereby empowers any attorney of any court of record, after the occurrence of any Event of Default hereunder, to appear for the Borrower and, with or without complaint filed, confess judgment, or a series of judgments, against the Borrower in favor of the Bank or any assignee thereof for the entire principal balance under any or all of the Loan Documents, all accrued interest and all other amounts due thereunder, together with costs of suit and an attorney's commission of the greater of 10% of such principal and interest or $1,000 added as a reasonable attorney's fee, and for doing so, the applicable Loan Documents or a copy verified by affidavit shall be a sufficient warrant. The Borrower hereby forever waives and releases all errors in said proceedings and all rights of appeal and all relief from any and all appraisement, stay or exemption laws of any state now in force or hereafter enacted. The Borrower acknowledges and agrees that, pursuant to the foregoing power to confess judgment granted to the Bank, the Borrower is voluntarily and knowingly waiving its right to notice and a hearing prior to the entry of a judgment by the Bank against the Borrower. Interest on any such judgment shall accrue at the Default Rate as defined in the applicable Loan Documents.

No single exercise of the foregoing power to confess judgment, or a series of judgments, shall be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void, but the power shall continue undiminished and it may be exercised from time to time as often as the Bank shall elect until such time as the Bank shall have received payment in full of the debt, interest and costs. Notwithstanding the attorney’s commission provided for in the preceding paragraph (which is included in the warrant for purposes of establishing a sum certain), the amount of attorneys’ fees that the Bank may recover from the Borrower shall not exceed the actual attorneys’ fees incurred by the Bank.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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WITNESS the due execution of this Amendment as a document under seal as of the date first written above.

PERISHIP GLOBAL LLC

By: VERIFYME, INC., Sole Member

By: /s/ Adam Stedham

(SEAL)

Adam Stedham, Chief Executive Officer

PNC BANK, NATIONAL ASSOCIATION

By: /s/ Matthew Ludwig

(SEAL)

Matthew Ludwig, Vice President

- 4 -

EXHIBIT A TO

WAIVER AND AMENDMENT TO LOAN DOCUMENTS DATED AS OF AUGUST 07, 2024

A. Loan Documents. The Loan Documents that are the subject of this Amendment include the following (as each of such documents has been amended, modified or otherwise supplemented previously):

1. $1,000,000.00 Revolving Line of Credit Note dated September 15, 2022 executed and delivered to the Bank by the Borrower (the “Note”)

2. Amended and Restated Loan Agreement dated October 31, 2023 between the Borrower and the Bank (the “Loan Agreement”)

3. Waiver and Amendment to Loan Documents dated October 31, 2023 between the Borrower and the Bank

4. All other documents, instruments, agreements, and certificates executed and delivered in connection with the Loan Documents listed in this Section A.

B. Waiver. The Borrower has acknowledged and agreed with the Bank that the Borrower failed to comply with the covenant set forth in Section 5.4 of the Loan Agreement for the period ending December 31, 2023. The Borrower's failure to comply with the foregoing covenant constitutes one or more Events of Default under the Loan Documents. The Borrower has requested that the Bank waive the Events of Default resulting from such non-compliance. In reliance upon the Borrower's representations and warranties and subject to the terms and conditions set forth herein, the Bank agrees to grant a waiver of Borrower's non-compliance with the foregoing covenants and of the Events of Default resulting from such violation solely for the above-referenced periods. The Borrower agrees that it will hereafter comply fully with these covenants and all other provisions of the Loan Documents, which remain in full force and effect. Except as expressly described in this Amendment, this waiver shall not constitute (a) a modification or an alteration of the terms, conditions or covenants of the Loan Documents or (b) a waiver, release or limitation upon the Bank's exercise of any of its rights and remedies thereunder, which are hereby expressly reserved. This waiver shall not relieve or release the Borrower in any way from any of its respective duties, obligations, covenants or agreements under the Loan Documents or from the consequences of any Event of Default thereunder, except as expressly described above. This waiver shall not obligate the Bank, or be construed to require the Bank, to waive any other Events of Default or defaults, whether now existing or which may occur after the date of this waiver.

C. Amendment(s). The Loan Documents are amended as follows:

1. The Expiration Date, as set forth in the Note, is hereby extended from September 30, 2024 to September 30, 2025, effective on October 01, 2024.

2. The following provisions hereby replace the Section entitled “Anti-Money Laundering/International Trade Law Compliance” in each guaranty agreement executed and delivered to the Bank by any Guarantor consenting to this Amendment (or, alternatively, are hereby added to any such guaranty agreement that does not already include a provision entitled “Anti-Money Laundering/International Trade Law Compliance”):

“Anti-Corruption Laws and International Trade Laws; Anti-Money Laundering Laws; Certain Definitions.

- 5 -

Representations and Warranties. The Guarantor hereby makes the following representations and warranties, which shall be continuing in nature and remain in full force and effect until the Guaranteed Obligations are paid in full:

The Guarantor, and its directors and officers, and each employee, agent or affiliate acting on behalf of the Guarantor: (a) is not a Sanctioned Person; (b) does not do any business in or with, or derive any of its operating income from direct or indirect investments in or transactions involving, any Sanctioned Jurisdiction or Sanctioned Person; and (c) is not in violation of, and has not, during the past five (5) years, directly or indirectly, taken any act that could cause the Guarantor to be in violation of, applicable International Trade Laws or Anti-Corruption Laws.

The Guarantor has not nor has any of its directors, officers, employees, or to the knowledge of the Guarantor, any agents or affiliates acting on behalf of the Guarantor, during the past five (5) years, received any notice or communication from any Person that alleges, or been involved in an internal investigation involving any allegations relating to, potential violation of any International Trade Laws or Anti-Corruption Laws, or received a request for information from any Official Body regarding International Trade Law matters or Anti-Corruption Law matters. There is no Blocked Property pledged by the Guarantor as Collateral.

Affirmative Covenants. The Guarantor agrees that until all Guaranteed Obligations have been paid in full and any commitments of the Bank to the Borrower have been terminated, the Guarantor shall (a) immediately notify the Bank in writing upon the occurrence of a Reportable Compliance Event; (b) immediately provide substitute Collateral to the Bank if, at any time, any Collateral pledged by the Guarantor becomes Blocked Property; and (c) conduct its business in compliance with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and International Trade Laws and maintain in effect policies and procedures reasonably designed to ensure compliance with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and International Trade Laws by the Guarantor, and its directors and officers, and any employee, agent or affiliate acting on behalf of the Guarantor in connection with the Guaranteed Obligations.

Negative Covenants. The Guarantor covenants and agrees that until all Guaranteed Obligations have been paid in full and any commitments of the Bank to the Borrower have been terminated, the Guarantor will not, without the Bank’s prior written consent, (I) permit its directors and officers, and any employee, agent or affiliate acting on behalf of the Guarantor in connection with the Guaranteed Obligations, nor such Guarantor’s subsidiaries to (a) become a Sanctioned Person; (b) directly or indirectly provide, use, or make available the proceeds of any loan or advance from the Bank (i) to fund any activities or business of, with, or for the benefit of any Person that, at the time of such funding or facilitation, is a Sanctioned Person, (ii) to fund or facilitate any activities or business of or in any Sanctioned Jurisdiction, (iii) in any manner that could result in a violation by any Person (including the Bank) of Anti-Corruption Laws, Anti- Money Laundering Laws or International Trade Laws or (iv) in violation of any applicable Law, including, without limitation, any applicable Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law; (c) pay any Guaranteed Obligations with Blocked Property or funds derived from any unlawful activity; or (d) permit any Collateral pledged by the Guarantor to become Blocked Property; nor (II) directly or indirectly provide, use, or make available the proceeds of any loan or advance from the Bank to any subsidiary of the Guarantor that is not party to the loan agreement governing such loan or advance.

- 6 -

Certain Definitions. As used herein:

“Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended, (b) the U.K. Bribery Act 2010, as amended, and (c) any other applicable Law relating to anti-bribery or anti-corruption in any jurisdiction in which any Loan Party is located or doing business.

“Anti-Money Laundering Laws” means (a) the Bank Secrecy Act and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001; (b) the U.K. Proceeds of Crime Act 2002, the Money Laundering Regulations 2017, as amended and the Terrorist Asset-Freezing etc. Act 2010; and (c) any other applicable Law relating to anti-money laundering and countering the financing of terrorism in any jurisdiction in which any Loan Party is located or doing business.

“Blocked Property” means any property (a) owned, directly or indirectly, by a Sanctioned Person; (b) due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any interest; (d) located in a Sanctioned Jurisdiction; or (e) that otherwise could cause any actual or possible violation by the Bank of any applicable International Trade Law if the Bank were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.

“Collateral” means any collateral securing any debt, liabilities, or other obligations of any Loan Party to the Bank.

“Compliance Authority” means (a) the United States government or any agency or political subdivision thereof, including, without limitation, the U.S. Department of State, the U.S. Department of Commerce, the U.S. Department of the Treasury and its Office of Foreign Assets Control, and the U.S. Customs and Border Protection agency; (b) the government of Canada or any agency thereof; (c) the European Union or any agency thereof; (d) the government of the United Kingdom or any agency thereof; (e) the United Nations Security Council; and (f) any other Official Body with jurisdiction to administer Anti-Corruption Laws, Anti-Money Laundering Laws or International Trade Laws with respect to the conduct of a Covered Entity.

“Covered Entity” means (a) the Borrower and each of the Borrower’s subsidiaries; (b) each Guarantor and any pledgor of Collateral; and (c) each Person that directly or indirectly controls a Person described in clause (a) or (b) above.

“International Trade Laws” means all Laws relating to economic and financial sanctions, trade embargoes, export controls, customs, and anti-boycott measures.

“Law” means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award, or any settlement arrangement, by agreement, consent or otherwise, of any Official Body, foreign or domestic.

“Loan Parties” means the Borrower and any Guarantors.

“Official Body” means the government of the United States of America or of any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).

- 7 -

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Official Body, or other entity.

“Reportable Compliance Event” as used herein means (1) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, by, or enters into a settlement with an Official Body in connection with any Anti- Corruption Law, Anti-Money Laundering Law or International Trade Law, or any predicate crime to any Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a violation of any Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law; (2) any Covered Entity engages in a transaction that has caused or would cause the Bank to be in violation of any International Trade Law or Anti-Corruption Law, including a Covered Entity’s use of any proceeds of the Obligations guaranteed hereunder to directly or indirectly fund any activities or business of, with or for the benefit of any Sanctioned Person, or to fund or facilitate any activities or business of or in any Sanctioned Jurisdiction; (3) any Collateral qualifies as Blocked Property, or (4) any Covered Entity otherwise violates, or reasonably believes it will violate, any of the International Trade Law- or Anti-Corruption Law- specific representations and covenants herein.

“Sanctioned Jurisdiction” means, at any time, a country, area, territory, or jurisdiction that is the subject or target of comprehensive U.S. sanctions.

“Sanctioned Person” means any Person (a) located in, organized under the laws of, or ordinarily resident in a Sanctioned Jurisdiction; (b) identified on any sanctions-related list maintained by any Compliance Authority; or (c) owned 50% or more, in the aggregate, directly or indirectly by, controlled by, or acting for, on behalf of, or at the direction of, one or more Persons described in clauses (a) or (b) above.”

D. Conditions to Effectiveness of Amendment. The Bank’s willingness to agree to the amendments set forth in this Amendment is subject to the prior satisfaction of the following conditions:

1. Execution by all parties and delivery to the Bank of this Amendment, including the attached Consent.

2. Payment by the Borrower to the Bank of all fees and expenses required by the Bank in connection with this Amendment, including without limitation those fees set forth in the Loan Fee Authorization.

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CONSENT OF GUARANTOR

Each of the undersigned guarantors (jointly and severally if more than one, the “Guarantor”) consents to the provisions of the foregoing Amendment and all prior amendments (if any) and confirms and agrees that: (a) the Guarantor’s obligations under its Guaranty and Suretyship Agreement dated as of September 15, 2022 (collectively if more than one, the “Guaranty”), relating to the Obligations mentioned in the Amendment, shall be unimpaired by the Amendment; (b) the Guarantor has no defenses, set offs, counterclaims, discounts or charges of any kind against the Bank, its officers, directors, employees, agents or attorneys with respect to the Guaranty; and (c) all of the terms, conditions and covenants in the Guaranty remain unaltered (except as expressly modified by the Amendment) and in full force and effect, are hereby ratified and confirmed, and continue to apply to the Obligations, as modified by the Amendment. The Guarantor certifies that all representations and warranties made in the Guaranty are true and correct.

The Guarantor hereby confirms that any collateral for the Obligations, including liens, security interests, mortgages, and pledges granted by the Guarantor or third parties (if applicable), shall continue unimpaired and in full force and effect, shall cover and secure all of the Guarantor’s existing and future Obligations to the Bank, as modified by this Amendment.

By signing below, the Guarantor agrees that this Consent, the Guaranty, the other Loan Documents, any amendments thereto and any other information, notice, signature card, agreement or authorization related thereto (each, a “Communication”) may, at the Bank’s option, be in the form of an electronic record. Any Communication may, at the Bank’s option, be signed or executed using electronic signatures. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Bank of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format) for transmission, delivery and/or retention. The Guarantor acknowledges and agrees that the methods for delivering Communications, including notices, under the Guaranty and the other Loan Documents include electronic transmittal to any electronic address provided by any party to the other party from time to time.

By signing below, each Guarantor who is an individual provides written authorization to the Bank or its designee (and any assignee or potential assignee hereof) to obtain the Guarantor's personal credit profile from one or more national credit bureaus. This authorization extends to obtaining a credit profile (i) in considering an application for credit that is evidenced, guaranteed or secured by the Guaranty or documents relating thereto, (ii) assessing creditworthiness and (iii) considering extensions of credit, including on an ongoing basis, as necessary for the purposes of (a) update, renewal or extension of such credit or additional credit, (b) reviewing, administering or collecting the resulting account and (c) reporting on the repayment and satisfaction of such credit obligations. By signing below, such individual further ratifies and confirms his or her prior requests and authorizations with respect to the matters set forth herein. For the avoidance of doubt, this provision does not apply to persons signing below in their capacities as officers or other authorized representatives of entities, organizations or governmental bodies. A photocopy or facsimile copy of this authorization shall be valid as the original. By signature below, each such Guarantor affirms his/her identity as the respective individual(s) identified in the Guaranty.

The Guarantor hereby empowers any attorney of any court of record, after the occurrence of any Event of Default under the Guaranty, to appear for the Guarantor and, with or without complaint filed, confess judgment, or a series of judgments, against the Guarantor in favor of the Bank or any assignee thereof for the entire amount of the Guaranteed Obligations, together with costs of suit and an attorney’s commission of the greater of 10% of such principal and interest or $1,000 added as a reasonable attorney’s fee, and for doing so, the Guaranty or a copy verified by affidavit shall be a sufficient warrant. The Guarantor hereby forever waives and releases all errors in said proceedings and all rights of appeal and all relief from any and all appraisement, stay or exemption laws of any state now in force or hereafter enacted. The Guarantor acknowledges and agrees that, pursuant to the foregoing power to confess judgment granted to the Bank, the Borrower is voluntarily and knowingly waiving its right to notice and a hearing prior to the entry of a judgment by the Bank against the Guarantor.

- 9 -

No single exercise of the foregoing power to confess judgment, or a series of judgments, shall be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void, but the power shall continue undiminished and it may be exercised from time to time as often as the Bank shall elect until such time as the Bank shall have received payment in full of the Guaranteed Obligations and costs. Notwithstanding the attorney’s commission provided for in the preceding paragraph (which is included in the warrant for purposes of establishing a sum certain), the amount of attorneys’ fees that the Bank may recover from the Guarantor shall not exceed the actual attorneys’ fees incurred by the Bank.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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The Guarantor ratifies and confirms the indemnification, confession of judgment (if applicable) and waiver of jury trial or arbitration provisions contained in the Guaranty, all of which are incorporated herein by reference.

WITNESS the due execution of this Consent as a document under seal as of the date of this Amendment, intending to be legally bound hereby.

VERIFYME, INC.
By:	/s/ Adam Stedham
	(SEAL)
Adam Stedham, Chief Executive Officer

- 11 -

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Adam Stedham, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of VerifyMe, Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2024

/s/ Adam Stedham

Adam Stedham

Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Nancy Meyers, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of VerifyMe, Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2024

/s/ Nancy Meyers

Nancy Meyers

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of VerifyMe, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof, I, Adam Stedham, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Adam Stedham

Adam Stedham

Chief Executive Officer and President

(Principal Executive Officer)

Date: November 12, 2024 

In connection with the quarterly report of VerifyMe, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof, I, Nancy Meyers, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: 

1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Nancy Meyers

Nancy Meyers

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Date: November 12, 2024

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to VerifyMe, Inc. and will be retained by VerifyMe, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover - shares	9 Months Ended
	Sep. 30, 2024	Nov. 04, 2024
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-39332
Entity Registrant Name	VERIFYME, INC.
Entity Central Index Key	0001104038
Entity Tax Identification Number	23-3023677
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	801 International Parkway
Entity Address, Address Line Two	Fifth Floor
Entity Address, City or Town	Lake Mary
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32746
City Area Code	585
Local Phone Number	736-9400
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,499,541
Common Stock, par value $0.001 per share
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	VRME
Security Exchange Name	NASDAQ
Warrants to Purchase Common Stock
Title of 12(b) Security	Warrants to Purchase Common Stock
Trading Symbol	VRMEW
Security Exchange Name	NASDAQ

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
CURRENT ASSETS
Cash and cash equivalents including restricted cash	$ 2,610	$ 3,095
Accounts receivable, net of allowance for credit loss reserve, $117 and $165 as of September 30, 2024 and December 31, 2023, respectively	1,200	3,017
Unbilled revenue	786	1,282
Prepaid expenses and other current assets	205	254
Inventory	19	38
TOTAL CURRENT ASSETS	4,820	7,686
PROPERTY AND EQUIPMENT, NET	159	240
RIGHT OF USE ASSET	339	468
INTANGIBLE ASSETS, NET	5,523	6,927
GOODWILL	3,988	5,384
TOTAL ASSETS	14,829	20,705
CURRENT LIABILITIES
Term note, current	500	500
Accounts payable	1,622	3,310
Other accrued expense	455	988
Lease liability- current	166	170
Contingent liability- current	22	173
TOTAL CURRENT LIABILITIES	2,765	5,141
LONG-TERM LIABILITIES
Contingent liability, non-current		751
Long-term lease liability	184	307
Term note	500	875
Convertible Note – related party	450	475
Convertible Note	650	625
TOTAL LIABILITIES	4,549	8,174
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 675,000,000 authorized; 10,715,065 and 10,453,315 issued, 10,444,698 and 10,123,964 shares outstanding as of September 30, 2024 and December 31, 2023, respectively	11	10
Additional paid in capital	95,991	95,031
Treasury stock at cost; 270,367 and 329,351 shares at September 30, 2024 and December 31, 2023, respectively	(464)	(659)
Accumulated deficit	(85,172)	(81,849)
Accumulated other comprehensive loss	(86)	(2)
STOCKHOLDERS' EQUITY	10,280	12,531
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	14,829	20,705
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible preferred stock
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible preferred stock

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Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Allowance for credit loss reserve	$ 117	$ 165
Common stock par value	$ 0.001	$ 0.001
Common stock, shares authorized	675,000,000	675,000,000
Common stock, shares issued	10,715,065	10,453,315
Common stock, shares outstanding	10,444,698	10,123,964
Treasury stock, shares	270,367	329,351
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	37,564,767	37,564,767
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	85	85
Preferred stock, shares issued	0.85	0.85
Preferred stock, shares outstanding	0.85	0.85

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
NET REVENUE		$ 5,435	$ 5,604	$ 16,546	$ 16,600
COST OF REVENUE	[1]	3,540	3,558	10,301	11,447
GROSS PROFIT		1,895	2,046	6,245	5,153
OPERATING EXPENSES
Segment management and Technology	[1]	1,329	1,341	4,189	3,697
General and administrative	[1]	778	1,178	2,780	3,393
Research and development		5	5	65	23
Sales and marketing	[1]	401	377	999	1,403
Goodwill and Intangible asset impairment		2,252		2,265	34
Total Operating expenses		4,765	2,901	10,298	8,550
LOSS BEFORE OTHER INCOME (EXPENSE)		(2,870)	(855)	(4,053)	(3,397)
OTHER (EXPENSE) INCOME
Interest expenses, net		(29)	(39)	(109)	(127)
Unrealized loss on equity investment					(2)
Change in fair value of contingent consideration		475	(36)	839	136
Other expense, net					(2)
TOTAL OTHER INCOME (EXPENSE), NET		446	(75)	730	5
NET LOSS		$ (2,424)	$ (930)	$ (3,323)	$ (3,392)
LOSS PER SHARE
BASIC		$ (0.23)	$ (0.09)	$ (0.32)	$ (0.35)
DILUTED		$ (0.23)	$ (0.09)	$ (0.32)	$ (0.35)
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC		10,603,747	9,879,202	10,306,392	9,732,619
DILUTED		10,603,747	9,879,202	10,306,392	9,732,619

[1] Includes share-based compensation of $486 thousand and $1,183 thousand for the three and nine months ended September 30, 2024, respectively, and $498 thousand and $1,099 thousand for the three and nine months ended September 30, 2023, respectively.  

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Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
NET LOSS	$ (2,424)	$ (930)	$ (3,323)	$ (3,392)
Change in fair value of interest rate, Swap	2	3	7	4
Foreign currency translation adjustments	(42)	(28)	(91)	(76)
Total Comprehensive Loss	$ (2,464)	$ (955)	$ (3,407)	$ (3,464)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (3,323)	$ (3,392)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities :
Allowance for bad debt	8	49
Stock based compensation	174	46
Unrealized loss on equity investment		2
Change in fair value of contingent consideration	(836)	(136)
Fair value of restricted stock awards and restricted stock units issued in exchange for services	1,009	1,053
Loss on disposal of equipment		2
Goodwill and Intangible Impairment	2,261	34
Amortization and depreciation	905	835
Unrealized loss on foreign currency transactions	(45)	16
Changes in operating assets and liabilities:
Accounts receivable	1,806	3,015
Unbilled revenue	495	300
Inventory	19	38
Prepaid expenses and other current assets	55	51
Accounts payable, other accrued expenses and net change in operating leases	(2,226)	(2,512)
Net cash provided by (used in) operating activities	302	(599)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of patents	(12)	(51)
Leasehold improvements		(8)
Purchase of office equipment	(7)	(24)
Cash paid in business combination		(363)
Deferred implementation costs		(58)
Capitalized software costs	(334)	(576)
Net cash used in investing activities	(353)	(1,080)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit		800
Proceeds from convertible debt		1,100
Proceeds from SPP Plan	21	80
Contingent consideration payments	(36)
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered	(47)	(18)
Increase in treasury shares (share repurchase program)	(1)	(10)
Repayment of debt and line of credit	(375)	(675)
Net cash (used in) provided by financing activities	(438)	1,277
Effect of exchange rate changes on cash	4	(2)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(485)	(404)
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- BEGINNING OF PERIOD	3,095	3,411
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- END OF PERIOD	2,610	3,007
Cash paid during the period for:
Interest	160	129
Income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Change in fair value of interest rate, swap	$ 7	$ 4

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Series A Convertible Preferred Stock [Member]	Series B Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stocks [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2022			$ 10	$ 92,987	$ (949)	$ (3)	$ (78,459)	$ 13,586
Beginning balance, shares at Dec. 31, 2022		0.85	8,951,035		389,967
Restricted stock awards, net of shares withheld for employee tax				317				317
Restricted stock awards, net of shares withheld for employee tax, shares			499,444
Restricted stock units, net of shares withheld for employee tax				718				718
Restricted Stock Units, net of shares withheld for employee tax, shares			67,717
Common stock issued in relation to Stock Purchase Plan				(84)	$ 211			127
Common stock issued in relation to Stock Purchase Plan, shares			70,047		(61,302)
Accumulated other comprehensive loss						(72)		(72)
Net loss							(3,392)	(3,392)
Common stock issued in relation to Acquisition				625				625
Common stock issued in relation to Acquisition, shares			353,492
Repurchase of Common Stock					$ (10)			(10)
Repurchase of common stock, shares			(6,201)		6,201
Ending balance, value at Sep. 30, 2023			$ 10	94,563	$ (748)	(75)	(81,851)	11,899
Ending balance, shares at Sep. 30, 2023		0.85	9,935,534		334,866
Beginning balance, value at Jun. 30, 2023			$ 10	94,111	$ (792)	(50)	(80,921)	12,358
Beginning balance, shares at Jun. 30, 2023		0.85	9,842,765		347,668
Restricted stock awards, net of shares withheld for employee tax				170				170
Restricted stock awards, net of shares withheld for employee tax, shares			14,000
Restricted stock units, net of shares withheld for employee tax				308				308
Restricted Stock Units, net of shares withheld for employee tax, shares			65,967
Common stock issued in relation to Stock Purchase Plan				(26)	$ 44			18
Common stock issued in relation to Stock Purchase Plan, shares			12,802		(12,802)
Accumulated other comprehensive loss						(25)		(25)
Net loss							(930)	(930)
Ending balance, value at Sep. 30, 2023			$ 10	94,563	$ (748)	(75)	(81,851)	11,899
Ending balance, shares at Sep. 30, 2023		0.85	9,935,534		334,866
Beginning balance, value at Dec. 31, 2023			$ 10	95,031	$ (659)	(2)	(81,849)	12,531
Beginning balance, shares at Dec. 31, 2023		0.85	10,123,964		329,351
Restricted stock units, net of shares withheld for employee tax				505	$ 125			630
Restricted Stock Units, net of shares withheld for employee tax, shares			39,845		(38,095)
Common stock issued in relation to Stock Purchase Plan, shares			21,889		(21,889)
Accumulated other comprehensive loss						(84)		(84)
Net loss							(3,323)	(3,323)
Restricted stock awards			1	331				332
Common stock issued in relation to Stock Purchase Plan				(46)	71			25
Common stock issued for services, shares			120,000
Repurchase of Common Stock					$ (1)			(1)
Repurchase of common stock, shares			(1,000)		1,000
Restricted stock awards, shares			140,000
Ending balance, value at Sep. 30, 2024			$ 11	95,991	$ (464)	(86)	(85,172)	10,280
Ending balance, shares at Sep. 30, 2024		0.85	10,444,698		270,367
Beginning balance, value at Jun. 30, 2024			$ 11	95,504	$ (464)	(46)	(82,748)	12,257
Beginning balance, shares at Jun. 30, 2024		0.85	10,384,968		270,367
Restricted stock awards, net of shares withheld for employee tax				345				345
Accumulated other comprehensive loss						(40)		(40)
Net loss							(2,424)	(2,424)
Restricted stock awards				56				56
Common stock issued in relation to Stock Purchase Plan				86				86
Common stock issued for services, shares			60,000
Ending balance, value at Sep. 30, 2024			$ 11	$ 95,991	$ (464)	$ (86)	$ (85,172)	$ 10,280
Ending balance, shares at Sep. 30, 2024		0.85	10,444,698		270,367

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (2,424)	$ (930)	$ (3,323)	$ (3,392)

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

VerifyMe, Inc. (“VerifyMe”) was incorporated in the State of Nevada on November 10, 1999. VerifyMe, together with its subsidiaries, including Trust Codes Global Limited (“Trust Codes Global”) and PeriShip Global LLC (“PeriShip Global”), (together the “Company,” “we,” “us,” or “our”) is based in Lake Mary, Florida and its common stock, par value $0.001 per share, and warrants to purchase common stock are traded on The Nasdaq Capital Market (“Nasdaq”) under the trading symbols “VRME” and “VRMEW,” respectively.

VerifyMe, is a traceability and customer support services provider using specialized software and process technology. The Company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions. Through our Precision Logistics segment, we provide a value-added service for sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as pre-shipment weather analysis, flight-tracking, sort volumes, and traffic, delivered to customers via a secure portal. The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center. Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones. The significant majority of VerifyMe revenue is within the Precision Logistics Segment. The Company’s activities are subject to significant risks and uncertainties. See the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report.

Reclassifications

Certain amounts presented for the three and nine months ended September 30, 2023, reflect reclassifications made to conform to the presentation in our current reporting period. These reclassifications had no effect on the previously reported net loss.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements (the “Interim Statements”) include the accounts of VerifyMe and its wholly owned subsidiaries PeriShip Global and Trust Codes Global. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The Interim Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2024.  The accompanying Interim Statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The interim results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future interim periods.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows (dollars in thousands):

	As of
	September 30, 2024		December 31, 2023
Cash and cash equivalents	$	2,610	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,610	$	3,095

The Company classifies cash and cash equivalents that are restricted from operating use for the next twelve months as restricted cash. No cash was subject to restriction as of September 30, 2024. As of December 31, 2023, the Company held $63 thousand subject to restrictions.

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method by which to allocate resources and assess performance. The Company has two reportable segments, namely, (i) Precision Logistics and (ii) Authentication. See Note 11 - Segment Reporting, for further discussion of the Company’s segment reporting structure. 

Foreign Currency Translation

The functional currency of our New Zealand operations is the local currency, New Zealand dollar (NZD). The translation of the foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the weighted average exchange rates prevailing during the year. The unrealized gains and losses resulting from such translation are included as a component of comprehensive income. Translation gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in “General and administrative” on our Consolidated Statements of Operations. The foreign currency transaction gains for the three and nine months ended September 30, 2024, was $67 thousand and 21 thousand, respectively. The foreign currency transaction losses for the three and nine months ended September 30, 2023, were $16 thousand and $30 thousand, respectively.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): “Improvements to Reportable Segment Disclosures”, which requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment's profit or loss to assess performance and decide how to allocate resources. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company adopted the new standard beginning January 1, 2024. Note 11 – Segment Reporting has been updated to reflect the new disclosure requirements and certain amounts have been reclassified in the Consolidated Statement of Operations. There is no other impact of adoption of this standard on the Company’s consolidated financial statements and disclosures.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, contingent consideration and long-term derivative assets or liabilities. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities.  The Company believes the carrying amount of its notes payable approximates fair value based on rates and other terms currently available to the Company for similar debt instruments.

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures,” and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2024, and December 31, 2023.

Amounts in Thousands ('000)

	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)
Balance as of December 31, 2023	$	4	$	(924	)
Change in fair value of Contingent Consideration		-		839
Payments		-		36
Currency		-		27
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		7		-
Balance at September 30, 2024	$	11	$	(22	)

Revenue Recognition

The Company accounts for revenues according to Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

The Company applies the following five steps, separated by reportable segments, in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements.

· identify the contract with a customer;

· identify the performance obligations in the contract;

· determine the transaction price;

· allocate the transaction price to performance obligations in the contract; and

· recognize revenue as the performance obligation is satisfied.

For more detailed information about reportable segments, see Note 11 – Segment reporting. The Company generally considers completion of an agreement, or Statement of Work (“SOW”) and/or purchase order as a customer contract, provided collection is considered probable.

Precision Logistics

Our Precision Logistics segment consists of two service lines, Proactive and Premium. Under our Proactive service line, clients pay us directly for carrier service coupled with our Proactive logistics service. Terms typically range 7 days and no longer than 30 days. The Company has determined it is the principal and recognizes shipment fees in gross revenue. Under our Premium service line, we provide complete white-glove shipping monitoring and predictive analytics services. This service includes customer web portal access, weather monitoring, temperature control, full service center support and last mile resolution. Payment terms are typically 30-45 days.

Under both service lines in our Precision Logistics segment, our performance obligation is met, and revenue is recognized when the packages are delivered. The transaction fees consist of fixed consideration made up of amounts contractually billed to the customer. There are no variable considerations in the transaction fee, in either service line.

Authentication

Our Authentication segment primarily consists of our brand protection service line which consists of a custom suite of products that offer clients traceability and brand solutions. Terms typically range between 30 and 90 days. Our performance obligation is met, and revenue is recognized, when our products are shipped or delivered depending on the specific agreement with the customer. The transaction fee is made up of fixed consideration based on the related purchase order or agreement. Warranties and other variable considerations are analyzed by the Company, in terms of historical warranties, current economic trends, and changes in customer demand, and have been determined to be insignificant in the three and nine months ended September 30, 2024.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assesses qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test. The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

Basic and Diluted Net Loss per Share of Common Stock

The Company follows FASB ASC 260, “Earnings Per Share,” when reporting earnings per share resulting in the presentation of basic and diluted earnings per share.  Because the Company reported a net loss for each of the periods presented, common stock equivalents, including preferred stock, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same. 

For the three and nine months ended September 30, 2024, and 2023, there were shares potentially issuable, that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. For the three and nine months ended September 30, 2024, there were approximately 8,256,000 anti-dilutive shares consisting of 2,305,000 unvested performance restricted stock units, restricted stock units, and restricted stock awards, 221,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three and nine months ended September 30, 2023, there were approximately 8,385,000 anti-dilutive shares consisting of 2,348,000 unvested performance restricted stock units, restricted stock units, restricted stock awards and options under the stock purchase plan, 307,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock.

Stock-Based Compensation

We account for stock-based compensation under the provisions of FASB ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock options on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model include risk-free interest rates, expected volatility and expected life of the stock options. Changes in these assumptions can materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line method. For performance restricted stock units with stock price appreciation targets (see Note 6 – Stock Options, Restricted Stock and Warrants), we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal based on actual achievement during the period.

We account for stock-based compensation awards to non-employees in accordance with ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, “Equity – Equity-Based Payments to Non-Employees”.  

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity-based payments are recorded as an expense over the service period, as if we had paid cash for the services. At the end of each financial reporting period, prior to vesting or prior to the completion of the services, the fair value of the equity-based payments will be re-measured, and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity-based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity-based payments are fully vested or the service completed. 

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REVENUE

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE

NOTE 2 – REVENUE

Revenue by Category

The following series of tables present our revenue disaggregated by various categories (dollars in thousands).

	Authentication				Precision Logistics				Consolidated
Revenue	Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,
	2024		2023		2024		2023		2024		2023
Proactive services	$	-	$	-	$	4,417	$	4,038	$	4,417	$	4,038
Premium services		-		-		886		1,419		886		1,419
Brand protection services		132		147		-		-		132		147
	$	132	$	147	$	5,303	$	5,457	$	5,435	$	5,604

	Authentication				Precision Logistics				Consolidated
Revenue	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023		2024		2023
Proactive services	$	-	$	-	$	12,587	$	12,742	$	12,587	$	12,742
Premium services		-		-		3,574		3,343		3,574		3,343
Brand protection services		385		515		-		-		385		515
	$	385	$	515	$	16,161	$	16,085	$	16,546	$	16,600

Contract Balances 

The timing of revenue recognition, billings and cash collections results in unbilled revenue (contract assets) and deferred revenue (contract liabilities) on the consolidated balance sheets. Amounts charged to our clients become billable according to the contract terms, which usually consider the delivery completion. Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within twelve months. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the nine-month period ended September 30, 2024, were not materially impacted by any other factors.

Applying the practical expedient in ASC Topic 606, we recognize the incremental costs of obtaining contracts (i.e. sales commissions) as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. As of September 30, 2024, we did not have any capitalized sales commissions.

For all periods presented, contract liabilities were not significant. 

The following table provides information about contract assets from contracts with customers: 

	Contract Asset
	September 30,
In Thousands	2024			2023
Beginning balance, January 1	$	1,282		$	1,185
Contract asset additions		6,464			5,394
Reclassification to accounts receivable, billed to customers		(6,960	)		(5,694	)
Ending balance (1)	$	786		$	885

______________

(1) Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

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BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

BUSINESS COMBINATIONS

NOTE 3 – BUSINESS COMBINATIONS

Trust Codes Global Limited

On March 1, 2023, we acquired, through Trust Codes Global, the business and certain assets of Trust Codes Limited (“Trust Codes”), specializing in brand protection, anti-counterfeiting, and consumer engagement technology with an expertise in the food and agriculture industry. Trust Codes Global uses unique QR codes or IoT, coupled with GS1 standards to deliver cloud-based brand protection based on a unique per-item digital identity to protect brand and product authenticity, increase data visualization of a product through the end-to-end supply chain, and creates a data-drive engine to inform and educate consumers of the product. The Company accounted for the transaction as an acquisition of a business under ASC 805 – Business Combination. The purchase price was approximately $1.0 million which consisted of $0.36 million in cash paid at closing and 353,492 shares of common stock of the Company, representing $0.65 million in stock consideration. In addition, the purchase agreement requires consideration contingent upon the achievement of earnings targets during a five-year period subsequent to the closing of the acquisition. The earn-out consideration is estimated at $1.1 million at the acquisition date, however the maximum amount of the payment is unlimited. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. All of the goodwill recorded for financial statement purposes is deductible for tax purposes. The Company incurred $278 thousand in relation to acquisition related costs which have been included in General and administrative in the nine months ended September 30, 2023, in the accompanying Consolidated Statements of Operations. Trust Codes Global is included in the Authentication segment and the results of its operations have been included in the consolidated financial statements beginning March 1, 2023. The pro-forma financial information for Trust Codes is immaterial to our results of operations and impractical to provide.

The following table summarizes the purchase price allocation for the acquisition (dollars in thousands).

Cash	$	363
Fair value of contingent consideration		1,125
Stock (issuance of 353,492 shares of common stock) (a)		625
Total purchase price	$	2,113
				Amortization
				Period
Purchase price allocation:
Prepaid expenses	$	25
Property and Equipment, net		18
ROU Asset		171
Developed Technology		485		8 years
Trade Names/Trademarks		148		18 years
Customer Relationships		68		10 years
Goodwill		1,383
Accounts payable and other accrued expenses		(14	)
Current lease liability		(63	)
Long term lease liability		(108	)
	$	2,113

(a) Stock issued was calculated based on the 15-day volume-weighted average price (“VWAP”) through February 28, 2023, calculated at $1.8388.

Contingent Consideration

ASC Topic 805 requires that contingent consideration to be recognized at fair value on the acquisition date and be re-measured each reporting period with subsequent adjustments recognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to, and volatility in, our results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.

As of September 30, 2024, contingent consideration presented as current liability totaled $22 thousand. As of September 30, 2024, we had no long term contingent consideration related to the acquisition of Trust Codes on the consolidated balance sheets. On May 15, 2024, a payment of $36 thousand was paid for contingent consideration.

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INTANGIBLE ASSETS AND GOODWILL

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

NOTE 4 – INTANGIBLE ASSETS AND GOODWILL

Goodwill

Goodwill represents costs in excess of values assigned to the underlying net assets of acquired businesses. Intangible assets acquired are recorded at estimated fair value. Goodwill is deemed to have an indefinite life and is not amortized but is tested for impairment annually, and at any time when events suggest an impairment more likely than not has occurred. We test goodwill at the reporting unit level.

ASC Topic 350, “Intangibles - Goodwill and Other” (“ASC Topic 350”), permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.  Under ASC Topic 350, an entity is not required to perform a quantitative goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying amount. A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S. GAAP.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The timing and frequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. On September 24, 2024, Paul Ryan, Executive Vice President, Authentication Segment, notified us of his resignation effective December 24, 2024. On October 4, 2024, we placed Mr. Ryan on garden leave, meaning he remains employed by us but is only working for us upon request. During the quarter, we have identified concerns relating to the commercial viability of this segment and we are evaluating a number of strategic alternatives for our Authentication segment. As a result, the Company made revisions to our internal forecasts and concluded that in accordance with ASC 350 a triggering event occurred indicating that potential impairment exists, which required the Company to conduct an interim test of the fair value of the goodwill for the Authentication segment. We performed a quantitative goodwill impairment test and determined the fair value of our reporting units using a combination of an equity approach and a market approach, employing a guideline public company approach. The results of our goodwill impairment test indicated that the carrying value of the Authentication reporting unit exceeded its estimated fair value. As a result, the Company recorded a goodwill impairment charge of $1,351 thousand during the three and nine months ended September 30, 2024, within goodwill and intangible asset impairment on the consolidated statement of operations. We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present.

Each of our two reportable segments represents an operating segment under ASC Topic 280, Segment Reporting. We test our goodwill at the reporting unit level, or one level below an operating segment, under ASC Topic 350, “Intangibles - Goodwill and Other”. We determined that we have two reporting units for purposes of goodwill impairment testing, which represent our two reportable business segments, as discussed below.

Changes in the carrying amount of goodwill by reportable business segment for the nine months ended September 30, 2024, were as follows (in thousands):

	Authentication			Precision Logistics		Total
Net book value at
January 1, 2024	$	1,396		$	3,988	$	5,384
2024 Activity
Goodwill impairment charge		(1,351	)		-		(1,351	)
Foreign currency translation		(45	)		-		(45	)
Net book value at
September 30, 2024	$	-		$	3,988	$	3,988

Intangible Assets Subject to Amortization

Our intangible assets include amounts recognized in connection with patents and trademarks, capitalized software and acquisitions, including customer relationships, tradenames, developed technology and non-compete agreements. Intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Amortization is recognized on a straight-line basis over the estimated useful life of the intangible assets. Intangible assets with definite lives are reviewed for impairment if indicators of impairment arise. Except for goodwill, we do not have any intangible assets with indefinite useful lives.

The revisions to our internal forecasts resulted in an interim triggering event for the three months ending September 30, 2024, indicating the carrying value of our long-lived assets including patents and trademarks, customer relationships, and developed technology may not be recoverable. Accordingly, the Company performed an interim impairment test and assessed the recoverability of the related intangible assets by using level 3 inputs and comparing the carrying value to the net undiscounted cashflow expected to be generated. The analysis indicated that certain intangible assets were impaired. The Company further concluded as of September 30, 2024 the carrying value exceeded its estimated fair value, which resulted in an impairment charge. The Company recorded an intangible impairment charge of $901 and $914 thousand during the three and nine months ended September 30, 2024 respectively, within goodwill and intangible asset impairment on the consolidated statement of operations.

Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and their respective balances were as follows (in thousands):

September 30, 2024	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,112	$	(209	)	$	903		11
Customer Relationships		1,839		(449	)		1,390		8
Developed Technology		3,143		(1,280	)		1,863		4
Internally Used Software		1,247		(138	)		1,109		6
Non-Compete Agreement		191		(93	)		98		3
Deferred Implementation		198		(38	)		160		9
Total Intangible Assets	$	7,730	$	(2,207	)	$	5,523
December 31, 2023
Patents and Trademarks	$	2,002	$	(564	)	$	1,438		13
Capitalized Software		161		(109	)		52		2
Customer Relationships		1,908		(317	)		1,591		9
Developed Technology		3,632		(938	)		2,694		5
Internally Used Software		914		(62	)		852		6
Non-Compete Agreement		191		(65	)		126		3
Deferred Implementation		198		(24	)		174		9
Total Intangible Assets	$	9,006	$	(2,079	)	$	6,927

Amortization expense for intangible assets was $277 thousand and $266 thousand for the three months ended September 30, 2024, and 2023, respectively, and $817 thousand and $761 thousand for the nine months ended September 30, 2024, and 2023, respectively. During the nine months ended September 30, 2024, the Company impaired certain assets by $914 thousand, to bring the gross carrying amount related to these assets to zero as a result of the impairment analysis of long lived assets under ASC 360.

Patents and Trademarks

As of September 30, 2024, our current patent and trademark portfolios consist of nine granted U.S. patents and two granted European patents (one validated in four countries of France, Germany, United Kingdom, and Italy and one validated in three countries of France, Germany and United Kingdom), two pending U.S. and foreign patent applications, twenty-three registered U.S. trademarks, two EU trademark registrations, one Colombian trademark registration, one Australian trademark registration, one Japanese trademark registration, one Mexican trademark registration, one Singaporean trademark registration, two UK trademark registrations, seven NZ trademark registration, one OAPI (African Intellectual Property Organization) trademark registration, and one pending US and one foreign trademark application in Nigeria. The Company abandoned one patent during the nine months ended September 30, 2024.

The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands):

Fiscal Year ending December 31,
2024 (three months remaining)	$	257
2025		1,023
2026		1,023
2027		996
2028		622
Thereafter		1,602
Total	$	5,523

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STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 5 – STOCKHOLDERS’ EQUITY

The Company expensed $56 thousand and $331 thousand related to restricted stock awards for the three and nine months ended September 30, 2024, respectively. The Company expensed $177 thousand and $325 thousand related to restricted stock awards for the three and nine months ended September 30, 2023, respectively.

The Company expensed $345 thousand and $678 thousand related to restricted stock units for the three and nine months ended September 30, 2024, and $316 thousand and $728 thousand related to restricted stock units for the three and nine months ended September 30, 2023.

During the nine months ended September 30, 2024, the Company issued 1,750 shares of common stock upon vesting of restricted stock units, and 38,095 shares of common stock from treasury shares, net of common stock withheld for taxes.

On March 31, 2024, the Company issued 30,000 of restricted common stock, vesting immediately, with a value of $42 thousand, for consulting services. On June 30, 2024, the Company issued an additional 30,000 of restricted common stock, vesting immediately, with a value of $42 thousand, for consulting services. On September 30, 2024, the Company issued an additional 60,000 of restricted common stock, vesting immediately, with a value of $86 thousand, for consulting services.

Non-Qualified Stock Purchase Plan

On June 10, 2021, the stockholders of the Company approved a non-qualified stock purchase plan (the “2021 Plan”). The 2021 Plan provides eligible participants, including employees, directors and consultants of the Company, the opportunity to purchase shares of the Company’s common stock thereby increasing their interest in the Company’s continued success. The maximum number of common stock reserved and available for issuance under the 2021 Plan is 500,000 shares. The purchase price of shares of common stock acquired pursuant to the exercise of an option will be the lesser of 85% of the fair market value of a share (a) on the enrollment date, and (b) on the exercise date. The 2021 Plan is not intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company applied FASB ASC 718, “Compensation-Stock Compensation” and estimated the fair value using the Black-Scholes model, as the 2021 Plan is considered compensatory. In relation to the 2021 Plan the Company expensed $0 and $4 thousand for the three and nine months ended September 30, 2024, respectively. During the nine months ended September 30, 2024, the Company received $21 thousand in proceeds related to the 2021 Plan. The Company has currently suspended new offering periods under the 2021 Plan.

Shares Held in Treasury

As of September 30, 2024, and December 31, 2023, the Company had 270,367 and 329,351 shares, respectively, held in treasury with a value of approximately $464 thousand and $659 thousand, respectively.  

On February 29, 2024, seven participants exercised their option under the Company’s non-qualified stock purchase plan, and as a result, 21,889 shares were issued from treasury, with an exercise price of $0.97 per share.

Shares Repurchase Program

In December 2023, the Company’s Board of Directors approved a new share repurchase program to allow the Company to spend up to $0.5 million to repurchase shares of its common stock so long as the price per share does not exceed $1.00 until December 14, 2024. During the nine months ended September 30, 2024, the Company repurchased 1,000 shares of common stock for $1 thousand under the Company’s current program. 

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

During 2013, the Company adopted the 2013 Omnibus Equity Compensation Plan (the “2013 Plan”). Under the 2013 Plan, the Company is authorized to grant awards of stock options, restricted stock, restricted stock units and other stock-based awards up to an aggregate of 400,000 shares of common stock.  The 2013 Plan is intended to permit certain stock options granted to employees under the 2013 Plan to qualify as incentive stock options.  All options granted under the 2013 Plan, which are not intended to qualify as incentive stock options are deemed to be non-qualified stock options.  

On November 14, 2017, the Executive Committee of the Company’s Board of Directors adopted the 2017 Equity Incentive Plan (the “2017 Plan”) which covered the potential issuance of 260,000 shares of common stock. The 2017 Plan provided that directors, officers, employees, and consultants of the Company were eligible to receive equity incentives under the 2017 Plan at the discretion of the Board or the Board’s Compensation Committee.

On August 10, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”), subject to stockholder approval, which authorizes the potential issuance of up to 1,069,110 shares of common stock. On September 30, 2020, the Company’s stockholders approved the 2020 Plan, and upon such approval the 2020 Plan became effective and the 2017 Plan was terminated. Shares of common stock underlying existing awards under the 2017 Plan may become available for issuance pursuant to the terms of the 2020 Plan under certain circumstances. Employees and non-employee directors of the Company or its affiliates, and other individuals who perform services for the Company or any of its affiliates, are eligible to receive awards under the 2020 Plan at the discretion of the Board of Directors or the Board’s Compensation Committee.

On March 28, 2022, the Company’s Board of Directors adopted the First Amendment to the 2020 Plan, subject to stockholder approval, which increased the shares authorized for potential issuance under the 2020 Plan to 2,069,100 shares of common stock and extended the term of the 2020 Plan to June 9, 2032. On June 9, 2022, the Company’s stockholders approved the First Amendment to the 2020 Plan. On April 17, 2023, the Company’s Board of Directors adopted the Second Amendment to the 2020 Plan, subject to stockholder approval, which increased the shares authorized for potential issuance under the 2020 Plan to 3,069,100 shares of common stock and extended the term of the 2020 Plan to June 6, 2033. On June 6, 2023, the Company’s stockholders approved the Second Amendment to the 2020 Plan. On March 18, 2024, the Company’s Board of Directors adopted the Third Amendment to the 2020 Plan, subject to stockholder approval, which increased the shares authorized for potential issuance under the 2020 Plan to 4,069,100 shares of common stock and extended the term of the 2020 Plan to June 4, 2034. On June 4, 2024, the Company’s stockholders approved the Third Amendment to the 2020 Plan.

The 2020 Plan, as amended, is administered by the Compensation Committee which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

In connection with incentive stock options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock with respect to which incentive stock options are exercisable for the first time by any individual during any calendar year (under all plans of the Company and its affiliates) shall not exceed $100 thousand, and the options in excess of $100 thousand shall be deemed to be non-qualified stock options, including prices, duration, transferability and limitations on exercise. The maximum number of shares of common stock that may be issued under the 2020 Plan pursuant to incentive stock options may not exceed, in the aggregate, 1,000,000.

The Company has issued non-qualified stock options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgements.

Stock Options

The following table summarizes the activities for the Company’s stock options as of September 30, 2024:

	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in thousands)(1)
Balance as of December 31, 2023		301,471		$	4.56
Granted		-			-
Forfeited/Cancelled/Expired		(80,471	)	$	7.27
Balance as of September 30, 2024		221,000		$	3.57
Exercisable as of September 30, 2024		221,000		$	3.57		0.7	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period. 

As of September 30, 2024, the Company had no unvested stock options.

During the nine months ended September 30, 2024, and 2023, the Company expensed $0 thousand, with respect to options.

As of September 30, 2024, there was $0 unrecognized compensation cost related to outstanding stock options.

Restricted Stock Awards and Restricted Stock Units

The following table summarizes the unvested restricted stock awards as of September 30, 2024:

				Weighted -
				Average
	Number of			Grant
	Award Shares			Date Fair Value
Unvested at December 31, 2023		416,669			1.44
Granted		140,000			1.60
Vested		(416,669	)		1.44
Balance at September 30, 2024		140,000		$	1.60

As of September 30, 2024, total unrecognized share-based compensation cost related to unvested restricted stock awards is $152 thousand, which is expected to be recognized over a weighted-average period of less than one year.

The following table summarizes the unvested time-based restricted stock units as of September 30, 2024: 

				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2023		371,253			1.32
Granted		88,011			1.46
Vested		(70,527	)		1.33
Forfeited		(25,334	)		1.23
Balance at September 30, 2024		363,403		$	1.35

As of September 30, 2024, total unrecognized share-based compensation cost related to unvested time-based restricted stock units was $198 thousand, which is expected to be recognized over a weighted-average period of less than one year.

The following table summarizes the unvested performance based restricted stock units as of September 30, 2024:

				Weighted -
				Average
	Number of			Number of
	Unit Shares			Unit Shares
Unvested at December 31, 2023		1,438,760			1.51
Granted		555,000			1.08
Forfeited/Cancelled		(192,100	)		1.78
Balance at September 30, 2024		1,801,660		$	1.35

For restricted stock units with stock price appreciation targets, we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value of each grant was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the derived service period and there is no ongoing adjustment or reversal based on actual achievement during the period.

As of September 30, 2024, total unrecognized share-based compensation cost related to unvested performance based restricted stock units was $960 thousand, which is expected to be recognized over a weighted-average period of 1.2 years.

Warrants

The following table summarizes the activities for the Company’s warrants as of September 30, 2024:

	Number of Warrant Shares		Weighted- Average Exercise Price		Weighted - Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)(1)
Balance as of December 31, 2023		4,628,586	$	4.13
Granted		-		-
Expired		-		-
Balance as of September 30, 2024		4,628,586	$	4.13		1.5
Exercisable as of September 30, 2024		4,628,586	$	4.13		1.5	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.43 for our common stock on September 30, 2024.

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DEBT

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

DEBT

NOTE 7—DEBT

PeriShip Global is a party to a debt facility with PNC Bank, National Association (the “PNC Facility”). The PNC Facility includes a $1 million revolving line of credit (the “RLOC”) with a term of one-year which was scheduled to expire in September 2024. On August 14, 2024, the Company signed a waiver and amendment which provided a waiver for a certain event of default and extended the line of credit to September 30, 2025. The RLOC has no scheduled payments of principal until maturity, and bears interest per annum at a rate equal to the sum of Daily SOFR plus 2.85% with monthly interest payments. The PNC Facility also includes a four-year term note (the “Term Note”) for $2 million which matures in September of 2026 and requires equal quarterly payments of principal and interest. The Term Note incurs interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%.  The RLOC and Term Note are guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe.

The PNC Facility includes a number of affirmative and restrictive covenants applicable to PeriShip Global, including, among others, a financial covenant to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year, affirmative covenants regarding delivery of financial statements, payment of taxes, and establishing primary depository accounts with PNC Bank, and restrictive covenants regarding dispositions of property, acquisitions, incurrence of additional indebtedness or liens, investments and transactions with affiliates. PeriShip Global is also restricted from paying dividends or making other distributions or payments on its capital stock if an event of default (as defined in the PNC Facility) has occurred or would occur upon such declaration of dividend. PeriShip Global was in compliance with all affirmative and restrictive covenants under the PNC Facility at September 30, 2024.

As of September 30, 2024, our short-term debt outstanding under the Term Note was $0.5 million and total long-term debt outstanding under the Term Note was $0.5 million. During the nine months ended September 30, 2024, the Company made a repayment of $375 thousand towards the principal of the outstanding Term Note.

As of September 30, 2024, $0 was outstanding on the RLOC.

Effective October 17, 2022, the Company entered into an interest rate swap agreement, with a notional amount of $1,958 thousand, effectively fixing the interest rate on the Company’s outstanding debt at 7.602%. The Company has designated the intertest rate swap, expiring September 2026, as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset and liability associated with the interest rate swap are not significant as of September 30, 2024, and as of December 31, 2023, respectively.

Convertible Debt

On August 25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory notes for the aggregate principal amount of $1,100 thousand of which $475 thousand was purchased by related parties including certain members of management and the Board of Directors. As of September 30, 2024, $450 thousand is held by related parties after one member of management left the Company. The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024. The notes will mature on August 25, 2026, unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock. The Company may not redeem the notes prior to the maturity date. For the nine months ended September 30, 2024, interest expense related to the convertible debt was $66 thousand. As of September 30, 2024, the principal amount outstanding on the convertible debt was $1,100 thousand and is included in Convertible debt and Convertible debt-related party on the accompanying Consolidated Balance Sheets.

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INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8—INCOME TAXES

There are no taxes payable as of September 30, 2024, or December 31, 2023.

Some of the federal tax carry forwards will expire at various dates through 2037. Generally, these can be carried forward and applied against future taxable income at the tax rate applicable at that time. We are currently using an effective income tax rate of 21% for our projected available net operating loss carry-forward. No tax benefit has been recognized in the nine months ending September 30, 2024, due to the uncertainty surrounding the realizability of the benefit.

Utilization of the net operating losses (NOL) carryforwards may be subject to a substantial annual limitation as required by Section 382 of the IRC, due to ownership changes of the company that could occur in the future, as well as similar state provisions. In general, an “ownership change” as defined by Section 382 results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income.

In accordance with FASB ASC 740 “Income Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all, of the deferred tax assets may or will not be realized. The Company did not utilize any NOL deductions for the nine months ended September 30, 2024.

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LEASES

9 Months Ended

Sep. 30, 2024

Leases

LEASES

NOTE 9– LEASES

The Company accounts for its leases under Accounting Standard Codification (“ASC”) Topic 842, “Leases”. The Company determines at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. We have elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. Our current long-term leases include an option to extend the term of the lease prior to the end of the initial term. It is not reasonably certain that we will exercise the option and have not included the impact of the option in the lease term for purposes of determining total future lease payments. As our lease agreement does not explicitly state the discount rate implicit in the lease, we use our promissory note borrowing rate to calculate the present value of future payments.

In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred.

We have operating leases for office facilities. We do not have any finance leases.

Lease expenses are included in General & administrative expenses on the accompanying Consolidated Statements of Operations. The components of lease expense were as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	50	$	47	$	145	$	132
Short-term lease cost		4		5		13		23
Total lease costs	$	54	$	52	$	158	$	155

Supplemental information related to leases was as follows (dollars in thousands):

	September 30, 2024			December 31, 2023
Operating Lease right-of-use asset	$	339		$	468
Current portion of operating lease liabilities	$	166		$	170
Non-current portion of operating lease liabilities		184			307
Total operating lease liabilities	$	350		$	477
Cash paid for amounts included in the measurement of operating lease liabilities	$	144		$	177
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-
Weighted-average remaining lease term for operating leases (years)		2.3
Weighted average discount rate for operating leases		6.4	%

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of September 30, 2024 (in thousands):

Year ending December 31,
2024 (three months remaining)	$	48
2025		196
2026		139
2027		45
Total future lease payments		428
Less: imputed interest		(78	)
Present value of future lease payments		350
Less: current portion of lease liabilities		(166	)
Long-term lease liabilities	$	184

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CONCENTRATIONS

9 Months Ended

Sep. 30, 2024

Risks and Uncertainties [Abstract]

CONCENTRATIONS

NOTE 10– CONCENTRATIONS

For the three months ended September 30, 2024, one customer represented 14% of revenues and one customer represented 23% of revenues for the three months ended September 30, 2023. For the nine months ended September 30, 2024, one customer represented 19% of revenues and one customer represented 18% of revenues for the nine months ended September 30, 2023.

As of September 30, 2024, two customers made up 38% of accounts receivable.

During the three and nine months ended September 30, 2024, one vendor accounted for 99% of transportation cost, in our Precision Logistics segment. 

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 11 – SEGMENT REPORTING

As of September 30, 2024, we operated through two reportable business segments: (i) Precision Logistics and (ii) Authentication.

Precision Logistics:

This segment offers a value-added service provider for time and temperature sensitive parcel management. Through logistics management from a sophisticated IT platform with proprietary databases, package and flight-tracking software, weather, traffic, as well as dynamic dashboards with real-time visibility into shipment transit and last-mile events that are managed by a service center we provide our clients an end-to-end vertical approach for their most critical service delivery needs. Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

Authentication:

This segment specializes in solutions that connect brands with consumers through their products. Consumers can authenticate products with their smart phone prior to usage, and brand owners have the ability to gather business intelligence while engaging directly with their consumers. Our Authentication segment also provides brand protection and supply chain functions such as counterfeit prevention.

We do not allocate the following items to the segments: general & administrative expenses, research and development and other income (expense).

The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated loss before income tax expense (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue:
Precision Logistics	$	5,303		$	5,457		$	16,161		$	16,085
Authentication		132			147			385			515
Total Revenue	$	5,435		$	5,604		$	16,546		$	16,600
Gross Profit:
Precision Logistics	$	1,777		$	1,909		$	5,903		$	4,748
Authentication		118			137			342			405
Total Gross Profit		1,895			2,046			6,245			5,153
Segment Management and Technology - Precision Logistics		1,013			1,029			3,259			2,895
Segment Management and Technology - Authentication		316			312			930			802
Sales and marketing - Precision Logistics		262			181			599			733
Sales and marketing - Authentication		139			196			400			670
General and administrative		778			1,178			2,780			3,393
Research and development		5			5			65			23
Goodwill and Intangible asset impairment		2,252			-			2,265			34
LOSS BEFORE OTHER INCOME (EXPENSE)		(2,870	)		(855	)		(4,053	)		(3,397	)
OTHER INCOME (EXPENSE)		446			(75	)		730			5
NET LOSS	$	(2,424	)	$	(930	)	$	(3,323	)	$	(3,392	)

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 12 – SUBSEQUENT EVENTS 

On November 4, 2024, the Company issued 54,843 shares of common stock upon vesting of 69,667 restricted stock units, net of 14,824 withheld for taxes related to a stock grant on November 2, 2022.

On November 8, 2024, the Board of Directors approved closing the Trust Codes Global business by the end of November 2024, unless the Company can find a purchaser for the Trust Codes Global business prior to the end of November 2024.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Nature of the Business

Nature of the Business

VerifyMe, Inc. (“VerifyMe”) was incorporated in the State of Nevada on November 10, 1999. VerifyMe, together with its subsidiaries, including Trust Codes Global Limited (“Trust Codes Global”) and PeriShip Global LLC (“PeriShip Global”), (together the “Company,” “we,” “us,” or “our”) is based in Lake Mary, Florida and its common stock, par value $0.001 per share, and warrants to purchase common stock are traded on The Nasdaq Capital Market (“Nasdaq”) under the trading symbols “VRME” and “VRMEW,” respectively.

VerifyMe, is a traceability and customer support services provider using specialized software and process technology. The Company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions. Through our Precision Logistics segment, we provide a value-added service for sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as pre-shipment weather analysis, flight-tracking, sort volumes, and traffic, delivered to customers via a secure portal. The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center. Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones. The significant majority of VerifyMe revenue is within the Precision Logistics Segment. The Company’s activities are subject to significant risks and uncertainties. See the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report.

Reclassifications

Reclassifications

Certain amounts presented for the three and nine months ended September 30, 2023, reflect reclassifications made to conform to the presentation in our current reporting period. These reclassifications had no effect on the previously reported net loss.

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim consolidated financial statements (the “Interim Statements”) include the accounts of VerifyMe and its wholly owned subsidiaries PeriShip Global and Trust Codes Global. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The Interim Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2024.  The accompanying Interim Statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The interim results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future interim periods.

Restricted Cash

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows (dollars in thousands):

	As of
	September 30, 2024		December 31, 2023
Cash and cash equivalents	$	2,610	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,610	$	3,095

The Company classifies cash and cash equivalents that are restricted from operating use for the next twelve months as restricted cash. No cash was subject to restriction as of September 30, 2024. As of December 31, 2023, the Company held $63 thousand subject to restrictions.

Segment Reporting

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method by which to allocate resources and assess performance. The Company has two reportable segments, namely, (i) Precision Logistics and (ii) Authentication. See Note 11 - Segment Reporting, for further discussion of the Company’s segment reporting structure. 

Foreign Currency Translation

Foreign Currency Translation

The functional currency of our New Zealand operations is the local currency, New Zealand dollar (NZD). The translation of the foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the weighted average exchange rates prevailing during the year. The unrealized gains and losses resulting from such translation are included as a component of comprehensive income. Translation gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in “General and administrative” on our Consolidated Statements of Operations. The foreign currency transaction gains for the three and nine months ended September 30, 2024, was $67 thousand and 21 thousand, respectively. The foreign currency transaction losses for the three and nine months ended September 30, 2023, were $16 thousand and $30 thousand, respectively.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): “Improvements to Reportable Segment Disclosures”, which requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment's profit or loss to assess performance and decide how to allocate resources. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company adopted the new standard beginning January 1, 2024. Note 11 – Segment Reporting has been updated to reflect the new disclosure requirements and certain amounts have been reclassified in the Consolidated Statement of Operations. There is no other impact of adoption of this standard on the Company’s consolidated financial statements and disclosures.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, contingent consideration and long-term derivative assets or liabilities. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities.  The Company believes the carrying amount of its notes payable approximates fair value based on rates and other terms currently available to the Company for similar debt instruments.

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures,” and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2024, and December 31, 2023.

Amounts in Thousands ('000)

	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)
Balance as of December 31, 2023	$	4	$	(924	)
Change in fair value of Contingent Consideration		-		839
Payments		-		36
Currency		-		27
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		7		-
Balance at September 30, 2024	$	11	$	(22	)

Revenue Recognition

Revenue Recognition

The Company accounts for revenues according to Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

The Company applies the following five steps, separated by reportable segments, in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements.

· identify the contract with a customer;

· identify the performance obligations in the contract;

· determine the transaction price;

· allocate the transaction price to performance obligations in the contract; and

· recognize revenue as the performance obligation is satisfied.

For more detailed information about reportable segments, see Note 11 – Segment reporting. The Company generally considers completion of an agreement, or Statement of Work (“SOW”) and/or purchase order as a customer contract, provided collection is considered probable.

Precision Logistics

Our Precision Logistics segment consists of two service lines, Proactive and Premium. Under our Proactive service line, clients pay us directly for carrier service coupled with our Proactive logistics service. Terms typically range 7 days and no longer than 30 days. The Company has determined it is the principal and recognizes shipment fees in gross revenue. Under our Premium service line, we provide complete white-glove shipping monitoring and predictive analytics services. This service includes customer web portal access, weather monitoring, temperature control, full service center support and last mile resolution. Payment terms are typically 30-45 days.

Under both service lines in our Precision Logistics segment, our performance obligation is met, and revenue is recognized when the packages are delivered. The transaction fees consist of fixed consideration made up of amounts contractually billed to the customer. There are no variable considerations in the transaction fee, in either service line.

Authentication

Our Authentication segment primarily consists of our brand protection service line which consists of a custom suite of products that offer clients traceability and brand solutions. Terms typically range between 30 and 90 days. Our performance obligation is met, and revenue is recognized, when our products are shipped or delivered depending on the specific agreement with the customer. The transaction fee is made up of fixed consideration based on the related purchase order or agreement. Warranties and other variable considerations are analyzed by the Company, in terms of historical warranties, current economic trends, and changes in customer demand, and have been determined to be insignificant in the three and nine months ended September 30, 2024.

Goodwill

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assesses qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test. The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

Basic and Diluted Net Loss per Share of Common Stock

Basic and Diluted Net Loss per Share of Common Stock

The Company follows FASB ASC 260, “Earnings Per Share,” when reporting earnings per share resulting in the presentation of basic and diluted earnings per share.  Because the Company reported a net loss for each of the periods presented, common stock equivalents, including preferred stock, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same. 

For the three and nine months ended September 30, 2024, and 2023, there were shares potentially issuable, that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. For the three and nine months ended September 30, 2024, there were approximately 8,256,000 anti-dilutive shares consisting of 2,305,000 unvested performance restricted stock units, restricted stock units, and restricted stock awards, 221,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three and nine months ended September 30, 2023, there were approximately 8,385,000 anti-dilutive shares consisting of 2,348,000 unvested performance restricted stock units, restricted stock units, restricted stock awards and options under the stock purchase plan, 307,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock.

Stock-Based Compensation

Stock-Based Compensation

We account for stock-based compensation under the provisions of FASB ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock options on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model include risk-free interest rates, expected volatility and expected life of the stock options. Changes in these assumptions can materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line method. For performance restricted stock units with stock price appreciation targets (see Note 6 – Stock Options, Restricted Stock and Warrants), we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal based on actual achievement during the period.

We account for stock-based compensation awards to non-employees in accordance with ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, “Equity – Equity-Based Payments to Non-Employees”.  

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity-based payments are recorded as an expense over the service period, as if we had paid cash for the services. At the end of each financial reporting period, prior to vesting or prior to the completion of the services, the fair value of the equity-based payments will be re-measured, and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity-based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity-based payments are fully vested or the service completed. 

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Schedule of cash, cash equivalents and restricted cash

	As of
	September 30, 2024		December 31, 2023
Cash and cash equivalents	$	2,610	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,610	$	3,095

Schedule of fair value assets measured on recurring basis

	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)
Balance as of December 31, 2023	$	4	$	(924	)
Change in fair value of Contingent Consideration		-		839
Payments		-		36
Currency		-		27
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		7		-
Balance at September 30, 2024	$	11	$	(22	)

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REVENUE (Tables)

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

	Authentication				Precision Logistics				Consolidated
Revenue	Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,
	2024		2023		2024		2023		2024		2023
Proactive services	$	-	$	-	$	4,417	$	4,038	$	4,417	$	4,038
Premium services		-		-		886		1,419		886		1,419
Brand protection services		132		147		-		-		132		147
	$	132	$	147	$	5,303	$	5,457	$	5,435	$	5,604

	Authentication				Precision Logistics				Consolidated
Revenue	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023		2024		2023
Proactive services	$	-	$	-	$	12,587	$	12,742	$	12,587	$	12,742
Premium services		-		-		3,574		3,343		3,574		3,343
Brand protection services		385		515		-		-		385		515
	$	385	$	515	$	16,161	$	16,085	$	16,546	$	16,600

Schedule of contract assets from contracts with customers

	Contract Asset
	September 30,
In Thousands	2024			2023
Beginning balance, January 1	$	1,282		$	1,185
Contract asset additions		6,464			5,394
Reclassification to accounts receivable, billed to customers		(6,960	)		(5,694	)
Ending balance (1)	$	786		$	885

______________

(1) Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

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BUSINESS COMBINATIONS (Tables)

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of business acquisitions

Cash	$	363
Fair value of contingent consideration		1,125
Stock (issuance of 353,492 shares of common stock) (a)		625
Total purchase price	$	2,113
				Amortization
				Period
Purchase price allocation:
Prepaid expenses	$	25
Property and Equipment, net		18
ROU Asset		171
Developed Technology		485		8 years
Trade Names/Trademarks		148		18 years
Customer Relationships		68		10 years
Goodwill		1,383
Accounts payable and other accrued expenses		(14	)
Current lease liability		(63	)
Long term lease liability		(108	)
	$	2,113

(a) Stock issued was calculated based on the 15-day volume-weighted average price (“VWAP”) through February 28, 2023, calculated at $1.8388.

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INTANGIBLE ASSETS AND GOODWILL (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill by reportable business segment

	Authentication			Precision Logistics		Total
Net book value at
January 1, 2024	$	1,396		$	3,988	$	5,384
2024 Activity
Goodwill impairment charge		(1,351	)		-		(1,351	)
Foreign currency translation		(45	)		-		(45	)
Net book value at
September 30, 2024	$	-		$	3,988	$	3,988

Schedule of intangible assets subject to amortization

September 30, 2024	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,112	$	(209	)	$	903		11
Customer Relationships		1,839		(449	)		1,390		8
Developed Technology		3,143		(1,280	)		1,863		4
Internally Used Software		1,247		(138	)		1,109		6
Non-Compete Agreement		191		(93	)		98		3
Deferred Implementation		198		(38	)		160		9
Total Intangible Assets	$	7,730	$	(2,207	)	$	5,523
December 31, 2023
Patents and Trademarks	$	2,002	$	(564	)	$	1,438		13
Capitalized Software		161		(109	)		52		2
Customer Relationships		1,908		(317	)		1,591		9
Developed Technology		3,632		(938	)		2,694		5
Internally Used Software		914		(62	)		852		6
Non-Compete Agreement		191		(65	)		126		3
Deferred Implementation		198		(24	)		174		9
Total Intangible Assets	$	9,006	$	(2,079	)	$	6,927

Schedule of future amortization expense

Fiscal Year ending December 31,
2024 (three months remaining)	$	257
2025		1,023
2026		1,023
2027		996
2028		622
Thereafter		1,602
Total	$	5,523

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Tables)

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Schedule of stock options

	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in thousands)(1)
Balance as of December 31, 2023		301,471		$	4.56
Granted		-			-
Forfeited/Cancelled/Expired		(80,471	)	$	7.27
Balance as of September 30, 2024		221,000		$	3.57
Exercisable as of September 30, 2024		221,000		$	3.57		0.7	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period. 

Schedule of unvested restricted stock awards

				Weighted -
				Average
	Number of			Grant
	Award Shares			Date Fair Value
Unvested at December 31, 2023		416,669			1.44
Granted		140,000			1.60
Vested		(416,669	)		1.44
Balance at September 30, 2024		140,000		$	1.60

Schedule of unvested restricted stock units

				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2023		371,253			1.32
Granted		88,011			1.46
Vested		(70,527	)		1.33
Forfeited		(25,334	)		1.23
Balance at September 30, 2024		363,403		$	1.35

Schedule of unvested performance restricted stock units

				Weighted -
				Average
	Number of			Number of
	Unit Shares			Unit Shares
Unvested at December 31, 2023		1,438,760			1.51
Granted		555,000			1.08
Forfeited/Cancelled		(192,100	)		1.78
Balance at September 30, 2024		1,801,660		$	1.35

Schedule of warrants outstanding

	Number of Warrant Shares		Weighted- Average Exercise Price		Weighted - Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)(1)
Balance as of December 31, 2023		4,628,586	$	4.13
Granted		-		-
Expired		-		-
Balance as of September 30, 2024		4,628,586	$	4.13		1.5
Exercisable as of September 30, 2024		4,628,586	$	4.13		1.5	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.43 for our common stock on September 30, 2024.

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LEASES (Tables)

9 Months Ended

Sep. 30, 2024

Leases

Schedule of components of lease expense

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	50	$	47	$	145	$	132
Short-term lease cost		4		5		13		23
Total lease costs	$	54	$	52	$	158	$	155

Schedule of supplemental information related to leases

	September 30, 2024			December 31, 2023
Operating Lease right-of-use asset	$	339		$	468
Current portion of operating lease liabilities	$	166		$	170
Non-current portion of operating lease liabilities		184			307
Total operating lease liabilities	$	350		$	477
Cash paid for amounts included in the measurement of operating lease liabilities	$	144		$	177
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-
Weighted-average remaining lease term for operating leases (years)		2.3
Weighted average discount rate for operating leases		6.4	%

Schedule of operating lease liabilities maturities

Year ending December 31,
2024 (three months remaining)	$	48
2025		196
2026		139
2027		45
Total future lease payments		428
Less: imputed interest		(78	)
Present value of future lease payments		350
Less: current portion of lease liabilities		(166	)
Long-term lease liabilities	$	184

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Schedule of segment reporting information

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue:
Precision Logistics	$	5,303		$	5,457		$	16,161		$	16,085
Authentication		132			147			385			515
Total Revenue	$	5,435		$	5,604		$	16,546		$	16,600
Gross Profit:
Precision Logistics	$	1,777		$	1,909		$	5,903		$	4,748
Authentication		118			137			342			405
Total Gross Profit		1,895			2,046			6,245			5,153
Segment Management and Technology - Precision Logistics		1,013			1,029			3,259			2,895
Segment Management and Technology - Authentication		316			312			930			802
Sales and marketing - Precision Logistics		262			181			599			733
Sales and marketing - Authentication		139			196			400			670
General and administrative		778			1,178			2,780			3,393
Research and development		5			5			65			23
Goodwill and Intangible asset impairment		2,252			-			2,265			34
LOSS BEFORE OTHER INCOME (EXPENSE)		(2,870	)		(855	)		(4,053	)		(3,397	)
OTHER INCOME (EXPENSE)		446			(75	)		730			5
NET LOSS	$	(2,424	)	$	(930	)	$	(3,323	)	$	(3,392	)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cash and cash equivalents	$ 2,610	$ 3,032
Restricted cash	(0)	63
Total cash and cash equivalents including restricted cash	$ 2,610	$ 3,095	$ 3,007	$ 3,411

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Platform Operator, Crypto Asset [Line Items]
Change in fair value of contingent consideration	$ 836	$ 136
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Platform Operator, Crypto Asset [Line Items]
Derivative Asset at beginning	4
Change in fair value of contingent consideration
Payments
Currency
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss	7
Derivative Asset at end	11
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Platform Operator, Crypto Asset [Line Items]
Contingent Consideration at beginning	(924)
Change in fair value of contingent consideration	839
Payments	36
Currency	27
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss
Contingent Consideration at end	$ (22)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001
Restricted cash	$ (0)		$ (0)		$ 63,000
Foreign currency transaction losses	$ 67	$ 16	$ 21	$ 30
Anti-dilutive shares	8,256,000	8,385,000	8,256,000	8,385,000
Restricted Stock [Member]
Anti-dilutive shares	2,305,000	2,348,000	2,305,000	2,348,000
Share-Based Payment Arrangement, Option [Member]
Anti-dilutive shares	221,000	307,000	221,000	307,000
Warrant [Member]
Anti-dilutive shares	4,629,000	4,629,000	4,629,000	4,629,000
Conversion Convertible Debt [Member]
Anti-dilutive shares	957,000	957,000	957,000	957,000
Preferred Stock [Member]
Anti-dilutive shares	144,000	144,000	144,000	144,000
Verify Me Inc [Member]
State of incorporation			Nevada
State of incorporation			Nov. 10, 1999

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REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Revenues	$ 5,435	$ 5,604	$ 16,546	$ 16,600
Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	4,417	4,038	12,587	12,742
Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	886	1,419	3,574	3,343
Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	132	147	385	515
Authentication [Member]
Disaggregation of Revenue [Line Items]
Revenues	132	147	385	515
Authentication [Member] | Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues
Authentication [Member] | Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues
Authentication [Member] | Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	132	147	385	515
Precision Logistics [Member]
Disaggregation of Revenue [Line Items]
Revenues	5,303	5,457	16,161	16,085
Precision Logistics [Member] | Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	4,417	4,038	12,587	12,742
Precision Logistics [Member] | Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	886	1,419	3,574	3,343
Precision Logistics [Member] | Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues

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REVENUE (Details 1) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2024	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Beginning balance		$ 1,282	$ 1,185
Contract asset additions		6,464	5,394
Reclassification to accounts receivable, billed to customers		(6,960)	(5,694)
Ending balance	[1]	$ 786	$ 885

[1] Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

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BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands		Mar. 01, 2023	Sep. 30, 2024	Dec. 31, 2023
Business Acquisition [Line Items]
Goodwill			$ 3,988	$ 5,384
Trust Codes Global Limited [Member]
Business Acquisition [Line Items]
Cash		$ 363
Fair value of contingent consideration		1,125
Stock (issuance of 353,492 shares of restricted common stock)	[1]	625
Total purchase price		2,113
Prepaid expenses		25
Property and Equipment, net		18
ROU Asset		171
Goodwill		1,383
Accounts payable and other accrued expenses		(14)
Current lease liability		(63)
Long term lease liability		(108)
Total purchase price allocation		2,113
Trust Codes Global Limited [Member] | Developed Technology Rights [Member]
Business Acquisition [Line Items]
Intangible Assets		$ 485
Amortization Period		8 years
Trust Codes Global Limited [Member] | Trademarks [Member]
Business Acquisition [Line Items]
Intangible Assets		$ 148
Amortization Period		18 years
Trust Codes Global Limited [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible Assets		$ 68
Amortization Period		10 years

[1] Stock issued was calculated based on the 15-day volume-weighted average price (“VWAP”) through February 28, 2023, calculated at $1.8388.

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BUSINESS COMBINATIONS (Details Narrative) - USD ($) $ in Thousands	Mar. 01, 2023	Sep. 30, 2024	May 15, 2024	Dec. 31, 2023
Business Acquisition [Line Items]
Consideration transferred	$ 360
Common stock shares, issued		10,715,065		10,453,315
Earn-out consideration	1,100
Current liability		$ 22
Contingent consideration payment			$ 36
Business Combination [Member]
Business Acquisition [Line Items]
Purchase price	1,000
Stock consideration amount	650
Acquisition related costs	$ 278,000
Business Combination [Member] | Restricted Stock [Member]
Business Acquisition [Line Items]
Common stock shares, issued	353,492

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INTANGIBLE ASSETS AND GOODWILL (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Beginning balance	$ 5,384
Goodwill impairment charge	(1,351)
Foreign currency translation	(45)
Ending balance	3,988
Authentication [Member]
Beginning balance	1,396
Goodwill impairment charge	(1,351)
Foreign currency translation	(45)
Ending balance
Precision Logistics [Member]
Beginning balance	3,988
Goodwill impairment charge
Foreign currency translation
Ending balance	$ 3,988

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INTANGIBLE ASSETS AND GOODWILL (Details 1) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 7,730	$ 9,006
Accumulated Amortization	(2,207)	(2,079)
Net Carrying Amount	5,523	6,927
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,112	2,002
Accumulated Amortization	(209)	(564)
Net Carrying Amount	$ 903	$ 1,438
Weighted average useful life (years)	11 years	13 years
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,839	$ 1,908
Accumulated Amortization	(449)	(317)
Net Carrying Amount	$ 1,390	$ 1,591
Weighted average useful life (years)	8 years	9 years
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,143	$ 3,632
Accumulated Amortization	(1,280)	(938)
Net Carrying Amount	$ 1,863	$ 2,694
Weighted average useful life (years)	4 years	5 years
Internally Used Software [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,247	$ 914
Accumulated Amortization	(138)	(62)
Net Carrying Amount	$ 1,109	$ 852
Weighted average useful life (years)	6 years	6 years
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 191	$ 191
Accumulated Amortization	(93)	(65)
Net Carrying Amount	$ 98	$ 126
Weighted average useful life (years)	3 years	3 years
Deferred Implementation [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 198	$ 198
Accumulated Amortization	(38)	(24)
Net Carrying Amount	$ 160	$ 174
Weighted average useful life (years)	9 years	9 years
Capitalized Software [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		$ 161
Accumulated Amortization		(109)
Net Carrying Amount		$ 52
Weighted average useful life (years)		2 years

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INTANGIBLE ASSETS AND GOODWILL (Details 2) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
2024 (three months remaining)	$ 257
2025	1,023
2026	1,023
2027	996
2028	622
Thereafter	1,602
Total	$ 5,523	$ 6,927

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INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible impairment charge	$ 901		$ 914
Amortization of intangible assets	$ 277,000	$ 266,000	817,000	$ 761,000
Intangible impairment charge			$ 914,000

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STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended				3 Months Ended		9 Months Ended
	Nov. 04, 2024	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Dec. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Feb. 29, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock award, expense						$ 56	$ 177	$ 331	$ 325
Restricted stock units, expense						345	$ 316	$ 678	728
Common stock issued upon vesting of restricted stock units, net of common stock withheld for taxes	14,824							1,750
Common stock withheld for taxes								38,095
Stock issued for services		60,000	30,000	30,000
Stock issued for services, value		$ 86	$ 42	$ 42		$ 86		$ 25
Proceeds from SPP Plan								$ 21	$ 80
Treasury stock share		270,367			329,351	270,367		270,367
Treasury stock value		$ 464			$ 659	$ 464		$ 464
Share repurchase program					$ 500
Repurchased shares of common stock								1,000
Repurchased shares of common stock, amount		$ 1				1		$ 1
Plan 2021 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense						$ 0		4
Proceeds from SPP Plan								$ 21
Non-qualified stock purchase plan										21,889
Non-qualified stock purchase exercise price										$ 0.97

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details) - Share-Based Payment Arrangement, Option [Member]	9 Months Ended
	Sep. 30, 2024 USD ($) $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning | shares	301,471
Weighted average exercise price, balance at beginning | $ / shares	$ 4.56
Granted | shares
Weighted average exercise price, granted | $ / shares
Forfeited/cancelled/expired | shares	(80,471)
Weighted average exercise price, forfeited/cancelled/expired | $ / shares	$ 7.27
Balance at ending | shares	221,000
Weighted average exercise price, Balance at ending | $ / shares	$ 3.57
Vested and exercisable at ending | shares	221,000
Weighted average exercise price, balance at ending | $ / shares	$ 3.57
Weighted average remaining contractual term, exercisable at ending	8 months 12 days
Vested and exercisable at ending | $		[1]

[1] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period. 

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 1) - Restricted Stock [Member]	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning | shares	416,669
Weighted - average grant date fair value, balance at beginning | $ / shares	$ 1.44
Granted | shares	140,000
Weighted - average grant date fair value, granted | $ / shares	$ 1.60
Vested | shares	(416,669)
Weighted - average grant date fair value, vested | $ / shares	$ 1.44
Balance at ending | shares	140,000
Weighted - average grant date fair value, balance at ending | $ / shares	$ 1.60

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 2) - Restricted Stock Units [Member]	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning | shares	371,253
Weighted - average grant date fair value, balance at beginning | $ / shares	$ 1.32
Granted | shares	88,011
Weighted - average grant date fair value, granted | $ / shares	$ 1.46
Vested | shares	(70,527)
Weighted - average grant date fair value, vested | $ / shares	$ 1.33
Forfeited | shares	(25,334)
Weighted - average grant date fair value, Forfeited | $ / shares	$ 1.23
Balance at ending | shares	363,403
Weighted - average grant date fair value, balance at ending | $ / shares	$ 1.35

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 3) - Nonvested Stock Options [Member]	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning | shares	1,438,760
Balance at beginning, weighted average grant date fair value | $ / shares	$ 1.51
Granted | shares	555,000
Granted, weighted average grant date fair value | $ / shares	$ 1.08
Forfeited/Cancelled | shares	(192,100)
Forfeited/Cancelled, weighted average grant date fair value | $ / shares	$ 1.78
Balance at ending | shares	1,801,660
Balance at ending, weighted average grant date fair value | $ / shares	$ 1.35

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 4)	9 Months Ended
	Sep. 30, 2024 USD ($) $ / shares shares
Equity [Abstract]
Number of warrants outstanding, beginning balance | shares	4,628,586
Weighted average exercise price, beginning balance | $ / shares	$ 4.13
Number of warrants outstanding, granted | shares
Weighted average exercise price, granted | $ / shares
Number of warrants outstanding, expired | shares
Weighted average exercise price, expired | $ / shares
Number of warrants outstanding, ending Balance | shares	4,628,586
Weighted average exercise price, ending balance | $ / shares	$ 4.13
Weighted average remaining contractual terms	1 year 6 months
Number of warrants outstanding, exercisable | shares	4,628,586
Weighted average exercise price, exercisable | $ / shares	$ 4.13
Weighted average remaining contractual terms, exercisable	1 year 6 months
Aggregate intrinsic value, exercisable | $		[1]

[1] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.43 for our common stock on September 30, 2024.

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details Narrative) - USD ($) $ in Thousands				1 Months Ended			9 Months Ended
	Nov. 04, 2024	Aug. 10, 2020	Nov. 14, 2017	Mar. 18, 2024	Apr. 17, 2023	Mar. 28, 2022	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2013
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for potential issuance	54,843
Unrecognized compensation cost							$ 0
Equity Incentive Plan2017 [Member] | Board of Directors Chairman [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for potential issuance			260,000
Equity investments fair value | Board of Directors Chairman [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for potential issuance		1,069,110		4,069,100	3,069,100	2,069,100
Issued Under The 2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Incentive stock options granted							1,000,000
Stock Options Restricted Stockand Unitsand Other Stockbased Awards [Member] | Omnibus Equity Compensation Plan2013 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares authorized to grand awards									400,000
Incentive Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price, description							In connection with incentive stock options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company).
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock or Unit Option Plan Expense							$ 0	$ 0
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested restricted stock awards							152
Restricted Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested restricted stock awards							$ 198
Nonvested Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Incentive stock options granted							555,000
Unvested restricted stock awards							$ 960
Weighted-average period							1 year 2 months 12 days

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DEBT (Details Narrative) - USD ($) $ in Thousands	1 Months Ended		9 Months Ended
	Aug. 25, 2023	Oct. 17, 2022	Sep. 30, 2024
Debt Disclosure [Abstract]
Short term debt outstanding			$ 500
Long-term debt outstanding			500
Principal outstanding			375
Outstanding on RLOC			0
Notional amount		$ 1,958
Interest rate		7.602%
Principal amount	$ 1,100
Convertible promissory notes purchased by related party	$ 475
Held-in-trust			450
Interest expense			66
Convertible debt			$ 1,100

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INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Income Tax Disclosure [Abstract]
Taxes payable	$ 0	$ 0
Effective income tax rate	21.00%

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LEASES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Leases
Operating lease cost	$ 50	$ 47	$ 145	$ 132
Short-term lease cost	4	5	13	23
Total lease costs	$ 54	$ 52	$ 158	$ 155

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LEASES (Details 1) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Leases
Operating Lease right-of-use asset	$ 339	$ 468
Current portion of operating lease liabilities	166	170
Non-current portion of operating lease liabilities	184	307
Total operating lease liabilities	350	477
Cash paid for amounts included in the measurement of operating lease liabilities	144	177
Right-of-use assets obtained in exchange for operating lease liabilities
Weighted-average remaining lease term for operating leases (years)	2 years 3 months 18 days
Weighted average discount rate for operating leases	6.40%

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LEASES (Details 2) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Leases
2024 (three months remaining)	$ 48
2025	196
2026	139
2027	45
Total future lease payments	428
Less: imputed interest	(78)
Present value of future lease payments	350	$ 477
Less: current portion of lease liabilities	(166)	(170)
Long-term lease liabilities	$ 184	$ 307

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CONCENTRATIONS (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	14.00%	23.00%	19.00%	18.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			38.00%
Transportation Cost [Member] | Product Concentration Risk [Member] | One Vendor [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	99.00%		99.00%

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SEGMENT REPORTING (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Total Revenue		$ 5,435	$ 5,604	$ 16,546	$ 16,600
Gross Profit		1,895	2,046	6,245	5,153
Management and Technology	[1]	1,329	1,341	4,189	3,697
Sales and marketing	[1]	401	377	999	1,403
General and administrative	[1]	778	1,178	2,780	3,393
Research and development		5	5	65	23
Goodwill and Intangible asset impairment				2,261	34
LOSS BEFORE OTHER INCOME (EXPENSE)		(2,870)	(855)	(4,053)	(3,397)
OTHER INCOME (EXPENSE)		446	(75)	730	5
NET LOSS		(2,424)	(930)	(3,323)	(3,392)
Precision Logistics [Member]
Total Revenue		5,303	5,457	16,161	16,085
Gross Profit		1,777	1,909	5,903	4,748
Management and Technology		1,013	1,029	3,259	2,895
Sales and marketing		262	181	599	733
Authentication [Member]
Total Revenue		132	147	385	515
Gross Profit		118	137	342	405
Management and Technology		316	312	930	802
Sales and marketing		139	196	400	670
Goodwill and Intangible asset impairment		$ 2,252		$ 2,265	$ 34

[1] Includes share-based compensation of $486 thousand and $1,183 thousand for the three and nine months ended September 30, 2024, respectively, and $498 thousand and $1,099 thousand for the three and nine months ended September 30, 2023, respectively.  

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SUBSEQUENT EVENTS (Details Narrative) - shares		9 Months Ended
	Nov. 04, 2024	Sep. 30, 2024
Subsequent Events [Abstract]
Number of shares issued	54,843
Shares vested	69,667
Shares withheld for taxes	14,824	1,750