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 March 31, 2025

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: 12,420,564 shares of common stock outstanding at May 6, 2025.

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)		11
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	30
ITEM 4.	Controls and Procedures	30
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	31
ITEM 1A.	Risk Factors	31
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
ITEM 3.	Defaults Upon Senior Securities	31
ITEM 4.	Mine Safety Disclosures	31
ITEM 5.	Other Information	31
ITEM 6.	Exhibits	31
SIGNATURES		32

3

PART I - FINANCIAL STATEMENTS

ITEM 1. 

VerifyMe, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

	March 31, 2025		December 31, 2024
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	5,707	$	2,823
Accounts receivable, net of allowance for credit loss reserve, $71 and $71 as of March 31, 2025 and December 31, 2024, respectively		955		2,636
Unbilled revenue		641		733
Prepaid expenses and other current assets		322		131
Inventory		47		39
TOTAL CURRENT ASSETS		7,672		6,362
PROPERTY AND EQUIPMENT, NET	$	88	$	116
RIGHT OF USE ASSET		100		236
INTANGIBLE ASSETS, NET		5,247		5,365
GOODWILL		3,988		3,988
TOTAL ASSETS	$	17,095	$	16,067
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Term note, current	$	-	$	500
Accounts payable		1,295		2,971
Other accrued expense		305		660
Lease liability- current		48		108
TOTAL CURRENT LIABILITIES		1,648		4,239
LONG-TERM LIABILITIES
Long-term lease liability		54		139
Term note		-		375
Convertible note – related party		450		450
Convertible note		300		650
TOTAL LIABILITIES	$	2,452	$	5,853
STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $0.001 par value, 37,564,767 shares authorized; 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		-		-
Series B Convertible Preferred Stock, $0.001 par value; 85 shares authorized; 0.85 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		-		-
Common stock, $0.001 par value; 675,000,000 shares authorized;12,665,892 and 10,829,908 shares issued, 12,414,772 and 10,539,441 shares outstanding as of March 31, 2025 and December 31, 2024, respectively		13		11
Additional paid in capital		101,225		96,344

4

Treasury stock as cost; 251,120 and 290,467 shares at March 31, 2025 and December 31, 2024, respectively		(351	)		(480	)
Accumulated deficit		(86,244	)		(85,673	)
Accumulated other comprehensive loss		-			12
STOCKHOLDERS' EQUITY		14,643			10,214
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,095		$	16,067

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
	March 31, 2025			March 31, 2024
NET REVENUE	$	4,455		$	5,759
COST OF REVENUE		2,965			3,499
GROSS PROFIT		1,490			2,260
OPERATING EXPENSES
Segment management and Technology(a)		926			1,381
General and administrative (a)		856			1,121
Research and development		5			55
Sales and marketing (a)		296			350
Total Operating expenses		2,083			2,907
LOSS BEFORE OTHER INCOME (EXPENSE)		(593	)		(647	)
OTHER INCOME (EXPENSE)
Interest income(expense) net		22			(38	)
Change in fair value of contingent consideration		-			132
TOTAL OTHER INCOME, NET		22			94
NET LOSS	$	(571	)	$	(553	)
LOSS PER SHARE
BASIC		(0.05	)		(0.05	)
DILUTED		(0.05	)		(0.05	)
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC		12,292,150			10,073,445
DILUTED		12,292,150			10,073,445

(a) Includes share-based compensation of $333 thousand and $458 thousand for the three months ended March 31, 2025 and March 31, 2024, 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
	March 31, 2025			March 31, 2024
NET LOSS	$	(571	)	$	(553	)
Change in fair value of interest rate, Swap		(12	)		3
Foreign currency translation adjustments		-			(67	)
Total comprehensive loss	$	(583	)	$	(617	)

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

7

VerifyMe, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three months ended
	March 31, 2025			March 31, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(571	)	$	(553	)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts		-			10
Stock based compensation		41			46
Change in fair value of contingent consideration		-			(132	)
Fair value of restricted stock awards and restricted stock units issued in exchange for services		292			412
Impairments		-			4
Amortization and depreciation		286			299
Gain on partial lease termination		(6	)		-
Unrealized loss on foreign currency transactions		-			53
Changes in operating assets and liabilities:
Accounts receivable		1,681			1,804
Unbilled revenue		92			363
Inventory		7			7
Prepaid expenses and other current assets		(203	)		(8	)
Accounts payable, other accrued expenses and net change in operating leases		(2,023	)		(2,365	)
Net cash used in operating activities		(404	)		(60	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of patents		-			(11	)
Purchase of office equipment		-			(2	)
Capitalized software costs		(156	)		(97	)
Net cash used in investing activities		(156	)		(110	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Warrants Exercise		4,348			-
Proceeds from SPP Plan		-			21
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered		(29	)		(1	)
Increase in treasury shares (share repurchase program)		-			(1	)
Repayment of debt and line of credit		(875	)		(125	)
Net cash provided by (used in) financing activities		3,444			(106	)
Effect of exchange rate changes on cash		-			(1	)
NET INCREASE(DECREASE) CASH AND CASH EQUIVALENTS		2,884			(277	)
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- BEGINNING OF PERIOD		2,823			3,095
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- END OF PERIOD	$	5,707		$	2,818

8

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	40	$	70
Income taxes	$	-	$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Lease modification	$	7	$	-
Conversion of convertible note and accrued interest	$	360	$	-
Change in fair value of interest rate, swap	$	12	$	3

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				Series B
	Convertible				Convertible
	Preferred				Preferred				Common								Treasury
	Stock				Stock				Stock								Stock
														Additional									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		-		-		-		-		-			-		148			-			-			-			-			148
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		1,750			-		263			-			-			-			-			263
Common stock issued in relation to Stock Purchase Plan		-		-		-		-		21,889			-		(46	)		(21,889	)		71			-			-			25
Common stock issued for services		-		-		-		-		30,000			-		42			-			-			-			-			42
Repurchase of Common Stock		-		-		-		-		(1,000	)		-		-			1,000			(1	)		-			-			(1	)
Accumulated other comprehensive loss		-		-		-		-		-			-		-			-			-			(64	)		-			(64	)
Net loss		-		-		-		-		-			-		-			-			-			-			(553	)		(553	)
Balance at March 31, 2024		-		-		0.85		-		10,176,603			10		95,438			308,462			(589	)		(66	)		(82,402	)		12,391

	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common						Treasury
	Stock				Stock				Stock						Stock
													Additional								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, 2024		-		-		0.85		-		10,539,441		11		96,344		290,467			(480	)		12			(85,673	)		10,214
Warrants exercise		-		-		-		-		1,461,896		2		4,346		-			-			-			-			4,348
Convertible note		-		-		-		-		313,520		-		285		(22,359	)		75			-			-			360
Restricted stock awards		-		-		-		-		-		-		55		-			-			-			-			55
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		39,915		-		154		(16,988	)		54			-			-			208
Common stock issued for services		-		-		-		-		60,000		-		41		-			-			-			-			41
Accumulated other comprehensive loss		-		-		-		-		-		-		-		-			-			(12	)		-			(12	)
Net loss		-		-		-		-		-		-		-		-			-			-			(571	)		(571	)
Balance at March 31, 2025		-		-		0.85		-		12,414,772		13		101,225		251,120			(351	)		-			(86,244	)		14,643

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

10

VerifyMe, Inc.

Notes to the Consolidated Financial Statements (unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

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

The Company is a logistics company that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions. The Company operates a Precision Logistics segment which includes the operations of our subsidiary PeriShip Global, LLC (“PeriShip Global”) and accounts for nearly all VerifyMe revenue and an Authentication segment. 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 deter counterfeit activities. Further information regarding our business segments is discussed below. 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 months ended March 31, 2024, 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 include the accounts of VerifyMe and its wholly owned subsidiary PeriShip 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, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025. 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 months ended March 31, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future interim periods.

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. 

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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.

11

Notes to the Consolidated Financial Statements (unaudited)

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220). This standard requires disclosure of specific information about costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, equity investments, and long-term derivatives. The carrying value of accounts receivable, unbilled revenue, 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 Accounting Standard Codification (“ASC”) Topic 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 March 31, 2025 and December 31, 2024.

Amounts in Thousands ('000)

	Derivative Asset
	(Level 2)
Balance as of December 31, 2024		12
Termination of SWAP, recognized in other comprehensive loss		(12	)
Balance at March 31, 2025	$	-

Revenue Recognition

The Company accounts for revenues according to 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.

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. For more detailed information about reportable segments, see Note 11 – Segment reporting.

12

Notes to the Consolidated Financial Statements (unaudited)

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 anti-counterfeit and brand protection. Terms typically range between 30 and 60 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.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, Intangibles-Goodwill and Other, 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 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.

Basic and Diluted Net Loss per Share of Common Stock

The Company follows ASC Topic 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 months ended March 31, 2025, and 2024, 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 months ended March 31, 2025, there were approximately 7,534,000 anti-dilutive shares consisting of 1,504,000 unvested performance restricted stock units, 454,000 restricted stock units and restricted stock awards, 151,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 652,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three months ended March 31, 2024, there were approximately 8,383,000 anti-dilutive shares consisting of 1,559,000 unvested performance restricted stock units, 785,000 restricted stock units, restricted stock awards and options under the stock purchase plan, 301,000 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, 8,000 shares issuable in connection with earnout earned for the Trust Codes Acquisition, and 144,000 shares issuable upon conversion of preferred stock.

Stock-Based Compensation

We account for stock-based compensation under the provisions of ASC Topic 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. We recognize forfeitures as they occur with a reduction in compensation expense in the period of forfeiture. For performance restricted stock units (“RSU”) 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 RSU’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.

13

Notes to the Consolidated Financial Statements (unaudited)

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).

	Precision Logistics				Authentication				Consolidated
Revenue	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
	2025		2024		2025		2024		2025		2024
Proactive services	$	3,694	$	4,225	$	-	$	-	$	3,694	$	4,225
Premium services		735		1,389		-		-		735		1,389
Brand protection services		-		-		26		145		26		145
	$	4,429	$	5,614	$	26	$	145	$	4,455	$	5,759

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 three-month period ended March 31, 2025, 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 March 31, 2025, 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
	March 31,
In Thousands	2025			2024
Beginning balance, January 1	$	733		$	1,282
Contract asset additions		641			916
Reclassification to accounts receivable, billed to customers		(733	)		(1,282	)
Ending balance, March 31 (1)	$	641		$	916

______________

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

14

Notes to the Consolidated Financial Statements (unaudited)

NOTE 3 – BUSINESS COMBINATIONS

On December 8, 2024, the Company sold Trust Codes Global pursuant to a Share Sale Agreement with a related party, Paul Ryan, former Executive Vice President of the Authentication Segment and employee of Trust Codes Global Limited. This divestiture did not qualify as a discontinued operation. The purchase price per the agreement was $1 NZD. We recognized a loss of $0.1 million on the sale of the business. Through his purchase, Mr. Ryan assumed the remaining cash balance in the bank accounts of $0.1 million and all continuing obligations and liabilities of Trust Codes Global Limited. The Trust Codes Global business was part of the Authentication segment. 

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. 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 three months ended March 31, 2025, were as follows (in thousands):

	Authentication		Precision Logistics		Total
Net book value at
January 1, 2025	$	-	$	3,988	$	3,988
2025 Activity
Net book value at
March 31, 2025	$	-	$	3,988	$	3,988

15

Notes to the Consolidated Financial Statements (unaudited)

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.

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):

March 31, 2025	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,112	$	(252	)	$	860		10
Customer Relationships		1,839		(541	)		1,298		7
Developed Technology		3,143		(1,541	)		1,602		3
Internally Used Software		1,568		(264	)		1,304		5
Non-Compete Agreement		191		(112	)		79		2
Deferred Implementation		135		(31	)		104		8
Total Intangible Assets	$	7,988	$	(2,741	)	$	5,247
December 31, 2024
Patents and Trademarks	$	1,112	$	(230	)	$	882		10
Customer Relationships		1,839		(495	)		1,344		7
Developed Technology		3,143		(1,411	)		1,732		3
Internally Used Software		1,418		(207	)		1,211		7
Non-Compete Agreement		191		(103	)		88		2
Deferred Implementation		135		(27	)		108		8
Total Intangible Assets	$	7,838	$	(2,473	)	$	5,365

Amortization expense for intangible assets was $274 thousand and $269 thousand for the three months ended March 31, 2025, and 2024, respectively.

Patents and Trademarks

As of March 31, 2025, our current patent and trademark portfolios consist of seven granted U.S. patents and one granted European patents, two pending foreign patent applications and several foreign trademarks.

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,
2025 (nine months remaining)	$	832
2026		1,067
2027		1,040
2028		664
2029		505
Thereafter		1,139
Total	$	5,247

NOTE 5 – STOCKHOLDERS’ EQUITY

The Company expensed $55 thousand and $148 thousand related to restricted stock awards for the three months ended March 31, 2025, and 2024, respectively.

16

Notes to the Consolidated Financial Statements (unaudited)

The Company expensed $237 thousand and $264 thousand related to restricted stock units for the three months ended March 31, 2025, and 2024, respectively.

On March 31, 2025, the Company issued 60,000 shares of restricted common stock, vesting immediately with a value of $41 thousand, for consulting services.

On January 2, 2025, the Company issued 39,915 shares of common stock, of which 16,988 were issued from treasury, upon vesting of 61,011 restricted stock units, net of 21,096 shares withheld for taxes related to stock grants on July 20, 2023 and July 1, 2024.

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. As of January 21, 2025, $350 thousand was converted to 313,520 shares of common stock, of which 22,359 were issued from treasury.

 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 ASC Topic 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 thousand and $4 thousand for the three months ended March 31, 2025 and March 31, 2024, respectively. During the three months ended March 31, 2025 and 2024, the Company received $0 thousand and $21 thousand, respectively, 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 March 31, 2025, and December 31, 2024, the Company had 251,120 and 290,467 shares, respectively, held in treasury with a value of approximately $351 thousand and $480 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 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 does not exceed $1.00 until December 14, 2024. On November 26, 2024, the Company approved an extension of the $0.5 million share repurchase program to repurchase shares of the Company’s common stock through December 31, 2025. The share repurchase program may be modified, suspended or discontinued at the discretion of the Board at any time.  The Company did not repurchase any shares during the three months ended March 31, 2025. 

NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

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”) and on September 30, 2020, the Company’s stockholders approved the 2020 Plan, which authorizes the potential issuance of up to 1,069,110 shares of common stock. Upon effectiveness of the 2020 Plan 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.

17

Notes to the Consolidated Financial Statements (unaudited)

On March 28, 2022, the Company’s Board of Directors adopted the First Amendment to the 2020 Plan and on June 9, 2022, the Company’s stockholders approved the First Amendment to the 2020 Plan, 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, 2023. On April 17, 2023, the Company’s Board of Directors adopted the Second Amendment to the 2020 Plan and on June 6, 2023, the Company’s stockholders approved the Second Amendment to the 2020 Plan, which increased the shares authorized for potential issuance under the 2020 Plan to 3,069,110 shares of common stock and extended the term of the 2020 Plan to June 6, 2033, and increased the annual cap on director compensation by $50 thousand. On March 18, 2024, the Company’s Board of Directors adopted the Third Amendment to the 2020 Plan, which on June 4, 2024, was approved by the Company’s stockholders, 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.

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 March 31, 2025:

	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, 2024	221,000		$	3.57	0.4	$	-
Granted	-			-
Forfeited/Cancelled/Expired	(70,000	)		3.51
Balance as of March 31, 2025	151,000		$	3.61	0.3	$	-
Exercisable as of March 31, 2025	151,000		$	3.61	0.3	$	-

(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. 

18

Notes to the Consolidated Financial Statements (unaudited)

As of March 31, 2025, the Company had no unvested stock options.

During the three months ended March 31, 2025, and 2024, the Company expensed $0 thousand, with respect to options.

As of March 31, 2025, 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 March 31, 2025:

			Weighted -
			Average
	Number of		Grant
	Award Shares		Date Fair Value
Unvested at December 31, 2024		140,000	$	1.60
Granted		-		-
Vested		-		-
Balance at March 31, 2025		140,000	$	1.60

As of March 31, 2025, total unrecognized share-based compensation cost related to unvested restricted stock awards is $41 thousand, which is expected to be recognized over a weighted-average period of less than one year.

The following table summarizes the unvested restricted stock units as of March 31, 2025: 

				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2024		273,736		$	1.38
Granted		86,773			1.75
Vested		(41,011	)		1.37
Forfeited		(5,000	)		1.37
Balance at March 31, 2025		314,498		$	1.48

As of March 31, 2025, total unrecognized share-based compensation cost related to unvested time-based restricted stock units was $185 thousand, which is expected to be recognized over a weighted-average period of less than one year.

19

Notes to the Consolidated Financial Statements (unaudited)

The following table summarizes the unvested performance-based restricted stock units as of March 31, 2025:

	Number of Unit Shares			Weighted - Average Number of Unit Shares
Unvested at December 31, 2024		1,606,660		$	1.37
Granted		-			-
Forfeited/Cancelled		(103,125	)		1.41
Balance at March 31, 2025		1,503,535		$	1.37

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 March 31, 2025, total unrecognized share-based compensation cost related to unvested performance based restricted stock units was $357 thousand, which is expected to be recognized over a weighted-average period of 1.1 years.

Warrants

The following table summarizes the activities for the Company’s warrants as of March 31, 2025:

	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, 2024		4,628,586			4.13		1.2
Granted		1,461,896			4.00
Exercised		(1,461,896	)		3.22
Balance as of March 31, 2025		4,628,586		$	4.38		1.9
Exercisable as of March 31, 2025		4,628,586		$	4.38		1.9	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.68 for our common stock on March 31, 2025.

On January 13, 2025, the Company entered into a warrant inducement agreement with an institutional investor and holder of existing warrants to purchase up to 1,461,896 shares of our common stock. The existing warrants were originally issued on April 14, 2022, with an exercise price of $3.215 per share and became exercisable six months following issuance. The net proceeds from the warrant exercise was $4.3 million. In exchange for the investor’s exercise of the existing warrants, the Company issued new warrants to purchase an equal number of shares at an exercise price of $4.00 per share. The new warrants were immediately exercisable and have a contractual term of five and one-half years from the issuance date.

The Company recognized the fair value of the new warrants using the Black-Scholes option pricing model. The fair value of the new warrants were estimated at $3,971 thousand. The transaction was treated as an equity issuance, and the fair value of the new warrants was recorded in additional paid-in capital. Direct transaction costs totaling approximately $352 thousand, including legal fees and placement agent commissions, were also recorded as a reduction to additional paid-in capital.

20

Notes to the Consolidated Financial Statements (unaudited)

The following table presents the assumptions used to estimate the fair value of the new warrants on January 13, 2025:

	January 13, 2025
Risk free interest rate	4.34%
Expected life	2.75 years
Expected volatility	171%
Expected dividend	-

At-the-Market Equity Offering Program

On March 6, 2025, the Company entered into an At-The-Market Sales Agreement (“ATM”) with Roth Capital Partners, LLC (“Roth”), pursuant to which the Company may issue and sell, from time to time, shares of its common stock up to an aggregate offering price of $15.8 million. Roth acts as the Company’s sales agent and is entitled to a 3.0% commission on gross proceeds from sales under the program.

In connection with the ATM program, the Company incurred direct legal and audit fees totaling $100 thousand. These costs have been recorded as deferred offering costs within other current assets and will be reclassified to additional paid-in capital on a pro-rata basis as shares are issued. Deferred offering costs will be assessed for recoverability at each reporting period. If management determines that the ATM program is not probable to be utilized, the deferred costs will be expensed to general and administrative expenses.

During the three months ended March 31, 2025, and as of the date of this filing, we have not sold any shares of common stock through the ATM.

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”). 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 included a four-year term note (the “Term Note”) for $2 million which matured in September of 2026 and required equal quarterly payments of principal and interest. The Term Note incurred interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%.  On January 21, 2025, the Term Note was paid in full and no future principal payments are due. The PNC Facility is 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. 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. On February 28, 2025, we received a waiver as of December 31, 2024 for certain events of default. PeriShip Global was in compliance with all affirmative and restrictive covenants under the PNC Facility at March 31, 2025.

As of January 21, 2025, the Term Note balance of $875 thousand was paid in full and no future principal payments are due.

As of March 31, 2025, $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 had 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 January 21, 2025, we terminated our interest rate swap agreement and $12 thousand was reclassified from accumulated other comprehensive loss.

21

Notes to the Consolidated Financial Statements (unaudited)

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 December 31, 2024, $450 thousand was 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 three months ended March 31, 2025 and March 31, 2024, interest expense related to the convertible debt was $15 thousand and $22 thousand, respectively. As of January 21, 2025, $350 thousand was converted to common stock, none of which was related parties. As of March 31, 2025 and December 31, 2024, the amount outstanding on the convertible debt was $750 thousand and $1,100 thousand, respectively and included in Convertible note and Convertible note – related party on the accompanying Consolidated Balance Sheets.

NOTE 8—INCOME TAXES

There are no taxes payable as of March 31, 2025, or December 31, 2024.

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 three months ending March 31, 2025, due to the uncertainty surrounding the realizability of the benefit. As of March 31, 2025, the Company had no unrecognized tax benefits.

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 three months ended March 31, 2025.

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.

22

Notes to the Consolidated Financial Statements (unaudited)

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 March 31,
	2025		2024
Operating lease cost	$	26	$	47
Short-term lease cost		4		5
Total lease costs	$	30	$	52

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

	March 31, 2025			December 31, 2024
Operating Lease right-of-use asset	$	100		$	236
Current portion of operating lease liabilities	$	48		$	108
Non-current portion of operating lease liabilities		54			139
Total operating lease liabilities	$	102		$	247
Cash paid for amounts included in the measurement of operating lease liabilities	$	30		$	126
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-
Weighted-average remaining lease term for operating leases (years)		2.1			2.3
Weighted average discount rate for operating leases		7.4	%		6.0	%

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of March 31, 2025 (in thousands):

Year ending December 31,
2025 (Excluding three months ended March 31, 2025)	$	36
2026		55
2027		19
Total future lease payments		110
Less: imputed interest		(8	)
Present value of future lease payments		102
Less: current portion of lease liabilities		(48	)
Long-term lease liabilities	$	54

NOTE 10– CONCENTRATIONS

For the three months ended March 31, 2025 and 2024, one customer represented 15% and 22% of revenues, respectively.

During the three months ended March 31, 2025, and 2024, one vendor accounted for 99% of transportation cost in our Precision Logistics segment.

As of March 31, 2025, one customer made up 41% of accounts receivable, net. As of December 31, 2024, two customers made up 36% of accounts receivable.

23

Notes to the Consolidated Financial Statements (unaudited)

NOTE 11 – SEGMENT REPORTING

As of March 31, 2025, we operated through two reportable business segments: (i) Precision Logistics and (ii) Authentication. The Chief Executive Officer is the chief operating decision maker (“CODM”). These segments reflect the way the CODM evaluates the Company’s business performance and allocates resources. The CODM assesses performance by using revenue, gross margin, operating expenses and net earnings. These metrics are analyzed by reviewing budget and forecast versus actual and prior year versus current year reporting. The various income performance measures are reviewed to ensure proper pricing strategies, effective cost controls and cash management across the organization. Reported revenue includes only the revenue generated by sales to external customers.

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 anti-counterfeit and brand protection.

We do not allocate the following items to the segments: general & administrative expenses 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
	March 31,								March 31,
	2025								2024
	Precision Logistics		Authentication			Consolidated			Precision Logistics		Authentication			Consolidated
NET REVENUE	$	4,429	$	26		$	4,455		$	5,614	$	145		$	5,759
COST OF REVENUE		2,959		6			2,965			3,486		13			3,499
GROSS PROFIT		1,470		20			1,490			2,128		132			2,260
OPERATING EXPENSES
Management and technology		596		28			624			776		256			1,032
Research and development		-		5			5			-		55			55
Sales and marketing		268		2			270			183		127			310
Other Segment Items		428		(100	)		328			339		50			389
Total Segment expenses		1,292		(65	)		1,227			1,298		488			1,786
Segment Income	$	178	$	85		$	263		$	830	$	(356	)	$	474
General and Administrative							(856	)							(1,121	)
Other Income (Expense)							22								94
NET LOSS						$	(571	)						$	(553	)

NOTE 12 – SUBSEQUENT EVENTS

On April 1, 2025, the Company issued 5,792 shares of common stock upon vesting of 7,000 restricted stock units, net of 1,208 shares withheld for taxes related to a stock grant on September 1, 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,” “would,” “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, 2024, 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,” the “Company,” “we,” “us,” or “our”), is a logistics company that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions. We operate a Precision Logistics segment which includes the operations of our subsidiary PeriShip Global and accounts for nearly all VerifyMe revenue, and an Authentication segment. 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 deter counterfeit activities. 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.

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· 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.

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 anti-counterfeit and brand protection. This is critical in the current landscape of increased counterfeit activity and customer expectations. VerifyMe has patented technologies that address the needs of brands.

Opportunities

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.

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.

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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, which we refer to as our Premium service. 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.

Current Economic Environment

In response to market conditions and lower demand some carriers have implemented strategies to address a potential global recession. The major carrier that PeriShip Global partners with laid out steps it has taken to significantly reduce permanent costs by the end of its 2025 fiscal year in response to these market conditions and lower demand. In mid-December 2024, the carrier forecasted flat revenue year over year for 2025.

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, the U.S. presidential administration has imposed tariffs on goods imported into the U.S. In response, several foreign governments have imposed new tariffs on certain goods imported from the U.S. and additional retaliatory measures against U.S. goods are expected. These or additional changes in U.S. or international trade policy, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions. 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 March 31, 2025, and 2024

The following discussion analyzes our results of operations for the three months ended March 31, 2025 and 2024.

Revenue	Three Months Ended March 31,
	2025		2024
Precision Logistics	$	4,429	$	5,614
Authentication		26		145
Total Revenue	$	4,455	$	5,759

Consolidated revenue decreased $1,304 thousand or 23% during the first quarter of 2025 compared to the first quarter of 2024. The decrease is primarily due to the decreased demand across several of our proactive customers as well as one customer’s shift to use their cold chain strategy, a discontinued contract with one customer in our Premium services, partially offset by an increase in remaining premium revenue. The decrease in revenue in our authentication segment is primarily due to the divestiture of our Trust Codes Global business in December 2024.

Gross Profit	Three Months Ended March 31,
	2025					2024
			% of Revenue					% of Revenue
Precision Logistics	$	1,470		33	%	$	2,129		38	%
Authentication		20		77	%		131		90	%
Total Gross Profit	$	1,490		33	%	$	2,260		39	%

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Gross profit for the three months ended March 31, 2025, was $1,490 thousand, compared to $2,260 thousand for the three months ended March 31, 2024. The resulting gross margin was 33% for the three months ended March 31, 2025, compared to 39% for the three months ended March 31, 2024. The gross profit decrease relates primarily to the decreased Premium services revenue which has higher margins and the Authentication decrease from the divestiture of our Trust Codes Global business in December 2024. Gross margin related to our Proactive services increased during Q1 2025.

Segment Management and Technology

Segment management and technology expenses decreased by $455 thousand to $926 thousand for the three months ended March 31, 2025, compared to $1,381 thousand for the three months ended March 31, 2024. The decrease relates primarily to the divestiture of Trust Codes Global in December 2024 and gain on derecognized liability in our Authentication segment and decrease in management wages in our Precision Logistics segment. Amortization and depreciation expense of $286 thousand for Q1 2025 compared to $299 thousand in Q1 2024.

General and Administrative Expenses

General and administrative expenses decreased by $265 thousand to $856 thousand for the three months ended March 31, 2025, compared to $1,121 thousand for the three months ended March 31, 2024. The decrease relates primarily to a decrease in stock-based compensation from $366 thousand for the three months ended March 31, 2024 to $232 thousand for the three months ended March 31, 2025.

Research and Development

Research and development expenses were $5 thousand and $55 thousand for the three months ended March 31, 2025, and 2024, respectively. The decrease relates to divestiture of our Trust Codes Global business in December 2024.

Sales and Marketing

Sales and marketing expenses decreased by $54 thousand to $296 thousand for the three months ended March 31, 2025, compared to $350 thousand for the three months ended March 31, 2024. The decrease is primarily related to a reduction in employees and consultants in our Authentication segment partially offset by an increase in employees in our Precision Logistics segment.

Interest Income(Expense), net

Interest income, net was $22 thousand for the three months ended March 31, 2025, compared to interest expense, net of $38 thousand for the three months ended March 31, 2024. In the three months ended March 31, 2025, the Company repaid the Term Note reducing the interest expense. The Company also invested the proceeds from the warrants exercise in January 2025 increasing interest income.

Net Loss

Consolidated net loss for the three months ended March 31, 2025, and 2024 was $571 thousand and $553 thousand, respectively. Although our loss before other income (expense) decreased, our net loss increased by $18 thousand. The increased loss was primarily related to the fair value gain on contingent consideration in the three months ending March 31, 2024 that did not recur in 2025, partially offset by the change in interest income (expense). The resulting consolidated loss per share for the three months ended March 31, 2025, and three months ended March 31, 2024, was $0.05 and $0.05 per diluted share, respectively. 

Liquidity and Capital Resources

Our operations used $404 thousand of cash during the three months ended March 31, 2025, compared to $60 thousand during the comparable period in 2024. The increase in cash used from operations is due to unfavorable changes in working capital accounts in the three months ended March 31, 2025.

Cash used in investing activities was $156 thousand during the three months ended March 31, 2025, compared to $110 thousand during the three months ended March 31, 2024. The increase in spend in investing activities relates primarily to increased capitalized software costs in the three months ended March 31, 2025.

Cash provided by financing activities during the three months ended March 31, 2025, was $3,444 thousand compared to cash used in financing activities during the three months ended March 31, 2024 of $106 thousand. The increased cash primarily relates to proceeds from the exercise of warrants, partially offset by the repayment of the Term Note during the three months ended March 31, 2025.

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On January 13, 2025, we entered into an Inducement Letter Agreement with an institutional investor and holder of existing warrants to purchase up to 1,461,896 shares of our common stock for $4.7 million in gross proceeds. The existing warrants were originally issued on April 14, 2022, with an exercise price of $3.215 per share, and became exercisable six months following issuance. Pursuant to the Inducement Letter Agreement, the holder agreed to exercise the existing warrants for cash at the exercise price of $3.215 per share in consideration for our agreement to issue a new unregistered warrant to purchase up to an aggregate of 1,461,896 shares of common stock at an exercise price of $4.00 per share. The new warrant was immediately exercisable upon issuance and has a term of five and one-half years from the issuance date.

The Company recognized the fair value of the new warrants, calculated using the Black-Scholes option pricing model, as $3,971 thousand. The transaction was treated as an equity issuance, and the fair value of the new warrants was recorded in additional paid-in capital. Direct transaction costs totaling approximately $352 thousand, including legal fees and placement agent commissions, were also recorded as a reduction to additional paid-in capital.

On March 6, 2025, the Company entered into an ATM with Roth pursuant to which the Company may issue and sell, from time to time, shares of its common stock up to an aggregate offering price of $15.8 million. Roth acts as the sales agent and is entitled to a 3.0% commission on gross proceeds from sales under the program.

In connection with the ATM, we incurred direct legal and audit fees totaling $100 thousand. These costs have been recorded as deferred offering costs within other current assets and will be reclassified to additional paid-in capital and amortized over a period of one year once shares are issued. Deferred offering costs will be assessed for recoverability at each reporting period. If management determines that the ATM program is not probable to be utilized, the deferred costs will be expensed to general and administrative expenses.

During the three months ended March 31, 2025, and as of the date of this filing, we have not sold any shares of common stock through the ATM.

On September 22, 2022, we entered into the PNC Facility with PNC Bank, National Association. The PNC Facility includes a $1 million RLOC. 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 RLOC is guaranteed by the Company and secured by the assets of PeriShip Global and the Company. As of March 31, 2025, $0 was outstanding on the RLOC.

The PNC Facility included a four-year Term Note for $2 million which matured in September of 2026 and required equal quarterly payments of principal and interest. The Term Note incurred interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%. The PNC Facility is guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe. As of January 21, 2025, the Term Note was paid in full and no future principal payments are due.

We believe that our cash and cash equivalents will fund our operations beyond 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

None.

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 March 31, 2025, 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 March 31, 2025, 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 March 31, 2025 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, 2024, 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, 2024, and subsequent Quarterly Reports on Form 10-Q, except as noted herein.

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

On March 31, 2025, 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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

During the three months ended March 31, 2025, 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
4.1	Form of Common Warrant (incorporated here by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 14, 2025).
10.1	Form of Inducement Letter Agreement dated January 13, 2025 (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 14, 2025).
10.2	Sales Agreement, dated as of March 6, 2025, between VerifyMe, Inc. and Roth Capital Partners, LLC (incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on March 6, 2025).
10.3*	Waiver and Amendment to Loan Documents between PeriShip Global LLC and PNC Bank, National Association, effective March 28, 2025.
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

31

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: May 13, 2025	By: /s/ Adam Stedham
	Adam Stedham
	Chief Executive Officer and President (Principal Executive Officer)
Date: May 13, 2025	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 March 28, 2025, 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 other than liabilities, damages, claims, losses or expenses arising out of the gross negligence or willful misconduct of the Bank or any of it indemnitees. 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

- 3 -

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

PERISHIP GLOBAL LLC
By: VERIFYME
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

AMENDMENT TO LOAN DOCUMENTS

DATED AS OF MARCH 28, 2025

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

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. Waiver and Amendment to Loan Documents dated August 07, 2024, between the Borrower and the Bank

5. 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 5.6 of the Loan Agreement for the period ending December 31, 2024. 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. Section 5.6 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“5.6. Change in Business, Management or Ownership. Make or permit, nor shall any Guarantor or grantor under the Security Documents (other than VerifyMe, Inc.) make or permit, any change in (i) its form of organization, including a division into two or more entities; (ii) the nature of its business as carried on as of the date hereof; (iii) the composition of its current executive management; or (iv) its equity ownership.”

- 5 -

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.

- 6 -

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.

- 7 -

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

- 8 -

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

- 9 -

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: May 13, 2025

/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: May 13, 2025

/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 March 31, 2025, 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: May 13, 2025

In connection with the quarterly report of VerifyMe, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025, 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: May 13, 2025

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	3 Months Ended
	Mar. 31, 2025	May 06, 2025
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2025
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2025
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		12,420,564
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	Mar. 31, 2025	Dec. 31, 2024
CURRENT ASSETS
Cash and cash equivalents	$ 5,707	$ 2,823
Accounts receivable, net of allowance for credit loss reserve, $71 and $71 as of March 31, 2025 and December 31, 2024, respectively	955	2,636
Unbilled revenue	641	733
Prepaid expenses and other current assets	322	131
Inventory	47	39
TOTAL CURRENT ASSETS	7,672	6,362
PROPERTY AND EQUIPMENT, NET	88	116
RIGHT OF USE ASSET	100	236
INTANGIBLE ASSETS, NET	5,247	5,365
GOODWILL	3,988	3,988
TOTAL ASSETS	17,095	16,067
CURRENT LIABILITIES
Term note, current		500
Accounts payable	1,295	2,971
Other accrued expense	305	660
Lease liability- current	48	108
TOTAL CURRENT LIABILITIES	1,648	4,239
LONG-TERM LIABILITIES
Long-term lease liability	54	139
Term note		375
Convertible note – related party	450	450
Convertible note	300	650
TOTAL LIABILITIES	2,452	5,853
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 675,000,000 shares authorized;12,665,892 and 10,829,908 shares issued, 12,414,772 and 10,539,441 shares outstanding as of March 31, 2025 and December 31, 2024, respectively	13	11
Additional paid in capital	101,225	96,344
Treasury stock as cost; 251,120 and 290,467 shares at March 31, 2025 and December 31, 2024, respectively	(351)	(480)
Accumulated deficit	(86,244)	(85,673)
Accumulated other comprehensive loss		12
STOCKHOLDERS' EQUITY	14,643	10,214
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	17,095	16,067
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible preferred stock
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible preferred stock

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Allowance for credit loss reserve	$ 71	$ 71
Common stock par value	$ 0.001	$ 0.001
Common stock, shares authorized	675,000,000	675,000,000
Common stock, shares issued	12,665,892	10,829,908
Common stock, shares outstanding	12,414,772	10,539,441
Treasury stock, shares	251,120	290,467
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
		Mar. 31, 2025	Mar. 31, 2024
Income Statement [Abstract]
NET REVENUE		$ 4,455	$ 5,759
COST OF REVENUE		2,965	3,499
GROSS PROFIT		1,490	2,260
OPERATING EXPENSES
Segment management and Technology	[1]	926	1,381
General and administrative	[1]	856	1,121
Research and development		5	55
Sales and marketing	[1]	296	350
Total Operating expenses		2,083	2,907
LOSS BEFORE OTHER INCOME (EXPENSE)		(593)	(647)
OTHER INCOME (EXPENSE)
Interest income(expense) net		22	(38)
Change in fair value of contingent consideration			132
TOTAL OTHER INCOME, NET		22	94
NET LOSS		$ (571)	$ (553)
LOSS PER SHARE
BASIC		$ (0.05)	$ (0.05)
DILUTED		$ (0.05)	$ (0.05)
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC		12,292,150	10,073,445
DILUTED		12,292,150	10,073,445

[1] Includes share-based compensation of $333 thousand and $458 thousand for the three months ended March 31, 2025 and March 31, 2024, respectively.

XML

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Income Statement [Abstract]
NET LOSS	$ (571)	$ (553)
Change in fair value of interest rate, Swap	(12)	3
Foreign currency translation adjustments		(67)
Total comprehensive loss	$ (583)	$ (617)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (571)	$ (553)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts		10
Stock based compensation	41	46
Change in fair value of contingent consideration		(132)
Fair value of restricted stock awards and restricted stock units issued in exchange for services	292	412
Impairments		4
Amortization and depreciation	286	299
Gain on partial lease termination	(6)
Unrealized loss on foreign currency transactions		53
Changes in operating assets and liabilities:
Accounts receivable	1,681	1,804
Unbilled revenue	92	363
Inventory	7	7
Prepaid expenses and other current assets	(203)	(8)
Accounts payable, other accrued expenses and net change in operating leases	(2,023)	(2,365)
Net cash used in operating activities	(404)	(60)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of patents		(11)
Purchase of office equipment		(2)
Capitalized software costs	(156)	(97)
Net cash used in investing activities	(156)	(110)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Warrants Exercise	4,348
Proceeds from SPP Plan		21
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered	(29)	(1)
Increase in treasury shares (share repurchase program)		(1)
Repayment of debt and line of credit	(875)	(125)
Net cash provided by (used in) financing activities	3,444	(106)
Effect of exchange rate changes on cash		(1)
NET INCREASE(DECREASE) CASH AND CASH EQUIVALENTS	2,884	(277)
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- BEGINNING OF PERIOD	2,823	3,095
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- END OF PERIOD	5,707	2,818
Cash paid during the period for:
Interest	40	70
Income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Lease modification	7
Conversion of convertible note and accrued interest	360
Change in fair value of interest rate, swap	$ 12	$ 3

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, 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 awards				148				148
Restricted stock units, net of shares withheld for employee tax				263				263
Restricted Stock Units, net of shares withheld for employee tax, shares			1,750
Common stock issued in relation to Stock Purchase Plan				(46)	$ 71			25
Common stock issued in relation to Stock Purchase Plan, shares			21,889		(21,889)
Common stock issued for services				42				42
Common stock issued for services, shares			30,000
Repurchase of Common Stock					$ (1)			(1)
Repurchase of common stock, shares			(1,000)		1,000
Accumulated other comprehensive loss						(64)		(64)
Net loss							(553)	(553)
Ending balance, value at Mar. 31, 2024			$ 10	95,438	$ (589)	(66)	(82,402)	12,391
Ending balance, shares at Mar. 31, 2024		0.85	10,176,603		308,462
Beginning balance, value at Dec. 31, 2024			$ 11	96,344	$ (480)	12	(85,673)	10,214
Beginning balance, shares at Dec. 31, 2024		0.85	10,539,441		290,467
Warrants exercise			$ 2	4,346				4,348
Warrants exercise, shares			1,461,896
Convertible note				285	$ 75			360
Convertible Note, shares			313,520		(22,359)
Restricted stock awards				55				55
Restricted stock units, net of shares withheld for employee tax				154	$ 54			208
Restricted Stock Units, net of shares withheld for employee tax, shares			39,915		(16,988)
Common stock issued for services				41				41
Common stock issued for services, shares			60,000
Accumulated other comprehensive loss						(12)		(12)
Net loss							(571)	(571)
Ending balance, value at Mar. 31, 2025			$ 13	$ 101,225	$ (351)		$ (86,244)	$ 14,643
Ending balance, shares at Mar. 31, 2025		0.85	12,414,772		251,120

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (571)	$ (553)

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Insider Trading Arrangements	3 Months Ended
	Mar. 31, 2025
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

3 Months Ended

Mar. 31, 2025

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

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

The Company is a logistics company that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions. The Company operates a Precision Logistics segment which includes the operations of our subsidiary PeriShip Global, LLC (“PeriShip Global”) and accounts for nearly all VerifyMe revenue and an Authentication segment. 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 deter counterfeit activities. Further information regarding our business segments is discussed below. 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 months ended March 31, 2024, 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 include the accounts of VerifyMe and its wholly owned subsidiary PeriShip 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, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025. 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 months ended March 31, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future interim periods.

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. 

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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.

Notes to the Consolidated Financial Statements (unaudited)

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220). This standard requires disclosure of specific information about costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, equity investments, and long-term derivatives. The carrying value of accounts receivable, unbilled revenue, 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 Accounting Standard Codification (“ASC”) Topic 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 March 31, 2025 and December 31, 2024.

Amounts in Thousands ('000)

	Derivative Asset
	(Level 2)
Balance as of December 31, 2024		12
Termination of SWAP, recognized in other comprehensive loss		(12	)
Balance at March 31, 2025	$	-

Revenue Recognition

The Company accounts for revenues according to 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.

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. For more detailed information about reportable segments, see Note 11 – Segment reporting.

Notes to the Consolidated Financial Statements (unaudited)

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 anti-counterfeit and brand protection. Terms typically range between 30 and 60 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.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, Intangibles-Goodwill and Other, 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 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.

Basic and Diluted Net Loss per Share of Common Stock

The Company follows ASC Topic 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 months ended March 31, 2025, and 2024, 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 months ended March 31, 2025, there were approximately 7,534,000 anti-dilutive shares consisting of 1,504,000 unvested performance restricted stock units, 454,000 restricted stock units and restricted stock awards, 151,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 652,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three months ended March 31, 2024, there were approximately 8,383,000 anti-dilutive shares consisting of 1,559,000 unvested performance restricted stock units, 785,000 restricted stock units, restricted stock awards and options under the stock purchase plan, 301,000 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, 8,000 shares issuable in connection with earnout earned for the Trust Codes Acquisition, and 144,000 shares issuable upon conversion of preferred stock.

Stock-Based Compensation

We account for stock-based compensation under the provisions of ASC Topic 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. We recognize forfeitures as they occur with a reduction in compensation expense in the period of forfeiture. For performance restricted stock units (“RSU”) 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 RSU’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.

Notes to the Consolidated Financial Statements (unaudited)

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

3 Months Ended

Mar. 31, 2025

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).

	Precision Logistics				Authentication				Consolidated
Revenue	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
	2025		2024		2025		2024		2025		2024
Proactive services	$	3,694	$	4,225	$	-	$	-	$	3,694	$	4,225
Premium services		735		1,389		-		-		735		1,389
Brand protection services		-		-		26		145		26		145
	$	4,429	$	5,614	$	26	$	145	$	4,455	$	5,759

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 three-month period ended March 31, 2025, 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 March 31, 2025, 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
	March 31,
In Thousands	2025			2024
Beginning balance, January 1	$	733		$	1,282
Contract asset additions		641			916
Reclassification to accounts receivable, billed to customers		(733	)		(1,282	)
Ending balance, March 31 (1)	$	641		$	916

______________

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

Notes to the Consolidated Financial Statements (unaudited)

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BUSINESS COMBINATIONS

3 Months Ended

Mar. 31, 2025

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

BUSINESS COMBINATIONS

NOTE 3 – BUSINESS COMBINATIONS

On December 8, 2024, the Company sold Trust Codes Global pursuant to a Share Sale Agreement with a related party, Paul Ryan, former Executive Vice President of the Authentication Segment and employee of Trust Codes Global Limited. This divestiture did not qualify as a discontinued operation. The purchase price per the agreement was $1 NZD. We recognized a loss of $0.1 million on the sale of the business. Through his purchase, Mr. Ryan assumed the remaining cash balance in the bank accounts of $0.1 million and all continuing obligations and liabilities of Trust Codes Global Limited. The Trust Codes Global business was part of the Authentication segment. 

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INTANGIBLE ASSETS AND GOODWILL

3 Months Ended

Mar. 31, 2025

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. 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 three months ended March 31, 2025, were as follows (in thousands):

	Authentication		Precision Logistics		Total
Net book value at
January 1, 2025	$	-	$	3,988	$	3,988
2025 Activity
Net book value at
March 31, 2025	$	-	$	3,988	$	3,988

Notes to the Consolidated Financial Statements (unaudited)

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.

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):

March 31, 2025	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,112	$	(252	)	$	860		10
Customer Relationships		1,839		(541	)		1,298		7
Developed Technology		3,143		(1,541	)		1,602		3
Internally Used Software		1,568		(264	)		1,304		5
Non-Compete Agreement		191		(112	)		79		2
Deferred Implementation		135		(31	)		104		8
Total Intangible Assets	$	7,988	$	(2,741	)	$	5,247
December 31, 2024
Patents and Trademarks	$	1,112	$	(230	)	$	882		10
Customer Relationships		1,839		(495	)		1,344		7
Developed Technology		3,143		(1,411	)		1,732		3
Internally Used Software		1,418		(207	)		1,211		7
Non-Compete Agreement		191		(103	)		88		2
Deferred Implementation		135		(27	)		108		8
Total Intangible Assets	$	7,838	$	(2,473	)	$	5,365

Amortization expense for intangible assets was $274 thousand and $269 thousand for the three months ended March 31, 2025, and 2024, respectively.

Patents and Trademarks

As of March 31, 2025, our current patent and trademark portfolios consist of seven granted U.S. patents and one granted European patents, two pending foreign patent applications and several foreign trademarks.

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,
2025 (nine months remaining)	$	832
2026		1,067
2027		1,040
2028		664
2029		505
Thereafter		1,139
Total	$	5,247

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STOCKHOLDERS’ EQUITY

3 Months Ended

Mar. 31, 2025

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 5 – STOCKHOLDERS’ EQUITY

The Company expensed $55 thousand and $148 thousand related to restricted stock awards for the three months ended March 31, 2025, and 2024, respectively.

Notes to the Consolidated Financial Statements (unaudited)

The Company expensed $237 thousand and $264 thousand related to restricted stock units for the three months ended March 31, 2025, and 2024, respectively.

On March 31, 2025, the Company issued 60,000 shares of restricted common stock, vesting immediately with a value of $41 thousand, for consulting services.

On January 2, 2025, the Company issued 39,915 shares of common stock, of which 16,988 were issued from treasury, upon vesting of 61,011 restricted stock units, net of 21,096 shares withheld for taxes related to stock grants on July 20, 2023 and July 1, 2024.

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. As of January 21, 2025, $350 thousand was converted to 313,520 shares of common stock, of which 22,359 were issued from treasury.

 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 ASC Topic 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 thousand and $4 thousand for the three months ended March 31, 2025 and March 31, 2024, respectively. During the three months ended March 31, 2025 and 2024, the Company received $0 thousand and $21 thousand, respectively, 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 March 31, 2025, and December 31, 2024, the Company had 251,120 and 290,467 shares, respectively, held in treasury with a value of approximately $351 thousand and $480 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 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 does not exceed $1.00 until December 14, 2024. On November 26, 2024, the Company approved an extension of the $0.5 million share repurchase program to repurchase shares of the Company’s common stock through December 31, 2025. The share repurchase program may be modified, suspended or discontinued at the discretion of the Board at any time.  The Company did not repurchase any shares during the three months ended March 31, 2025. 

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

3 Months Ended

Mar. 31, 2025

Equity [Abstract]

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

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”) and on September 30, 2020, the Company’s stockholders approved the 2020 Plan, which authorizes the potential issuance of up to 1,069,110 shares of common stock. Upon effectiveness of the 2020 Plan 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.

Notes to the Consolidated Financial Statements (unaudited)

On March 28, 2022, the Company’s Board of Directors adopted the First Amendment to the 2020 Plan and on June 9, 2022, the Company’s stockholders approved the First Amendment to the 2020 Plan, 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, 2023. On April 17, 2023, the Company’s Board of Directors adopted the Second Amendment to the 2020 Plan and on June 6, 2023, the Company’s stockholders approved the Second Amendment to the 2020 Plan, which increased the shares authorized for potential issuance under the 2020 Plan to 3,069,110 shares of common stock and extended the term of the 2020 Plan to June 6, 2033, and increased the annual cap on director compensation by $50 thousand. On March 18, 2024, the Company’s Board of Directors adopted the Third Amendment to the 2020 Plan, which on June 4, 2024, was approved by the Company’s stockholders, 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.

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 March 31, 2025:

	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, 2024	221,000		$	3.57	0.4	$	-
Granted	-			-
Forfeited/Cancelled/Expired	(70,000	)		3.51
Balance as of March 31, 2025	151,000		$	3.61	0.3	$	-
Exercisable as of March 31, 2025	151,000		$	3.61	0.3	$	-

(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. 

Notes to the Consolidated Financial Statements (unaudited)

As of March 31, 2025, the Company had no unvested stock options.

During the three months ended March 31, 2025, and 2024, the Company expensed $0 thousand, with respect to options.

As of March 31, 2025, 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 March 31, 2025:

			Weighted -
			Average
	Number of		Grant
	Award Shares		Date Fair Value
Unvested at December 31, 2024		140,000	$	1.60
Granted		-		-
Vested		-		-
Balance at March 31, 2025		140,000	$	1.60

As of March 31, 2025, total unrecognized share-based compensation cost related to unvested restricted stock awards is $41 thousand, which is expected to be recognized over a weighted-average period of less than one year.

The following table summarizes the unvested restricted stock units as of March 31, 2025: 

				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2024		273,736		$	1.38
Granted		86,773			1.75
Vested		(41,011	)		1.37
Forfeited		(5,000	)		1.37
Balance at March 31, 2025		314,498		$	1.48

As of March 31, 2025, total unrecognized share-based compensation cost related to unvested time-based restricted stock units was $185 thousand, which is expected to be recognized over a weighted-average period of less than one year.

Notes to the Consolidated Financial Statements (unaudited)

The following table summarizes the unvested performance-based restricted stock units as of March 31, 2025:

	Number of Unit Shares			Weighted - Average Number of Unit Shares
Unvested at December 31, 2024		1,606,660		$	1.37
Granted		-			-
Forfeited/Cancelled		(103,125	)		1.41
Balance at March 31, 2025		1,503,535		$	1.37

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 March 31, 2025, total unrecognized share-based compensation cost related to unvested performance based restricted stock units was $357 thousand, which is expected to be recognized over a weighted-average period of 1.1 years.

Warrants

The following table summarizes the activities for the Company’s warrants as of March 31, 2025:

	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, 2024		4,628,586			4.13		1.2
Granted		1,461,896			4.00
Exercised		(1,461,896	)		3.22
Balance as of March 31, 2025		4,628,586		$	4.38		1.9
Exercisable as of March 31, 2025		4,628,586		$	4.38		1.9	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.68 for our common stock on March 31, 2025.

On January 13, 2025, the Company entered into a warrant inducement agreement with an institutional investor and holder of existing warrants to purchase up to 1,461,896 shares of our common stock. The existing warrants were originally issued on April 14, 2022, with an exercise price of $3.215 per share and became exercisable six months following issuance. The net proceeds from the warrant exercise was $4.3 million. In exchange for the investor’s exercise of the existing warrants, the Company issued new warrants to purchase an equal number of shares at an exercise price of $4.00 per share. The new warrants were immediately exercisable and have a contractual term of five and one-half years from the issuance date.

The Company recognized the fair value of the new warrants using the Black-Scholes option pricing model. The fair value of the new warrants were estimated at $3,971 thousand. The transaction was treated as an equity issuance, and the fair value of the new warrants was recorded in additional paid-in capital. Direct transaction costs totaling approximately $352 thousand, including legal fees and placement agent commissions, were also recorded as a reduction to additional paid-in capital.

Notes to the Consolidated Financial Statements (unaudited)

The following table presents the assumptions used to estimate the fair value of the new warrants on January 13, 2025:

	January 13, 2025
Risk free interest rate	4.34%
Expected life	2.75 years
Expected volatility	171%
Expected dividend	-

At-the-Market Equity Offering Program

On March 6, 2025, the Company entered into an At-The-Market Sales Agreement (“ATM”) with Roth Capital Partners, LLC (“Roth”), pursuant to which the Company may issue and sell, from time to time, shares of its common stock up to an aggregate offering price of $15.8 million. Roth acts as the Company’s sales agent and is entitled to a 3.0% commission on gross proceeds from sales under the program.

In connection with the ATM program, the Company incurred direct legal and audit fees totaling $100 thousand. These costs have been recorded as deferred offering costs within other current assets and will be reclassified to additional paid-in capital on a pro-rata basis as shares are issued. Deferred offering costs will be assessed for recoverability at each reporting period. If management determines that the ATM program is not probable to be utilized, the deferred costs will be expensed to general and administrative expenses.

During the three months ended March 31, 2025, and as of the date of this filing, we have not sold any shares of common stock through the ATM.

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DEBT

3 Months Ended

Mar. 31, 2025

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”). 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 included a four-year term note (the “Term Note”) for $2 million which matured in September of 2026 and required equal quarterly payments of principal and interest. The Term Note incurred interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%.  On January 21, 2025, the Term Note was paid in full and no future principal payments are due. The PNC Facility is 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. 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. On February 28, 2025, we received a waiver as of December 31, 2024 for certain events of default. PeriShip Global was in compliance with all affirmative and restrictive covenants under the PNC Facility at March 31, 2025.

As of January 21, 2025, the Term Note balance of $875 thousand was paid in full and no future principal payments are due.

As of March 31, 2025, $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 had 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 January 21, 2025, we terminated our interest rate swap agreement and $12 thousand was reclassified from accumulated other comprehensive loss.

Notes to the Consolidated Financial Statements (unaudited)

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 December 31, 2024, $450 thousand was 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 three months ended March 31, 2025 and March 31, 2024, interest expense related to the convertible debt was $15 thousand and $22 thousand, respectively. As of January 21, 2025, $350 thousand was converted to common stock, none of which was related parties. As of March 31, 2025 and December 31, 2024, the amount outstanding on the convertible debt was $750 thousand and $1,100 thousand, respectively and included in Convertible note and Convertible note – related party on the accompanying Consolidated Balance Sheets.

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INCOME TAXES

3 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8—INCOME TAXES

There are no taxes payable as of March 31, 2025, or December 31, 2024.

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 three months ending March 31, 2025, due to the uncertainty surrounding the realizability of the benefit. As of March 31, 2025, the Company had no unrecognized tax benefits.

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 three months ended March 31, 2025.

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LEASES

3 Months Ended

Mar. 31, 2025

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.

Notes to the Consolidated Financial Statements (unaudited)

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 March 31,
	2025		2024
Operating lease cost	$	26	$	47
Short-term lease cost		4		5
Total lease costs	$	30	$	52

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

	March 31, 2025			December 31, 2024
Operating Lease right-of-use asset	$	100		$	236
Current portion of operating lease liabilities	$	48		$	108
Non-current portion of operating lease liabilities		54			139
Total operating lease liabilities	$	102		$	247
Cash paid for amounts included in the measurement of operating lease liabilities	$	30		$	126
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-
Weighted-average remaining lease term for operating leases (years)		2.1			2.3
Weighted average discount rate for operating leases		7.4	%		6.0	%

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of March 31, 2025 (in thousands):

Year ending December 31,
2025 (Excluding three months ended March 31, 2025)	$	36
2026		55
2027		19
Total future lease payments		110
Less: imputed interest		(8	)
Present value of future lease payments		102
Less: current portion of lease liabilities		(48	)
Long-term lease liabilities	$	54

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CONCENTRATIONS

3 Months Ended

Mar. 31, 2025

Risks and Uncertainties [Abstract]

CONCENTRATIONS

NOTE 10– CONCENTRATIONS

For the three months ended March 31, 2025 and 2024, one customer represented 15% and 22% of revenues, respectively.

During the three months ended March 31, 2025, and 2024, one vendor accounted for 99% of transportation cost in our Precision Logistics segment.

As of March 31, 2025, one customer made up 41% of accounts receivable, net. As of December 31, 2024, two customers made up 36% of accounts receivable.

Notes to the Consolidated Financial Statements (unaudited)

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2025

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 11 – SEGMENT REPORTING

As of March 31, 2025, we operated through two reportable business segments: (i) Precision Logistics and (ii) Authentication. The Chief Executive Officer is the chief operating decision maker (“CODM”). These segments reflect the way the CODM evaluates the Company’s business performance and allocates resources. The CODM assesses performance by using revenue, gross margin, operating expenses and net earnings. These metrics are analyzed by reviewing budget and forecast versus actual and prior year versus current year reporting. The various income performance measures are reviewed to ensure proper pricing strategies, effective cost controls and cash management across the organization. Reported revenue includes only the revenue generated by sales to external customers.

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 anti-counterfeit and brand protection.

We do not allocate the following items to the segments: general & administrative expenses 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
	March 31,								March 31,
	2025								2024
	Precision Logistics		Authentication			Consolidated			Precision Logistics		Authentication			Consolidated
NET REVENUE	$	4,429	$	26		$	4,455		$	5,614	$	145		$	5,759
COST OF REVENUE		2,959		6			2,965			3,486		13			3,499
GROSS PROFIT		1,470		20			1,490			2,128		132			2,260
OPERATING EXPENSES
Management and technology		596		28			624			776		256			1,032
Research and development		-		5			5			-		55			55
Sales and marketing		268		2			270			183		127			310
Other Segment Items		428		(100	)		328			339		50			389
Total Segment expenses		1,292		(65	)		1,227			1,298		488			1,786
Segment Income	$	178	$	85		$	263		$	830	$	(356	)	$	474
General and Administrative							(856	)							(1,121	)
Other Income (Expense)							22								94
NET LOSS						$	(571	)						$	(553	)

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2025

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 12 – SUBSEQUENT EVENTS

On April 1, 2025, the Company issued 5,792 shares of common stock upon vesting of 7,000 restricted stock units, net of 1,208 shares withheld for taxes related to a stock grant on September 1, 2024.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2025

Accounting Policies [Abstract]

Nature of the Business

Nature of the Business

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

The Company is a logistics company that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions. The Company operates a Precision Logistics segment which includes the operations of our subsidiary PeriShip Global, LLC (“PeriShip Global”) and accounts for nearly all VerifyMe revenue and an Authentication segment. 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 deter counterfeit activities. Further information regarding our business segments is discussed below. 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 months ended March 31, 2024, 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 include the accounts of VerifyMe and its wholly owned subsidiary PeriShip 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, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025. 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 months ended March 31, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future interim periods.

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. 

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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.

Notes to the Consolidated Financial Statements (unaudited)

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220). This standard requires disclosure of specific information about costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement 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, equity investments, and long-term derivatives. The carrying value of accounts receivable, unbilled revenue, 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 Accounting Standard Codification (“ASC”) Topic 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 March 31, 2025 and December 31, 2024.

Amounts in Thousands ('000)

	Derivative Asset
	(Level 2)
Balance as of December 31, 2024		12
Termination of SWAP, recognized in other comprehensive loss		(12	)
Balance at March 31, 2025	$	-

Revenue Recognition

Revenue Recognition

The Company accounts for revenues according to 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.

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. For more detailed information about reportable segments, see Note 11 – Segment reporting.

Notes to the Consolidated Financial Statements (unaudited)

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 anti-counterfeit and brand protection. Terms typically range between 30 and 60 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.

Goodwill

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, Intangibles-Goodwill and Other, 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 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.

Basic and Diluted Net Loss per Share of Common Stock

Basic and Diluted Net Loss per Share of Common Stock

The Company follows ASC Topic 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 months ended March 31, 2025, and 2024, 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 months ended March 31, 2025, there were approximately 7,534,000 anti-dilutive shares consisting of 1,504,000 unvested performance restricted stock units, 454,000 restricted stock units and restricted stock awards, 151,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 652,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three months ended March 31, 2024, there were approximately 8,383,000 anti-dilutive shares consisting of 1,559,000 unvested performance restricted stock units, 785,000 restricted stock units, restricted stock awards and options under the stock purchase plan, 301,000 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, 8,000 shares issuable in connection with earnout earned for the Trust Codes Acquisition, 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 ASC Topic 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. We recognize forfeitures as they occur with a reduction in compensation expense in the period of forfeiture. For performance restricted stock units (“RSU”) 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 RSU’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.

Notes to the Consolidated Financial Statements (unaudited)

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)

3 Months Ended

Mar. 31, 2025

Accounting Policies [Abstract]

Schedule of fair value assets measured on recurring basis

	Derivative Asset
	(Level 2)
Balance as of December 31, 2024		12
Termination of SWAP, recognized in other comprehensive loss		(12	)
Balance at March 31, 2025	$	-

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REVENUE (Tables)

3 Months Ended

Mar. 31, 2025

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

	Precision Logistics				Authentication				Consolidated
Revenue	Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,
	2025		2024		2025		2024		2025		2024
Proactive services	$	3,694	$	4,225	$	-	$	-	$	3,694	$	4,225
Premium services		735		1,389		-		-		735		1,389
Brand protection services		-		-		26		145		26		145
	$	4,429	$	5,614	$	26	$	145	$	4,455	$	5,759

Schedule of contract assets from contracts with customers

	Contract Asset
	March 31,
In Thousands	2025			2024
Beginning balance, January 1	$	733		$	1,282
Contract asset additions		641			916
Reclassification to accounts receivable, billed to customers		(733	)		(1,282	)
Ending balance, March 31 (1)	$	641		$	916

______________

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

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INTANGIBLE ASSETS AND GOODWILL (Tables)

3 Months Ended

Mar. 31, 2025

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill by reportable business segment

	Authentication		Precision Logistics		Total
Net book value at
January 1, 2025	$	-	$	3,988	$	3,988
2025 Activity
Net book value at
March 31, 2025	$	-	$	3,988	$	3,988

Schedule of intangible assets subject to amortization

March 31, 2025	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,112	$	(252	)	$	860		10
Customer Relationships		1,839		(541	)		1,298		7
Developed Technology		3,143		(1,541	)		1,602		3
Internally Used Software		1,568		(264	)		1,304		5
Non-Compete Agreement		191		(112	)		79		2
Deferred Implementation		135		(31	)		104		8
Total Intangible Assets	$	7,988	$	(2,741	)	$	5,247
December 31, 2024
Patents and Trademarks	$	1,112	$	(230	)	$	882		10
Customer Relationships		1,839		(495	)		1,344		7
Developed Technology		3,143		(1,411	)		1,732		3
Internally Used Software		1,418		(207	)		1,211		7
Non-Compete Agreement		191		(103	)		88		2
Deferred Implementation		135		(27	)		108		8
Total Intangible Assets	$	7,838	$	(2,473	)	$	5,365

Schedule of future amortization expense

Fiscal Year ending December 31,
2025 (nine months remaining)	$	832
2026		1,067
2027		1,040
2028		664
2029		505
Thereafter		1,139
Total	$	5,247

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Tables)

3 Months Ended

Mar. 31, 2025

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, 2024	221,000		$	3.57	0.4	$	-
Granted	-			-
Forfeited/Cancelled/Expired	(70,000	)		3.51
Balance as of March 31, 2025	151,000		$	3.61	0.3	$	-
Exercisable as of March 31, 2025	151,000		$	3.61	0.3	$	-

(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, 2024		140,000	$	1.60
Granted		-		-
Vested		-		-
Balance at March 31, 2025		140,000	$	1.60

Schedule of unvested restricted stock units

				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2024		273,736		$	1.38
Granted		86,773			1.75
Vested		(41,011	)		1.37
Forfeited		(5,000	)		1.37
Balance at March 31, 2025		314,498		$	1.48

Schedule of unvested performance restricted stock units

	Number of Unit Shares			Weighted - Average Number of Unit Shares
Unvested at December 31, 2024		1,606,660		$	1.37
Granted		-			-
Forfeited/Cancelled		(103,125	)		1.41
Balance at March 31, 2025		1,503,535		$	1.37

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, 2024		4,628,586			4.13		1.2
Granted		1,461,896			4.00
Exercised		(1,461,896	)		3.22
Balance as of March 31, 2025		4,628,586		$	4.38		1.9
Exercisable as of March 31, 2025		4,628,586		$	4.38		1.9	$	-

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.68 for our common stock on March 31, 2025.

Schedule of assumptions used

	January 13, 2025
Risk free interest rate	4.34%
Expected life	2.75 years
Expected volatility	171%
Expected dividend	-

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LEASES (Tables)

3 Months Ended

Mar. 31, 2025

Leases

Schedule of components of lease expense

	Three months ended March 31,
	2025		2024
Operating lease cost	$	26	$	47
Short-term lease cost		4		5
Total lease costs	$	30	$	52

Schedule of supplemental information related to leases

	March 31, 2025			December 31, 2024
Operating Lease right-of-use asset	$	100		$	236
Current portion of operating lease liabilities	$	48		$	108
Non-current portion of operating lease liabilities		54			139
Total operating lease liabilities	$	102		$	247
Cash paid for amounts included in the measurement of operating lease liabilities	$	30		$	126
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-
Weighted-average remaining lease term for operating leases (years)		2.1			2.3
Weighted average discount rate for operating leases		7.4	%		6.0	%

Schedule of operating lease liabilities maturities

Year ending December 31,
2025 (Excluding three months ended March 31, 2025)	$	36
2026		55
2027		19
Total future lease payments		110
Less: imputed interest		(8	)
Present value of future lease payments		102
Less: current portion of lease liabilities		(48	)
Long-term lease liabilities	$	54

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2025

Segment Reporting [Abstract]

Schedule of segment reporting information

	Three Months Ended
	March 31,								March 31,
	2025								2024
	Precision Logistics		Authentication			Consolidated			Precision Logistics		Authentication			Consolidated
NET REVENUE	$	4,429	$	26		$	4,455		$	5,614	$	145		$	5,759
COST OF REVENUE		2,959		6			2,965			3,486		13			3,499
GROSS PROFIT		1,470		20			1,490			2,128		132			2,260
OPERATING EXPENSES
Management and technology		596		28			624			776		256			1,032
Research and development		-		5			5			-		55			55
Sales and marketing		268		2			270			183		127			310
Other Segment Items		428		(100	)		328			339		50			389
Total Segment expenses		1,292		(65	)		1,227			1,298		488			1,786
Segment Income	$	178	$	85		$	263		$	830	$	(356	)	$	474
General and Administrative							(856	)							(1,121	)
Other Income (Expense)							22								94
NET LOSS						$	(571	)						$	(553	)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Fair Value, Inputs, Level 2 [Member] - Fair Value, Recurring [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2025 USD ($)
Platform Operator, Crypto Asset [Line Items]
Derivative Asset at beginning	$ 12
Termination of SWAP, recognized in other comprehensive loss	(12)
Derivative Asset at end

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - $ / shares	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024	Dec. 31, 2024
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Anti-dilutive shares	7,534,000	8,383,000
Restricted Stock [Member]
Anti-dilutive shares	1,504,000	1,559,000
Restricted Stock Awards [Member]
Anti-dilutive shares	454,000
Share-Based Payment Arrangement, Option [Member]
Anti-dilutive shares	151,000	301,000
Warrant [Member]
Anti-dilutive shares	4,629,000	4,629,000
Conversion Convertible Debt [Member]
Anti-dilutive shares	652,000	957,000
Preferred Stock [Member]
Anti-dilutive shares	144,000	144,000
Trust Codes Acquisition [Member]
Anti-dilutive shares		8,000
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
	Mar. 31, 2025	Mar. 31, 2024
Disaggregation of Revenue [Line Items]
Revenues	$ 4,455	$ 5,759
Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	3,694	4,225
Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	735	1,389
Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	26	145
Precision Logistics [Member]
Disaggregation of Revenue [Line Items]
Revenues	4,429	5,614
Precision Logistics [Member] | Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	3,694	4,225
Precision Logistics [Member] | Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	735	1,389
Precision Logistics [Member] | Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues
Authentication [Member]
Disaggregation of Revenue [Line Items]
Revenues	26	145
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	$ 26	$ 145

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REVENUE (Details 1) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2025	Mar. 31, 2024
Revenue from Contract with Customer [Abstract]
Beginning balance		$ 733	$ 1,282
Contract asset additions		641	916
Reclassification to accounts receivable, billed to customers		(733)	(1,282)
Ending balance	[1]	$ 641	$ 916

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

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BUSINESS COMBINATIONS (Details Narrative) $ in Thousands	Dec. 08, 2024 USD ($)
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]
Purchase price	$ 100
Loss form sale of the business	$ 100

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INTANGIBLE ASSETS AND GOODWILL (Details) $ in Thousands	Mar. 31, 2025 USD ($)
Beginning balance	$ 3,988
Ending balance	3,988
Authentication [Member]
Beginning balance
Ending balance
Precision Logistics [Member]
Beginning balance	3,988
Ending balance	$ 3,988

XML

INTANGIBLE ASSETS AND GOODWILL (Details 1) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 7,988	$ 7,838
Accumulated Amortization	(2,741)	(2,473)
Net Carrying Amount	5,247	5,365
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,112	1,112
Accumulated Amortization	(252)	(230)
Net Carrying Amount	$ 860	$ 882
Weighted average useful life (years)	10 years	10 years
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,839	$ 1,839
Accumulated Amortization	(541)	(495)
Net Carrying Amount	$ 1,298	$ 1,344
Weighted average useful life (years)	7 years	7 years
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,143	$ 3,143
Accumulated Amortization	(1,541)	(1,411)
Net Carrying Amount	$ 1,602	$ 1,732
Weighted average useful life (years)	3 years	3 years
Internally Used Software [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,568	$ 1,418
Accumulated Amortization	(264)	(207)
Net Carrying Amount	$ 1,304	$ 1,211
Weighted average useful life (years)	5 years	7 years
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 191	$ 191
Accumulated Amortization	(112)	(103)
Net Carrying Amount	$ 79	$ 88
Weighted average useful life (years)	2 years	2 years
Deferred Implementation [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 135	$ 135
Accumulated Amortization	(31)	(27)
Net Carrying Amount	$ 104	$ 108
Weighted average useful life (years)	8 years	8 years

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INTANGIBLE ASSETS AND GOODWILL (Details 2) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
2025 (nine months remaining)	$ 832
2026	1,067
2027	1,040
2028	664
2029	505
Thereafter	1,139
Total	$ 5,247	$ 5,365

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INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 274	$ 269

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STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended			3 Months Ended
	Apr. 01, 2025	Jan. 02, 2025	Nov. 26, 2024	Dec. 31, 2023	Aug. 25, 2023	Mar. 31, 2025	Mar. 31, 2024	Dec. 31, 2024	Feb. 29, 2024	Oct. 17, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Restricted stock award, expense						$ 55	$ 148
Restricted stock units, expense						$ 237	264
Common stock issued upon vesting of restricted common stock	1,208					60,000
Common stock issued upon vesting of restricted common stock, value						$ 41
Stock issued	5,792
Principal amount										$ 1,958
Proceeds from SPP Plan							21
Treasury stock share						251,120		290,467
Treasury stock value						$ 351		$ 480
Share repurchase program			$ 500	$ 500
Plan 2021 [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock-based compensation expense						0	4
Proceeds from SPP Plan						$ 0	$ 21
Non-qualified stock purchase plan									21,889
Non-qualified stock purchase exercise price									$ 0.97
Convertible Note Purchase Agreement [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Principal amount					$ 1,100
Amount converted					$ 350
Shares issued					313,520
Restricted Stock Units (RSUs) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock issued upon vesting of restricted common stock		61,011
Treasury [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares vested		16,988
Shares issued					22,359
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock issued upon vesting of restricted common stock		21,096
Stock issued		39,915

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details) - Share-Based Payment Arrangement, Option [Member] - USD ($)		3 Months Ended	12 Months Ended
		Mar. 31, 2025	Dec. 31, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning		221,000
Weighted average exercise price, balance at beginning		$ 3.57
Weighted Average Remaining Contractual Term		3 months 18 days	4 months 24 days
Granted
Weighted average exercise price, granted
Forfeited/cancelled/expired		(70,000)
Weighted average exercise price, forfeited/cancelled/expired		$ 3.51
Balance at ending		151,000	221,000
Weighted average exercise price, balance at ending		$ 3.61	$ 3.57
Number of shares exercisable, balance at ending		151,000
Weighted average exercise price exercisable, balance at ending		$ 3.61
Weighted average remaining contractual term, exercisable at ending		3 months 18 days
Aggregate intrinsic value exercisable, balance 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]	3 Months Ended
	Mar. 31, 2025 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning | shares	140,000
Weighted - average grant date fair value, balance at beginning | $ / shares	$ 1.60
Granted | shares
Weighted - average grant date fair value, granted | $ / shares
Vested | shares
Weighted - average grant date fair value, vested | $ / shares
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]	3 Months Ended
	Mar. 31, 2025 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning | shares	273,736
Weighted - average grant date fair value, balance at beginning | $ / shares	$ 1.38
Granted | shares	86,773
Weighted - average grant date fair value, granted | $ / shares	$ 1.75
Vested | shares	(41,011)
Weighted - average grant date fair value, vested | $ / shares	$ 1.37
Forfeited | shares	(5,000)
Weighted - average grant date fair value, Forfeited | $ / shares	$ 1.37
Balance at ending | shares	314,498
Weighted - average grant date fair value, balance at ending | $ / shares	$ 1.48

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 3) - Nonvested Stock Options [Member]	3 Months Ended
	Mar. 31, 2025 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning | shares	1,606,660
Balance at beginning, weighted average grant date fair value | $ / shares	$ 1.37
Granted | shares
Granted, weighted average grant date fair value | $ / shares
Forfeited/Cancelled | shares	(103,125)
Forfeited/Cancelled, weighted average grant date fair value | $ / shares	$ 1.41
Balance at ending | shares	1,503,535
Balance at ending, weighted average grant date fair value | $ / shares	$ 1.37

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 4) - USD ($)		3 Months Ended	12 Months Ended
		Mar. 31, 2025	Dec. 31, 2024
Equity [Abstract]
Number of warrants outstanding, beginning balance		4,628,586
Weighted average exercise price, beginning balance		$ 4.13
Weighted average remaining contractual terms		1 year 10 months 24 days	1 year 2 months 12 days
Number of warrants outstanding, granted		1,461,896
Weighted average exercise price, granted		$ 4.00
Number of warrants outstanding, exercised		(1,461,896)
Weighted average exercise price, exercised		$ 3.22
Number of warrants outstanding, ending Balance		4,628,586	4,628,586
Weighted average exercise price, ending balance		$ 4.38	$ 4.13
Number of warrants outstanding, exercisable		4,628,586
Weighted average exercise price, exercisable		$ 4.38
Weighted average remaining contractual terms, exercisable		1 year 10 months 24 days
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 $0.68 for our common stock on March 31, 2025.

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 5)	Jan. 13, 2025
Equity [Abstract]
Risk free interest rate	4.34%
Expected life	2 years 9 months
Expected volatility	171.00%
Expected dividend	(0.00%)

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STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands					1 Months Ended			3 Months Ended
	Mar. 06, 2025	Jan. 13, 2025	Aug. 10, 2020	Nov. 14, 2017	Mar. 18, 2024	Apr. 17, 2023	Mar. 28, 2022	Mar. 31, 2025	Mar. 31, 2024	Apr. 14, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation cost								$ 0
Inducement Letter Agreement [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of warrants to purchase		1,461,896
Exercise price		$ 4.00								$ 3.215
Gross proceeds		$ 4,300
Fair value of warrants		3,971
Direct transaction costs		$ 352
At The Market Sales Agreement [Member] | Roth Capital Partners LLC [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Aggregate offering price	$ 15,800
Commission on gross proceeds	3.00%
Legal and audit fees	$ 100
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								$ 41
Nonvested Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Incentive stock options granted
Unvested restricted stock awards								$ 357
Weighted-average period								1 year 1 month 6 days
Issued Under The 2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Incentive stock options granted								1,000,000
Board of Directors Chairman [Member] | Equity Incentive Plan 2017 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for potential issuance				260,000
Board of Directors Chairman [Member] | Equity investments fair value [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for potential issuance			1,069,110		4,069,100	3,069,110	2,069,100

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DEBT (Details Narrative) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended
	Jan. 21, 2025	Aug. 25, 2023	Oct. 17, 2022	Mar. 31, 2025	Mar. 31, 2024	Dec. 31, 2024
Line of Credit Facility [Line Items]
Principal payment	$ 875			$ 875	$ 125
Notional amount			$ 1,958
Interest rate			7.602%
Term Note [Member]
Line of Credit Facility [Line Items]
Interest rate				Daily SOFR plus 3.1%
Term note				$ 2,000
Convertible Debt [Member]
Line of Credit Facility [Line Items]
Principal amount		$ 1,100
Convertible promissory notes purchased by related party		$ 475
Held by related parties						$ 450
Interest expense				15	$ 22
Convertible debt				750		$ 1,100
Revolving Line Of Credit [Member]
Line of Credit Facility [Line Items]
Revolving line of credit				$ 1,000
Interest rate				Daily SOFR plus 2.85% with monthly interest payments
Outstanding on RLOC				$ 0

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INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Dec. 31, 2024
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
	Mar. 31, 2025	Mar. 31, 2024
Leases
Operating lease cost	$ 26	$ 47
Short-term lease cost	4	5
Total lease costs	$ 30	$ 52

XML

LEASES (Details 1) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Leases
Operating Lease right-of-use asset	$ 100	$ 236
Current portion of operating lease liabilities	48	108
Non-current portion of operating lease liabilities	54	139
Total operating lease liabilities	102	247
Cash paid for amounts included in the measurement of operating lease liabilities	30	126
Right-of-use assets obtained in exchange for operating lease liabilities
Weighted-average remaining lease term for operating leases (years)	2 years 1 month 6 days	2 years 3 months 18 days
Weighted average discount rate for operating leases	7.40%	6.00%

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LEASES (Details 2) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Leases
2025 (Excluding three months ended March 31, 2025)	$ 36
2026	55
2027	19
Total future lease payments	110
Less: imputed interest	(8)
Present value of future lease payments	102	$ 247
Less: current portion of lease liabilities	(48)	(108)
Long-term lease liabilities	$ 54	$ 139

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CONCENTRATIONS (Details Narrative)	3 Months Ended		12 Months Ended
	Mar. 31, 2025	Mar. 31, 2024	Dec. 31, 2024
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	15.00%	22.00%
Transportation Cost [Member] | Product Concentration Risk [Member] | One Vendor [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	99.00%	99.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	41.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			36.00%

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SEGMENT REPORTING (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
NET REVENUE	$ 4,455	$ 5,759
COST OF REVENUE	2,965	3,499
GROSS PROFIT	1,490	2,260
OPERATING EXPENSES
Research and development	5	55
Total Segment expenses	2,083	2,907
Other Income (Expense)	22	94
NET LOSS	(571)	(553)
Precision Logistics [Member]
NET REVENUE	4,429	5,614
COST OF REVENUE	2,959	3,486
GROSS PROFIT	1,470	2,128
OPERATING EXPENSES
Management and technology	596	776
Research and development
Sales and marketing	268	183
Other Segment Items	428	339
Total Segment expenses	1,292	1,298
Segment Income	178	830
Authentication [Member]
NET REVENUE	26	145
COST OF REVENUE	6	13
GROSS PROFIT	20	132
OPERATING EXPENSES
Management and technology	28	256
Research and development	5	55
Sales and marketing	2	127
Other Segment Items	(100)	50
Total Segment expenses	(65)	488
Segment Income	85	(356)
Consolidated [Member]
NET REVENUE	4,455	5,759
COST OF REVENUE	2,965	3,499
GROSS PROFIT	1,490	2,260
OPERATING EXPENSES
Management and technology	624	1,032
Research and development	5	55
Sales and marketing	270	310
Other Segment Items	328	389
Total Segment expenses	1,227	1,786
Segment Income	263	474
General and Administrative	(856)	(1,121)
Other Income (Expense)	22	94
NET LOSS	$ (571)	$ (553)

XML

SUBSEQUENT EVENTS (Details Narrative) - shares		3 Months Ended
	Apr. 01, 2025	Mar. 31, 2025
Subsequent Events [Abstract]
Number of common stock issued	5,792
Number of restricted stock units vested	7,000
Shares withheld for tax withholding obligation	1,208	60,000