UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

(Mark one)

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

 

For the quarterly period ended September 30, 2025

 

OR

 

¨	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

 

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 ¨

 

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 ¨

 

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	¨		Accelerated filer	¨
Non-accelerated filer	x		Smaller reporting company	x
Emerging growth company	¨

 

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.  ¨

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 12,443,169 shares of common stock outstanding at November 7, 2025.

 

 

PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements	4
Consolidated Balance Sheets (Unaudited)		4
Consolidated Statements of Operations (Unaudited)		6
Consolidated Statements of Comprehensive Loss (Unaudited)		7
Consolidated Statements of Cash Flows (Unaudited)		8
Consolidated Statements of Stockholders' Equity (Unaudited)		10
Notes to Consolidated Financial Statements (Unaudited)		12
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	40
ITEM 4.	Controls and Procedures	40
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	41
ITEM 1A.	Risk Factors	41
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
ITEM 3.	Defaults Upon Senior Securities	42
ITEM 4.	Mine Safety Disclosures	42
ITEM 5.	Other Information	42
ITEM 6.	Exhibits	43
SIGNATURES		44

 

 

PART I - FINANCIAL STATEMENTS

ITEM 1. 

 

VerifyMe, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

		September 30, 2025				December 31, 2024
			(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	4,007			$	2,823
Accounts receivable, net of allowance for credit loss reserve, $9 and $71 as of September 30, 2025 and December 31, 2024, respectively			1,127				2,636
Note receivable, net of allowance for credit loss reserve, $12 and $0 as of September 30, 2025 and December 31, 2024			1,988				-
Unbilled revenue			381				733
Prepaid expenses and other current assets			339				131
Inventory			32				39
TOTAL CURRENT ASSETS			7,874				6,362
PROPERTY AND EQUIPMENT, NET		$	68			$	116
RIGHT OF USE ASSET			78				236
INTANGIBLE ASSETS, NET			2,317				5,365
GOODWILL			2,926				3,988
TOTAL ASSETS		$	13,263			$	16,067
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Term note, current		$	-			$	500
Accounts payable			978				2,971
Other accrued expense			348				660
Lease liability- current			51				108
Convertible Note – related party, current			400				-
Convertible Note, current			350				-
TOTAL CURRENT LIABILITIES			2,127				4,239
LONG-TERM LIABILITIES
Long-term lease liability			32				139
Term note			-				375
Convertible note – related party			-				450
Convertible note			-				650
TOTAL LIABILITIES		$	2,159			$	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 September 30, 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 September 30, 2025 and December 31, 2024, respectively			-				-

 

 

Common stock, $0.001 par value; 675,000,000 shares authorized;12,734,425 and 10,829,908 shares issued, 12,252,977 and 10,539,441 shares outstanding as of September 30, 2025 and December 31, 2024, respectively			13				11
Additional paid in capital			101,484				96,344
Treasury stock as cost; 481,448 and 290,467 shares at September 30, 2025 and December 31, 2024, respectively			(502	)			(480	)
Accumulated deficit			(89,891	)			(85,673	)
Accumulated other comprehensive loss			-				12
STOCKHOLDERS' EQUITY			11,104				10,214
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	13,263			$	16,067

 

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

 

 

VerifyMe, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share data)

		Three Months Ended								Nine Months Ended
		September 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
NET REVENUE		$	5,033			$	5,435			$	14,008			$	16,546
COST OF REVENUE			2,960				3,540				8,854				10,301
GROSS PROFIT			2,073				1,895				5,154				6,245
OPERATING EXPENSES
Segment management and Technology(a)			744				1,329				2,590				4,189
General and administrative (a)			669				778				2,241				2,780
Research and development			5				5				15				65
Sales and marketing (a)			237				401				805				999
Goodwill and intangible asset impairment			3,850				2,252				3,850				2,265
Total Operating expenses			5,505				4,765				9,501				10,298
LOSS BEFORE OTHER INCOME (EXPENSE)			(3,432	)			(2,870	)			(4,347	)			(4,053	)
OTHER INCOME (EXPENSE)
Interest income (expenses), net			67				(29	)			121				(109	)
Other income, net			9				-				8				-
Change in fair value of contingent consideration			-				475				-				839
TOTAL OTHER INCOME, NET			76				446				129				730
NET LOSS		$	(3,356	)		$	(2,424	)		$	(4,218	)		$	(3,323	)
LOSS PER SHARE
BASIC			(0.26	)			(0.23	)			(0.34	)			(0.32	)
DILUTED			(0.26	)			(0.23	)			(0.34	)			(0.32	)
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC			12,682,423				10,603,747				12,542,986				10,306,392
DILUTED			12,682,423				10,603,747				12,542,986				10,306,392

 

(a)       Includes share-based compensation of $92 thousand and $684 thousand for the three and nine months ended September 30, 2025, respectively, and $486 thousand and $1,183 thousand for the three and nine months ended September 30, 2024 respectively.  

 

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

 

 

VerifyMe, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)

		Three Months Ended								Nine Months Ended
		September 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
NET LOSS		$	(3,356	)		$	(2,424	)		$	(4,218	)		$	(3,323	)
Change in fair value of interest rate, Swap			-				2				(12	)			7
Foreign currency translation adjustments			-				(42	)			-				(91	)
Total Comprehensive Loss		$	(3,356	)		$	(2,464	)		$	(4,230	)		$	(3,407	)

 

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

 

 

VerifyMe, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

		Nine months ended
		September 30, 2025				September 30, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(4,218	)		$	(3,323	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Allowance for expected credit losses			8				8
Stock based compensation			86				174
Change in fair value of contingent consideration			-				(836	)
Fair value of restricted stock awards and restricted stock units issued in exchange for services			598				1,009
Loss on disposal of equipment			1				-
Goodwill and intangible asset impairment			3,850				2,261
Amortization and depreciation			853				905
Gain on partial lease termination			(6	)			-
Unrealized gain on foreign currency transactions			-				(45	)
Changes in operating assets and liabilities:
Accounts receivable			1,513				1,806
Unbilled revenue			352				495
Inventory			22				19
Prepaid expenses and other current assets			(219	)			55
Accounts payable, other accrued expenses and net change in operating leases			(2,291	)			(2,226	)
Net cash provided by operating activities			549				302
CASH FLOWS FROM INVESTING ACTIVITIES
Note Receivable			(2,000	)			-
Purchase of patents			-				(12	)
Purchase of office equipment			(7	)			(7	)
Capitalized software costs			(559	)			(334	)
Net cash used in investing activities			(2,566	)			(353	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Warrants Exercise			4,348				-
Proceeds from SPP Plan			-				21
Contingent consideration payments			-				(36	)
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered			(51	)			(47	)
Increase in treasury shares (share repurchase program)			(221	)			(1	)
Repayment of debt and line of credit			(875	)			(375	)
Net cash provided by (used in) financing activities			3,201				(438	)
Effect of exchange rate changes on cash			-				4
NET INCREASE(DECREASE) CASH AND CASH EQUIVALENTS			1,184				(485	)
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH - BEGINNING OF PERIOD			2,823				3,095
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	4,007			$	2,610

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest		$	70			$	160
Income taxes		$	-			$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Lease modification		$	7			$	-
Conversion of convertible note to common stock and accrued interest		$	360			$	-
Change in fair value of interest rate, swap		$	12			$	7

 

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

 

 

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

 

		Series A								Series B
		Convertible								Convertible
		Preferred								Preferred								Common												Treasury
		Stock								Stock								Stock								Additional				Stock								Accumulated Other
		Number of								Number of								Number of								Paid-In				Number of								Comprehensive				Accumulated
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Shares				Amount				Loss				Deficit				Total
Balance at June 30, 2025			-				-				0.85				-				12,323,668				13				101,392				410,757				(434	)			-				(86,535	)			14,436
Restricted Stock Units, net of shares withheld for employee tax			-				-				-				-				-				-				92				-				-				-				-				92
Repurchase of Common Stock			-				-				-				-				(70,691	)			-				-				70,691				(68	)			-				-				(68	)
Net loss			-				-				-				-				-				-				-				-				-				-				(3,356	)			(3,356	)
Balance at September 30, 2025			-				-				0.85				-				12,252,977				13				101,484				481,448				(502	)			-				(89,891	)			11,104

 

 

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

 

		Series A								Series B
		Convertible								Convertible
		Preferred								Preferred								Common												Treasury
		Stock								Stock								Stock								Additional				Stock								Accumulated Other
		Number of								Number of								Number of								Paid-In				Number of								Comprehensive				Accumulated
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Shares				Amount				Loss				Deficit				Total
Balance at December 31, 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			-				-				-				-				-				-				96				-				-				-				-				96
Restricted stock units, net of shares withheld for employee tax			-				-				-				-				90,297				-				327				(58,837	)			124				-				-				451
Common stock issued for services			-				-				-				-				120,000				-				86				-				-				-				-				86
Repurchase of Common Stock			-				-				-				-				(272,177	)			-				-				272,177				(221	)			-				-				(221	)
Accumulated other comprehensive loss			-				-				-				-				-				-				-				-				-				(12	)			-				(12	)
Net loss			-				-				-				-				-				-				-				-				-				-				(4,218	)			(4,218	)
Balance at September 30, 2025			-				-				0.85				-				12,252,977				13				101,484				481,448				(502	)			-				(89,891	)			11,104

 

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

 

 

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 is traded on The Nasdaq Capital Market (“Nasdaq”) under the trading symbol “VRME”.

 

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”) which 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 and nine months ended September 30, 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 and nine months ended September 30, 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 12 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 September 30, 2025 and December 31, 2024.

 

Amounts in Thousands ('000)

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 September 30, 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.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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 12 – Segment reporting.

 

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 and nine months ended September 30, 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 and nine months ended September 30, 2025, there were approximately 3,897,000 anti-dilutive shares consisting of 1,322,000 unvested performance restricted stock units, 224,000 restricted stock units and restricted stock awards, 1,555,000 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 and nine months ended September 30, 2024, there were approximately 8,256,000 anti-dilutive shares consisting of 2,305,000 unvested performance restricted stock units, restricted stock units, and restricted stock awards, 221,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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.

 

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 is completed.  

 

NOTE 2 – REVENUE

 

Revenue by Category

 

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

Schedule of disaggregation of revenue
		Precision Logistics								Authentication								Consolidated
Revenue		Three Months Ended September 30,								Three Months Ended September 30,								Three Months Ended September 30,
		2025				2024				2025				2024				2025				2024
Proactive services		$	4,164			$	4,417			$	-			$	-			$	4,164			$	4,471
Premium services			809				886				-				-				809				886
Brand protection services			-				-				60				132				60				132
		$	4,973			$	5,303			$	60			$	132			$	5,033			$	5,435

 

		Precision Logistics								Authentication								Consolidated
Revenue		Nine Months Ended September 30,								Nine Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024				2025				2024
Proactive services		$	11,687			$	12,587			$	-			$	-			$	11,687			$	12,587
Premium services			2,208				3,574				-				-				2,208				3,574
Brand protection services			-				-				113				385				113				385
		$	13,895			$	16,161			$	113			$	385			$	14,008			$	16,546

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

Contract Balances 

 

The timing of revenue recognition, billings and cash collections results in unbilled revenue (contract assets) and deferred revenue (contract liabilities) on the consolidated balance sheets. Amounts charged to our clients become billable according to the contract terms, which usually consider the delivery completion. Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within twelve months. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the nine-month period ended September 30, 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 (sales commissions) as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. As of September 30, 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:

Schedule of contract assets from contracts with customers
		Contract Asset
		September 30,
In Thousands		2025				2024
Beginning balance, January 1		$	733			$	1,282
Contract asset additions			4,967				6,464
Reclassification to accounts receivable, billed to customers			(5,319	)			(6,960	)
Ending balance, September 30 (1)		$	381			$	786

______________

(1)

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

 

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. On August 26, 2025, FedEx Corporation notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved FedEx preferred shippers effective September 24, 2025. As a result, we made revisions to our internal forecasts and concluded that in accordance with ASC 350 a triggering event occurred indicating that potential impairment exists, which required the Company to conduct an interim test of the fair value of the goodwill for the Precision Logistics segment. We performed a quantitative goodwill impairment test and determined the fair value of our reporting units using a combination of an income approach and a market approach, employing a guideline public company approach. The results of our goodwill impairment test indicated that the carrying value of the Precision Logistics reporting unit exceeded its estimated fair value. As a result, the Company recorded a goodwill impairment charge of $1,062 thousand during the three and nine months ended September 30, 2025, within goodwill and intangible asset impairment on the consolidated statement of operations. We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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

 

Changes in the carrying amount of goodwill by reportable business segment for the nine months ended September 30, 2025, were as follows (in thousands):

Schedule of goodwill by reportable business segment
		Authentication				Precision Logistics				Total
Net book value at
January 1, 2025		$	-			$	3,988			$	3,988
2025 Activity
Goodwill impairment charge			-				(1,062	)			(1,062	)
Net book value at
September 30, 2025		$	-			$	2,926			$	2,926

 

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.

 

ASC Topic 360-10, “Impairment or disposal of long lived assets (“ASC Topic 360”), provides guidance on accounting for the impairment and disposal of long lived assets, covering both tangible and intangible finite-lived assets. The standard ensures that financial statements reflect the economic reality of assets by properly accounting for declines in value or disposals. Under ASC Topic 360, an entity must perform an analysis to determine whether it is more likely than not that the fair value of a long lived asset is less than its carrying amount based on estimates of future cash flows.

 

Determining the fair value of long lived assets 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. Our fair value estimates are based on assumptions that 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 long lived asset impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment.

 

On August 26, 2025 FedEx Corporation notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved FedEx preferred shippers effective September 24, 2025. As a result, we made revisions to our internal forecasts that resulted in an interim triggering event for the three months ending September 30, 2025, indicating the carrying value of our long-lived assets including internally used software, deferred implementation, trademarks, customer relationships, non-compete and developed technology may not be recoverable. The analysis indicated that certain intangible assets were impaired. The Company further concluded as of September 30, 2025 the carrying value of the long lived assets exceeded its estimated fair values, which resulted in an impairment charge. We recorded an intangible asset impairment charge of $2,788 thousand during the three and nine months ended September 30, 2025, respectively, within goodwill and intangible asset impairment on the consolidated statement of operations.

 

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

Schedule of intangible assets subject to amortization
September 30, 2025		Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount				Weighted Average Remaining Useful Life (Years)
Patents and Trademarks		$	699			$	-			$	699				10
Developed Technology			795				-				795				3
Internally Used Software			823				-				823				5
Total Intangible Assets		$	2,317			$	-			$	2,317
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

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

Amortization expense for intangible assets was $271 thousand and $277 thousand for the three months ended September 30, 2025, and 2024 respectively, and $819 thousand and $817 thousand for the nine months ended September 30, 2025, and 2024, respectively. During the nine months ended September 30, 2025 the Company impaired certain intangible assets by $2,788 thousand, and $914 thousand during the nine months ended September 30, 2024, to adjust the gross carrying amount related to these assets as a result of the impairment analysis of long lived assets under ASC 360.

 

Patents and Trademarks

 

As of September 30, 2025, our current patent and trademark portfolios consist of six 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):

Schedule of future amortization expense
Fiscal Year ending December 31,
2025 (three months remaining)		$	137
2026			549
2027			549
2028			333
2029			238
Thereafter			511
Total		$	2,317

 

NOTE 5 – STOCKHOLDERS’ EQUITY

 

The Company expensed $0 thousand and $96 thousand related to restricted stock awards for the three and nine months ended September 30, 2025, respectively. The Company expensed $56 thousand and $331 thousand related to restricted stock awards for the three and nine months ended September 30, 2024, respectively.

 

The Company expensed $92 thousand and $502 thousand related to restricted stock units for the three and nine months ended September 30, 2025, respectively. The Company expensed $345 thousand and $678 thousand related to restricted stock units for the three and nine months ended September 30, 2024, respectively.

 

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.

 

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 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 September 30, 2025, the Company issued an additional 60,000 shares of restricted common stock, vesting immediately with a value of $45 thousand, for consulting services.

 

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.

 

On June 19, 2025, the Company issued 41,849 shares of common stock from treasury, upon vesting of 68,027 restricted stock units, net of 26,178 shares withheld for taxes related to a stock grant on June 19, 2023.

 

On June 30, 2025, the Company issued 2,741 shares of common, upon vesting of 4,000 restricted stock units, net of 1,259 shares withheld for taxes related to a stock grant on January 1, 2025.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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 for the three and nine months ended September 30, 2025, respectively. During the three and nine months ended September 30, 2024, the Company expensed $0 and $4 thousand, respectively. During the nine months ended September 30, 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 September 30, 2025, and December 31, 2024, the Company had 481,448 and 290,467 shares, respectively, held in treasury with a value of approximately $502 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.  During the nine months ended September 30, 2025, the Company repurchased 272,177 shares for $221 thousand under the Company’s current plan. 

 

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.

 

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.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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

 

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

 

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

 

Stock Options

 

The following table summarizes the activities for the Company’s stock options as of September 30, 2025:

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			(221,000	)			3.57
Balance as of September 30, 2025			-			$	-				-			$	-
Exercisable as of September 30, 2025			-			$	-				-			$	-

  

(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 September 30, 2025, the Company had no outstanding stock options.

 

During the nine months ended September 30, 2025, and 2024, the Company expensed $0, with respect to options.

 

As of September 30, 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 September 30, 2025:

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			(140,000	)			1.60
Balance at September 30, 2025			-			$	-

 

As of September 30, 2025, total unrecognized share-based compensation cost related to unvested restricted stock awards is $0.

 

The following table summarizes the unvested restricted stock units as of September 30, 2025:

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			110,773				1.52
Vested			(155,038	)			1.44
Forfeited			(20,334	)			1.57
Balance at September 30, 2025			209,137			$	1.39

 

As of September 30, 2025, total unrecognized share-based compensation cost related to unvested time-based restricted stock units was $69 thousand, which is expected to be recognized over a weighted-average period of less than one 1 year.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

The following table summarizes the unvested performance-based restricted stock units as of September 30, 2025:

Schedule of unvested performance restricted stock units
						Weighted -
						Average
		Number of				Number of
		Unit Shares				Unit Shares
Unvested at December 31, 2024			1,606,660			$	1.37
Granted			-				-
Forfeited/Cancelled			(285,069	)			2.40
Balance at September 30, 2025			1,321,591			$	1.15

 

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

 

As of September 30, 2025, total unrecognized share-based compensation cost related to unvested performance based restricted stock units was $199 thousand, which is expected to be recognized over a weighted-average period of less than a year.

 

Warrants

 

The following table summarizes the activities for the Company’s warrants as of September 30, 2025:

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
Issued			1,461,896				4.00
Exercised			(1,461,896	)			3.22
Expired			(3,073,379	)			4.60
Balance as of September 30, 2025			1,555,207			$	3.95				4.6
Exercisable as of September 30, 2025			1,555,207			$	3.95				4.6			$	-

 

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.89 for our common stock on September 30, 2025.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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 was 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.

 

On June 23, 2025, the Company’s warrants listed on Nasdaq under the symbol “VRMEW” (the “Uplist Warrants”) expired pursuant to the terms of the Form of Common Stock Purchase Warrant. On June 23, 2025, Nasdaq filed a Form 25 formalizing the suspension of the Uplist Warrants.

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

Schedule of assumptions used
		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 $150 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 and nine months ended September 30, 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 September 30, 2025. On August 8, 2025, the Company extended the line of credit to September 30, 2026. 

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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 September 30, 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.

 

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. As of September 30, 2025, $400 thousand was held by related parties after a board member left the Company. The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024. The notes will mature on August 25, 2026, unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock. The Company may not redeem the notes prior to the maturity date. For the nine months ended September 30, 2025 and September 30, 2024, interest expense related to the convertible debt was $46 thousand and $66 thousand, respectively. As of January 21, 2025, $350 thousand was converted to common stock, none of which was related parties. As of September 30, 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—NOTE RECEIVABLE

 

ZenCredit Agreement

 

On August 8, 2025, we entered into a Master Loan Agreement and Promissory Note (the “Loan Agreement”) with ZenCredit Ventures, LLC (“ZenCredit”). Pursuant to the Loan Agreement, we agreed to loan ZenCredit up to $2 million. Pursuant to the terms of the Loan Agreement, ZenCredit will pay us regular quarterly interest payments at an annual interest rate of 16%. The term of the initial promissory note is nine months at which time all accrued principal and interest is due to us unless we elect to make an Additional Loan (as such term is defined in the Loan Agreement) subject to the terms of the Loan Agreement. On August 11, 2025, we loaned ZenCredit $2 million in exchange for a promissory note issued pursuant to the Loan Agreement. As of September 30, 2025 the Company reserved $12 thousand allowance for credit loss on the note.

 

NOTE 9—INCOME TAXES

 

There are no taxes payable as of September 30, 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 nine months ending September 30, 2025, due to the uncertainty surrounding the realizability of the benefit. As of September 30, 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 nine months ended September 30, 2025.

 

NOTE 10– 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.

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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

 

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

 

Lease expenses are included in Segment management and technology expenses on the accompanying Consolidated Statements of Operations. The components of lease expense were as follows (in thousands):

Schedule of components of lease expense
		Three months ended September 30,								Nine months ended September 30,
		2025				2024				2025				2024
Operating lease cost		$	13			$	50			$	52			$	145
Short-term lease cost			4				4				12				13
Total lease costs		$	17			$	54			$	64			$	158

 

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

Schedule of supplemental information related to leases
		September 30, 2025				December 31, 2024
Operating Lease right-of-use asset		$	78			$	236
Current portion of operating lease liabilities		$	51			$	108
Non-current portion of operating lease liabilities			32				139
Total operating lease liabilities		$	83			$	247
Cash paid for amounts included in the measurement of operating lease liabilities		$	53			$	126
Right-of-use assets obtained in exchange for operating lease liabilities		$	-			$	-
Weighted-average remaining lease term for operating leases (years)			1.6				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 September 30, 2025 (in thousands):

Schedule of operating lease liabilities maturities
Year ending December 31,
2025 (Excluding nine months ended September 30, 2025)		$	14
2026			55
2027			19
Total future lease payments			88
Less: imputed interest			(5	)
Present value of future lease payments			83
Less: current portion of lease liabilities			(51	)
Long-term lease liabilities		$	32

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

NOTE 11– CONCENTRATIONS

 

For the three months ended September 30, 2025, one customer represented 10% of revenues and one customer represented 14% of revenues for the three months ended September 30, 2024. For the nine months ended September 30, 2025, one customer represented 12% of revenues and one customer represented 19% of revenues for the nine months ended September 30, 2024.

 

During the three and nine months ended September 30, 2025, one vendor accounted for 99% of transportation cost, in our Precision Logistics segment. 

 

As of September 30, 2025, one customer made up 23% of accounts receivable, net. As of December 31, 2024, two customers made up 36% of accounts receivable.

 

NOTE 12 – SEGMENT REPORTING

 

As of September 30, 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).

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

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):

Schedule of segment reporting information
		Three Months Ended												Three Months Ended
		September 30,												September 30,
		2025												2024
		Precision Logistics				Authentication				Consolidated				Precision Logistics				Authentication				Consolidated
NET REVENUE		$	4,973			$	60			$	5,033			$	5,303			$	132			$	5,435
COST OF REVENUE			2,934				26				2,960				3,526				14				3,540
GROSS PROFIT			2,039				34				2,073				1,777				118				1,895
OPERATING EXPENSES
Management and technology			401				7				408				642				264				906
Research and development			-				5				5				-				5				5
Sales and marketing			214				3				217				245				140				385
Other Segment Items			356				-				356				387				52				439
Goodwill and Intangible asset impairment			3,850				-				3,850				-				2,252				2,252
Total Segment expenses			4,821				15				4,836				1,274				2,713				3,987
Segment (Expense) Income		$	(2,782	)		$	19			$	(2,763	)		$	503			$	(2,595	)		$	(2,092	)
General and Administrative											(669	)											(778	)
Other Income											76												446
NET LOSS										$	(3,356	)										$	(2,424	)

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

		Nine Months Ended												Nine Months Ended
		September 30,												September 30,
		2025												2024
		Precision Logistics				Authentication				Consolidated				Precision Logistics				Authentication				Consolidated
NET REVENUE		$	13,895			$	113			$	14,008			$	16,161			$	385			$	16,546
COST OF REVENUE			8,815				39				8,854				10,258				43				10,301
GROSS PROFIT			5,080				74				5,154				5,903				342				6,245
OPERATING EXPENSES
Management and technology			1,554				44				1,598				2,215				779				2,994
Research and development			-				15				15				-				65				65
Sales and marketing			729				6				735				667				401				1,068
Other Segment Items			1,162				(100	)			1,062				975				151				1,126
Goodwill and Intangible asset impairment			3,850				-				3,850				-				2,265				2,265
Total Segment expenses (income)			7,295				(35	)			7,260				3,857				3,661				7,518
Segment (Expense) Income		$	(2,215	)		$	109			$	(2,106	)		$	2,046			$	(3,319	)		$	(1,273	)
General and Administrative											(2,241	)											(2,780	)
Other Income											129												730
NET LOSS										$	(4,218	)										$	(3,323	)

 

 

Notes to the Consolidated Financial Statements (unaudited)

 

NOTE 13 – SUBSEQUENT EVENTS

 

 

On October 9, 2025, the Company issued 70,000 restricted stock awards vesting on October 9, 2026 to two members of the Board of Directors.

 

On October 10, 2025, the Company issued 89,310 shares of common stock underlying vested restricted stock units to a former board member.

 

After the third quarter ended September 30, 2025, the Company discontinued one foreign patent application, and abandoned one US and one European patent because they have no current planned use.

 

On November 3, 2025, the Company issued 30,882 shares of common stock upon vesting of 46,336 restricted stock units, net of 15,454 withheld for taxes related to a stock grant on November 2, 2022.

 

 

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, sources of 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 and diversion 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 delayed delivery times and brand impairment. Utilizing predictive analytics from multiple data sources including flight-tracking, weather, traffic, major carrier feeds, and time of day data, we provide our clients an end-to-end vertical approach for their most critical service delivery needs. Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, as well as delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

 

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

 

Precision Logistics generates revenue from two business service models.

 

·

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

·

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

 

 

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

 

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.

 

Partnerships:

 

On August 26, 2025, FedEx Corporation notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved FedEx preferred shippers effective September 24, 2025. As such, PeriShip Global is no longer a FedEx preferred shipper and our Precision Logistics segment can no longer offer our Proactive services to FedEx customers. We continue to provide our Premium services to FedEx customers. On September 24, 2025, we began offering Proactive services to the customers of an alternative Preferred Shipping Partner.

 

 

On July 29, 2025, PeriShip Global entered into (i) a Digital Channel Program Agreement (the “Program Agreement”) and (ii) a Partner API Access Agreement (the “Integration Agreement” and together with the Program Agreement, the “Agreements”) with an alternative Preferred Shipping Partner (“Partner”). The Agreements provide PeriShip Global access to designated Partner services at promotional rates as part of a specialized logistics management services for time-sensitive and perishable shipments, including proactive monitoring, weather tracking, and issue resolution through certain digital channel program applications. Pursuant to the Integration Agreement, PeriShip Global will be permitted to develop Interfaces to certain Partner APIs, Access Services and Information (as such terms are defined in the Integration Agreement). The Agreements have a term of three years, subject to customary termination and renewal provisions.

 

Our Authentication segment has a contract with HP Indigo. We believe this partnership 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. 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 carriers, may benefit out-sourced service providers. Additionally, 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. While the fourth quarter is historically our highest revenue quarter, we expect revenues from Proactive services to decline in the quarter ended December 31, 2025 as compared to the quarter ended December 31, 2024 due to the previously disclosed loss of FedEx as a shipping supplier. The seasonality of our business may cause fluctuations in our quarterly operating results.

 

Recent Developments

 

FedEx

 

On August 26, 2025, the FedEx Corporation notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved FedEx preferred shippers effective September 24, 2025. As such, PeriShip Global is no longer a FedEx preferred shipper and our Precision Logistics segment can no longer offer our Proactive services to FedEx customers. We continue to provide our Premium services to FedEx customers. As a result of this change, it is likely that our revenues from Proactive services will materially decline in the quarters ended December 31, 2025 and March 31, 2026 as compared to the quarters ended December 31, 2024 and March 31, 2025. We expect our Proactive services revenues to substantially recover during 2026 as we transition additional customers and increase our existing and new customer bases.

 

Partner Agreements

 

On July 29, 2025, PeriShip Global entered into a Program Agreement, and an Integration Agreement with an alternative Preferred Shipping Partner (“Partner”). The Agreements provide PeriShip Global access to designated Partner services at promotional rates as part of a specialized logistics management services for time-sensitive and perishable shipments, including proactive monitoring, weather tracking, and issue resolution through certain digital channel program applications. Pursuant to the Integration Agreement, PeriShip Global will be permitted to develop Interfaces to certain Partner APIs, Access Services and Information (as such terms are defined in the Integration Agreement). The Agreements have a term of three years, subject to customary termination and renewal provisions.

  

ZenCredit Agreement

 

On August 8, 2025, we entered into a Master Loan Agreement and Promissory Note (the “Loan Agreement”) with ZenCredit Ventures, LLC (“ZenCredit”). Pursuant to the Loan Agreement, we agreed to loan ZenCredit up to $2 million. Pursuant to the terms of the Loan Agreement, ZenCredit will pay us regular quarterly interest payments at an annual interest rate of 16%. The term of the initial promissory note is nine months at which time all accrued principal and interest is due to us unless we elect to make an Additional Loan (as such term is defined in the Loan Agreement) subject to the terms of the Loan Agreement. On August 11, 2025, we loaned ZenCredit $2 million in exchange for a promissory note issued pursuant to the Loan Agreement.

 

 

Nasdaq Deficiency Notice

 

On April 3, 2025, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based on the closing bid price of our common stock for 30 consecutive business days, we no longer meet Nasdaq Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of at least $1 per share (the “Minimum Bid Price Rule”). The Nasdaq Listing Rules provide a compliance period of 180 calendar days, or until September 30, 2025, in which to regain compliance with the Minimum Bid Price Rule. On October 1, 2025, we received written notice from the Listing Qualifications staff of Nasdaq providing a second 180 calendar day compliance period, or until March 30, 2026, in which to regain compliance with the Minimum Bid Price Rule. On October 17, 2025, we received written notice from the Listing Qualifications staff of Nasdaq stating that for the last 10 consecutive business days, the closing bid price of our common stock has been at $1.00 per share or greater, and accordingly, we regained compliance with the minimum bid price requirements set forth in The Nasdaq Listing Rules for continued listing on the Nasdaq Capital Market. Nasdaq informed us in the compliance notice that it now considers this matter closed.

 

Results of Operations

 

Comparison of the three months ended September 30, 2025, and 2024

 

The following discussion analyzes our results of operations for the three months ended September 30, 2025 and 2024.

 

Revenue		Three Months Ended September 30,
(in thousands)		2025				2024
Precision Logistics		$	4,973			$	5,303
Authentication			60				132
Total Revenue		$	5,033			$	5,435

 

Consolidated revenue decreased $402 thousand or 7% during the third quarter of 2025 compared to the third quarter of 2024. The decrease is primarily due to a $767 thousand decrease related to discontinued services with two customers in our Proactive services, partially offset by increased revenues from new and existing customers in the Precision Logistics segment. 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 September 30,
(in thousands)		2025								2024
						% of Revenue								% of Revenue
Precision Logistics		$	2,039				41	%		$	1,777				34	%
Authentication			34				57	%			118				89	%
Total Gross Profit		$	2,073				41	%		$	1,895				35	%

 

Gross profit for the three months ended September 30, 2025, was $2,073 thousand, compared to $1,895 thousand for the three months ended September 30, 2024. The resulting gross margin was 41% for the three months ended September 30, 2025, compared to 35% for the three months ended September 30, 2024. The gross profit increase relates primarily to decreased costs related to our Proactive services.

 

Segment Management and Technology

 

Segment management and technology expenses decreased by $585 thousand to $744 thousand for the three months ended September 30, 2025, compared to $1,329 thousand for the three months ended September 30, 2024. The decrease relates primarily to the divestiture of Trust Codes Global in December 2024, a decrease in management wages and stock compensation expense, and the capitalization of development expense related to internally used software in our Precision Logistics segment.

 

General and Administrative Expenses

 

General and administrative expenses decreased by $109 thousand to $669 thousand for the three months ended September 30, 2025, compared to $778 thousand for the three months ended September 30, 2024. The decrease relates primarily to a decrease in stock-based compensation and management wages.

 

 

Research and Development

 

Research and development expenses were $5 thousand for the three months ended September 30, 2025, and 2024, respectively.

 

Sales and Marketing

 

Sales and marketing expenses decreased by $164 thousand to $237 thousand for the three months ended September 30, 2025, compared to $401 thousand for the three months ended September 30, 2024. This improvement was primarily due to a decrease in headcount and travel expense in the Precision Logistics and Authentication segments.

 

Goodwill and Intangible Asset Impairment

 

As a result of a long-lived asset and goodwill asset impairment assessments performed in the third quarter of 2025, an intangible asset impairment charge of $2,788 thousand and a goodwill impairment charge of $1,062 thousand was recorded for the three months ended September 30, 2025 relating to the Precision Logistics segment. An intangible asset impairment charge of $901 thousand and a goodwill impairment charge of $1,351 thousand was recorded for the three months ended September 30, 2024 relating to Authentication segment.

 

Interest Income(Expense), net

 

Interest income, net was $67 thousand for the three months ended September 30, 2025, compared to interest expense, net of $29 thousand for the three months ended September 30, 2024. This increase primarily relates to a reduction of interest expense resulting from the repayment of the Term Note in the first quarter of 2025, an increase in interest income from the Company’s investment of proceeds from the warrants exercise in January 2025, and interest income earned on the promissory note with ZenCredit entered on August 8, 2025.

 

Net Loss

 

Consolidated net loss for the three months ended September 30, 2025, and 2024 was $3,356 thousand and $2,424 thousand, respectively. The increased loss relates primarily to the one time goodwill and intangible asset impairment, noted above, and the gain on change in fair value of the contingent consideration related to the acquisition of Trust Codes Global for the three months ended September 30, 2024 that did not recur in the three months ended September 30, 2025. The resulting consolidated loss per share for the three months ended September 30, 2025, and three months ended September 30, 2024, was $0.26 and $0.23 per basic and diluted share, respectively. 

 

Comparison of the Nine months ended September 30, 2025, and 2024

 

The following discussion analyzes our results of operations for the nine months ended September 30, 2025, and 2024.

 

Revenue		Nine Months Ended September 30,
(in thousands)		2025				2024
Precision Logistics		$	13,895			$	16,161
Authentication			113				385
Total Revenue		$	14,008			$	16,546

 

Consolidated revenue decreased $2,538 thousand for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The decrease is primarily due to the decreased demand across several of our Proactive services customers, one customer’s shift to use their cold chain strategy, and a discontinued contract with one customer in our Premium services. 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		Nine Months Ended September 30,
(in thousands)		2025								2024
						% of Revenue								% of Revenue
Precision Logistics		$	5,080				37	%		$	5,903				37	%
Authentication			74				65	%			342				89	%
Total Gross Profit		$	5,154				37	%		$	6,245				38	%

 

Gross profit for the nine months ended September 30, 2025, was $5,154 thousand, compared to $6,245 thousand for the nine months ended September 30, 2024. The resulting gross margin was 37% for the nine months ended September 30, 2025, compared to 38% for the nine months ended September 30, 2024. The gross profit decrease relates to the decrease in Premium services revenue which has higher margins than Proactive services, and the decrease in Authentication revenue from the divestiture of our Trust Codes Global business in December 2024. Our Proactive services gross margin percentage improved in 2025 compared to 2024.

 

 

Segment Management and Technology

 

Segment management and technology expenses decreased by $1,599 thousand to $2,590 thousand for the nine months ended September 30, 2025, compared to $4,189 thousand for the nine months ended September 30, 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 a decrease in management wages and severance expense in our Precision Logistics segment.

 

General and Administrative Expenses

 

General and administrative expenses decreased by $539 thousand to $2,241 thousand for the nine months ended September 30, 2025, compared to $2,780 thousand for the nine months ended September 30, 2024. The decrease relates primarily to a decrease in stock-based compensation from $1,055 thousand for the nine months ended September 30, 2024 to $465 thousand for the nine months ended September 30, 2025.

 

Research and Development

 

Research and development expenses were $15 thousand and $65 thousand for the nine months ended September 30, 2025, and 2024, respectively.

 

Sales and Marketing

 

Sales and marketing expenses decreased by $194 thousand to $805 thousand for the nine months ended September 30, 2025, compared to $999 thousand for the nine months ended September 30, 2024. The decrease is primarily related to a reduction in employees and consultants in our Precision Logistics and Authentication segments.

 

Goodwill and Intangible Asset Impairment

 

As a result of a long-lived asset and goodwill asset impairment assessment performed in the third quarter of 2025, an intangible asset impairment charge of $2,788 thousand and a goodwill impairment charge of $1,062 thousand was recorded for the nine months ended September 30, 2025 relating to the Precision Logistics segment. An intangible asset impairment charge of $914 thousand and a goodwill impairment charge of $1,351 thousand was recorded for the nine months ended September 30, 2024 relating to Authentication segment.

 

Interest Income (Expense), net

 

Interest income was $121 thousand for the nine months ended September 30, 2025, compared to interest expense of $109 thousand for the nine months ended September 30, 2024. This increase in interest income primarily relates to the repayment of the Term Note in the first quarter of 2025 reducing interest expense as well as the increase in interest income from the Company’s investment of the proceeds from the warrants exercise in January 2025, and interest income earned on the Loan Agreement with ZenCredit entered on August 8, 2025.

 

Net Loss

 

Consolidated net loss for the nine months ended September 30, 2025, and 2024 was $4,218 thousand and $3,323 thousand, respectively. The increased loss relates primarily to the one time goodwill and intangible asset impairment, noted above, and the gain on change in fair value of the contingent consideration related to the acquisition of Trust Codes Global for the nine months ended September 30, 2024 that did not recur in the nine months ended September 30, 2025. The resulting consolidated loss per share for the nine months ended September 30, 2025, and nine months ended September 30, 2024, was $0.34 and $0.32 per basic and diluted share, respectively.

 

Liquidity and Capital Resources

 

Our operations provided $549 thousand of cash during the nine months ended September 30, 2025, compared to $302 thousand during the comparable period in 2024.

 

Cash used by investing activities was $2,566 thousand during the nine months ended September 30, 2025, compared to $353 thousand during the nine months ended September 30, 2024. The increase in spending in investing activities relates primarily to a Promissory Note of $2 million with ZenCredit entered into on August 8, 2025 and increased capitalized software costs in the nine months ended September 30, 2025.

 

Cash provided by financing activities during the nine months ended September 30, 2025, was $3,201 thousand compared to cash used in financing activities during the nine months ended September 30, 2024 of $438 thousand. The increased cash primarily relates to proceeds from the exercise of warrants, partially offset by the repurchase of shares under the repurchase program and repayment of the Term Note during the nine months ended September 30, 2025.

 

 

On August 8, 2025, we entered into the Loan Agreement with ZenCredit. Pursuant to the Loan Agreement, we agreed to loan ZenCredit up to $2 million and on August 11, 2025 we loaned ZenCredit $2 million in exchange for a promissory note issued pursuant to the Loan Agreement. Pursuant to the terms of the Loan Agreement, ZenCredit will pay us regular quarterly interest payments at an annual interest rate of 16%. The term of the initial promissory note is nine months at which time all accrued principal and interest is due to us unless we elect to make an Additional Loan (as such term is defined in the Loan Agreement) subject to the terms of the Loan Agreement. As of September 30, 2025, we reserved $12 thousand allowance for expected credit loss on the Note.

 

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 $150 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 nine months ended September 30, 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 September 30, 2025, $0 was outstanding on the RLOC. On August 8, 2025, the Company extended the line of credit to September 30, 2026.

 

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

 

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

 

Goodwill

 

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

 

 

On August 26, 2025, FedEx Corporation notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved FedEx preferred shippers effective September 24, 2025. As a result, the Company made revisions to our internal forecasts and concluded that in accordance with ASC 350 a triggering event occurred indicating that potential impairment exists, which required us to conduct an interim test of the fair value of the goodwill for the Precision Logistics segment. We performed a quantitative goodwill impairment test and determined the fair value of our reporting units using a combination of an income approach, and a market approach, employing a guideline public company approach. The results of our goodwill impairment test indicated that the carrying value of the Precision Logistics reporting unit exceeded its estimated fair value. As a result, we recorded a goodwill impairment charge of $1,062 thousand during the three and nine months ended September 30, 2025, within goodwill and intangible asset impairment on the consolidated statement of operations.

 

Intangibles

 

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

 

On August 26, 2025, FedEx Corporation notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved FedEx preferred shippers effective September 24, 2025. As a result of the revised internal forecasts, the Company concluded in accordance with ASC 360 that this change was an interim triggering event for the three months ended September 30, 2025, indicating the carrying value of our long-lived assets including internally used software, deferred implementation, trademarks, customer relationships, non-compete and developed technology may not be recoverable. Accordingly, the Company performed an interim impairment test and assessed the recoverability of the related intangible assets by using level 3 inputs and comparing the carrying value to the net undiscounted cashflow expected to be generated. The analysis indicated that certain intangible assets were impaired. We recorded an intangible impairment charge of $2,788 thousand during the three months ended September 30, 2025, within goodwill and intangible asset impairment on the consolidated statement of operations.

 

Use of Non-GAAP Financial Measures 

 

This Form 10-Q includes both financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”), as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to and should not be considered as alternatives to any other GAAP financial measures. They may not be indicative of the historical operating results of VerifyMe nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. 

 

VerifyMe’s management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. The Company believes that both management and shareholders benefit from referring to EBITDA and Adjusted EBITDA in planning, forecasting and analyzing future periods. Additionally, the Company believes Adjusted EBITDA is useful to investors to evaluate its results because it excludes certain items that are not directly related to the Company’s core operating performance. In particular, with regard to our comparison of Adjusted EBITDA for the three and nine months ended September 30, 2025, to the three and nine months ended September 30, 2024, we believe is useful to investors in understanding the results of operations. The Company’s management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison. The Company’s management recognizes that EBITDA and Adjusted EBITDA, as non-GAAP financial measures, have inherent limitations because of the described excluded items. 

 

The Company defines EBITDA as net loss before interest (income) expense, income tax expense (benefit), and depreciation and amortization. Adjusted EBITDA represents EBITDA plus non-cash stock compensation expense, fair value of restricted stock units issued in exchange for services, severance expense, gain on derecognized liability, goodwill and intangible asset impairments, change in fair value of contingent consideration,  and one-time professional expenses for acquisitions and divestiture. VerifyMe believes EBITDA and Adjusted EBITDA are important measures of VerifyMe’s operating performance because they allow management, investors and analysts to evaluate and assess VerifyMe’s core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability. 

 

 A reconciliation of EBITDA and Adjusted EBITDA to the most comparable financial measure, net loss, calculated in accordance with GAAP is included in a schedule to this press release. The Company believes that providing the non-GAAP financial measure, together with the reconciliation to GAAP, helps investors make comparisons between VerifyMe and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules as the presentation here may not be comparable to other similarly titled measures of other companies. 

 

 

VerifyMe, Inc.

Consolidated EBITDA and Adjusted EBITDA Reconciliation Table (Unaudited) 
(In thousands)

 

		Three Months Ended  September 30,								Nine Months Ended  September 30,
		2025				2024				2025				2024
Net Loss (GAAP)		$	(3,356	)		$	(2,424	)		$	(4,218	)		$	(3,323	)
Interest (income) expense, net			(67	)			29				(121	)			109
Amortization and depreciation			281				306				853				905
Total EBITDA (Non-GAAP)			(3,142	)			(2,089	)			(3,486	)			(2,309	)
Adjustments:
Stock based compensation			-				85				86				174
Fair value of restricted stock and restricted stock units issued in exchange for services			92				401				598				1,009
Severance			37				-				112				141
Change in fair value of contingent consideration			-				(475	)			-				(839	)
Gain on derecognized liability			(9	)			-				(109	)			-
Goodwill and intangible asset impairment			3,850				2,252				3,850				2,265
One-time professional expenses for acquisitions/divestiture			4				-				51				-
Total Adjusted EBITDA (Non-GAAP)		$	832			$	174			$	1,102			$	441

 

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.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures are designed to ensure information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s Chief Executive Officer, our principal executive officer, and Chief Financial Officer, our principal financial officer, have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 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 September 30, 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 September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 

 

 

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 set forth below.

 

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

 

PeriShip Global partners with one major global carrier for its customers’ shipping needs. Our business is dependent, and we believe that it will continue to depend on our relationship with a new strategic partner. On August 26, 2025, our prior strategic partner notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved preferred shippers effective September 24, 2025. As such, PeriShip Global is no longer a preferred shipper with that strategic partner and our Precision Logistics segment can no longer offer our Proactive services to that strategic partner’s customers. We continue to provide our Premium services to that strategic partner’s customers. On September 24, 2025, we began offering Proactive services to customers of our new strategic partner.

 

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

 

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

 

As a result of the change in the strategic partner through which we provide our Proactive services, it is likely that our revenues from Proactive services will materially decline in the quarters ended December 31, 2025 and March 31, 2026 as compared to the quarters ended December 31, 2024 and March 31, 2025. We expect our Proactive services revenues to substantially recover during 2026 as we transition additional customers and increase our existing and new customer bases however, there can be no assurance that our Proactive service revenue will return to historical levels.

 

In addition, a material portion of our revenue has been generated by our prior strategic partner reselling our services to its customers under a “white label” arrangement, which we refer to as a Premium Service. We continue to provide our Premium services to our prior strategic partner’s customers, but it is unlikely that this will continue in the long-term. Under this arrangement we provide our logistics services to our prior strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Sales through our prior strategic partner accounted for approximately 16% of revenue of our Precision Logistics segment for the year ended December 31, 2024, and 17% for the year ended December 31, 2023. Our prior strategic partner provides its own service offering to its customers that competes with our Premium Services, and we expect revenue from our Premium Services in our Precision Logistics segment will likely decrease over time as our prior strategic partner competes with us for these customers. If we fail to offset any reduction in business for our Premium Services in our Precision Logistics segment through our Proactive Services or other service offerings, our business, financial condition and results of operations could be materially adversely affected.

 

 

Our business is subject to seasonal trends.

 

Historically, our operating results in the Precision Logistics segment have been subject to seasonal trends when measured on a quarterly basis. Our first and second quarters have traditionally been the weakest compared to our third and fourth quarters. This trend is dependent on numerous factors including economic conditions, customer demand and weather. Because revenue is directly related to the available working days of shippers, national holidays and the number of business days during a given period may also create seasonal impact on our results of operations. After the winter holiday season and during the remaining winter months, our freight volumes are typically lower because some customers reduce shipment levels. In addition, a substantial portion of our revenue is derived from customers in industries whose shipping patterns are tied closely to consumer demand which can sometimes be difficult to predict or are based on just-in-time production schedules. Therefore, our revenue is, to a large degree, affected by factors that are outside of our control. In addition, as a result of the change in the strategic partner through which we provide our Proactive services, it is likely that our revenues from Proactive services will materially decline in the quarters ended December 31, 2025 and March 31, 2026 as compared to the quarters ended December 31, 2024 and March 31, 2025 and we will not experience as much of a seasonal increase in our revenues during the fourth quarter of fiscal year ended December 31, 2025. There can be no assurance that our historic operating patterns will continue in future periods as we cannot influence or forecast many of these factors.

 

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

 

Share Repurchase Plan

 

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period		Total Number of Shares (or Units)  Purchased		Average Price Paid per Share (or Units)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) (In thousands)
07/01/2025-07/31/2025		-		-		-		$330
08/01/2025-08/31/2025		70,689		$0.98		70,691		$262
09/01/2025-09/30/2025		-		-		-		$262
Total		70,689		$0.98		70,691		$262

 

(1)

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.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

During the three months ended September 30, 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
3.1		Amended and Restated Bylaws of VerifyMe, Inc., as amended through July 8, 2025 (incorporated herein by reference from Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025).
10.1*†+		Digital Channel Program Agreement
10.2*†+		Partner API Access Agreement
10.3*		Master Loan Agreement with ZenCredit Ventures, LLC
10.4*		Promissory Note to ZenCredit Ventures, LLC
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

+ Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K of the Securities Act of 1933, as amended. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

† Certain portions of this exhibit have been omitted (indicated by asterisks) pursuant to Item 601(b) of Regulation S-K of the Securities Act of 1933, as amended, because such omitted information is (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

SIGNATURES 

 

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

 

	VERIFYME, INC.
Date: November 14, 2025	By: /s/ Adam Stedham
	Adam Stedham
	Chief Executive Officer and President (Principal Executive Officer)
Date: November 14, 2025	By: /s/ Jennifer Cola
	Jennifer Cola
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 

 

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