Rochester, NY - April 2, 2019 – GlobeNewswire — VerifyMe, Inc. (OTCQB: VRME), a technology solutions company that markets products supported by patents, patent applications and trade secrets which provides identifiers and serialization for authenticating, tracking and tracing functions for labels, packaging and products, today announced the Company's financial results for the fourth quarter and year ended December 31, 2018.

Key Financial Highlights for Q4 2018:

• Revenues increased to $39,772, compared to $0 in Q4 2017
• Operating loss decreased by 71% to $0.5 million
• Net loss decreased by 76% to $534,158
• Adjusted EBITDA decreased by 33% to $0.4 million

Key Financial Highlights for Full Year 2018:

• Revenues increased to $78,884, compared to $0 in 2017
• Operating loss decreased by 8% to $2.6 million
• Net loss decreased by 13% to $2.9 million
• Adjusted EBITDA decreased by 1% to $1.3 million

Key Business Highlights for Q4 and Full Year 2018:

• Executed three reseller agreements; a global label manufacturer and two print service providers
• Global contractual partnerships with HP Indigo, Micro Focus and S-One LP continued to progress and are expected to generate revenue in 2019
• HP Indigo expanding RainbowSecure to its largest series of digital printers
• Placed order for Smartphone Enabled Cloud Connected Authentication devices
• FDA mandate for serialization, track and trace for all pharmaceutical packaging and labeling
• A top 10 global consumer products company has expanded its use of RainbowSecure to 2.5 million product labels in the month of January 2019

Subsequent to the end of 2018, the Company has been actively marketing with HP Indigo and S-One LP. These engagements have involved demonstrating the technology solutions at tradeshows and active discussions and meetings with prospective clients.

Given our business model involves royalty rates based on volume of impressions and software in the cloud, we are targeting gross margins in the 70-80% range for 2019.

Management Commentary

“We had an extremely eventful and productive 2018, as we continued to lay the groundwork for commercializing our technology. We have now transitioned from research and development to the sales and marketing and revenue ramp stage,” commented, Patrick White, VerifyMe’s Chief Executive Officer. “Our security and authentication technology is applicable across a wide range of industries and applications. We have successfully aligned with partners such as HP Indigo, Micro Focus, S-One LP and others, which will now assist us in driving market adoption. Our pipeline of prospects is robust as we look to scale our business and ramp our revenue in 2019.

Mr. White concluded, “While 2018 was a success, we know this is just the beginning. There is much work to do in delivering our proprietary, patented and disruptive technology solutions for the global anti-counterfeit, piracy and brand protection markets, and continuing to build shareholder value.”

Financial Results for the Three Months Ended December 31, 2018:

Revenue for the three months ended December 31, 2018 was $39,772, compared to $0 for the three months ended December 31, 2017.

Gross profit for the three months ended December 31, 2018 was $25,251, compared to $0 for the three months ended December 31, 2017. The resulting gross margin was 63.5% for the three months ended December 31, 2018.

General and administrative expenses for the three months ended December 31, 2018 was $206,330, a decrease of $610,786 or 75%, compared to $817,116 for the three months ended December 31, 2017.

Legal and accounting expenses for the three months ended December 31, 2018 was $54,401, a decrease of $48,987 or 47%, compared to $103,388 for the three months ended December 31, 2017.

Payroll expenses for the three months ended December 31, 2018 was $47,319, a decrease of $604,978 or 93%, compared to $652,297 for the three months ended December 31, 2017.

Research and development expenses for the three months ended December 31, 2018 was $85,383, a decrease of $9,418 or 10%, compared to $94,801 for the three months ended December 31, 2017.

Sales and marketing expenses for the three months ended December 31, 2018 was $118,073, an increase of $114,273, compared to $3,800 for the three months ended December 31, 2017.

Operating loss for the three months ended December 31, 2018 was $486,215, a decrease of $1,185,579, or 71%, compared to $1,671,794 for the three months ended December 31, 2017.

Adjusted EBITDA loss for the three months ended December 31, 2018 was $416,157, a decrease of $209,428 or 33% compared to $625,585 for the three months ended December 31, 2017.

Net loss for the three months ended December 31, 2018 was $534,158, a decrease of $1,653,103, or 76%, compared to $2,187,261 for the three months ended December 31, 2017. The resulting EPS loss for the three months ended December 31, 2018 was $(0.00) per diluted share, compared to $(0.08) per diluted share for the three months ended December 31, 2017.

Financial Results for the Year Ended December 31, 2018:

Revenue for the year ended December 31, 2018 was $74,884, compared to $0 for the year ended December 31, 2017.

Gross profit for the year ended December 31, 2018 was $46,082, compared to $0 for the year ended December 31, 2017. The resulting gross margin was 61.5% for the year ended December 31, 2018.

General and Administrative expenses for the year ended December 31, 2018 were $1,585,329, a decrease of $104,554 or 6%, compared to $1,689,883 for the year ended December 31, 2017. The decrease is attributable primarily to a decrease in non-cash stock-based compensation for consultants.

Legal and accounting expenses for the year ended December 31, 2018 was $416,772, an increase of $170,252 or 69%, compared to $246,520 for the year ended December 31, 2017. In the beginning of 2017, the Company had released its then attorneys and hired its current attorneys in the second quarter of 2017. Thus, charges in 2018 for legal fees include a full year, in comparison to half year charges in 2017.

Payroll expenses for the year ended December 31, 2018 was $316,837, a decrease of $450,420 or 59%, compared to $767,257 for the year ended December 31, 2017. The majority of the decrease was the result of lower non-cash charges related to stock-based compensation.

Research and development expenses for the year ended December 31, 2018 was $187,655, an increase of $59,611 or 47%, compared to $128,044 for the year ended December 31, 2017.

Sales and marketing expenses for the year ended December 31, 2018 was $135,290, an increase of $131,490, compared to $3,800 for the year ended December 31, 2017. The increase was related to hiring of the Company’s VP of Sales, and expenses for travel and costs related to various trade shows and other sales and marketing activities.

Operating loss for the year ended December 31, 2018 was $2,595,801, a decrease of $239,703 or 8%, compared to $2,835,504 for the year ended December 31, 2017.

Adjusted EBITDA loss for the year ended December 31, 2018 was $1,310,960, a decrease of $12,788, or 1%, compared to $1,323,748 for the year ended December 31, 2017.

Net loss for the year ended December 31, 2018 was $2,932,462, a decrease of $452,878, or 13%, compared to $3,385,340 for the year ended December 31, 2017. The resulting EPS loss for the year ended December 31, 2018 was $(0.03) per diluted share, compared to $(0.14) per diluted share for the year ended December 31, 2017.

About VerifyMe, Inc.

VerifyMe, Inc., is a technology solutions company that markets products supported by patents, patent applications and trade secrets which provides identifiers and serialization for authenticating, tracking and tracing functions for labels, packaging and products. The company also markets multi-factor biometric verification solutions to verify people. VerifyMe’s physical technology authenticates packaging, labels and documents with a suite of proprietary security inks and pigments, which work in conjunction with serialization and track-and-trace software. The company’s digital technologies authenticate people by performing strong, multi-factor biometric verification via its patented digital software platforms. To learn more, visit www.verifyme.com

Non-GAAP – Financial Measure:

This press release includes both a financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as a non-GAAP financial measure. 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 net income (loss), operating income (loss), and cash flow from operating activities, liquidity or any other 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.

Our management uses and relies on Adjusted EBITDA which is a non-GAAP financial measure. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measure in planning, forecasting and analyzing future periods. Our management uses this non-GAAP financial measure in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measure has inherent limitations because of the excluded items described below.

VerifyMe defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below. VerifyMe excludes these expenses because they are non-cash or non-recurring in nature.

We have included a reconciliation of our non-GAAP financial measure to the most comparable financial measures calculated in accordance with GAAP. We believe 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.

The following table presents a reconciliation of Adjusted EBITDA to net loss allocable to common shareholders, a GAAP financial measure:

screenshot1221.jpg
VRME.png