Company Continues to Execute on Global and Domestic Expansion Iniatitives

Rochester, NY - May 15, 2019 – Accesswire — VerifyMe, Inc. (OTCQB: VRME), a technology solutions company that markets invisible ink identifiers and serialization for authenticating, tracking and tracing functions for labels, packaging and products, announced the Company's financial results for the first quarter ended March 31, 2019.

Key Financial Highlights for Q1 2019:

  • Revenues increased to $46,454, compared to $0 in Q1 2018
  • Operating loss decreased by 31% to $0.5 million
  • Net loss decreased by 54% to  $0.5 million
 
Key Business Highlights for Q1 2019:
  • Participated at several key industry events, including HP Indigo Singapore, DSCOOP and Brand Protection Excellence Forum
  • Strengthened Board of Directors with appointments of Eugene Robin, Arthur Laffer and Chris Gardner
  • A top 10 global consumer products company has applied VerifyMe’s RainbowSecure™ invisible ink technology to 4.5 million product labels during the quarter
  • New VerifyMe Smart Phone Authenticators manufactured in Q1 2019 – these devices will  be leased to brand owners and their investigative teams
 
Subsequent to the end of the first quarter, the Company executed several agreements that will accelerate revenue growth in future quarters.
  • Signed first European license agreement with Arca Etichette, based in Italy, to open European market to VerifyMe brand protection using HP Indigo digital presses
  • Signed commercial technology license agreement with Niagara Label, a western New York label manufacturer specializing in the food and beverage industry
  • Executed a strategic partnership with Covectra, a multi-layered brand protection company, to market and cross-sell each other’s products and services to the pharmaceutical and other industries
 
Management Commentary
“I am pleased to report that we have had an excellent start to the year as we executed on multiple  global and domestic pipeline development objectives.” commented, Patrick White, VerifyMe’s Chief Executive Officer. “All of our hard work and innovation on our security and authentication technology is being recognized by industry experts, partners and clients. Partners such as HP Indigo, Micro Focus, S-One LP and others, are now helping us in driving market adoption.”
 
Mr. White concluded, “Our recently announced contracts and partnerships with Arca Etichette, Niagra Label and Covectra validate our proprietary, patented and disruptive technology solutions for the global anti-counterfeit, piracy and brand protection markets. The late-2018 FDA mandate for serialization, track and trace for all pharmaceutical packaging and label has spurred great interest for our technology solutions in the pharmaceutical industry. We are exctited to now be in the commercializtion phase and look forward to ramping our revenue. 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.  Watch for additional announcments concerning new significant clients and global market expansion.”
 
In conjunction with the smart phone reading device, the VeriPAS cloud-based software gives brand owners the ability to monitor, control and protect their products life cycle. This software resides in the cloud and brand owners can access it over the internet. The software generates serialization codes which the brand owner purchases from VerifyMe. These codes are then printed on labels and packaging in both visible codes for consumers to engage and invisible codes known as RainbowSecure which trained brand inspectors can review with VerifyMe’s smart phone reading device. 
 
Recently Announced Contracts and Partnerships
Arca Etichette (“Arca”) – April 16
Arca Etichette, a leading label and packaging company based in Milan, Italy, signed a license agreement for Arca to incorporate VerifyMe’s brand protection technology solutions to brand owners throughout Europe.
 
This agreement launches VerifyMe’s digital security, authentication and tracking solutions in Europe. The contract is the first leasing of VerifyMe’s patented smart phone authentication devices which reads invisible codes into the cloud and are recorded in the Company’s serialization, track & trace software platform called VeriPAS. VerifyMe’s devices will be leased to brand owners by Arca and in exchange for recurring revenue.
 
Arca’s business covers a wide range of industries, including Pharmaceuticals, Cosmetics, Toiletries, Food, Automotive, Domestic Appliances and Mechanical Components with National and Multinational Companies. Its global customer base of brand owners have increasingly experienced counterfeiting and product diversion of their products and have expressed a desire for a technology solution to mediate these issues to protect their brand and improve their profitability.
 
This global agreement provides Arca with the ability to place VerifyMe’s digital security, authentication and tracking technology solutions in the hands of brand owners who seek to secure their products and goods from counterfeiters and product diversion. This contract entails the first leasing of VerifyMe’s smartphone authentication devices, which read the invisible RainbowSecure™ codes into the cloud and are recorded in the Company’s serialization, track and trace software platform called, “VeriPAS”. These devices are expected to be leased to brand owners and investigators, which will result in a recurring leasing revenue business model for VerifyMe.
 
Niagra Label (“Niagra”) – April 24
Niagara Label, a western New York label manufacturer with 33 years experience signed a license agreement for Niagara to incorporate VerifyMe’s brand protection technology solutions to brand owners throughout the United States. 
 
Niagara is headquartered near Buffalo N.Y. and is strongly positioned and conveniently located to the Northeast, Midwest and Mid-Atlantic regions, specializing in the food & beverage markets.
Niagara works with brand owners in the following industries:
  • Wine, Beer & Spirits
  • Food & Beverage
  • Cannabis 
  • Health & Beauty
  • Industrial/Chemical
 
This global agreement will place VerifyMe’s digital security, authentication and tracking technology solutions in the hands of brand owners who seek to secure and track their products and goods from counterfeiters. The contract entails the leasing of VerifyMe’s Smart Phone authentication devices, which read the invisible RainbowSecure codes into the cloud and are recorded in the Company’s serialization, track and trace software platform called, VeriPAS. These devices are expected to be leased by Niagara Label brand owners and investigators, which will result in a recurring revenue and high gross margin business model for VerifyMe.
 
Covectra – May 6
Covectra, Inc., a multi-layered brand protection company, executed a strategic partnership agreement with VerifyMe. The Cross-Selling Agreement has been signed as a Memorandum of Understanding giving VerifyMe the ability to sell and create a distribution channel to the Pharmaceutical, Food & Beverage, Tobacco and other industries. The Agreement addresses the Pharmaceutical industry’s new Serialization, Track and Trace technology requirements mandated by the FDA in November 2018. 
 
The strategic partnership agreement enables the integration and cross-selling of both companies’ products with each other, specifically:
  • Integrate Covectra’s serialization code generation and management, packaging line serialization system, and authentication engine (“AuthentiTrack”) with VerifyMe’s VeriPAS covert authentication system.
  • Covectra will market and sell AuthentiTrack with the VeriPAS integration as part of its product offering to customers and potential customers who are seeking covert marking products and services.
  • VerifyMe will market and sell VeriPAS with the AuthentiTrack integration, as well as Covectra’s integration services to customers and potential customers who are seeking turnkey solutions integrated into their packaging lines.
  • The two companies will work together to commercialize Covectra’s StellaGuard solution for use with the HP Indigo digital printing presses that dispense VerifyMe’s RainbowSecure ink, and to integrate the solution with VeriPAS so that customers can use one application to read both the StellaGuard “stars” and VerifyMe’s covert RainbowSecure ink.
  • VerifyMe will be the exclusive reseller of the StellaGuard product for use with the HP Indigo digital printing presses and will be a non-exclusive reseller of the StellaGuard product for all other potential uses.

  • Will add additional mutually-agreed upon sales channel relationships to the partnership if and when they become available.
 
Financial Results for the Three Months Ended March 31, 2019:
Revenue for the three months ended March 31, 2019 was $46,454, compared to $0 for the three months ended March 31, 2018. The revenue relates to an order for the printing of labels with our authentication serialization technology for a large global brand owner.
 
Gross profit for the three months ended March 31, 2019 was $31,687, compared to $0 for the three months ended March 31, 2018. The resulting gross margin was 68.2% for the three months ended March 31, 2019.
 
General and administrative expenses for the three months ended March 31, 2019 were $232,682, a decrease of $262,892 or 53%, compared to $495,574 for the three months ended March 31, 2018. 
 
Legal and accounting expenses for the three months ended March 31, 2019 were $62,364, a decrease of $71,340 or 53%, compared to $133,704 for the three months ended March 31, 2018. 
 
Payroll expenses for the three months ended March 31, 2019 were $104,789, an increase of $12,738 or 14%, compared to $92,951 for the three months ended March 31, 2018. 
 
Research and development expenses for the three months ended March 31, 2019 were $3,643, a decrease of $8,553 or 70%, compared to $12,196 for the three months ended March 31, 2018. 
 
Sales and marketing expenses for the three months ended March 31, 2019 were $143,933, an increase of $135,891, compared to $8,042 for the three months ended March 31, 2018. The increase in sales and marketing relates to the Company entering its commercialization phase, specifically the hiring of our VP of Global Business Development and our increased participation in global trade shows.
 
Operating loss for the three months ended March 31, 2019 was $514,934, a decrease of $226,633, or 31%, compared to $741,567 for the three months ended March 31, 2018. 
 
Adjusted EBITDA loss for the three months ended March 31, 2019 was $420,142, an increase of $371,237, as compared to $48,905 for the three months ended March 31, 2018. 
 
Net loss for the three months ended March 31, 2019 was $513,306, a decrease of $610,327, or 54%, compared to $1,123,633 for the three months ended March 31, 2018. The resulting EPS loss for the three months ended March 31, 2019 was $(0.01) per diluted share, compared to $(0.01) per diluted share for the three months ended March 31, 2018.
 
 
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:
 

    Three Month Ended March 31,   
    2019     2018  
             
Net loss   $ (513,306 )   $ (1,123,633 )
                 
Interest expense (income), net     (1,628 )     791  
Amortization and depreciation     5,707       5,034  
Total EBITDA (Non-GAAP)     (509,227 )     (1,117,808 )
                 
Adjustments:                
                 
Stock based compensation     -       32,644  
Fair value of options and warrants issued in exchange for services     123,711       205,969  
Fair value of restricted stock and restricted stock units issued in exchange for services     (34,626 )     51,290  
Common stock and warrants issued for services     -       -  
Share-based payment for settlement agreement with shareholders     -       279,000  
Cash payment for settlement agreement with shareholders     -       500,000  
                 
Total Adjusted EBITDA (Non-GAAP)   $ (420,142 )   $ (48,905 )
 
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    
 
Cautionary Note Regarding Forward-looking Statements
This release contains forward-looking statements regarding accelerating  revenue growth, our pipeline, the leasing of authenticators and the related recurring revenue and high gross margins and our projected 2019 gross margins. The words "believe," "may", “estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the company's ability to work with partners in selling its technologies to businesses, production difficulties, our inability to enter into contracts and deals with future partners, and issues which may affect the reluctance of large companies to change their purchasing of products, acceptance of our technologies, and the efficiency of our authenticators in the field Further information on our risk factors is contained in our filings with the SEC, including the Form 10-K for the year ended December 31, 2018. Any forward-looking statement made by us herein speaks only as of the date on which it is made. 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 any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
 
For Licensing or Other Information Contact:
     Company: VerifyMe, Inc.
     Email: IR@verifyme.com
     Website:  http://www.verifyme.com
                 
 
 
 
 
 
 
 
FINANCIAL STATEMENTS
  
VerifyMe, Inc.
Balance Sheets
 
 
    As of  
    March 31, 2019     December 31, 2018  
    (Unaudited)        
ASSETS            
CURRENT ASSETS            
Cash and cash equivalents   $ 1,055,585     $ 1,673,201  
Accounts Receivable     28,262       30,373  
Deposits on Equipment     163,090       -  
Prepaid expenses and other current assets     22,781       25,781  
Inventory     30,374       41,982  
TOTAL CURRENT ASSETS     1, 307,292       1,771,337  
                 
INTANGIBLE ASSETS                
Patents and Trademarks, net of accumulated amortization of                
$264,001 and $258,294 as of March 31, 2019 and December 31, 2018     227,777       209,049  
Capitalized Software Costs     70,231       70,231  
TOTAL ASSETS   $ 1,605,300     $ 2,050,617  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
CURRENT LIABILITIES                
Accounts payable and other accrued expenses   $ 377,786     $ 411,211  
Accrued Payroll     81,370       69,041  
TOTAL CURRENT LIABILITIES     459,156       480,252  
                 
STOCKHOLDERS' EQUITY                
Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares                
 authorized; 264,778 shares issued and outstanding as of March 31, 2019 and                
304,778 shares issued and outstanding as of December 31, 2018     265       305  
                 
Series B Convertible Preferred Stock, $.001 par value; 85 shares                
  authorized; 0.85 shares issued and outstanding as of March 31, 2019 and 2018     -       -  
                 
Common stock of $.001 par value; 675,000,000 authorized; 103,993,706 and
102,553,706 issued, 103,643,166 and 102,203,166 shares outstanding as of
March 31, 2019 and December 31, 2018
    103,643       102,203  
                 
Additional paid in capital     60,932,481       60,844,796  
                 
Treasury stock as cost (350,540 shares at March 31, 2019 and December
31, 2018)
    (113,389 )     (113,389 )
                 
Accumulated deficit     (59,776,856 )     (59,263,550 )
STOCKHOLDERS' EQUITY     1,148,644       1,570,365  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,605,300     $ 2,050,617  
 
 
 
 
VerifyMe, Inc.
Statements of Operations
(Unaudited)
    Three months ended  
    March 31, 2019     March 31, 2018  
NET REVENUE            
Sales   $ 46,454     $ -  
                 
COST OF SALES     14,767       -  
                 
GROSS PROFIT     31,687       -  
                 
OPERATING EXPENSES                
General and administrative (a)     232,682       495,574  
Legal and accounting     62,364       133,704  
Payroll expenses (a)     104,789       92,051  
Research and development     3,643       12,196  
Sales and marketing (a)     143,143       8,042  
Total Operating expenses     546,621       741,567  
                 
LOSS BEFORE OTHER INCOME (EXPENSE)     (514,934 )     (741,567 )
                 
OTHER (EXPENSE) INCOME                
Interest income (expenses), net     1,628       (791 )
Settlement agreement with shareholders     -       (779,000 )
Gain on accounts payable forgiveness     -       397,725  
      1,628       (382,066 )
NET LOSS   $ (513,306 )   $ (1,123,633 )
                 
LOSS PER SHARE                
BASIC   $ (0.01 )   $ (0.01 )
DILUTED   $ (0.01 )   $ (0.01 )
                 
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING                
BASIC     94,092,049       76,278,102  
DILUTED     94,092,049       76,278,102  
 
VerifyMe, Inc.
Statements of Cash Flows
(Unaudited)
 
    Three months ended  
    March 31, 2019     March 31, 2018  
CASH FLOWS FROM OPERATING ACTIVITIES            
Net loss   $ (513,306 )   $ (1,123,633 )
Adjustments to reconcile net loss to net cash used in                
operating activities:                
Stock based compensation     -       32,644  
Fair value of options and warrants issued in exchange for services     123,711       205,969  
Fair value of restricted stock and restricted stock units issued in exchange for services     (34,626 )     51,290  
Gain on accounts payable forgiveness     -       (397,725 )
Share-based payment for settlement agreement with shareholders     -       279,000  
Amortization and depreciation     5,707       5,034  
Changes in operating assets and liabilities:                
Accounts Receivable     2,111       -  
Deposit on Equipment     (163,090 )     -  
Inventory     11,608       (9,768 )
Prepaid expenses and other current assets     (4,200     (12,566 )
Accounts payable and accrued expenses     (21,096 )     (12,286 )
Net cash used in operating activities     (593,181 )     (982,041 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of Patents     (24,435 )     (825 )
Net cash used in investing activities     (24,435 )     (825 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from exercise of warrants     -       1,476,489  
Proceeds from sale of common stock     -       1,154,777  
Net cash provided by financing activities     -       2,631,266  
                 
NET INCREASE  IN CASH AND                
CASH EQUIVALENTS     (617,616 )     1,648,400  
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD     1,673,201       693,001  
                 
CASH AND CASH EQUIVALENTS - END OF PERIOD   $ 1,055,585     $ 2,341,401  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                
Cash paid during the period for:                
Interest   $ -     $ -  
    Income taxes   $ -     $ -  
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                
                 
Series A Convertible Preferred Stock converted to common stock   $ 800     $ 400  
Series B Convertible Preferred Stock converted to common stock   $ -     $ 599  
Cashless Exercise of Warrants   $ -     $ 4,028  
Common Stock and Warrants Issued for Common Stock Payable   $ -     $ 122,478