ROCHESTER, N.Y., Aug. 14, 2020 (GLOBE NEWSWIRE) — VerifyMe, Inc. (NASDAQ: VRME) (“VerifyMe,” “we,” “our,” or the “Company”), a technology solutions provider specializing in brand protection functions such as counterfeit prevention, authentication, serialization, and track and trace features for labels, packaging and products, announced the Company’s financial results for the second quarter ended June 30, 2020 (“Q2 2020”).Key Financial Highlights for Q2 2020:Revenues increased 86% to $75,256, compared to $40,479 in the second quarter ended June 30, 2019Gross margins of 82%Operating loss increased by 11% to $0.7 millionAdjusted EBITDA(1) improved by 12% to a loss of $352,927Cash balance of $9.6 millionAlleviated going concern issue_________________________________
(1) Adjusted EBITDA is a non-GAAP financial measure. Please see “Use of Non-GAAP Financial Measures” for a discussion of this non-GAAP measure. A reconciliation to the most directly comparable GAAP measure, net loss, is included as a schedule to this release.Recent Business Highlights:Nasdaq listingFormed strategic partnership with Techind Engineers & Consultants-Impex, part of the Gohar Group, of IndiaExpanded VerifyMe® as Authentic™ labels availability for Amazon retailers to enable customers to easily authenticate their product including all legitimate COVID-19 related products with smart phoneSigned first order for VeriPAS™ track and trace technology in the cannabis industryExpanded our contracted sales channel partners and representatives from four in 2019 to sixteen in 2020Granted Notice of Allowance for our patent for our dual code authentication process relating to our invisible QR code and smartphone reading system from the U.S. Patent & Trademark OfficeContinued initial contract with multi-billion-dollar global consumer products companyExpanded reach with new sales representative relationship based outside the United States in Zug, SwitzerlandFocused sales team on six major consumable sales verticalsManagement Commentary
“It has been an eventful past several months, highlighted by our successful $10 million public offering with Maxim Group LLC and Joseph Gunnar & Co., LLC, and our uplisting to Nasdaq,” commented, Patrick White, VerifyMe’s President and Chief Executive Officer.Mr. White continued, “All companies have been impacted by the global COVID-19 pandemic, but we were more fortunate than most due to the fact that we have operated virtually since I took over as Chief Executive Officer in 2017. One major impact the pandemic had to our business was that certain new projects were pushed out, however, none were cancelled. Our current customers have continued marking product and we have been advised by one major customer that they intend to expand their use of our technology to additional products and three countries in the Far East starting in December 2020. It is also important to note that the COVID-19 pandemic environment presents needs for our technology. VerifyMe technologies can be used to authenticate face masks, hygienic hand wipes and COVID-19 test kits. Our pipeline of opportunities is at its highest in Company history, and we anticipate additional projects that are expected to add revenue in the coming 12-months.”Mr. White concluded, “With a healthy balance sheet and a solid cash position, we believe we are in an excellent position to ramp our business with our strategic partners, existing clients and prospective new clients. We also believe that our high margined revenue demonstrates our business model’s ability to generate profitable growth. I couldn’t be more personally excited about our future and believe we are well-positioned for future success.”Sales Team Focus on Six Major Consumable Sales Verticals:CosmeticsFood and BeveragesPharmaceuticals (including cannabis and nutraceuticals)Government Products (including voting ballots, drivers’ licenses, passports, tax stamps, and immigration documents)Apparel (uniforms, military, police, sports, and fashion brands)E-Commerce (preventing website counterfeiting for brand owners)Financial Results for the Three Months Ended June 30, 2020:
Revenue for the three months ended June 30, 2020 was $75,256, an 86% increase as compared to $40,479 for the three months ended June 30, 2019. The revenue primarily related to security printing with our authentication serialization technology for two large global brand owners.Gross profit for the three months ended June 30, 2020 was $62,084, compared to $33,394 for the three months ended June 30, 2019. The resulting gross margin was 82% for the three months ended June 30, 2020, compared to 82% for the three months ended June 30, 2019. We believe our high gross profit margins demonstrate our business model’s ability to generate profitable growth.General and administrative expenses for the three months ended June 30, 2020 were $461,211, an increase of $43,016 or 10%, compared to $418,195 for the three months ended June 30, 2019. The increase primarily related to non-cash stock-based compensation which increased by approximately $82,000 offset by a net decrease in consulting expenses.Legal and accounting expenses for the three months ended June 30, 2020 were $53,174, a decrease of $15,161 or 22%, compared to $68,335 for the three months ended June 30, 2019. The decrease related primarily to a decrease in legal fees.Payroll expenses for the three months ended June 30, 2020 were $209,530, an increase of $107,744 or 106%, compared to $101,786 for the three months ended June 30, 2019. The increase related primarily to an increase in non-cash stock-based compensation of approximately $95,000 and an increase in salary of our Chief Financial Officer effective January 1, 2020.Research and development expenses for the three months ended June 30, 2020 were $402, a decrease of $2,206 or 85%, compared to $2,608 for the three months ended June 30, 2019. The decrease is primarily due to our shift from research and development to commercialization of our products.Sales and marketing expenses for the three months ended June 30, 2020 were $79,439, a decrease of $29,719 or 27%, compared to $109,158 for the three months ended June 30, 2019. The decrease primarily related to a decrease in non-cash stock-based compensation of approximately $57,000 and lower costs due to a decrease in trade shows primarily as a result of the COVID-19 pandemic, offset by increases in sales consulting fees.Operating loss for the three months ended June 30, 2020 was $741,672, an increase of $74,984, or 11%, compared to $666,688 for the three months ended June 30, 2019. The increase primarily related to an increase in non-cash stock-based compensation offset by increases in revenue. Operating loss for the three months ended June 30, 2020 included approximately $353,000 of non-cash stock-based compensation compared to approximately $260,000 of non-cash stock-based compensation for the three months ended June 30, 2019.Net loss for the three months ended June 30, 2020 was $2,653,057, an increase of $1,987,401, or 299%, compared to $665,656 for the three months ended June 30, 2019. The increase primarily was due to amortization of debt discount related to our convertible debentures included in interest expense. The resulting loss per share for the three months ended June 30, 2020 was $1.05 per diluted share, compared to $0.34 per diluted share for the three months ended June 30, 2019.At June 30, 2020, VerifyMe had a $9.6 million cash balance, $0.1 million debt, and 5.34 million shares issued and outstanding.Financial Results for the Six Months Ended June 30, 2020:
Revenue for the six months ended June 30, 2020 was $167,102, a 92% increase as compared to $86,933 for the six months ended June 30, 2019. The revenue primarily related to security printing with our authentication serialization technology for two large global brand owners.Gross profit for the six months ended June 30, 2020 was $137,128, compared to $65,081 for the six months ended June 30, 2019. The resulting gross margin was 82% for the six months ended June 30, 2020, compared to 75% for the six months ended June 30, 2019. This increase was primarily a result of more efficient usage of our RainbowSecure® invisible ink allowing more output per canister. We believe our high gross profit margins demonstrate our business model’s ability to generate profitable growth.General and administrative expenses for the six months ended June 30, 2020 were $1,031,793, an increase of $380,916 or 59%, compared to $650,877 for the six months ended June 30, 2019. The increase resulted primarily from an increase in non-cash charges related to stock-based compensation of $409,476 while the remaining variance was due to efficiencies within the Company.Legal and accounting expenses for the six months ended June 30, 2020 were $89,725, a decrease of $40,974 or 31%, compared to $130,699 for the six months ended June 30, 2019. The decrease related primarily to a decrease in legal fees.Payroll expenses for the six months ended June 30, 2020 were $303,525, an increase of $96,950 or 47%, compared to $206,575 for the six months ended June 30, 2019. The increase related primarily to an increase in non-cash stock-based compensation of approximately $71,000, and an increase in salary of our Chief Financial Officer effective January 1, 2020.Research and development expenses for the six months ended June 30, 2020 were $402, a decrease of $5,849 or 94%, compared to $6,251 for the six months ended June 30, 2019. The decrease is primarily due to our shift from research and development to commercialization of our products.Sales and marketing expenses for the six months ended June 30, 2020 were $122,349, a decrease of $129,952 or 52%, compared to $252,301 for the six months ended June 30, 2019. The decrease in sales and marketing relates to the departure of our VP of Global Business Development and our decreased participation in trade shows that have been cancelled due to the COVID-19 pandemic.Operating loss for the six months ended June 30, 2020 was $1,410,666, an increase of $229,044 or 19%, compared to $1,181,622 for the six months ended June 30, 2019. The increase primarily related to an increase in non-cash stock-based compensation offset by increases in revenue. Operating loss for the six months ended June 30, 2020 included approximately $675,000 of non-cash stock-based compensation compared to approximately $349,000 of non-cash stock-based compensation for the six months ended June 30, 2019.Net loss for the six months ended June 30, 2020 was $3,745,220, an increase of $2,566,258 or 218%, compared to $1,178,962 for the six months ended June 30, 2019. The increase primarily was due to amortization of debt discount related to our convertible debentures included in interest expense. The resulting loss per share for the six months ended June 30, 2020 was $1.58 per diluted share, compared to $0.61 per diluted share for the six months ended June 30, 2019.About VerifyMe, Inc.
VerifyMe, Inc. (NASDAQ: VRME), is a technology solutions provider specializing in brand protection functions such as counterfeit prevention, authentication, serialization, and track and trace features for labels, packaging and products. 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 known as VeriPAS™ that allows both consumers and brand inspectors to verify authenticity with their smartphones. VeriPAS™ is a serialization software system that brand owners access through a web portal to monitor, control and protect their products complete life cycle. To learn more, visit www.verifyme.com.Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements regarding revenue opportunities, the use of our products in additional presses and locations, the results of ongoing tests, and roll-out of our products and authentication devices. 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 impact of the COVID-19 pandemic, intellectual property litigation, the successful development of our sales and marketing capabilities, our ability to retain key management personnel, our ability to work with partners in selling our technologies to businesses, production difficulties, our inability to enter into contracts and arrangements with future partners, 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 Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2019 and the Quarterly Report on Form 10-Q for the three months ended June 30, 2020. 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.Use of Non-GAAP Financial Measures
This press release 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. 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 income before income tax expense (benefit), interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation and change in fair value of derivative liabilities. 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 this press release. The Company believes that providing the non-GAAP financial measures, 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.For Licensing or Other Information Contact:
Company: VerifyMe, Inc.
Email: IR@verifyme.com
Website: http://www.verifyme.comInvestors:
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Balance SheetsVerifyMe, Inc.
Statements of Operations
(Unaudited)(a) Includes share based compensation of $365,295 and $687,924 for the three and six months ended June 30, 2020, respectively, and $259,923 and $349,008 for the three and six months ended June 30, 2019, respectively.VerifyMe, Inc.
Statements of Cash Flows
(Unaudited) VerifyMe, Inc.
GAAP to Non-GAAP Reconciliation
(Unaudited)
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