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What changed in VerifyMe, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of VerifyMe, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+205 added−244 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-28)

Top changes in VerifyMe, Inc.'s 2023 10-K

205 paragraphs added · 244 removed · 157 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

59 edited+15 added−43 removed18 unchanged
Biggest changeResearch in our PeriShip Global Solutions segment is currently focused on developing: · multi-carrier software support so our services can be provided to clients no matter which carrier they choose to ship their packages; · the ability to print labels utilizing our own label printing software rather than relying on a carrier’s print engine; · an mobile app for smart phones so our clients can access our portal from their phones rather than a personal computer; · the imbedding of artificial intelligence into our proprietary IT portal to expand and improve our predictive analytics capabilities; · imbedding a new temperature sensitive ink solution that will give an indication if a temperature exceeded a certain level on packaging for vaccines, food and beverages, and other temperature sensitive packaging, that need constant cold storage temperatures during transit; · creating revenue from our weather analytics.
Biggest changeResearch in our Precision Logistics segment is currently focused on developing: · the ability to print labels utilizing our own label printing software rather than relying on a carrier’s print engine; · the imbedding of machine learning into our proprietary IT portal to expand and improve our predictive analytics capabilities; and · creating revenue from our weather analytics.
Utilizing predictive analytics from multiple data sources including weather, traffic, flight data, 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.
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.
While a recession, whether global or more localized to the U.S., may decrease the demand for our services that are more discretionary in nature, we believe that the internal cost cutting measures, if implemented by the major global carrier, may benefit out-sourced service providers, including PeriShip Global.
While a recession, whether global or more localized to the U.S., may decrease the demand for our services that are more discretionary in nature, we believe that the internal cost cutting measures, if implemented by the major global carrier may benefit out-sourced service providers.
This partnership includes the ability for both companies to white label each partner’s services. In addition, PeriShip Global has data feeds directly from the carrier into our proprietary logistics optimization software which provides shippers much more detailed information and predictive analytics on their shipment versus a standard shipping code look up which is provided by the carrier.
This partnership includes the ability for both companies to white label each partner’s services. In addition, Precision Logistics has data feeds directly from the carrier into our proprietary logistics optimization software which provides shippers much more detailed information and predictive analytics on their shipment versus a standard shipping code look up which is provided by the carrier.
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.
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.
We expect that all of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired PeriShip business is included in the PeriShip Global Solutions segment and the results of its operations have been included in the consolidated financial statements beginning April 22, 2022.
We expect that all of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired PeriShip Global business is included in the Precision Logistics segment and the results of its operations have been included in the consolidated financial statements beginning April 22, 2022.
We are seeking to expand our business in this market and believe that as additional pharmaceutical companies seek to comply with the legislation, our products will provide attractive alternatives to address the need for product identifiers. · Consumer Products –We believe our technology solutions are particularly suited for the cosmetics, health and beauty and apparel industries.
We are seeking to expand our business in this market and believe that as additional pharmaceutical companies seek to comply with the legislation, our products will provide attractive alternatives to address the need for product identifiers. 3 Table of Contents · Consumer Products – We believe our technology solutions are particularly suited for the cosmetics, health and beauty and apparel industries.
We believe many of the clients of PeriShip Global will benefit from the legacy VerifyMe business consumer engagement and food safety technologies. We will also continue to re-establish trade show attendance which had declined during the height of the COVID pandemic.
We believe many of the clients of PeriShip Global will benefit from the legacy VerifyMe business consumer engagement and food safety technologies. We will also continue to participate in trade show attendance which had declined during the height of the COVID pandemic.
PeriShip Global’s 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.
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.
Amazon has become a competitor with their new “Project Zero” brand protection system utilizing their “Transparency” serialization product. Amazon’s product serialization service provides a unique code for every unit that is manufactured, and the brand puts these codes on its products as part of its manufacturing process, which Amazon scans and verifies.
Amazon has an anti-counterfeit service with their “Project Zero” brand protection system utilizing their “Transparency” serialization product. Amazon’s product serialization service provides a unique code for every unit that is manufactured, and the brand puts these codes on its products as part of its manufacturing process, which Amazon scans and verifies.
There are approximately 10 U.S. companies that operate a similar business model, however most of these companies specialize in a particular field such as healthcare or non-perishable building materials. PeriShip Global is operating in all of the perishable segments.
There are other companies that operate a similar business model, however most of these companies specialize in a particular field such as healthcare or non-perishable building materials. PeriShip Global is operating in all of the perishable segments.
We give the consumer the ability to test a products authenticity instantly with a smartphone.
We give the consumer the ability to test a product’s authenticity instantly with a smartphone.
VerifyMe has a contract with HP Indigo, and a strategic partnership with INX International, the third largest producer of inks in North America. We believe these partnerships can be used to enable brand owners to securely prevent product diversion, engage with their consumers and authenticate labels, packaging and products, alleviating liability from counterfeit products that harm consumers.
Our Authentication segment has a contract with HP Indigo, and a strategic partnership with INX, the third largest producer of inks in North America. We believe these partnerships can be used to enable brand owners to securely prevent counterfeiting, prevent product diversion and authenticate labels, packaging and products alleviating liability from counterfeit products that harm consumers.
If an alert is created the shipper and our call 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. PeriShip Global has two meteorologists on staff that track world-wide weather patterns to address predicted 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.
Available Information We make available free of charge on our website, www.verifyme.com, all materials that we file electronically with the Securities and Exchange Commission (“SEC”), including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC.
We have also entered into commissioned sales contract arrangement with our strategic partner, HP Indigo. 8 Table of Contents Available Information We make available free of charge on our website, www.verifyme.com, all materials that we file electronically with the Securities and Exchange Commission (“SEC”), including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC.
We spent approximately $89 thousand and $51 thousand during the years ended December 31, 2022, and 2021, respectively, on research and development.
We spent approximately $107 thousand and $89 thousand during the years ended December 31, 2023, and 2022, respectively, on research and development.
We believe taking the data feeds from a carrier and adding real-time visibility with predictive analytics and the human intervention factor of PeriShip Global’s call center gives us a major competitive advantage against other third-party platforms that solely rely on the carrier’s data feeds. PeriShip Global utilizes a variety of input sources beyond just the carrier’s data feed.
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.
A package may experience a variety of weather conditions between the origin and destination, and our team actively monitors these conditions to minimize the changes of timely and safe transit of shipments. Similarly, traffic and construction also create unpredictable delays which our team works diligently to mitigate.
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.
The expiration date of a pending application that matures into a registration depends upon the issuance date and any adjustment under 35 U.S.C. 154(b). 6 Table of Contents It is cost prohibitive to register patents in every country.
Our registered patents expire between the years 2024 and 2039. The expiration date of a pending application that matures into a registration depends upon the issuance date and any adjustment under 35 U.S.C. 154(b). 5 Table of Contents It is cost prohibitive to register patents in every country.
The call center acts as a help desk and monitors shipping to delivery for our customers. Pre-Transit Service : PeriShip Global helps clients prepare their products for shipments by advising clients on packaging requirements for various types of perishable products.
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.
While some of our granted patents are commercially ready, we believe that others may have commercial application in the future but will require additional capital and/or a strategic partner in order to reach the potential markets. All of our patents are related to the inventions described above. Our registered patents expire between the years 2023 and 2039.
The Company abandoned two patents during the year ended December 31, 2023. While some of our granted patents are commercially ready, we believe that others may have commercial application in the future but will require additional capital and/or a strategic partner in order to reach the potential markets. All of our patents are related to the inventions described above.
PeriShip Global generates revenue from three business service models. · Proactive Service – PeriShip Global clients pay us directly for carrier service coupled with our proactive logistics assistance. · Direct Premium Service –PeriShip Global clients pay us directly for carrier service coupled with our complete white-glove shipping monitoring and predictive analytics service.
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.
Through our VerifyMe Solutions segment, our technologies provide unit level traceability, brand protection, unit level traceability and consumer engagement solutions allowing brand owners to gather business intelligence, cross-sell products, monitor product diversion through the supply chain and build brand loyalty through interaction utilizing our unique dynamic codes which are read by consumers with their smart phones.
Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones.
In addition, VerifyMe’s consumer engagement solutions could give PeriShip Global food and beverage clients the ability to gather rich business intelligence, turn “unknown consumers” into “known consumers” and build customer loyalty with engagement functions like videos, discounts, contests, etc. Strategic Partnerships PeriShip Global has a direct partnership with a major global carrier company.
In addition, our Authentication segment brand enhancement solutions could give the Precision Logistics food and beverage clients the ability to gather rich business intelligence and build customer loyalty with engagement functions like videos, discounts, contests, recipes, etc. Partnerships: Precision Logistics has a direct partnership with a major global carrier company.
Our current patent and trademark portfolios consist of eleven granted U.S. patents and one granted European patent validated in four countries (France, Germany, United Kingdom, and Italy), six pending U.S. and foreign patent applications, fifteen registered U.S. trademarks (of which seven trademarks were acquired through our wholly owned subsidiary, PeriShip Global), two EU trademark registrations, one Colombian trademark registration, one Australian trademark registration, one Japanese trademark registration, one Mexican trademark registration, one Singaporean trademark registration, two UK trademark registrations, and twenty-one pending US and foreign trademark applications.
As of December 31, 2023, our current patent and trademark portfolios consist of nine granted U.S. patents and two granted European patents, one validated in four countries (France, Germany, United Kingdom, and Italy), and the second patent validated in three countries (France, Germany, and United Kingdom), three pending U.S. and foreign patent applications, twenty-six registered U.S. trademarks (of which nineteen are in the name of VerifyMe, Inc., and seven trademarks were acquired through our wholly owned subsidiary, PeriShip Global), two EU trademark registrations, one Colombian trademark registration, one Australian trademark registration, one Japanese trademark registration, one Mexican trademark registration, one Singaporean trademark registration, two UK trademark registrations, seven NZ trademark registration (of which six are in the name of Trust Codes Limited and/or Trust Codes Global Limited), one OAPI (African Intellectual Property Organization) trademark registration (in the name of Trust Codes Global Limited), and two pending US and foreign trademark applications.
However, our name and brand could be confused with brands that have similar names, including but not limited to Verified.Me, a service offered to Canadians by SecureKey Technologies Inc. We have a pending application for the VerifyMe name in Canada but can make no assurances regarding its approval.
However, our name and brand could be confused with brands that have similar names, including but not limited to Verified.Me, a service offered to Canadians by SecureKey Technologies Inc.
Our Solutions PeriShip Global Solutions: The PeriShip Global Solutions segment specializes in predictive analytics through its proprietary software platform 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 extended delivery times.
Further information regarding our business segments is discussed below: Precision Logistics: The Precision Logistics (formerly PeriShip Global Solutions) segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive perishable products. We manage complex industry-specific shipping logistic processes that require critical time, temperature control and handling to prevent spoilage and extreme delivery times and brand impairment.
For example, currently PeriShip Global ships vaccines for major pharmaceutical companies. With the addition of VerifyMe technology, PeriShip Global can add unit level traceability and authentication to protect clients’ vaccines from product diversion and sub-standard counterfeits.
With the addition of our Authentication technology, we can add unit level traceability and authentication to protect clients’ vaccines from product diversion and sub-standard counterfeits.
In addition, we believe that combining VerifyMe’s solutions into the product offering for PeriShip Global clientele, including food and beverage and healthcare industries, gives PeriShip Global a competitive advantage to generate revenue by enhancing PeriShip Global’s clients’ ability to grow revenue, gain business intelligence and build brand loyalty. The current global logistics industry worldwide is facing an economic slowdown.
We are focusing our sales emphasis on those industries. In addition, we believe that combining our authentication solutions into the product offering for Precision Logistics clientele, gives our Precision Logistics segment a competitive advantage to generate revenue by enhancing clients’ ability to grow revenue, gain business intelligence and build brand loyalty. The U.S. logistics industry is facing an economic slowdown.
Through our PeriShip Global Solutions segment we provide a value-added service for time and temperature sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as flight-tracking, weather, and traffic, all delivered to customers via a secure portal. The portal provides real-time visibility into shipment transit and last-mile events, with dynamic dashboards.
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.
Using the 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. 2 Table of Contents 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.
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.
As a result, we may not have sufficient resources to develop and market our services to the market effectively. We expect competition with our products and services to continue and intensify in the future. Major Customers/Vendors During the year ended December 31, 2022, one customer accounted for 13% of total revenue.
As a result, we may not have sufficient resources to develop and market our services to the market effectively. We expect competition with our products and services to continue and intensify in the future.
VerifyMe Opportunities We believe VerifyMe’s products have applications in many areas. Currently, we are aggressively marketing opportunities in the following areas: · Food and Beverage – Food safety is becoming more common as supply chains become more global and as imaging and manufacturing technology become more accessible.
Currently, we are aggressively marketing opportunities in the following areas: · Agriculture, Food and Beverage – Food safety is becoming more common as supply chains become more global and as imaging and manufacturing technology become more accessible. Food traceability, sustainability and carbon neutral production is becoming a significant consideration for brand and governments.
All aspects of the of the shipping journey is managed by a dedicated call center. Using our proprietary logistics solution, 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.
PeriShip Global provides shipping logistics services utilizing proprietary predictive analytics software and supporting service center services. 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.
If delays or other issues occur the PeriShip team informs clients and works with them to proactively resolve such shipment issues. VerifyMe Solutions: The VerifyMe Solutions segment in traceability to connect brands with consumers through their product. Brands can gain unit level traceability through the supply chain.
If delays or other issues occur, we inform clients and work with them to proactively resolve such shipment issues. 2 Table of Contents Authentication : The Authentication (formerly VerifyMe Solutions) segment specializes in traceability to connect brands with consumers through their product.
ITEM 1. BUSINESS. Overview VerifyMe, Inc. (“VerifyMe”) together with its subsidiaries PeriShip Global, LLC (“PeriShip Global”) and Trust Codes Global Limited (“Trust Codes Global”), (together the “Company,” “we,” “us,” or “our”), is a software driven predictive analytics logistics provider of high-touch end-to-end logistics management, which represents most of our current revenue stream.
ITEM 1. BUSINESS. Overview VerifyMe, Inc. (“VerifyMe”) together with its subsidiaries, including PeriShip Global, LLC (“PeriShip Global”) and Trust Codes Global Limited (“Trust Codes Global”), (together the “Company,” “we,” “us,” or “our”), is a traceability and customer support services provider using specialized software and process technology.
It also stated it is cutting $500 million from its capital expenditure budget for its fiscal year, which runs through May of 2023. 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.
We have seen a softening in demand for some services related to high-end perishable items and cannabis products which seem to be impacted by reduced discretionary spending by U.S. consumers.
Post-Delivery : PeriShip Global provides 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 : PeriShip Global has full-time meteorologists on staff to monitor weather.
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.
These consultants mainly focus on brand owners, and they are not constricted geographically. 7 Table of Contents Competition PeriShip Global has developed its own software portal with predictive analytics for weather, traffic, power grids, and data feeds it receives from one of the world’s largest logistics carriers.
For our Authentication segment, these strategic partners have relationships with government and brands and include both paid and commissioned sales only contract arrangements. 7 Table of Contents Competition PeriShip Global has developed its own software portal with predictive analytics for weather, traffic, power grids, and data feeds it receives from one of the world’s largest logistics carriers.
In lieu of building, training, and supporting a world-wide internal sales force, we have engaged with multiple strategic partners who have existing relationships in their particular geographical locations. For our VerifyMe Solutions segment, these strategic partners have relationships with government and brands and include both paid and commissioned sales only contract arrangements.
In lieu of building, training, and supporting a world-wide internal sales force, we continue to have strategic partners who have existing relationships in their particular geographical locations.
This tool provides details on the unique shipper’s in-transit shipments, with the ability to select and analyze data on individual shipments. Call Center Service : PeriShip Global has assembled a team of customer resolution specialists based in the U.S. This human intervention service team resolves shipping problems on behalf of our customers.
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.
In recent years, however, demand has increased for more sophisticated overt and covert security technologies with a strong desire for technologies that can provide variable images and data.
In North America, brand protection products, such as tamper-resistant packaging, security labels, and anti-theft devices are readily available and utilized on a widespread basis. In recent years, however, demand has increased for more sophisticated overt and covert security technologies with a strong desire for technologies that can provide variable images and data.
In addition, we provide proactive alerts to address on-coming weather issues to make changes in scheduling to meet critical deadlines for shipments. We offer post-delivery services such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.
We offer post-delivery services such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.
Our legacy ink technology in our VerifyMe Solution Segment is effectively complete, and we are concentrating on the marketing of our technologies. VerifyMe continues to monitor the market for state-of-the-art innovation and may add new products and services in the future, if we believe it would provide a competitive market advantage and could be successfully monetized.
VerifyMe continues to monitor the market for state-of-the-art innovation and may either develop, partner to deploy or seek to acquire new technologies, products and services in the future, if we believe it would provide a competitive market advantage and could be successfully monetized. 6 Table of Contents Sales and Marketing Strategy Business development and sales resources are aligned to support existing customer accounts and new customer development.
The purchase price was approximately $1,000,000, which consisted of approximately $350,000 in cash paid at closing, and 353,492 shares of restricted common stock of the Company, representing $650,000 in Stock Consideration.
The purchase price was approximately $1.0 million which consisted of approximately $0.36 million in cash paid at closing, and 353,492 shares of restricted common stock of the Company, representing $0.65 million in stock consideration. In addition, the purchase agreement requires consideration contingent upon the achievement of earnings targets during a five-year period subsequent to the closing of the acquisition.
These products are combined with “software as a service” or “SAAS” which is stored in the cloud and accessed through the internet. · VerifyMe Engage™ for consumer engagement allowing the brand owner to gather business intelligence and engage with their customers · VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packages and products · VerifyMe Track & Trace™ for unit level traceability and supply chain control 3 Table of Contents PeriShip Global and VerifyMe Synergies: We believe that PeriShip Global and our VerifyMe solutions have synergistic product centric technology platforms and combined have a compelling technology offering for brand owners.
These products are combined with “software as a service” or “SaaS” which is stored in the cloud and accessed through the internet. · VerifyMe Engage™ for brand enhancement allowing the brand owner to gather business intelligence and engage with customers · VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packaging and products · VerifyMe Track & Trace™ for unit level traceability and supply chain control Opportunities Precision Logistics: 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 this represents an opportunity for PeriShip Global since major global carriers are cutting internal staff and are reducing research and development investments. To maintain their credibility in the market, these carriers will need to ensure they meet their customers’ demands for time and temperature sensitive shipments, while maintaining their overheads.
To maintain their credibility in the market, these carriers will need to ensure they meet their customers’ demands for time and temperature sensitive shipments, while maintaining their overheads. We believe outsourcing this function to our Precision Logistics segment provides the ideal solution for all parties involved.
Security printing for currency production began in Europe over a century ago and has resulted in the establishment of old-line security printers which have branched out into brand and product protection as well. In North America, brand protection products, such as tamper-resistant packaging, security labels, and anti-theft devices are readily available and utilized on a widespread basis.
The market for protection from diversion, theft and forgery is a highly fragmented industry that includes smaller companies as well as a number of large, well-established companies. Security printing for currency production began in Europe over a century ago and has resulted in the establishment of old-line security printers which have branched out into brand and product protection as well.
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 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.
PeriShip Service Products: The PeriShip Global Solutions 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 and alerts based on real-time data.
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.
Due to the current economic downturn, we believe several companies will opt to outsource their logistics services to reduce their operational costs and maintain cash flows. The outsourcing of supply chain logistics operations to service providers such as PeriShip Global allows companies to improve the efficiency of their businesses by focusing their resources on core competencies.
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. Authentication: We believe the products in our Authentication segment have applications in many areas.
Additionally, PeriShip Global is working with this major global carrier to address their small and medium sized business clients, which we believe is an underserved segment and presents considerable growth opportunities for PeriShip Global.
We are working with this major global carrier to address their small and medium-sized business clients, which we believe is an underserved market and presents considerable growth opportunities for our Precision Logistics segment. However, 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.
On April 22, 2022, we acquired, through PeriShip Global, the business and certain assets of PeriShip, LLC, a value-added service provider for time and temperature sensitive parcel management. PeriShip Global provides shipping logistics services utilizing proprietary predictive analytics software and supporting call center services.
Trust Codes Global is included in the Authentication segment and the results of its operations are included in the consolidated financial statement beginning March 1, 2023. 4 Table of Contents On April 22, 2022, we acquired, through PeriShip Global, the business and certain assets of PeriShip, LLC, a value-added service provider for time and temperature sensitive parcel management.
By staying in contact and engaging with customers, we are able to identify possible needs and look for opportunities to expand the services we are providing. We are currently revising the PeriShip Global website, with an on-line chat system as well as aligning with the VerifyMe website to advertise our synergistic offerings.
We use social media channels, such as LinkedIn, Facebook and Twitter as a means of marketing our services. By staying in contact and engaging with customers, we are able to identify possible needs and look for opportunities to expand the services we are providing. We are currently revising and optimizing our websites to improve customer engagement and SEO.
However, 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. 5 Table of Contents Business Combination On March 1, 2023, we acquired, through Trust Codes Global, the business and certain assets of Trust Codes Limited, which provides unique item level codes for brand protection, data intelligence and consumer engagement technology with an expertise in the food and agriculture industry.
Business Combinations On March 1, 2023, we acquired, through Trust Codes Global, the business and certain assets of Trust Codes, a company specializing in brand protection, anti-counterfeiting and consumer engagement technology with an expertise in the food and agriculture industry.
Trust Codes Global is based in New Zealand and provides brand protection based on a digital identity assigned at the unique item level delivered to customers through a software as a service model. The use of unique QR codes or IoT, coupled with GS1 standards, connects brands to consumers.
Trust Codes Global uses unique QR codes or IoT, coupled with GS1 standards to deliver cloud-based brand protection based on a unique per-item digital identity to protect brand and product authenticity, increase data visualization of a product through the end-to-end supply chain and creates a data driven engine to inform and educate consumers of the product.
During the year ended December 31, 2021, five customers accounted for 95% of total revenue. During the years ended December 31, 2022, one vendor accounted for 99% of transportation cost in our PeriShip Global Solutions segment. As of December 31, 2022, two customers accounted for 23% of total accounts receivable.
Major Customers/Vendors During the year ended December 31, 2023, one customer represented 17% of revenues and one customer represented 13% of revenues for the year ended December 31, 2022. As of December 31, 2023, three customers made up 47% of accounts receivable. As of December 31, 2022, two customers accounted for 23% of total accounts receivable.
We believe outsourcing this function to PeriShip Global provides the ideal solution for all parties involved. 4 Table of Contents Building logistics infrastructure is a capital-intensive process as the investment is locked in for a considerably long period.
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 will opt to outsource their precision logistics services to reduce their operational costs.
As of December 31, 2021, three customers accounted for 91% of total accounts receivable. Employees and External Sales Force As of December 31, 2022, we employed approximately 50 persons and several consultants. Of these employees, approximately 40 were employed in our PeriShip Global operations and 8 were employed by our legacy business, VerifyMe.
During the year ended December 31, 2023, and December 31, 2022, one vendor accounted for 99% of transportation costs, in our Precision Logistics segment. Employees and External Sales Force As of December 31, 2023, we employed approximately fifty persons and eight consultants.
Removed
In addition, VerifyMe technologies provide product traceability, brand protections services, and consumer engagement solutions. Our operations are split into two segments: PeriShip Global Solutions and VerifyMe Solutions.
Added
The company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions.
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Further information regarding our business segments is discussed below: Business Update Recent Developments On March 1, 2023, the Company entered into an Asset Purchase Agreement (the “APA”) effective as of February 28, 2023 by and among the Company, Trust Codes Global, Trust Codes Limited, a New Zealand limited liability company (“Trust Codes”) and Signum Holdings Limited.
Added
The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center.
Removed
Pursuant to the terms of the APA Trust Codes Global agreed to purchase from Trust Codes and Trust Codes agreed to sell to Trust Codes Global substantially all of the assets of Trust Codes and certain specified liabilities (the “Transaction”). The Transaction closed simultaneously with the execution of the APA on March 1 , 2023.
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This is critical in the current landscape of increased regulations, as well as increased counterfeit activity and product diversion. The ability to detect fraud or abnormal behavior while tracing an item’s journey from production through to the consumer’s hands provides consumers and brands the assurance they require.
Removed
Trust Codes Global leverages advanced algorithms to protect authenticity and brand value and provides data-driven storytelling which allows visibility of the journey for each item through the supply chain to the consumer’s hands.
Added
VerifyMe has custom software, patented technologies, and a cloud environment that combines machine learning and data science to meet the needs of consumers and brands. In addition, the personalized consumer experience with the brand creates a connection that increases brand perception and loyalty. Products : We have a custom suite of products that offer clients traceability and brand solutions.
Removed
We believe combining the solutions of Trust Codes Global and PeriShip Global will allow the Company to provide a competitive advantage in the software logistics space, securing supply chains from products manufacture all way to the point of delivery, elevating a consumer’s trust and their brand experience.
Added
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.
Removed
Please refer to Note 17 – Subsequent Events – to the Audited Consolidated Financial Statements appended to this Report and incorporated by reference into Item 8 in this Annual Report on Form 10-K. In January 2023 we signed a mutual sales referral agreement with The Agrarian Group.
Added
We believe this represents an opportunity since major global carriers are cutting internal staff. These carriers are looking for lower cost alternatives to service their customers as well as partners that can help the carrier increase revenues.
Removed
The agreement is structured to help advance food safety and customer loyalty, as well as increase revenue for both companies. The food industry is a focus area for our VerifyMe Solutions segment and perishable food has been a long-standing focus of our PeriShip Global segment.
Added
Synergies : We believe that Precision Logistics and Authentication segments have synergistic product centric technology platforms and combined have a compelling technology offering for brand owners. For example, currently our Precision Logistics segment ships vaccines for major pharmaceutical companies.
Removed
In November 2022 we entered into an amended five-year renewal agreement with HP Indigo to provide VerifyInk TM security ink taggants for HP Indigo digital presses. This amended agreement also increases the scope of cooperation, in which HP Indigo will refer opportunities for additional VerifyMe technologies.
Added
Current Economic Environment In response to market conditions and lower demand some carriers have implemented strategies to address a potential global recession.
Removed
In September 2022 we entered into a $2 million term loan agreement and a $1 million line of credit with PNC Bank and repaid the $2 million promissory note from the acquisition of PeriShip LLC.
Added
In April 2023, the major carrier that PeriShip Global partners with laid out steps it was taking to slash $4 billion in permanent costs by the end of its 2025 fiscal year in response to these market conditions and lower demand.
Removed
In August 2022, we entered into a multi-year contract extension with our strategic partner and largest customer of PeriShip Global to continue to provide proactive customer service to their customers. The term of the agreement has been extended to March 1, 2026.
Added
In June 2023, the major carrier stated that due to ongoing demand its plans to ground 29 more aircraft in its fiscal year that started in June 2024. In mid-December 2023, the carrier forecasted a low single digit percentage decline in revenue year over year for 2024.
Removed
This service includes the customer web portal access, weather monitoring, temperature control, full call center support and last mile resolution. · Indirect Premium Service – Our carrier partner also offers a “white label” version of our Premium Service to its customers and pays us a fixed contractual fee.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

35 edited+12 added−26 removed165 unchanged
Biggest changeWe operate in a highly competitive industry and our business may suffer if we are unable to adequately address potential downward pricing pressures and other competitive factors. The transportation and logistics industry is highly competitive and cyclical, and is expected to remain so for the foreseeable future. The traceability and consumer engagement industry is also highly competitive.
Biggest changeThe transportation and logistics industry is highly competitive, cyclical, and is expected to remain so for the foreseeable future. The traceability and consumer engagement industry is also highly competitive. We face competition in all geographic markets and each industry sector in which we operate. We have and may face continued competition by strategic partners.
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.
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.
Additionally, if our service providers fail to meet their obligations, provide poor, inaccurate or untimely service, or we are unable to make alternative arrangements for these services, we may fail, in turn, to provide our services or to meet our obligations to our users, and our business, financial condition and operating results could be materially and adversely affected. 17 Table of Contents Fluctuations in labor costs, raw materials, changes in the availability of key suppliers, or catastrophic events may increase the cost of our products and services.
Additionally, if our service providers fail to meet their obligations, provide poor, inaccurate or untimely service, or we are unable to make alternative arrangements for these services, we may fail, in turn, to provide our services or to meet our obligations to our users, and our business, financial condition and operating results could be materially and adversely affected. 17 Table of Contents Fluctuations in labor costs, changes in the availability of key suppliers, or catastrophic events may increase the cost of our products and services.
Increases in labor costs might be difficult to pass on to our customers. In our VerifyMe Solutions segment, security pigments, ink canisters, labels and bar codes are key elements in the cost of our products. Our inability to offset material price inflation could adversely affect our results of operations.
Increases in labor costs might be difficult to pass on to our customers. In our Authentication segment (formerly VerifyMe Solutions segment), security pigments, ink canisters, labels and bar codes are key elements in the cost of our products. Our inability to offset material price inflation could adversely affect our results of operations.
For example, demand for high-end perishable items and cannabis products, and subsequently the demand for shipping, brand protection, and other services related to such, can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control.
For example, demand for high-end perishable items, and subsequently the demand for shipping, brand protection, and other services related to such, can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control.
Additionally, under the terms of the Term Note, the Company is required to make monthly loan principal payments of $41,667 per month plus interest, through September 15, 2026. 20 Table of Contents The terms of the Term Note and the PNC Facility have been structured in such a way that, if we default under one, we will also default under the other.
Additionally, under the terms of the Term Note, the Company is required to make monthly loan principal payments of $41,667 per month plus interest, through September 15, 2026. The terms of the Term Note and the PNC Facility have been structured in such a way that, if we default under one, we will also default under the other.
Risks Related to our Debt If we do not timely pay amounts due and comply with the covenants under our debt facilities, our business, financial condition and results of operations may be adversely impacted.
Risks Relating to our Debt If we do not timely pay amounts due and comply with the covenants under our debt facilities, our business, financial condition and results of operations may be adversely impacted.
If our existing shareholders and investors seek to sell a substantial number of shares of our common stock, such selling efforts may cause significant declines in the market price of our common stock. 19 Table of Contents Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock .
If our existing shareholders and investors seek to sell a substantial number of shares of our common stock, such selling efforts may cause significant declines in the market price of our common stock. Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock .
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. 10 Table of Contents Severe climate conditions and other catastrophic events can have an adverse impact on our business.
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. Severe climate conditions and other catastrophic events can have an adverse impact on our business.
Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business. 9 Table of Contents Our PeriShip Global Solutions segment relies on one key strategic partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues.
Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business. 9 Table of Contents Our Precision Logistics segment relies on one key strategic partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues.
These covenants may restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our stockholders. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
These covenants may restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our stockholders. 20 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
Further sales could depress the price of our common stock. The existence of these shares and shares of common stock issuable upon conversion of outstanding shares of Series B Convertible Preferred Stock, warrants and options create a circumstance commonly referred to as an “overhang” which can act as a depressant to our common stock price.
The existence of these shares and shares of common stock issuable upon conversion of outstanding shares of Series B Convertible Preferred Stock, warrants and options create a circumstance commonly referred to as an “overhang” which can act as a depressant to our common stock price.
Our business is subject to seasonal trends. Historically, our operating results in the PeriShip Global Solutions 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.
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.
The Company has recorded significant goodwill and other identifiable intangible assets on its balance sheet as a result of its acquisition of the PeriShip business in 2022.
The Company has recorded significant goodwill and other identifiable intangible assets on its balance sheet as a result of its acquisition of the PeriShip business in 2022 and Trust Codes business in 2023.
Numerous competitive factors could impair our ability to maintain our current profitability, including the following: · our competitors may periodically reduce their prices to gain business, especially during times of weak economic conditions, which may limit our ability to maintain or increase prices or impede our ability to maintain or grow our customer relationships; · our inability to achieve expected customer retention levels or sales growth targets; · we compete with many other transportation and logistics service providers, and companies providing traceability and consumer engagement solutions, some of which have greater capital resources or lower cost structures than us; · our inability to compete with new entrants in the market that may offer similar services at lower cost or have greater technological capabilities; · customers may choose to provide for themselves the services that we now provide; · many customers periodically accept proposals from multiple carriers for their shipping needs, and this process may depress rates or result in the loss of some of our business to competitors; and · advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher prices to cover the cost of these investments; and · we may not have sufficient resources to develop and market our services effectively, or at all.
Numerous competitive factors could impair our ability to maintain our current profitability, including the following: · our competitors may periodically reduce their prices to gain business, especially during times of weak economic conditions, which may limit our ability to maintain or increase prices or impede our ability to maintain or grow our customer relationships; · our inability to achieve expected customer retention levels or sales growth targets; · we compete with many other transportation and logistics service providers, and companies providing traceability and consumer engagement solutions, which has included and may include our strategic partners, some of which have greater capital resources or lower cost structures than us; · our strategic partners may take steps to position their own product offerings as a replacement or competitor to our service offerings; · our inability to compete with existing and new entrants in the market that may offer similar services at lower cost or have greater technological capabilities; · customers may choose to provide for themselves the services that we now provide; · many customers periodically accept proposals from multiple carriers for their shipping needs, and this process may depress rates or result in the loss of some of our business to competitors; and · advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher prices to cover the cost of these investments; and · we may not have sufficient resources to develop and market our services effectively, or at all.
Provisions of our publicly traded warrants could discourage an acquisition of us by a third party . In addition to certain provisions of our amended and restated articles of incorporation, as amended, and our amended and restated by-laws, certain provisions of our outstanding warrants could make it more difficult or expensive for a third party to acquire us.
In addition to certain provisions of our amended and restated articles of incorporation, as amended, and our amended and restated by-laws, certain provisions of our outstanding warrants could make it more difficult or expensive for a third party to acquire us.
We rely on strategic partnerships with one large logistics carrier for our PeriShip Global Solutions segment and larger companies which integrate our technologies into their product offerings for our legacy VerifyMe Solutions segment. These strategies leave us largely dependent upon the success of our partners.
We rely on strategic partnerships with one large logistics carrier for our Precision Logistics segment and larger companies which integrate our technologies into their product offerings for our legacy Authentication segment. These strategies leave us largely dependent upon the success of our partners.
In 2022, we completed the IRC Section 382 analysis, and determined that an ownership change occurred sufficient to impose additional limitations on the use of NOL carryforwards.
The Company completed an IRC Section 382 analysis in 2022, and determined that an ownership change occurred sufficient to impose additional limitations on the use of NOL carryforwards. The Company has not completed an IRC Section 382 analysis in 2023.
In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.
In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. Our management concluded that our disclosure controls and procedures were effective as of December 31, 2023.
The shipping and logistics industry is rapidly evolving. We expect to continue to face significant competition, which could materially adversely affect us. The shipping and logistics industry is rapidly evolving, including demands for faster deliveries and increased visibility into shipments. We expect to face significant competition on a local, regional, national and international basis. Competitors include the U.
The shipping and logistics industry is rapidly evolving, including demands for faster deliveries and increased visibility into shipments. We expect to face significant competition on a local, regional, national and international basis. Competitors include the U.
Under this arrangement we provide our logistics services to our strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Sales through our strategic partner accounted for approximately 13% of revenue of our PeriShip Global Solutions segment for the year ended December 31, 2022.
Under this arrangement we provide our logistics services to our strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Sales through our strategic partner accounted for approximately 17% of revenue of our Precision Logistics segment for the year ended December 31, 2023.
In the event of a delisting, we would expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock or warrants to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements.
In the event of a delisting, we would expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock or warrants to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements. 19 Table of Contents Provisions of our publicly traded warrants could discourage an acquisition of us by a third party .
We face competition in all geographic markets and each industry sector in which we operate. Many of these competitors have significantly more resources and are actively pursuing acquisition opportunities and are developing new technologies to gain competitive advantages. The primary competitive factors are price and quality of service.
Many of these competitors have significantly more resources and are actively pursuing acquisition opportunities and are developing new technologies to gain competitive advantages. The primary competitive factors are price and quality of service.
The exercise, conversion or exchange of warrants or convertible securities, including for other securities, will cause us to issue additional shares of our common stock and will dilute the percentage ownership of our shareholders.
As of December 31, 2023, there were no shares issuable related to the Trust Codes earnout. The exercise, conversion or exchange of warrants or convertible securities, including for other securities, will cause us to issue additional shares of our common stock and will dilute the percentage ownership of our shareholders.
We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could harm our financial condition and ability to become profitable.
We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could harm our financial condition and ability to become profitable. We will need to expand our sales, marketing and support organizations and our distribution arrangements to increase market acceptance of our products and services .
Risks Relating to our Common Stock Upon exercise of our outstanding options or warrants, conversion of our Series B Convertible Preferred Stock and vesting of our restricted stock units, we will be obligated to issue a substantial number of additional shares of common stock which will dilute our present shareholders .
We have not used any exchange rate hedging programs to mitigate the effect of exchange rate fluctuations. 18 Table of Contents Risks Relating to our Common Stock Upon exercise of our outstanding options or warrants, conversion of our Series B Convertible Preferred Stock, conversion of our Convertible debt, vesting of our restricted stock units, and issuance of shares relating to the Trust Codes earnout, we will be obligated to issue a substantial number of additional shares of common stock which will dilute our present shareholders .
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline . Sales of large blocks of our common stock over a short time in the spring of 2022 had a significant adverse effect on our common stock price.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline . Sales of large blocks of our common stock could depress the price of our common stock.
In particular, c ertain weather-related conditions such as ice and snow can disrupt the operations of our carrier partners during the peak holiday season, which could have a disproportionately large negative impact on our business and revenues.
In particular, c ertain weather-related conditions such as ice and snow can disrupt the operations of our carrier partners during the peak holiday season, which could have a disproportionately large negative impact on our business and revenues. 10 Table of Contents We operate in a highly competitive industry and our business may suffer if we are unable to adequately address potential downward pricing pressures and other competitive factors.
However, if our key strategic partner takes steps to position this product offering as a replacement or competitor to our service offerings, there can be no assurance that such steps would not increase our cost of delivering our services to our customers, hinder our ability to deliver our services to our customers, entice our existing customers to discontinue using our services, or reduce the number of customers referred to us by our strategic partner.
There can be no assurance that such competitive factors will not increase our cost of delivering our services to our customers, hinder our ability to deliver our services to our customers, entice our existing customers to discontinue using our services, or reduce the number of customers referred to us by strategic partners.
However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others. 14 Table of Contents As management deems appropriate, we will pursue the registration of our domain names, trademarks, and service marks in the U.S. and in certain locations outside the U.S.
However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others.
It also stated it is cutting $500 million from its capital expenditure budget for its fiscal year, which runs through May of 2023. 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.
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.
If we are required to sue third parties who we allege are violating our intellectual property rights, or if we are sued for violating a third party’s patents or other intellectual property rights, we may incur substantial expenses, and we could incur substantial damages, including amounts we cannot afford to pay .
We may, over time, increase our investment in protecting our innovations through increased patent filings that are expensive and time-consuming and may not result in issued patents that can be effectively enforced. 14 Table of Contents If we are required to sue third parties who we allege are violating our intellectual property rights, or if we are sued for violating a third party’s patents or other intellectual property rights, we may incur substantial expenses, and we could incur substantial damages, including amounts we cannot afford to pay .
As a result, we cannot ensure that demand for our services and products will materialize or remain constant.
As a result, we cannot ensure that demand for our services and products will materialize or remain constant. In response to market conditions and lower demand some carriers have implemented strategies to address a potential global recession.
We are obligated to issue additional shares of our common stock in connection with our outstanding options, warrants and shares of our Series B Convertible Preferred Stock. As of December 31, 2022, there were options, warrants, shares of Series B Convertible Stock outstanding, and restricted stock units convertible into 337,471; 5,103,455; 144,444; and 413,626 shares of common stock, respectively.
We are obligated to issue additional shares of our common stock in connection with our outstanding options, warrants and shares of our Series B Convertible Preferred Stock.
If we are unable to develop new products to meet market demands, our business could be materially adversely affected. As a company with revenues deriving from clients in the cannabis industry, we face many unique and evolving risks.
If we are unable to develop new products to meet market demands, our business could be materially adversely affected. Foreign Currency Exchange Rate Risk We operate in the US and New Zealand, which exposes us to market risk associated with foreign currency exchange rate fluctuations.
Removed
Our key strategic partner has announced that it is developing a service that may be competitive to our own, and others may do the same.
Added
Any of these factors could harm our business, financial condition and results of operations and may have a material adverse impact on our business. The shipping and logistics industry is rapidly evolving. We expect to continue to face significant competition, which could materially adversely affect us.
Removed
In the second quarter of 2020 our key strategy partner publicly announced that it plans to develop an inhouse software solution in collaboration with a multinational software company that may ultimately be competitive with our service offerings. In January 2022, our key strategy partner announced the development of a logistics as a service solution as a result of this collaboration.
Added
In April 2023, the major carrier that PeriShip Global partners with laid out steps it was taking to slash $4 billion in permanent costs by the end of its 2025 fiscal year in response to these market conditions and lower demand.
Removed
The details regarding this product offering, and whether this inhouse solution will ultimately be developed and successfully launched commercially, are unclear. To date we do not believe that this product offering has been adopted by our existing clients or adversely impacted our results in a material way.
Added
In June 2023, the major carrier stated that due to ongoing demand its plans to ground 29 more aircraft in its fiscal year that started in June 2024. In mid-December 2023 the carrier forecasted a low single digit percentage decline in revenue year over year for 2024.
Removed
In addition, other carriers or companies, such as Amazon, may develop services that compete with ours. Further, some of our existing customers may develop their own logistics capabilities such that they no longer require our services. Any of these events could harm our business, financial condition and results of operations and may have a material adverse impact on our business.
Added
As management deems appropriate, we will pursue the registration of our domain names, trademarks, and service marks in the U.S. and in certain locations outside the U.S.
Removed
In early September, 2022, the major global carrier company that PeriShip partners with disclosed that a global recession could be coming based on various indicators in its business including the demand for packages weakening considerably in the final weeks of August 2022, a negative impact on its express delivery business due to the weakening global economy, particularly in Asia and Europe, and a decline in the volume of freight it handles in every region around the world.
Added
Our foreign currency exposure primarily relates to intercompany receivables and payables and third-party receivables and payables that are denominated in currencies other than the functional currency of our legal entities. Our largest foreign currency exposure is unsettled intercompany payables and receivables which are reviewed on a regular basis.
Removed
The major global carrier stated that it expects business conditions to further weaken during its current quarter and is responding by reducing flights, temporarily parking aircraft, trimming hours for its staff, delaying some hiring plans and closing ninety office locations as well as five corporate offices.
Added
Gains and losses from foreign currency transactions are included in “General and administrative” on our Consolidated Statements of Operations.
Removed
For the year ended December 31, 2022, Federal and state NOLs of $23.1 million and $0, respectively, will expire unutilized due to the limitations of Section 382, leaving Federal and state NOL carryforwards of $24.4 million and $13.1 million, respectively that may be offset against future taxable income.
Added
Our foreign subsidiary operates in a currency other than the United States dollar; therefore, increases or decreases in the value of the U.S. dollar against other major currencies will affect our operating results and the value of our balance sheet items denominated in foreign currencies.
Removed
Because a small number of customers account for most of our revenue, the loss of any of these customers would have a material adverse impact on our operating results and cash flows .
Added
Our most significant exposures to translation risk relates to functional currency assets and liabilities that are denominated in the New Zealand dollar. The changes in the net investment of our foreign subsidiary are reflected in "Foreign currency translation adjustments” on our Consolidated Statements of Comprehensive Loss.
Removed
We derive our revenue from a limited number of customers and our revenue in 2022 grew to $19,576 thousand with the acquisition of PeriShip Global, compared to $867 thousand in 2021. Our principal revenue has been generated from thirty customers in 2022, compared to five customers in 2021.
Added
For the years ended December 31, 2023, there were approximately 8,286,000 anti-dilutive shares consisting 1,439,000 unvested performance restricted stock units, 816,000 restricted stock units, restricted stock awards and options under the stock purchase plan, 301,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock.
Removed
Certain of our agreements with customers have short terms or can be terminated on short notice. Any termination of a business relationship with, or a significant sustained reduction in business received from, one of these customers could have a material adverse effect on our operating results and cash flows.
Added
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. The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable semiannually in arrears.
Removed
If we are unable to materially increase the number of our customers and the number of products for which they use our service, it could adversely impact our financial condition and our business. We will need to expand our sales, marketing and support organizations and our distribution arrangements to increase market acceptance of our products and services .
Added
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.
Removed
We may, over time, increase our investment in protecting our innovations through increased patent filings that are expensive and time-consuming and may not result in issued patents that can be effectively enforced.
Added
Although we believe the majority of our investors will choose to convert into shares, if this does not occur, this may have a material adverse impact on our cash and as a result, a material adverse impact on our business.
Removed
Our management concluded that our disclosure controls and procedures were effective as of December 31, 2022, and the remediated material weaknesses in our internal control over financial reporting identified in Item 9A of the Report covering the year ended December 31, 2021 have been remediated.
Removed
We currently derive approximately 5% of revenues from clients in the cannabis industry from use of our track and trace and customer engagement technologies. As such, any risks related to the cannabis industry may adversely impact our clients, and potential clients, which may in turn, impact the demand for our products and services.
Removed
Specific risks impacting the cannabis industry include, but are not limited, to the following: United States federal law prohibits Marijuana Under the Controlled Substances Act (“CSA”), marijuana is a Schedule-I controlled substance making it illegal under federal law to grow, cultivate, distribute, sell or possess marijuana for any purpose or to assist or conspire with those who do so.
Removed
Although the use of marijuana is legal in certain states under state law, since federal law supersedes state law, strict enforcement of federal law would likely result in adverse effects on our clients’ operations, which would in turn, adversely impact our revenues. 18 Table of Contents Banking regulations could limit access to banking services and expose us to risk Funds received from our clients in the cannabis industry, operating legally under state law, may subject us to a variety of federal laws and regulations involving money laundering, financial record keeping and proceeds of crime, since the funds are considered illegal under the CSA and as such banks and other financial institutions providing services to us risk violation of anti money laundering statutes and other applicable statutes.
Removed
Furthermore, banks often refuse to provide banking services to businesses involved in the cannabis industry due to the federal and state laws and regulations governing financial institutions.
Removed
The difficulty and potential inability to open bank accounts that our clients in the cannabis industry deal with, makes it difficult to conduct business and as such could affect our ability to collect revenues earned. Furthermore, our clients in this industry are more susceptible to theft, and potentially lack the ability to insure themselves against theft.
Removed
We may experience similar difficulties in obtaining banking and financial services because of the activities of our clients in the cannabis industry.
Removed
The legality of cannabis could be reversed in one or more states The voters or legislatures of states in which marijuana has already been legalized could potentially repeal applicable laws that permit the operation of both medical and retail marijuana businesses.
Removed
These actions might force businesses, including those that are our clients, to cease operations in one or more states entirely. Additionally, these actions could negatively impact us and lead to a decrease of our revenue through the loss of current and potential customers.
Removed
Recent and changing interpretations of the law regarding medical and recreational use of marijuana State laws and regulations surrounding medical and recreational use of marijuana are fairly recent and constantly changing resulting in a potential challenge to maintain compliance.
Removed
As such, violations of these laws, or allegations of such violations, could be disruptive to our clients’ business and in return cause a disruption in our operations. Future modifications of state and local laws surrounding marijuana, may limit operations of our clients’ business in this industry, which could negatively impact our revenues.
Removed
Dependence on client licensing Our clients in the cannabis industry must obtain various licenses from various local and state licensing agencies. As such, there is a risk that our existing clients will not be able to retain their licenses going forward, should they violate applicable rules and regulations, or should renewal become more stringent.
Removed
If our customers are not able to maintain or renew their licenses, this would adversely impact our operations. Insurance Risk Insurance companies may limit policies to only cover claims legal under federal law. As such our clients in the cannabis industry may not be properly insured.
Removed
Any claims against our clients may have a negative impact on our ability to collect revenues from our clients in the cannabis sector.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. We do not own any significant real property, but our subsidiary leases approximately 5,000 square feet of primarily office space in Connecticut used in connection with our PeriShip Solutions segment. The lease expires in 2027.
Biggest changeITEM 2. PROPERTIES. We do not own any significant real property, but one of our subsidiaries leases approximately 5,000 square feet of primarily office space in Connecticut used in connection with our Precision Logistics segment. The lease expires in 2027. Our Trust Codes subsidiary leases premises approximately 2,000 square feet located in New Zealand. The lease expires in 2026.
We believe that our property has been well maintained, is suitable and adequate for us to operate and upon expiration of this lease, we do not anticipate any difficulty in obtaining renewals or alternative space.
We believe that our properties have been well maintained, are suitable and adequate for us to operate and upon expiration of this lease, we do not anticipate any difficulty in obtaining renewals or alternative space. 21 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShare Repurchase Plan The following table provides information about our share repurchase activity for the three months ended December 31, 2022 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) 10/01/2022-10/31/2022 - - - $ 1,390 11/01/2022-11/30/2022 28,201 1.36 28,201 1,353 12/01/2022-12/31/2022 56,175 1.21 56,175 1,285 Total 84,376 1.26 84,376 $ 1,285 (1) Effective July 1, 2022, the Company’s Board of Directors terminated the existing share repurchase program and approved a new share repurchase program to replace the existing program due to expire in August 2022 to allow the Company to spend up to $1.5 million to repurchase shares of its common stock, so long as the price does not exceed $5.00 until July 1, 2023.
Biggest changeShare Repurchase Plan The following table provides information about our share repurchase activity for the three months ended December 31, 2023 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) 10/01/2023-10/31/2023 - - - $ - 11/01/2023-11/30/2023 - - - - 12/01/2023-12/31/2023 - - - 500 Total - - - $ 500 (1) Effective December 6, 2023, the Company’s Board of Directors approved a new 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.
Common Shareholders As of March 16, 2023, we had approximately 1,440 shareholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, this number is not indicative of the total number of shareholders represented by these shareholders of record.
Common Shareholders As of March 18, 2024, we had approximately 1,450 shareholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, this number is not indicative of the total number of shareholders represented by these shareholders of record.
During the three months ended December 31, 2022, the Company repurchased 84,376 shares of common stock under the Company’s current program. ITEM 6. [RESERVED.]
During the three months ended December 31, 2023, the Company did not repurchase shares of common stock under the Company’s program. ITEM 6. [RESERVED.]
Removed
Use of Proceeds On June 17, 2020, our Registration Statement on Form S-1 (File No. 333-234155), as amended (the “Registration Statement”) relating to an underwritten public offering of an aggregate of 2,173,913 units consisting of one share of the Company’s common stock and a warrant to purchase one share of common stock at an exercise price equal to $4.60 per share of common stock was declared effective by the SEC.
Removed
The cash proceeds from the offering were $9,023 thousand, net of underwriting discounts and commissions of approximately $800 thousand and fees and expenses of approximately $450 thousand.
Removed
All proceeds from the offering have been utilized and there were no material changes in our use of the net proceeds from the offering, as described in our final prospectus filed with the SEC on June 19, 2020.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe 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 includes a four-year Term Note for $2 million which matures in September of 2026 and requires equal quarterly payments of principal and interest.
Biggest changeThe PNC Facility also includes a four-year Term Note for $2 million which matures in September of 2026 and requires equal quarterly payments of principal and interest. The Term Note incurs interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%.
Currently, we are aggressively marketing opportunities in the following areas: · Food and Beverage – Food safety is becoming more common as supply chains become more global and as imaging and manufacturing technology become more accessible. Food traceability, sustainability and carbon neutral production is becoming a significant consideration for brand and governments.
Currently, we are aggressively marketing opportunities in the following areas: · Agriculture, Food and Beverage – Food safety is becoming more common as supply chains become more global and as imaging and manufacturing technology become more accessible. Food traceability, sustainability and carbon neutral production is becoming a significant consideration for brand and governments.
Utilizing predictive analytics from multiple data sources including weather, traffic, flight data, 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.
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.
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. 28 Table of Contents 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 (“ASU 2018-07”), which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions.
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. 30 Table of Contents 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 (“ASU 2018-07”), which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions.
Results of Operations Comparison of the Years Ended December 31, 2022, and 2021 The following discussion analyzes our results of operations for the years ended December 31, 2022, and 2021. The following information should be considered together with our financial statements for such periods and the accompanying notes thereto.
Results of Operations Comparison of the Years Ended December 31, 2023, and 2022 The following discussion analyzes our results of operations for the years ended December 31, 2023, and 2022. The following information should be considered together with our financial statements for such periods and the accompanying notes thereto.
We expect to continue to fund our operations primarily through utilization of our current financial resources and future revenue and may issue additional debt or equity. 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 expect to continue to fund our operations primarily through utilization of our current financial resources and future revenue and may issue additional debt or equity. 28 Table of Contents 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.
The following should be read in conjunction with our annual financial statements contained elsewhere in this Report. 22 Table of Contents Overview VerifyMe, Inc.
The following should be read in conjunction with our annual financial statements contained elsewhere in this Report. 23 Table of Contents Overview VerifyMe, Inc.
We are seeking to expand our business in this market and believe that as additional pharmaceutical companies seek to comply with the legislation, our products will provide attractive alternatives to address the need for product identifiers. · Consumer Products –We believe our technology solutions are particularly suited for the cosmetics, health and beauty and apparel industries.
We are seeking to expand our business in this market and believe that as additional pharmaceutical companies seek to comply with the legislation, our products will provide attractive alternatives to address the need for product identifiers. 25 Table of Contents · Consumer Products – We believe our technology solutions are particularly suited for the cosmetics, health and beauty and apparel industries.
Of the proceeds of $2.0 million, we used $1.8 million to settle debt outstanding issued in connection with the PeriShip Global acquisition, including the redemption of 61,000 shares of our common stock. As of December 31, 2022, our short-term debt outstanding under the Term Note was $0.5 million and total long-term debt outstanding under the Term Note was $1.4 million.
Of the proceeds of $2.0 million, we used $1.8 million to settle debt outstanding issued in connection with the PeriShip Global acquisition, including the redemption of 61,000 shares of our common stock. As of December 31, 2023, our short-term debt outstanding under the Term Note was $0.5 million and total long-term debt outstanding under the Term Note was $0.9 million.
PeriShip Global’s 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.
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.
Using the 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.
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.
For our annual goodwill impairment test as of December 31, 2022, we performed a qualitative assessment as permitted by ASU 2017-04 for our reporting unit PeriShip Global and determined that it was more likely than not that the fair value exceeded their respective carrying value.
For our annual goodwill impairment test as of December 31, 2023, we performed a qualitative assessment as permitted by ASU 2017-04 for our reporting units and determined that it was more likely than not that the fair value exceeded their respective carrying value.
Each product type requires its own particular packaging to protect it during the shipment, and we utilize our extensive knowledge and research to provide our customers with packaging recommendations to meet their unique needs. 23 Table of Contents · Post-Delivery : PeriShip Global provides 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 : PeriShip Global has full-time meteorologists on staff to monitor weather.
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.
If an alert is created the shipper and our call 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. PeriShip Global has two meteorologists on staff that track world-wide weather patterns to address predicted 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 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 have identified that the estimates used in the valuation of the assets of the PeriShip acquisition are critical and require significant judgment.
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 taking the data feeds from a carrier and adding real-time visibility with predictive analytics and the human intervention factor of PeriShip Global’s call center gives us a major competitive advantage against other third-party platforms that solely rely on the carrier’s data feeds. PeriShip Global utilizes a variety of input sources beyond just the carrier’s data feed.
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.
A package may experience a variety of weather conditions between the origin and destination, and our team actively monitors these conditions to minimize the changes of timely and safe transit of shipments. Similarly, traffic and construction also create unpredictable delays which our team works diligently to mitigate.
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.
Further information regarding our business segments is discussed below: PeriShip Global Solutions: The PeriShip Global Solutions segment specializes in predictive analytics through its proprietary software platform 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 extended delivery times.
Further information regarding our business segments is discussed below: Precision Logistics: The Precision Logistics (formerly PeriShip Global Solutions) segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive perishable products. We manage complex industry-specific shipping logistic processes that require critical time, temperature control and handling to prevent spoilage and extreme delivery times and brand impairment.
The call center acts as a help desk and monitors shipping to delivery for our customers. · Pre-Transit Service : PeriShip Global helps clients prepare their products for shipments by advising clients on packaging requirements for various types of perishable products.
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.
Over 90% of our revenue is derived from logistics management for time and temperature sensitive packages with the remaining from our traceability solutions. Our terms vary based on the solutions we offer and are examined on a case-by-case basis.
Over 95% of our revenue is derived from logistics management for time and temperature sensitive packages with the remaining from our traceability solutions. Our terms vary based on the solutions we offer and are examined on a case-by-case basis. For licensing of our VerifyInk TM technology we depend on the integrity of our clients’ reporting.
Liquidity and Capital Resources Our operations used $2,551 thousand of cash during the year ended December 31, 2022, compared to $3,254 thousand during the year end December 31, 2021.
Liquidity and Capital Resources Our operations provided $244 thousand of cash during the year ended December 31, 2023, compared to $2,551 thousand cash used in operations during the year end December 31, 2022.
PeriShip Global generates revenue from three business service models. · Proactive Service – PeriShip Global clients pay us directly for carrier service coupled with our proactive logistics assistance. · Direct Premium Service –PeriShip Global clients pay us directly for carrier service coupled with our complete white-glove shipping monitoring and predictive analytics service.
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.
The outsourcing of supply chain related and other logistics operations to service providers such as PeriShip Global which allows companies to improve the efficiency of their businessed by focusing their resources on core competencies. VerifyMe Opportunities We believe VerifyMe’s products have applications in many areas.
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. Authentication: We believe the products in our Authentication segment have applications in many areas.
PeriShip 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. We were in compliance with all affirmative and restrictive covenants under the PNC Facility at December 31, 2022.
PeriShip 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.
General and Administrative Expenses General and administrative expenses were $8,428 thousand for the year ended December 31, 2022, compared to $4,216 thousand for the year ended December 31, 2021, an increase of $4,212 thousand.
General and Administrative Expenses General and administrative expenses were $10,586 thousand for the year ended December 31, 2023, compared to $8,428 thousand for the year ended December 31, 2022, an increase of $2,158 thousand.
Through our VerifyMe Solutions segment, our technologies provide unit level traceability, brand protection, and consumer engagement solutions allowing brand owners to gather business intelligence, cross-sell products, monitor product diversion through the supply chain and build brand loyalty through interaction utilizing our unique dynamic codes which are read by consumers with their smart phones.
Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones.
Our operations are split into two segments: PeriShip Global Solutions and VerifyMe Solutions. Through our PeriShip Global Solutions segment we provide a value-added service for time and temperature sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as flight-tracking, weather, and traffic, all delivered to customers via a secure portal.
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.
Changes in the contract assets increased significantly as of December 31, 2022, compared to December 31, 2021, due to the business combination. No other factors materially impacted the balances. Business Combinations Accounting for business combinations requires management to make significant estimates and assumptions to determine the fair values of assets acquired and liabilities assumed at the acquisition date.
No other factors materially impacted the balances. 29 Table of Contents Business Combinations Accounting for business combinations requires management to make significant estimates and assumptions to determine the fair values of assets acquired and liabilities assumed at the acquisition date.
For example, currently PeriShip Global ships vaccines for major pharmaceutical companies. With the addition of VerifyMe technology, PeriShip Global can add unit level traceability and authentication to protect clients’ vaccines from product diversion and sub-standard counterfeits.
With the addition of our Authentication technology, we can add unit level traceability and authentication to protect clients’ vaccines from product diversion and sub-standard counterfeits.
Net cash used in investing activities was $7,884 thousand for the year ended December 31, 2022, compared to $2,851 thousand for the year ended December 31, 2021. During the year ended December 31, 2022, $7,500 thousand was used for the acquisition of the PeriShip Global business.
During the year ended December 31, 2022, $7,500 thousand was used for the acquisition of the PeriShip Global business.
In addition, VerifyMe’s consumer engagement solutions could give PeriShip Global food and beverage clients the ability to gather rich business intelligence, turn “unknown consumers” into “known consumers” and build customer loyalty with engagement functions like videos, discounts, contests, etc.
In addition, our Authentication segment brand enhancement solutions could give the Precision Logistics food and beverage clients the ability to gather rich business intelligence and build customer loyalty with engagement functions like videos, discounts, contests, recipes, etc.
The use of cash in 2021 relates primarily to the acquisition of sponsor units in the SPAC of $2,593 thousand. 26 Table of Contents Net cash provided by financing activities for the year ended December 31, 2022, was $4,424 thousand compared to $7,588 thousand for the year ended December 31, 2021, related to proceeds from debt and offerings of our common stock in 2022 and 2021.
Net cash provided by financing activities for the year ended December 31, 2023, was $634 thousand compared to $4,424 thousand for the year ended December 31, 2022, related to proceeds from issuance of convertible debt in 2023 and debt and offerings of our common stock in 2022.
Amounts charged to our clients become billable when the performance obligation has been met at a point in time. Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. These assets are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.
Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. These assets are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract assets have not significantly increased as of December 31, 2023, due to the business combination.
We believe outsourcing this function to PeriShip Global provides the ideal solution for all parties involved. Building logistics infrastructure is a capital-intensive process as the investment is locked in for a considerably long period. Due to the current economic downturn, we believe several companies will opt to outsource their logistics services to reduce their operational costs and maintain cash flows.
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 will opt to outsource their precision logistics services to reduce their operational costs.
The resulting consolidated loss per diluted share for the year ended December 31, 2022, was $1.70 compared to a consolidated income per diluted share of $0.49 for the year ended December 31, 2021.
The decreased loss was primarily due to the impairment of the SPAC of $10,932 thousand during 2022. The resulting consolidated loss per diluted share for the year ended December 31, 2023, was $0.35 compared to a consolidated loss per diluted share of $1.70 for the year ended December 31, 2022.
In addition, we feel that combining VerifyMe’s solutions into the product offering for PeriShip Global clientele, including food and beverage and healthcare industries, gives PeriShip Global a competitive advantage to generate revenue by enhancing PeriShip Global’s clients’ ability to grow revenue, gain business intelligence and build brand loyalty. 24 Table of Contents The current global logistics industry worldwide is facing an economic slowdown.
We are focusing our sales emphasis on those industries. In addition, we believe that combining our authentication solutions into the product offering for Precision Logistics clientele, gives our Precision Logistics segment a competitive advantage to generate revenue by enhancing clients’ ability to grow revenue, gain business intelligence and build brand loyalty. The U.S. logistics industry is facing an economic slowdown.
The increase in revenue primarily relates to the acquisition of the PeriShip Global business on April 22, 2022, which contributed $18,190 thousand for the twelve months ended December 31, 2022. VerifyMe Solutions segment increased revenue by $519 thousand, a 60% increase, primarily driven by growth in our agriculture segment.
The increase in revenue primarily relates to the acquisition of the PeriShip Global business on April 22, 2022, which increased revenue by $6,462 thousand for the twelve months ended December 31, 2023, partially offset by a $725 thousand decline in the Authentication revenue.
Revenue Twelve Months Ended December 31, 2022 2021 (In thousands) (In thousands) PeriShip Global Solutions $ 18,190 - VerifyMe Solutions 1,386 867 Total Revenue $ 19,576 $ 867 25 Table of Contents Consolidated revenue for the year ended December 31, 2022, was $19,576 thousand, a 2,158% increase compared to $867 thousand, for the year ended December 31, 2021.
Revenue Years Ended December 31, 2023 2022 (In thousands) (In thousands) Precision Logistics $ 24,652 18,190 Authentication 661 1,386 Total Revenue $ 25,313 $ 19,576 26 Table of Contents Consolidated revenue for the year ended December 31, 2023, was $25,313 thousand, a 29% increase compared to $19,576 thousand, for the year ended December 31, 2022.
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.
The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price.
Gross Profit Twelve Months Ended December 31, 2022 2021 (In thousands) % of Revenue (In thousands) % of Revenue PeriShip Global Solutions 5,505 30 % - - VerifyMe Solutions 983 71 % 599 69 % Total Gross Profit $ 6,488 33 % $ 599 69 % Consolidated gross profit for the years ended December 31, 2022, and 2021, was $6,488 thousand and $599 thousand, respectively.
Gross Profit Years Ended December 31, 2023 2022 (In thousands) % of Revenue (In thousands) % of Revenue Precision Logistics 8,475 34 % 5,505 30 % Authentication 528 80 % 983 71 % Total Gross Profit $ 9,003 36 % $ 6,488 33 % Consolidated gross profit for the years ended December 31, 2023, and 2022, was $9,003 thousand and $6,488 thousand, respectively.
This tool provides details on the unique shipper’s in-transit shipments, with the ability to select and analyze data on individual shipments. · Call Center Service : PeriShip Global has assembled a team of customer resolution specialists based in the U.S. This human intervention service team resolves shipping problems on behalf of our customers.
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.
In addition, we provide proactive alerts to address on-coming weather issues to make changes in scheduling to meet critical deadlines for shipments. We offer post-delivery services such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.
We offer post-delivery services such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.
These products are combined with “software as a service” or “SAAS” which is stored in the cloud and accessed through the internet. · VerifyMe Engage™ for consumer engagement allowing the brand owner to gather business intelligence and engage with their customers · VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packages and products · VerifyMe Track & Trace™ for unit level traceability and supply chain control PeriShip Global and VerifyMe Synergies: We believe that PeriShip Global and our VerifyMe solutions have synergistic product centric technology platforms and combined have a compelling technology offering for brand owners.
These products are combined with “software as a service” or “SaaS” which is stored in the cloud and accessed through the internet. · VerifyMe Engage™ for brand enhancement allowing the brand owner to gather business intelligence and engage with customers · VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packaging and products · VerifyMe Track & Trace™ for unit level traceability and supply chain control Opportunities Precision Logistics: 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.
The resulting gross margin was 33% for the year ended December 31, 2022, compared to 69% for the year ended December 31, 2021. The decrease in our gross margin is due to the acquisition of the PeriShip Global business which has significantly lower margins than the VerifyMe Solutions segment.
The resulting gross margin was 36% for the year ended December 31, 2023, compared to 33% for the year ended December 31, 2022. The increase in our gross margin is due to the acquisition of the PeriShip Global business acquired on April 22, 2022, which is included for the full twelve months of 2023.
Goodwill We have recorded goodwill as part of our acquisition of the PeriShip business, 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.
Goodwill We have recorded goodwill as part of our acquisition of the PeriShip business and Trust Codes business, which represents the excess of purchase price over the fair value of net assets acquired in the business combinations.
If delays or other issues occur the PeriShip team informs clients and works with them to pro-actively resolve such shipment issues. VerifyMe Solutions : The VerifyMe Solutions segment specializes in traceability to connect brands with consumers through their product. Through VerifyMe technologies brand inspectors can authenticate product with visible and invisible unique to product serialized codes.
If delays or other issues occur, we inform clients and work with them to proactively resolve such shipment issues. 24 Table of Contents Authentication : The Authentication (formerly VerifyMe Solutions) segment specializes in traceability to connect brands with consumers through their product.
We believe this represents an opportunity for PeriShip Global since major global carriers are cutting internal staff and are reducing research and development investments. To maintain their credibility in the market, these carriers will need to ensure they meet their customers’ demands for time and temperature sensitive shipments, while maintaining their overheads.
To maintain their credibility in the market, these carriers will need to ensure they meet their customers’ demands for time and temperature sensitive shipments, while maintaining their overheads. We believe outsourcing this function to our Precision Logistics segment provides the ideal solution for all parties involved.
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 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.
For licensing of our VerifyInk TM technology we depend on the integrity of our clients’ reporting. 27 Table of Contents The timing of revenue recognition, billings and cash collections results in billed accounts receivable, and unbilled revenue when billings occur after the end of the month (contract assets) on the consolidated balance sheets.
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, and unbilled revenue when billings occur after the end of the month (contract assets) on the consolidated balance sheets. Amounts charged to our clients become billable when the performance obligation has been met at a point in time.
PeriShip Service Products: The PeriShip Global Solutions 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 and alerts based on real-time data.
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.
Research and Development Research and development expenses increased by $38 thousand to $89 thousand for the year ended December 31, 2022, from $51 thousand for the year ended December 31, 2021. The increase related to the acquisition of the PeriShip Global business and research and development related to their IT platform.
Research and Development Research and development expenses increased by $18 thousand to $107 thousand for the year ended December 31, 2023, from $89 thousand for the year ended December 31, 2022. The increase was primarily related to research and development activities as a result of the acquisition of Trust Codes during the first quarter of 2023.
We believe that our cash and cash equivalents, together with the net proceeds from the April 12, 2022, offering and proceeds from debt issued, will fund our operations for the next 12 months.
We believe that our cash and cash equivalents, together with the proceeds from the convertible note, from debt issued and RLOC, will fund our operations for the next 12 months including expected capital expenditures. We expect to grow our business organically and through key acquisitions that will help accelerate the growth of our business.
The Term Note incurs interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%. The RLOC and Term Note are guaranteed by the Company and secured by the assets of PeriShip and the Company.
The RLOC and Term Note are guaranteed by the Company and secured by the assets of PeriShip and the Company.
Sales and Marketing Sales and marketing expenses for the year ended December 31, 2022, were $1,718 thousand compared to $1,163 thousand for the year ended December 31, 2021, an increase of $555 thousand. The increase is related to the acquisition of the PeriShip Global business, primarily consisting of salaries and related expenses for four employees.
Sales and Marketing Sales and marketing expenses for the year ended December 31, 2023, were $1,638 thousand compared to $1,718 thousand for the year ended December 31, 2022, a decrease of $80 thousand.
(“VerifyMe”) together with its subsidiaries PeriShip Global, LLC (“PeriShip Global”) and Trust Codes Global Limited (“Trust Codes Global”), (together the “Company,” “we,” “us,” or “our”), is a software driven predictive analytics logistics provider of high-touch end-to-end logistics management, which represents most of our current revenue stream. In addition, VerifyMe technologies provide product traceability, brand protections services, and consumer engagement solutions.
(“VerifyMe”) together with its subsidiaries, including PeriShip Global, LLC (“PeriShip Global”) and Trust Codes Global Limited (“Trust Codes Global”), (together the “Company,” “we,” “us,” or “our”), is a traceability and customer support services provider using specialized software and process technology.
The decrease in cash used from operations is due to a net change in non-cash addbacks to net income and the acquisition of PeriShip Global, which generates cash, that occurred during the year ended December 31, 2022.
The increase in cash from operations is due to a favorable change in working capital accounts during 2023 compared to 2022 from our acquisition of PeriShip Global in April of 2022. 27 Table of Contents Net cash used in investing activities was $1,195 thousand for the year ended December 31, 2023, compared to $7,884 thousand for the year ended December 31, 2022.
Net Income (Loss) Our net loss for the year ended December 31, 2022, was $14,398 thousand, compared to net income of $3,612 thousand for the year ended December 31, 2021.
The decrease is related to a reduction in employees and consultants in the Authentication segment partially offset by the PeriShip Global business included for the full twelve months of 2023. Net Loss Our net loss for the year ended December 31, 2023, was $3,390 thousand, compared to $14,398 thousand for the year ended December 31, 2022.
On September 22, 2022, we entered into the PNC Facility with PNC Bank, National Association. The PNC Facility includes a $1 million RLOC with a term of one-year, expiring in September 2023.
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.
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The portal provides real-time visibility into shipment transit and last-mile events, with dynamic dashboards. All aspects of the of the shipping journey is managed by a dedicated call center. Using our proprietary logistics solution, 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.
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The company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions.
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This service includes the customer web portal access, weather monitoring, temperature control, full call center support and last mile resolution. · Indirect Premium Service – Our carrier partner also offers a “white label” version of our Premium Service to its customers and pays us a fixed contractual fee.
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The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center.
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Brand owners have the ability to gather business intelligence while engaging directly with their consumers and can receive programmable alerts related to counterfeit products or if their products are in unexpected geographical markets. Consumers can authenticate products with their smart phone prior to usage and engage with the brand in unique and innovative ways.
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This is critical in the current landscape of increased regulations, as well as increased counterfeit activity and product diversion. The ability to detect fraud or abnormal behavior while tracing an item’s journey from production through to the consumer’s hands provides consumers and brands the assurance they require.
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Engagement can come in many forms such as free giveaways, product specifications, seed to table tracking, cross-selling of products, contests, videos, and recipes. VerifyMe Products : VerifyMe has a custom suite of products that offer clients traceability and consumer engagement.
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VerifyMe has custom software, patented technologies, and a cloud environment that combines machine learning and data science to meet the needs of consumers and brands. In addition, the personalized consumer experience with the brand creates a connection that increases brand perception and loyalty. Products : We have a custom suite of products that offer clients traceability and brand solutions.
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PeriShip Global Opportunities According to a 2023 report entitled, “Perishable Goods Transportation Market in the US 2023-2027”, written by Infiniti research Limited, the Perishable Goods logistics market size was $4.0 billion in 2022 and is estimated to be $4.3 billion in 2023 and is expected to grow to $5.9 billion by 2027.
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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.
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That represents a compound average market acceleration with a growth rate of approximately 8% per year. This report is based on perishable product segments including meat, poultry, seafood, dairy, fruits and vegetables, and bakery and confectionary.
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We believe this represents an opportunity since major global carriers are cutting internal staff. These carriers are looking for lower cost alternatives to service their customers as well as partners that can help the carrier increase revenues.
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PeriShip Global services all of these product segments Currently 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.
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Synergies : We believe that Precision Logistics and Authentication segments have synergistic product centric technology platforms and combined have a compelling technology offering for brand owners. For example, currently our Precision Logistics segment ships vaccines for major pharmaceutical companies.
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We believe the Pharmaceutical and healthcare industries represent the biggest areas of opportunity and we are focusing our PeriShip Global sales emphasis on those industries.
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The Authentication segment maintained its existing client base but had reduced orders in the nutraceutical market in 2023.
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The increase related to the acquisition of the PeriShip Global business, and primarily made up of salaries and related expenses for approximately 35 employees in the IT and operations department.
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The Precision Logistics segment had increased premium services revenue which has higher margins as well as process improvements to increase proactive services margins. With the acquisition of Trust Codes in March 2023, providing custom software, our margins in the Authentication segment also increased.
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The decrease was primarily due to the impairment of the SPAC of $10,932 thousand during 2022 compared to an unrealized gain on the SPAC of $8,371 in 2021, partially offset by a gain on extinguishment of debt of $326 thousand and the changes discussed above for the acquisition of the PeriShip Global business.
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The increase relates to the acquisition of the PeriShip Global business on April 22, 2022 included for the full twelve months of 2023, the deal transaction costs related to the acquisition of the Trust Codes Global business of $278 thousand, operations related to Trust Codes, as well as severance expense of approximately $590 thousand which has been paid in full by the end of January 2024, partially offset by costs related to the acquisition of the PeriShip Global business of $661 thousand in 2022 that did not recur in 2023.
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On April 12, 2022, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with the selling stockholder and certain directors, providing for the issuance and sale to purchasers therein of an aggregate of 880,208 shares of our common stock, pre-funded warrants to purchase up to 675,000 shares of our common stock, and warrants to purchase up to 1,555,208 shares of our common stock, for gross proceeds to us of approximately $5.0 million and net proceeds of $4.6 million.
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Stock-based compensation was $1,509 thousand, including $121 thousand relating to severance in 2023, compared to $1,375 thousand in 2022. Amortization and depreciation expense was $1,134 thousand and $770 thousand for the twelve months ended December 30, 2023, and 2022, respectively.

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