VerifyMe Reports Second Quarter 2019 Results

ROCHESTER, N.Y., Aug. 14, 2019 (GLOBE NEWSWIRE) -- VerifyMe, Inc. (OTCQB: VRME), a technology solutions company that markets invisible ink identifiers and serialization for authenticating, tracking and tracing functions for labels, packaging and products, announced the company's financial results for the second quarter ended June 30, 2019.

Key Financial Highlights for Q2 2019:

• Revenues increased to $40,479, compared to $6,799 in Q2 2018
• Operating loss decreased by 17% to $0.7 million
• Net loss decreased by 16% to $0.7 million

Recent Business Highlights:

• Awarded initial contract from multi-billion-dollar global consumer products company for VerifyMe’s RainbowSecure^® Invisible Ink technology on labels and packaging using HP Indigo digital printing presses.  This contract marks the first direct contract with a major brand owner
• As reported in the 10Q, Patrick White, CEO of VerifyMe has had his contract renewed for another 12 month period. 
• Signed agreement with Jeffrey Unger, CEO of G2 Capital Advisors as a special advisor to the VerifyMe Board of Directors. Jeffrey is an accomplished Senior Executive and M&A advisor with significant international and cross border experience. Jeffrey has successfully led organizations to profitability and exit strategies through both uptrend and downtrend cycles and has led or participated in over 150 M&A and financing transactions across several industries, to date.
• Formed strategic partnership with INX International Inc. to develop an ink jet system which will open availability of VerifyMe RainbowSecure^® technology to the Flexo/Roll fed packaging manufacturing industry
• Signed agreement with Taiwan based Identity Management Systems Co., Ltd. (“IMS”) for Far East brand owner market expansion
• Executed a strategic partnership with Covectra, a multi-layered brand protection company, to market and cross-sell each other’s products and services to the pharmaceutical and other industries
• Signed commercial technology license agreement with a western New York label manufacturer specializing in the food and beverage industry
• Signed first European license agreement with Arca Etichette, based in Italy, to open European market to VerifyMe brand protection using HP Indigo digital presses
• Signed an agreement with Stonefish Advisors, Inc. to expand sales channels and develop a “VerifyMe” brand licensing program
• Due to the growing counterfeit problems Amazon retailers are dealing with, VerifyMe is developing an Amazon retailer product authentication system with an Amazon retailer optimization firm. More news to follow.
  
• In conjunction with our strategic partner, HP Indigo, VerifyMe is developing currency samples containing VerifyMe security features to submit to the U.S. Bureau of Printing and Engraving for currency protection consideration. 

Management Commentary
“Our second quarter results reflect the continued business from a top 10 global consumer products company applying VerifyMe’s RainbowSecure^® invisible ink technology to approximately 4 million product labels during the quarter,” commented, Patrick White, VerifyMe’s Chief Executive Officer. “During the second quarter, we signed a significant deal with INX International Inc., which should expand our availability to the Flexo/Roll fed press industry which is a significant portion of the market we previously did not serve. Our team is now preparing for upcoming September tradeshows in Europe and to execute on multiple domestic and global pipeline opportunities to drive market penetration.”

Mr. White concluded, “We believe our recent stock performance is not reflective of the business traction and success we are gaining in the market for our digital technology solutions that provide identifiers and serialization for authenticating, tracking and tracing functions for labels, packaging and products. We believe that we have the only serialization technology that cannot be removed or defaced.  That point is the true differentiator between our technology and all of the others in the market.  We are seeing major brand owners, like the multi-billion dollar consumer products company we just signed, demand a solution like ours to combat counterfeit goods because they have tried others and they have failed. Interest continues to grow and has never been higher. We believe the partnerships and contracts we have been signing are setting us up for growth in the latter part of 2019, 2020 and beyond.  We do not believe the recent decline in our share price has anything to do with our business performance and is instead influenced by certain shareholders that are associated with each other who have sold large blocks of our shares at undervalued stock prices.  The relationships that VerifyMe has forged with its strategic partners such as HP Indigo, Micro Focus, S-One LP and INX International reflects the strength of our technology and what we offer global Brand owners.  We look forward to continuing to communicate our business progress.”

Financial Results for the Three Months Ended June 30, 2019:
Revenue for the three months ended June 30, 2019 was $40,479, a 495% increase as compared to $6,799 for the three months ended June 30, 2018. The revenue primarily relates security printing with our authentication serialization technology for a large global brand owner.

Gross profit for the three months ended June 30, 2019 was $33,394, compared to $4,799 for the three months ended June 30, 2018. The resulting gross margin was 82.5% for the three months ended June 30, 2019.

General and administrative expenses for the three months ended June 30, 2019 were $418,195, a decrease of $107,565 or 20%, compared to $525,760 for the three months ended June 30, 2018. The decrease resulted from a decrease in non-cash restricted stock and option awards and continued efficiencies within the Company.

Legal and accounting expenses for the three months ended June 30, 2019 were $68,335, a decrease of $95,435 or 58%, compared to $163,770 for the three months ended June 30, 2018. 

Payroll expenses for the three months ended June 30, 2019 were $101,786, a slight increase of $1,983 or 2%, compared to $99,803 for the three months ended June 30, 2018. 

Research and development expenses for the three months ended June 30, 2019 were $2,608, a decrease of $13,625 or 84%, compared to $16,233 for the three months ended June 30, 2018. 

Sales and marketing expenses for the three months ended June 30, 2019 were $109,158, an increase of $109,133, compared to $25 for the three months ended June 30, 2018. The increase in sales and marketing relates to the Company entering its commercialization phase, specifically the hiring of our VP of Global Business Development and our increased participation in global trade shows.

Operating loss for the three months ended June 30, 2019 was $666,688, a decrease of $134,104, or 17%, compared to $800,792 for the three months ended June 30, 2018. 

Net loss for the three months ended June 30, 2019 was $665,656, a decrease of $129,539, or 16%, compared to $795,195 for the three months ended June 30, 2018. The resulting loss per share  for the three months ended June 30, 2019 was $(0.01) per diluted share, compared to $(0.01) per diluted share for the three months ended June 30, 2018.

At June 30, 2019, VerifyMe had a $585,193 cash balance, $0 debt, and 109.7 million shares issued and 109.3 million shares outstanding.

Financial Results for the Six Months Ended June 30, 2019:
Revenue for the six months ended June 30, 2019 was $86,933, a 1,179% increase as compared to $6,799 for the six months ended June 30, 2018. The revenue primarily relates security printing with our authentication serialization technology for a large global brand owner.

Gross profit for the six months ended June 30, 2019 was $65,081, compared to $4,799 for the six months ended June 30, 2018. The resulting gross margin was 74.9% for the six months ended June 30, 2019.

General and administrative expenses for the six months ended June 30, 2019 were $650,877, a decrease of $370,457 or 36%, compared to $1,021,334 for the six months ended June 30, 2018. The decrease related primarily to a settlement agreement with shareholders which occurred in the six months ended March 31, 2018 resulting in a total expense of $779,000.

Legal and accounting expenses for the six months ended June 30, 2019 were $130,699, a decrease of $166,775 or 56%, compared to $297,474 for the six months ended June 30, 2018. 

Payroll expenses for the six months ended June 30, 2019 were $206,575, an increase of $14,721 or 8%, compared to $191,854 for the six months ended June 30, 2018. 

Research and development expenses for the six months ended June 30, 2019 were $6,251, a decrease of $22,178 or 78%, compared to $28,429 for the six months ended June 30, 2018. 

Sales and marketing expenses for the six months ended June 30, 2019 were $252,301, an increase of $244,234, compared to $8,067 for the six months ended June 30, 2018. The increase in sales and marketing relates to the Company entering its commercialization phase, specifically the hiring of our VP of Global Business Development and our increased participation in global trade shows.

Operating loss for the six months ended June 30, 2019 was $1,181,622, a decrease of $360,737, or 23%, compared to $1,542,359 for the six months ended June 30, 2018. 

Net loss for the six months ended June 30, 2019 was $1,178,962, a decrease of $739,866, or 39%, compared to $1,918,828 for the six months ended June 30, 2018. The resulting EPS loss for the six months ended June 30, 2019 was $(0.01) per diluted share, compared to $(0.02) per diluted share for the six months ended June 30, 2018.

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

Cautionary Note Regarding Forward-looking Statements
This release contains forward-looking statements regarding potential business opportunities listed under “Key Business Highlights” and accelerating revenue growth in 2019, 2020 and beyond, our pipeline, the leasing of authenticators and the related recurring revenue and high gross margins and our projected 2019 gross margins.  The words "believe," "may", “estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the company's ability to work with partners in selling its technologies to businesses, production difficulties, our inability to enter into contracts and deals with future partners, and issues which may affect the reluctance of large companies to change their purchasing of products, acceptance of our technologies, and the efficiency of our authenticators in the field Further information on our risk factors is contained in our filings with the SEC, including the Form 10-K for the year ended December 31, 2018. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

For Licensing or Other Information Contact:
     Company: VerifyMe, Inc.
     Email: [email protected]
     Website:  http://www.verifyme.com
                

FINANCIAL STATEMENTS  

VerifyMe, Inc.
Balance Sheets

		As of
		June 30, 2019				December 31, 2018
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	585,193			$	1,673,201
Accounts Receivable			22,024				30,373
Deposits on Equipment			163,090				-
Prepaid expenses and other current assets			29,981				25,781
Inventory			43,266				41,982
TOTAL CURRENT ASSETS			843,554				1,771,337
INTANGIBLE ASSETS
Patents and Trademarks, net of accumulated amortization of $269,929 and $258,294 as of June 30, 2019 and December 31, 2018			225,988				209,049
Capitalized Software Costs			116,427				70,231
TOTAL ASSETS		$	1,185,969			$	2,050,617
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other accrued expenses		$	351,722			$	411,211
Accrued Payroll			93,836				69,041
TOTAL CURRENT LIABILITIES			445,558				480,252
STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares authorized; 0 shares issued and outstanding as of June 30, 2019 and 304,778 shares issued and outstanding as of December 31, 2018			-				305
Series B Convertible Preferred Stock, $.001 par value; 85 shares authorized; 0.85 shares issued and outstanding as of June 30, 2019 and December 31, 2018			-				-
Common stock of $.001 par value; 675,000,000 authorized; 109,672,373 and 102,553,706 issued, 109,321,833 and 102,203,166 shares outstanding as of June 30, 2019 and December 31, 2018			109,332				102,203
Additional paid in capital			61,186,990				60,844,796
Treasury stock as cost (350,540 shares at June 30, 2019 and December 31, 2018)			(113,389	)			(113,389	)
Accumulated deficit			(60,442,512	)			(59,263,550	)
STOCKHOLDERS' EQUITY			740,411				1,570,365
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,185,969			$	2,050,617

VerifyMe, Inc.
Statements of Operations
(Unaudited)

		Three months ended								Six months ended
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
NET REVENUE
Sales		$	40,479			$	6,799			$	86,933			$	6,799
COST OF SALES			7,085				2,000				21,852				2,000
GROSS PROFIT			33,394				4,799				65,081				4,799
OPERATING EXPENSES							-
General and administrative			418,195				525,760				650,877				1,021,334
Legal and accounting			68,335				163,770				130,699				297,474
Payroll expenses			101,786				99,803				206,575				191,854
Research and development			2,608				16,233				6,251				28,429
Sales and marketing			109,158				25				252,301				8,067
Total Operating expenses			700,082				805,591				1,246,703				1,547,158
							-
LOSS BEFORE OTHER INCOME (EXPENSE)			(666,688	)			(800,792	)			(1,181,622	)			(1,542,359	)
OTHER (EXPENSE) INCOME
Interest income (expenses), net			1,032				1,074				2,660				283
Settlement agreement with shareholders			-				-				-				(779,000	)
Gain on accounts payable forgiveness			-				4,523				-				402,248
			1,032				5,597				2,660				(376,469	)
							-
NET LOSS		$	(665,656	)		$	(795,195	)		$	(1,178,962	)		$	(1,918,828	)
LOSS PER SHARE
BASIC		$	(0.01	)		$	(0.01	)		$	(0.01	)		$	(0.02	)
DILUTED		$	(0.01	)		$	(0.01	)		$	(0.01	)		$	(0.02	)
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC			97,520,779				95,910,130				96,434,361				86,488,400
DILUTED			97,520,779				95,910,130				96,434,361				86,488,400

VerifyMe, Inc.
Statements of Cash Flows
(Unaudited)

		Six months ended
		June 30, 2019				June 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(1,178,962	)		$	(1,918,828	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation			15,000				44,119
Fair value of options and warrants issued in exchange for services			249,788				226,188
Fair value of restricted stock and restricted stock units issued in exchange for services			84,220				235,406
Gain on accounts payable forgiveness			-				(402,248	)
Share-based payment for settlement agreement with shareholders			-				279,000
Amortization and depreciation			11,635				10,894
Changes in operating assets and liabilities:
Accounts Receivable			8,349				(5,667	)
Deposit on Equipment			(163,090	)			-
Inventory			(1,284	)			(11,769	)
Prepaid expenses and other current assets			(4,200	)			-
Accounts payable and accrued expenses			(34,694	)			(80,398	)
Net cash used in operating activities			(1,013,238	)			(1,623,303	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Patents			(28,574	)			(825	)
Capitalized Software Costs			(46,196	)			-
Net cash used in investing activities			(74,770	)			(825	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of warrants			-				2,093,217
Proceeds from sale of common stock			-				1,154,211
Net cash provided by financing activities			-				3,247,428
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(1,088,008	)			1,623,300
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD			1,673,201				693,001
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	585,193			$	2,316,301
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest		$	-			$	-
Income taxes		$	-			$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Series A Convertible Preferred Stock converted to common stock		$	6,096			$	400
Series B Convertible Preferred Stock converted to common stock		$	-			$	599
Cashless Exercise of Stock Options		$	-			$	4,028
Cashless Exercise of Warrants		$	72			$	-
Common Stock and Warrants Issued for Common Stock Payable		$	-			$	122,478