VerifyMe Inc.

Company Overview

Business Model: VerifyMe, Inc. is a logistics company specializing in time and temperature sensitive products, complemented by brand protection and enhancement solutions. The company operates primarily through its Precision Logistics segment, which accounts for nearly all revenue, and a smaller Authentication segment. The Precision Logistics segment provides value-added services for sensitive parcel management, leveraging a proprietary software platform for predictive analytics (e.g., pre-shipment weather analysis, flight-tracking, sort volumes, traffic) delivered via a secure portal. This portal offers real-time shipment visibility and last-mile resolution, supported by a service center. Revenue in Precision Logistics is generated through two models: ProActive Service (clients pay VerifyMe, Inc. directly for carrier service and proactive logistics) and Premium Services (clients use VerifyMe, Inc.'s shipping monitoring, predictive analytics, or exception management services, either charged directly by the carrier under a "white label" arrangement or by VerifyMe, Inc. as "Direct Premium" service). The Authentication segment focuses on anti-counterfeit and brand protection technologies, though the company is not actively pursuing new business in this area.

Market Position: VerifyMe, Inc. positions its Precision Logistics segment with a competitive advantage through its proprietary "Predictive Analytics" technology, which integrates real-time meteorology, traffic, road construction, and power grid data beyond standard carrier feeds. This enables proactive issue prediction and resolution, aiming to prevent spoilage and reduce costs for shippers. The company targets small and medium-sized healthcare, agriculture, food and beverage companies, and sees significant opportunities in the pharmaceutical and healthcare industries due to the need for enhanced tracking and customer service. VerifyMe, Inc. believes its cost-competitive offering and the capital-intensive nature of logistics infrastructure may drive companies to outsource precision logistics services, allowing them to focus on core competencies. The Authentication segment is currently servicing existing customers without active pursuit of new business.

Recent Strategic Developments:

• Proposed Merger with Open World Ltd.: On February 11, 2026, VerifyMe, Inc. entered into a Merger Agreement with Open World Ltd., a Cayman Islands exempted company. Upon closing, Open World Ltd. will become a wholly-owned subsidiary of VerifyMe, Inc. Pre-closing stockholders of VerifyMe, Inc. are expected to retain approximately 10% of the post-closing aggregate common stock, while Open World Ltd. shareholders and SAFE investors will receive approximately 90%. The merger is subject to customary closing conditions, including stockholder approvals, regulatory clearances, and VerifyMe, Inc. having at least $1 million in "Closing Net Cash."
• Strategic Partner Transition: Effective September 24, 2025, VerifyMe, Inc.'s Precision Logistics segment ceased providing ProActive services to its prior carrier partner (FedEx Corporation) due to the partner's decision to provide preferred shipping services internally. In February 2026, Premium services to the prior carrier partner also ceased. VerifyMe, Inc. began offering ProActive services to a new Strategic Partner on September 24, 2025, and expects to broadly offer Premium and Direct Premium services to customers of this new Strategic Partner in the second quarter of 2026.
• ZenCredit Ventures, LLC Loan Agreement: On August 8, 2025, VerifyMe, Inc. entered into a Master Loan Agreement with ZenCredit Ventures, LLC, loaning up to $2 million. On August 11, 2025, $2 million was loaned in exchange for a promissory note maturing on May 11, 2026, with quarterly interest payments at an annual rate of 16%.
• ATM Program Termination: On February 11, 2026, VerifyMe, Inc. terminated its At-The-Market Sales Agreement with Roth Capital Partners, LLC, effective February 16, 2026. During the year ended December 31, 2025, the company sold 628,432 shares of common stock through this program for net proceeds of $483 thousand.
• Executive Employment Agreements: In connection with the merger, new employment agreements were entered into with Adam Stedham (to become President of Precision Logistics) and Jennifer Cola (to continue as Chief Financial Officer), effective upon the merger's closing.

Geographic Footprint: VerifyMe, Inc. is based in Lake Mary, Florida. Its subsidiary, PeriShip Global LLC, previously leased office space in Connecticut for its Precision Logistics segment, but this lease was terminated effective February 15, 2026. The company's employees and consultants can and do conduct work remotely. VerifyMe, Inc. has trademarked its brand in the United States and internationally, and its meteorologists track worldwide weather patterns.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 38.55% (2025) vs. 35.78% (2024)
• Operating Margin: -30.92% (2025) vs. -18.13% (2024)
• Net Margin: -29.91% (2025) vs. -15.80% (2024)

Investment in Growth:

• R&D Expenditure: $20 thousand (0.12% of revenue) in 2025 vs. $70 thousand (0.29% of revenue) in 2024. The company does not expect to continue R&D efforts for the foreseeable future.
• Capital Expenditures: $733 thousand in 2025 (comprising $18 thousand for office equipment and $715 thousand for capitalized software costs) vs. $511 thousand in 2024 (comprising $7 thousand for office equipment and $504 thousand for capitalized software costs).
• Strategic Investments: Loaned $2 million to ZenCredit Ventures, LLC on August 11, 2025, in exchange for a promissory note.

Business Segment Analysis

Precision Logistics

Financial Performance:

• Revenue: $16,242 thousand in 2025 (-31.66% YoY from $23,766 thousand in 2024)
• Operating (Loss): ($1,775 thousand) in 2025 vs. $3,033 thousand in 2024.
• Key Growth Drivers: The company is focusing sales emphasis on small and medium-sized healthcare, agriculture, food and beverage companies, and the pharmaceutical and healthcare industries, which require "high touch," "white-glove" exception management. The current economic environment may encourage companies to outsource precision logistics services to reduce operational costs.

Product Portfolio:

• PeriTrack®: Proprietary customer dashboard providing integrated tools for in-depth shipping activity insights and access to critical supply chain information.
• Service Center: A team of customer service agents supporting real-time visibility and last-mile resolution.
• Pre-Transit Service: Assistance for clients in preparing shipments.
• Post-Delivery: Customized reporting for trend analysis, system performance, and power outage maps.
• Weather/Traffic Service: Full-time meteorologists tracking worldwide weather patterns and integration of real-time traffic and road construction data.

Market Dynamics: The segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive perishable products. It manages complex, industry-specific shipping logistics processes. The market is highly competitive, with major carriers (e.g., FedEx Corporation, UPS, DHL) having internal operations that service critical time, temperature, and cold storage shipping. VerifyMe, Inc. differentiates by operating across all perishable and time-sensitive segments, unlike many competitors specializing in particular fields.

Sub-segment Breakdown:

• ProActive Services: $13,165 thousand revenue in 2025 vs. $19,365 thousand in 2024. This service line experienced a material decline in revenue in Q4 2025 due to the termination of the prior carrier partner agreement and larger shippers' reluctance to change suppliers during peak season.
• Premium Services: $3,077 thousand revenue in 2025 vs. $4,401 thousand in 2024. Premium services revenue increased by 5% in Q4 2025 compared to Q4 2024.

Authentication

Financial Performance:

• Revenue: $156 thousand in 2025 (-64.63% YoY from $441 thousand in 2024)
• Operating (Income)/Loss: $121 thousand in 2025 vs. ($3,571 thousand) in 2024. The 2024 loss included a significant goodwill and intangible asset impairment charge.
• Key Growth Drivers: The company is not actively pursuing new business in this segment but continues to service existing customers.

Product Portfolio:

• Anti-counterfeit and brand protection technologies.

Market Dynamics: The company is not actively pursuing new business in this segment.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: In 2025, VerifyMe, Inc. repurchased 272,177 shares for $221 thousand under a program that expired on December 31, 2025. The program authorized up to $0.5 million in repurchases, with a price limit of $1.00 per share.
• Dividend Payments: VerifyMe, Inc. has never declared or paid a cash dividend. The Merger Agreement with Open World Ltd. states that VerifyMe, Inc. may, but has no obligation to, declare a cash dividend to stockholders on or after the closing date, provided it does not compromise the $1 million "Closing Net Cash" requirement. The Board of Directors currently anticipates declaring a cash dividend prior to the closing of the Merger.
• Future Capital Return Commitments: No specific future capital return commitments beyond the potential dividend related to the merger.

Balance Sheet Position:

• Cash and Equivalents: $4,353 thousand as of December 31, 2025, compared to $2,823 thousand as of December 31, 2024.
• Total Debt: $750 thousand as of December 31, 2025 (convertible notes) vs. $1,100 thousand (convertible notes) and $875 thousand (Term Note) as of December 31, 2024. The Term Note was paid in full in January 2025.
• Net Cash Position: $3,603 thousand as of December 31, 2025.
• Credit Rating: Not disclosed.
• Debt Maturity Profile: Convertible notes totaling $750 thousand mature on August 25, 2026. The PNC Facility's Revolving Line of Credit (RLOC) was extended to September 30, 2026, with no scheduled principal payments until maturity.

Cash Flow Generation:

• Operating Cash Flow: $603 thousand provided in 2025 vs. $871 thousand provided in 2024.
• Free Cash Flow: Not explicitly calculated in the filing.
• Cash Conversion Metrics: Unbilled revenue (contract assets) was $338 thousand as of December 31, 2025, down from $733 thousand as of December 31, 2024. Accounts receivable, net, was $857 thousand as of December 31, 2025, down from $2,636 thousand as of December 31, 2024.

Operational Excellence

Production & Service Model: VerifyMe, Inc.'s Precision Logistics segment operates a proprietary IT platform that drives its value-added services. This platform utilizes predictive analytics from multiple data sources, including flight-tracking, real-time meteorology data, traffic and road construction data, power grid information, and major carrier feeds. This allows for real-time information and analysis to mitigate supply chain flow interruption and deliver last-mile resolution. The services are supported by a dedicated service center and full-time meteorologists on staff. The company offers bundled services including the PeriTrack® customer dashboard, Pre-Transit Service, and Post-Delivery customized reporting.

Supply Chain Architecture: Key Suppliers & Partners:

• Strategic Partner: An alternative Preferred Shipping Partner with whom PeriShip Global LLC entered into a Digital Channel Program Agreement and a Partner API Access Agreement on July 29, 2025. These agreements provide access to designated Strategic Partner services at promotional rates for time-sensitive and perishable shipments. VerifyMe, Inc. began offering ProActive services to this partner's customers in September 2025 and expects to broadly offer Premium and Direct Premium services in Q2 2026.
• Prior Carrier Partner (FedEx Corporation): Previously a preferred shipping partner. VerifyMe, Inc. ceased providing ProActive services to its customers in September 2025 and Premium services in February 2026, due to FedEx Corporation's decision to provide preferred shipping services internally. VerifyMe, Inc. can still provide Direct Premium services to customers using FedEx Corporation for their shipping needs.
• Transportation Costs Vendor: One vendor accounted for 89% of transportation costs in the Precision Logistics segment in 2025 (99% in 2024).

Facility Network:

• Manufacturing: Not applicable as the company provides services.
• Research & Development: R&D efforts were focused on expanding technology into new areas and developing unique customer applications. The company does not expect to continue R&D efforts for the foreseeable future.
• Distribution: The company does not own distribution facilities; it relies on carrier partners. Its subsidiary PeriShip Global LLC previously leased approximately 2,686 square feet of office space in Connecticut, but this lease was terminated effective February 15, 2026.

Operational Metrics: No specific quantitative operational metrics (e.g., capacity utilization, efficiency measures, quality indicators) were explicitly disclosed in the filing.

Market Access & Customer Relationships

Go-to-Market Strategy: VerifyMe, Inc. aligns its business development and sales resources to support both existing customer accounts and new customer development. The company utilizes social media channels and participates in trade shows to market its services. Its strategy involves engaging with customers to identify needs and expand service offerings, and participating in trade show opportunities that align with its core strategy or expansion areas.

Customer Portfolio:

• Customer Concentration: In 2025, one customer represented 13% of total revenues. In 2024, one customer represented 16% of total revenues. As of December 31, 2025, two customers accounted for 50% of accounts receivable (36% in 2024).
• Target Customers: The Precision Logistics segment specifically targets small and medium-sized healthcare, agriculture, food and beverage companies, and identifies significant opportunities in the pharmaceutical and healthcare industries.

Geographic Revenue Distribution: The filing does not provide a breakdown of revenue by specific geographic regions or countries.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The transportation and logistics industry is highly competitive, cyclical, and rapidly evolving, with increasing demands for faster deliveries and greater shipment visibility. It is characterized by competition based on product performance, features, price, ease of implementation, technology effectiveness, innovation, sales and distribution capabilities, and technical and application support. Building logistics infrastructure is capital-intensive.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Major Carriers: FedEx Corporation, UPS, and DHL, all of which have internal operations servicing the critical time, temperature, and cold storage shipping segment.
• Other Third-Party Platforms: Companies operating similar business models, though most specialize in particular fields (e.g., healthcare or non-perishable building materials).
• Start-ups and Smaller Companies: New entrants combining technologies with crowdsourcing for local market needs.

Emerging Competitive Threats: New technologies, disruptive business models, and alternative solutions from various sources are expected to intensify competition.

Competitive Response Strategy: VerifyMe, Inc. aims to maintain its competitive advantage by focusing on its proprietary predictive analytics technology and "high touch" exception management services. It is specifically targeting small and medium-sized businesses and the pharmaceutical/healthcare industries, which it believes are underserved. The company also anticipates that the current economic environment may lead more companies to outsource precision logistics services, which aligns with its business model.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Reliance on Strategic Partner: The Precision Logistics segment is highly dependent on its relationship with its Strategic Partner for shipping services and as a source of customers. Termination or modification of agreements, or the partner's inability to supply services on acceptable terms, could materially impact the business. Delays or disruptions by the Strategic Partner could lead to product loss, spoilage, reputational harm, and customer attrition.
• Seasonal Trends: Operating results in Precision Logistics are subject to seasonal fluctuations, with Q1 and Q2 traditionally weaker than Q3 and Q4. This is influenced by economic conditions, customer demand, weather, national holidays, and the number of business days.
• Economic Sensitivity: Adverse economic conditions (recessions, inflation, global instability, geopolitical events) can negatively affect customer business levels, demand for logistics services, and ability to pay. Demand for high-end perishable items, a significant portion of the company's shipments, is sensitive to discretionary consumer spending.
• Competitive Industry: The transportation and logistics industry is highly competitive and cyclical. Competitors, including major carriers and specialized third-party platforms, often have greater resources and are actively pursuing acquisitions and new technologies. Pricing pressures and inability to compete successfully could reduce volume, revenue, and profit margins.
• Merger-Related Risks: The proposed merger with Open World Ltd. is subject to closing conditions and may not be completed. Its pendency could adversely affect business relationships and operations, and the combined company may fail to realize anticipated synergies.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Carrier Dependency: The business relies heavily on its Strategic Partner (and for legacy customers, its prior carrier partner) for transportation services. Inability to adjust delivery during volatile demand or material interruptions could increase costs, reduce sales, and harm the business.
• Technology Failure: The proprietary technology is core to PeriShip Global LLC's operations. Failure of this technology would halt operations, leading to financial loss and service liability. Maintaining continuity, timeliness, redundancy, high performance, and scalability is essential.
• Cybersecurity Threats: The company's information technology systems are integral to operations and handle sensitive data. Sophisticated cyber-attacks, system failures, security breaches, or misuse by third parties could interrupt operations, damage reputation, cause customer loss, and incur significant costs and legal liabilities.
• Data Privacy Regulations: Evolving global data privacy regulations (e.g., GDPR, CCPA) may increase compliance burdens, limit product use, or require costly modifications to products and services.
• Intellectual Property: Failure to protect or enforce intellectual property rights (patents, trademarks) could harm the business. Litigation related to IP is expensive and could divert resources or result in substantial damages.
• Management and Key Personnel: The company depends significantly on its management team and other personnel, particularly in PeriShip Global LLC. Failure to attract, integrate, motivate, and retain qualified personnel, or the loss of key individuals, could disrupt operations and harm financial results.

Financial & Regulatory Risks

Market & Financial Risks:

• History of Losses: VerifyMe, Inc. has a history of operating losses and may not achieve or maintain profitability, which could adversely affect working capital and investor returns.
• Net Operating Loss (NOL) Limitations: The ability to use NOL carryforwards to offset future taxable income may be limited by "ownership change" rules under IRC Sections 382 and 383, particularly in connection with the proposed merger.
• Debt Obligations: The company is subject to risks associated with debt financing, including insufficient cash flow for payments, unfavorable refinancing terms, reduced funds for growth, and potential acceleration of obligations upon default. Covenants in debt agreements may restrict operating activities.
• Credit Risk (ZenCredit Ventures, LLC): The $2 million loan to ZenCredit Ventures, LLC is unsecured, and remedies in case of default may be limited. The creditworthiness of ZenCredit Ventures, LLC could be affected by economic factors, potentially leading to unexpected losses.

Regulatory & Compliance Risks:

• Foreign Corrupt Practices Act (FCPA): International business activities expose the company to FCPA liabilities, and unauthorized payments by employees or agents could result in severe sanctions.
• Nasdaq Listing Standards: Failure to comply with Nasdaq's continued listing standards (e.g., minimum bid price, financial requirements) could result in delisting, reduced liquidity, and harm to capital-raising ability.
• Legal Proceedings: No material legal proceedings are currently threatened or pending against the company.

Geopolitical & External Risks

Geopolitical Exposure:

• Global Uncertainty: Inflation, instability in the global economy, and geopolitical events (e.g., war in Iran, unrest in fuel-producing regions) can negatively affect transportation costs and reduce consumer spending, leading to fewer goods being transported globally.
• Trade Relations: Changes in U.S. or international trade policy (tariffs, export controls, quotas, embargoes, sanctions) could trigger retaliatory actions, increasing costs and reducing global economic activity and shipping volumes.
• Catastrophic Events: Disasters, severe weather, public health issues (pandemics), cyber-attacks, or terrorist attacks can cause shipment delays, inability to ship, and decreased revenues, particularly impacting time and temperature sensitive goods.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Predictive Analytics: Investment in proprietary technology that integrates real-time meteorology, traffic, road construction, and power grid information to predict and address shipping issues proactively.
• Customer Applications: Efforts focused on developing unique customer applications for logistics management.
• Innovation Pipeline: The company does not expect to continue research and development efforts for the foreseeable future but will evaluate future needs.

Intellectual Property Portfolio:

• Patent Strategy: As of December 31, 2025, the portfolio consists of six granted U.S. patents and one pending foreign patent application. Registered patents expire between 2027 and 2036. Four patents were abandoned in 2025. The company acknowledges the expense and time-consuming nature of worldwide patent filings and may prioritize select countries.
• Trademark Strategy: Trademarked the VerifyMe brand in the United States and internationally. Acknowledges potential confusion with similar brand names (e.g., Verified.Me, www.verifyme.ng).
• IP Litigation: Litigation to enforce IP rights or defend against infringement claims is expensive and could divert resources.

Technology Partnerships:

• Strategic Alliances: PeriShip Global LLC has a Partner API Access Agreement with its new Strategic Partner, allowing it to develop interfaces to certain APIs, access services, and information.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: In connection with the proposed merger, Adam Stedham is expected to resign as CEO and President to become President of Precision Logistics, and Jennifer Cola is expected to continue as CFO. Certain outstanding equity awards for employees and directors will accelerate and vest upon the merger's effective time. David Edmonds, Marshall Geller, Howard Goldberg, and Adam Stedham are expected to resign as directors from the Board of Directors at closing.

Board Composition: The Board of Directors consists of five members. Scott Greenberg, Marshall Geller, Howard Goldberg, and David Edmonds are determined to be independent directors. Adam Stedham is not an independent director. The Board has a non-executive Chairman (Scott Greenberg), a non-executive Vice Chairman (Marshall Geller), and a Lead Independent Director (Howard Goldberg). The Board has established an Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, Executive Committee, and Mergers & Acquisitions Committee, each with a written charter. Marshall Geller qualifies as an "Audit Committee Financial Expert."

Human Capital Strategy

Workforce Composition: As of December 31, 2025, VerifyMe, Inc. employed approximately thirty (30) persons and contracted with one (1) consultant. Many employees and consultants work remotely.

Talent Management: Acquisition & Retention: The company's ability to attract, integrate, motivate, and retain existing or additional personnel, particularly in PeriShip Global LLC, is critical. The employment market for sales, marketing, customer service, and support personnel in the industry is competitive. Employee Value Proposition: The company offers the VRME Retirement Savings Plan (401(k)) to U.S. employees, with discretionary matching contributions.

Diversity & Development: No specific diversity metrics or development programs were disclosed in the filing.

Environmental & Social Impact

No material information explicitly stated in the filing regarding environmental commitments or social impact initiatives.

Business Cyclicality & Seasonality

Demand Patterns: The Precision Logistics segment experiences seasonal fluctuations in net revenues. Revenues are generally higher in the fourth quarter due to increased holiday shipments. The first and second quarters have traditionally been the weakest. This trend is influenced by economic conditions, customer demand, weather, national holidays, and the number of business days. Revenues from ProActive services declined in Q4 2025 compared to Q4 2024 due to the loss of the prior carrier partner and larger shippers' reluctance to change suppliers during the peak season.

Planning & Forecasting: The company's revenue is affected by factors outside its control, making historic operating patterns uncertain for future periods.

Regulatory Environment & Compliance

Regulatory Framework:

• Industry-Specific Regulations: The company is subject to various laws and regulations, including those related to data privacy.
• International Compliance: The company has international trademarks and is subject to international regulations.
• Data Privacy: The regulatory framework for privacy issues worldwide is in flux. The company is subject to regulations like the European Union's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), which impose stringent requirements and significant penalties for non-compliance. Compliance costs may limit product adoption or require substantial investment.

Trade & Export Controls: Changes in U.S. or international trade policy, including tariffs, export controls, quotas, embargoes, or sanctions, could trigger retaliatory actions, impacting global economic activity and shipping volumes. The company is exposed to risks related to trade restrictions and compliance requirements.

Legal Proceedings: As of the date of the report, VerifyMe, Inc. is not aware of any threatened or pending legal proceedings that would have a material effect on its business, results of operations, cash flows, or financial position.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The reconciliation of the U.S. federal statutory income tax rate to the effective tax rate shows significant impacts from valuation allowances and permanent differences.
• Net Operating Losses (NOLs): As of December 31, 2025, the company has $25.3 million in NOL carryforwards for tax purposes. $6.6 million will expire starting in 2026, and $18.9 million will carry forward indefinitely.
• Valuation Allowance: A full valuation allowance of approximately $9.3 million was established against all deferred tax assets as of December 31, 2025, due to uncertainty regarding future profitability.
• Uncertain Tax Positions: No uncertain tax positions were reflected on the balance sheet as of December 31, 2025, or 2024.
• Tax Audits: Tax years from 2006 remain subject to examination by major tax jurisdictions due to the carryforward of unutilized NOLs.
• Interest and Penalties: The company recognized $2 thousand in interest and/or penalties related to income tax matters in 2025 ($1 thousand in 2024).

Tax Reform Impact: The Tax Cuts and Jobs Act of 2017 imposed a mandatory repatriation tax on certain unremitted foreign earnings. Following the divestiture of its foreign subsidiary on December 8, 2024, there will be no future dividends from foreign subsidiary earnings resulting in U.S. federal income taxes.

Insurance & Risk Transfer

Risk Management Framework: The company's information systems are subject to cyber and other risks. Its insurance is intended to address costs associated with aspects of cyber incidents, network failures, and privacy-related concerns, though it may not sufficiently cover all types of losses or claims. Insurance Coverage: No specific details on policy types or coverage limits were disclosed beyond the general mention of cyber insurance. Risk Transfer Mechanisms: No specific risk transfer mechanisms (e.g., hedging strategies, contractual risk allocation) were explicitly detailed in the filing, other than the termination of an interest rate swap agreement in January 2025.