VerifyMe Reports Second Quarter 2020 Results
VerifyMe reported strong financial results for Q2 2020, with revenues rising 86% to $75,256 compared to $40,479 in Q2 2019. Gross margins remained robust at 82%. However, operating loss increased 11% to $741,672, and net loss surged 299% to $2,653,057. The company has a healthy cash balance of $9.6 million and alleviated going concern issues. Noteworthy developments include a Nasdaq listing, strategic partnerships, and expansion of their authentication technology in the cannabis sector.
- Revenue increased 86% to $75,256 in Q2 2020.
- Gross margin remained strong at 82%.
- Successful Nasdaq listing.
- Formed strategic partnership with Techind Engineers & Consultants-Impex.
- Expanded product authentication technology for Amazon retailers.
- First order for VeriPAS™ technology in the cannabis industry.
- Notice of Allowance granted for a patent on dual code authentication.
- Operating loss increased by 11% to $741,672.
- Net loss rose 299% to $2,653,057.
- General and administrative expenses increased by 59% to $1,031,793.
ROCHESTER, N.Y., Aug. 14, 2020 (GLOBE NEWSWIRE) -- VerifyMe, Inc. (NASDAQ: VRME) (“VerifyMe,” “we,” “our,” or the “Company”), a technology solutions provider specializing in brand protection functions such as counterfeit prevention, authentication, serialization, and track and trace features for labels, packaging and products, announced the Company's financial results for the second quarter ended June 30, 2020 (“Q2 2020”).
Key Financial Highlights for Q2 2020:
- Revenues increased
86% to$75,256 , compared to$40,479 in the second quarter ended June 30, 2019 - Gross margins of
82% - Operating loss increased by
11% to$0.7 million - Adjusted EBITDA(1) improved by
12% to a loss of$352,927 - Cash balance of
$9.6 million - Alleviated going concern issue
_________________________________
(1) Adjusted EBITDA is a non-GAAP financial measure. Please see “Use of Non-GAAP Financial Measures” for a discussion of this non-GAAP measure. A reconciliation to the most directly comparable GAAP measure, net loss, is included as a schedule to this release.
Recent Business Highlights:
- Nasdaq listing
- Formed strategic partnership with Techind Engineers & Consultants-Impex, part of the Gohar Group, of India
- Expanded VerifyMe® as Authentic™ labels availability for Amazon retailers to enable customers to easily authenticate their product including all legitimate COVID-19 related products with smart phone
- Signed first order for VeriPAS™ track and trace technology in the cannabis industry
- Expanded our contracted sales channel partners and representatives from four in 2019 to sixteen in 2020
- Granted Notice of Allowance for our patent for our dual code authentication process relating to our invisible QR code and smartphone reading system from the U.S. Patent & Trademark Office
- Continued initial contract with multi-billion-dollar global consumer products company
- Expanded reach with new sales representative relationship based outside the United States in Zug, Switzerland
- Focused sales team on six major consumable sales verticals
Management Commentary
“It has been an eventful past several months, highlighted by our successful
Mr. White continued, “All companies have been impacted by the global COVID-19 pandemic, but we were more fortunate than most due to the fact that we have operated virtually since I took over as Chief Executive Officer in 2017. One major impact the pandemic had to our business was that certain new projects were pushed out, however, none were cancelled. Our current customers have continued marking product and we have been advised by one major customer that they intend to expand their use of our technology to additional products and three countries in the Far East starting in December 2020. It is also important to note that the COVID-19 pandemic environment presents needs for our technology. VerifyMe technologies can be used to authenticate face masks, hygienic hand wipes and COVID-19 test kits. Our pipeline of opportunities is at its highest in Company history, and we anticipate additional projects that are expected to add revenue in the coming 12-months.”
Mr. White concluded, “With a healthy balance sheet and a solid cash position, we believe we are in an excellent position to ramp our business with our strategic partners, existing clients and prospective new clients. We also believe that our high margined revenue demonstrates our business model’s ability to generate profitable growth. I couldn’t be more personally excited about our future and believe we are well-positioned for future success.”
Sales Team Focus on Six Major Consumable Sales Verticals:
- Cosmetics
- Food and Beverages
- Pharmaceuticals (including cannabis and nutraceuticals)
- Government Products (including voting ballots, drivers’ licenses, passports, tax stamps, and immigration documents)
- Apparel (uniforms, military, police, sports, and fashion brands)
- E-Commerce (preventing website counterfeiting for brand owners)
Financial Results for the Three Months Ended June 30, 2020:
Revenue for the three months ended June 30, 2020 was
Gross profit for the three months ended June 30, 2020 was
General and administrative expenses for the three months ended June 30, 2020 were
Legal and accounting expenses for the three months ended June 30, 2020 were
Payroll expenses for the three months ended June 30, 2020 were
Research and development expenses for the three months ended June 30, 2020 were
Sales and marketing expenses for the three months ended June 30, 2020 were
Operating loss for the three months ended June 30, 2020 was
Net loss for the three months ended June 30, 2020 was
At June 30, 2020, VerifyMe had a
Financial Results for the Six Months Ended June 30, 2020:
Revenue for the six months ended June 30, 2020 was
Gross profit for the six months ended June 30, 2020 was
General and administrative expenses for the six months ended June 30, 2020 were
Legal and accounting expenses for the six months ended June 30, 2020 were
Payroll expenses for the six months ended June 30, 2020 were
Research and development expenses for the six months ended June 30, 2020 were
Sales and marketing expenses for the six months ended June 30, 2020 were
Operating loss for the six months ended June 30, 2020 was
Net loss for the six months ended June 30, 2020 was
About VerifyMe, Inc.
VerifyMe, Inc. (NASDAQ: VRME), is a technology solutions provider specializing in brand protection functions such as counterfeit prevention, authentication, serialization, and track and trace features for labels, packaging and products. VerifyMe’s physical technology authenticates packaging, labels and documents with a suite of proprietary security inks and pigments, which work in conjunction with serialization and track and trace software known as VeriPAS™ that allows both consumers and brand inspectors to verify authenticity with their smartphones. VeriPAS™ is a serialization software system that brand owners access through a web portal to monitor, control and protect their products complete life cycle. To learn more, visit www.verifyme.com.
Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements regarding revenue opportunities, the use of our products in additional presses and locations, the results of ongoing tests, and roll-out of our products and authentication devices. The words "believe," "may," “estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the impact of the COVID-19 pandemic, intellectual property litigation, the successful development of our sales and marketing capabilities, our ability to retain key management personnel, our ability to work with partners in selling our technologies to businesses, production difficulties, our inability to enter into contracts and arrangements with future partners, issues which may affect the reluctance of large companies to change their purchasing of products, acceptance of our technologies and the efficiency of our authenticators in the field. Further information on our risk factors is contained in our filings with the Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2019 and the Quarterly Report on Form 10-Q for the three months ended June 30, 2020. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Use of Non-GAAP Financial Measures
This press release includes both financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”), as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to and should not be considered as alternatives to any other GAAP financial measures. They may not be indicative of the historical operating results of VerifyMe nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
VerifyMe’s management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. The Company believes that both management and shareholders benefit from referring to EBITDA and Adjusted EBITDA in planning, forecasting and analyzing future periods. The Company’s management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison. The Company’s management recognizes that EBITDA and Adjusted EBITDA, as non-GAAP financial measures, have inherent limitations because of the described excluded items.
The Company defines EBITDA as net income before income tax expense (benefit), interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation and change in fair value of derivative liabilities. EBITDA and Adjusted EBITDA are important measures of VerifyMe’s operating performance because they allow management, investors and analysts to evaluate and assess VerifyMe’s core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.
A reconciliation of EBITDA and Adjusted EBITDA to the most comparable financial measure, net loss, calculated in accordance with GAAP is included in this press release. The Company believes that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between VerifyMe and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules.
For Licensing or Other Information Contact:
Company: VerifyMe, Inc.
Email: IR@verifyme.com
Website: http://www.verifyme.com
Investors:
ClearThink
nyc@clearthink.capital
VerifyMe, Inc.
Balance Sheets
| As of | ||||||
| June 30, 2020 | December 31, 2019 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| CURRENT ASSETS | ||||||
| Cash and cash equivalents | $ | 9,595,133 | $ | 252,766 | ||
| Accounts Receivable | 46,074 | 81,113 | ||||
| Deposits on Equipment | - | 51,494 | ||||
| Prepaid expenses and other current assets | 46,801 | 31,801 | ||||
| Inventory | 34,630 | 30,158 | ||||
| TOTAL CURRENT ASSETS | 9,722,638 | 447,332 | ||||
| PROPERTY AND EQUIPMENT | ||||||
| Equipment for lease, net of accumulated amortization of | ||||||
| 227,714 | 177,021 | |||||
| INTANGIBLE ASSETS | ||||||
| Patents and Trademarks, net of accumulated amortization of | ||||||
| 233,698 | 218,570 | |||||
| Capitalized Software Costs, net of accumulated amortization of | ||||||
| 90,208 | 100,231 | |||||
| TOTAL ASSETS | $ | 10,274,258 | $ | 943,154 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||
| CURRENT LIABILITIES | ||||||
| Convertible Debt, net of unamortized debt discount | $ | - | $ | 297,997 | ||
| Derivative Liability | - | 171,499 | ||||
| Accounts payable and other accrued expenses | 371,609 | 422,297 | ||||
| Accrued Payroll | 13,133 | 119,041 | ||||
| TOTAL CURRENT LIABILITIES | 384,742 | 1,010,834 | ||||
| LONG-TERM LIABILITIES | ||||||
| Term Note | $ | 72,400 | $ | - | ||
| TOTAL LIABILITIES | $ | 457,142 | $ | 1,010,834 | ||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||||||
| Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares | ||||||
| authorized; 0 shares issued and outstanding as of June 30, 2020 and | ||||||
| 0 shares issued and outstanding as of December 31, 2019 | - | - | ||||
| Series B Convertible Preferred Stock, $.001 par value; 85 shares | ||||||
| authorized; 0.85 shares issued and outstanding as of June 30, 2020 and | - | - | ||||
| December 31, 2019 | ||||||
| Common stock of $.001 par value; 675,000,000 authorized; 5,350,391 and | ||||||
| 2,239,120 issued, 5,343,380 and 2,232,112 shares outstanding as of June 30, 2020 | ||||||
| and December 31, 2019, respectively | 5,343 | 2,232 | ||||
| Additional paid in capital | 75,441,731 | 61,814,826 | ||||
| Treasury stock as cost (7,011 shares at June 30, 2020 and December 31, 2019) | (113,389 | ) | (113,389 | ) | ||
| Accumulated deficit | (65,516,569 | ) | (61,771,349 | ) | ||
| STOCKHOLDERS' EQUITY (DEFICIT) | 9,817,116 | (67,680 | ) | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 10,274,258 | $ | 943,154 | ||
VerifyMe, Inc.
Statements of Operations
(Unaudited)
| Three months ended | Six months ended | |||||||||||
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||
| NET REVENUE | ||||||||||||
| Sales | $ | 75,256 | $ | 40,479 | $ | 167,102 | $ | 86,933 | ||||
| COST OF SALES | 13,172 | 7,085 | 29,974 | 21,852 | ||||||||
| GROSS PROFIT | 62,084 | 33,394 | 137,128 | 65,081 | ||||||||
| OPERATING EXPENSES | ||||||||||||
| General and administrative (a) | 461,211 | 418,195 | 1,031,793 | 650,877 | ||||||||
| Legal and accounting | 53,174 | 68,335 | 89,725 | 130,699 | ||||||||
| Payroll expenses (a) | 209,530 | 101,786 | 303,525 | 206,575 | ||||||||
| Research and development | 402 | 2,608 | 402 | 6,251 | ||||||||
| Sales and marketing (a) | 79,439 | 109,158 | 122,349 | 252,301 | ||||||||
| Total Operating expenses | 803,756 | 700,082 | 1,547,794 | 1,246,703 | ||||||||
| LOSS BEFORE OTHER INCOME (EXPENSE) | (741,672 | ) | (666,688 | ) | (1,410,666 | ) | (1,181,622 | ) | ||||
| OTHER (EXPENSE) INCOME | ||||||||||||
| Interest (expenses) income, net | (1,911,385 | ) | 1,032 | (2,054,050 | ) | 2,660 | ||||||
| Loss on Extinguishment of debt | - | - | (280,504 | ) | - | |||||||
| TOTAL OTHER (EXPENSE) INCOME | (1,911,385 | ) | 1,032 | (2,334,554 | ) | 2,660 | ||||||
| NET LOSS | $ | (2,653,057 | ) | $ | (665,656 | ) | $ | (3,745,220 | ) | $ | (1,178,962 | ) |
| LOSS PER SHARE | ||||||||||||
| BASIC | $ | (1.04 | ) | $ | (0.34 | ) | $ | (1.56 | ) | $ | (0.61 | ) |
| DILUTED | $ | (1.04 | ) | $ | (0.34 | ) | $ | (1.56 | ) | $ | (0.61 | ) |
| WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | ||||||||||||
| BASIC | 2,549,844 | 1,950,416 | 2,394,948 | 1,928,687 | ||||||||
| DILUTED | 2,549,844 | 1,950,416 | 2,394,948 | 1,928,687 | ||||||||
(a) Includes share based compensation of
VerifyMe, Inc.
Statements of Cash Flows
(Unaudited)
| Six months ended | ||||||
| June 30, 2020 | June 30, 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net loss | $ | (3,745,220 | ) | $ | (1,178,962 | ) |
| Adjustments to reconcile net loss to net cash used in | ||||||
| operating activities: | ||||||
| Stock based compensation | 49,681 | 15,000 | ||||
| Fair value of options in exchange for services | 485,470 | 249,788 | ||||
| Fair value of restricted stock awards issued in exchange for services | 98,938 | 84,220 | ||||
| Fair value of warrants in exchange for services | 53,835 | - | ||||
| Loss on Extinguishment of Debt | 280,504 | - | ||||
| Amortization of debt discount | 1,992,000 | - | ||||
| Common stock issued for interest expense | 60,802 | - | ||||
| Amortization and depreciation | 46,528 | 11,635 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts Receivable | 35,039 | 8,349 | ||||
| Deposits on Equipment | - | (163,090 | ) | |||
| Inventory | (4,472 | ) | (1,284 | ) | ||
| Prepaid expenses and other current assets | (15,000 | ) | (4,200 | ) | ||
| Accounts payable and accrued expenses | (37,555 | ) | (34,694 | ) | ||
| Net cash used in operating activities | (699,450 | ) | (1,013,238 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Purchase of Patents | (28,763 | ) | (28,574 | ) | ||
| Purchase of Equipment for lease | (22,069 | ) | - | |||
| Capitalized Software Costs | - | (46,196 | ) | |||
| Net cash used in investing activities | (50,832 | ) | (74,770 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Proceeds from public offering of securities, net of costs | 9,023,046 | - | ||||
| Proceeds from issuance of notes payable | 72,400 | - | ||||
| Repayment of bridge financing and early redemption fee | (750,000 | ) | - | |||
| Proceeds from convertible debt, net of costs | 1,747,203 | - | ||||
| Net cash provided by financing activities | 10,092,649 | - | ||||
| NET INCREASE (DECREASE) IN CASH AND | ||||||
| CASH EQUIVALENTS | 9,342,367 | (1,088,008 | ) | |||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 252,766 | 1,673,201 | ||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 9,595,133 | $ | 585,193 | ||
VerifyMe, Inc.
GAAP to Non-GAAP Reconciliation
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net loss (GAAP) | $ | (2,653,057 | ) | $ | (665,656 | ) | $ | (3,745,220 | ) | $ | (1,178,962 | ) | |||
| Interest expenses (income), net | 1,911,385 | (1,032 | ) | 2,054,050 | (2,660 | ) | |||||||||
| Loss on Extinguishment of Debt | - | - | 280,504 | - | |||||||||||
| Amortization and depreciation | 23,450 | 5,928 | 46,528 | 11,635 | |||||||||||
| EBITDA (Non-GAAP) | (718,222 | ) | (660,760 | ) | (1,364,138 | ) | (1,169,987 | ) | |||||||
| Adjustments: | |||||||||||||||
| Stock based compensation | 9,447 | 15,000 | 49,681 | 15,000 | |||||||||||
| Fair value of options in exchange for services | 267,865 | 126,077 | 485,470 | 249,788 | |||||||||||
| Fair value of restricted stock awards issued in exchange for services | 34,148 | 118,846 | 98,938 | 84,220 | |||||||||||
| Fair value of warrants in exchange for services | 53,835 | - | 53,835 | - | |||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | (352,927 | ) | $ | (400,837 | ) | $ | (676,214 | ) | $ | (820,979 | ) | |||
FAQ
What were VerifyMe's revenue results for Q2 2020?
What is the gross margin for VerifyMe in Q2 2020?
What was the net loss for VerifyMe in Q2 2020?
What strategic partnerships did VerifyMe announce?
What is the significance of VerifyMe's Nasdaq listing?
