VerifyMe Reports First Quarter 2019 Results
- 175
Company Continues to Execute on Global and Domestic Expansion Iniatitives
ROCHESTER, NY / ACCESSWIRE / May 15, 2019 / 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 first quarter ended March 31, 2019.
Key Financial Highlights for Q1 2019:
- Revenues increased to $46,454, compared to $0 in Q1 2018
- Operating loss decreased by 31% to $0.5 million
- Net loss decreased by 54% to $0.5 million
Key Business Highlights for Q1 2019:
- Participated at several key industry events, including HP Indigo Singapore, DSCOOP and Brand Protection Excellence Forum
- Strengthened Board of Directors with appointments of Eugene Robin, Arthur Laffer and Chris Gardner
- A top 10 global consumer products company has applied VerifyMe's RainbowSecure™ invisible ink technology to 4.5 million product labels during the quarter
- New VerifyMe Smart Phone Authenticators manufactured in Q1 2019 - these devices will be leased to brand owners and their investigative teams
Subsequent to the end of the first quarter, the Company executed several agreements that will accelerate revenue growth in future quarters.
- 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 commercial technology license agreement with Niagara Label, a western New York label manufacturer specializing in the food and beverage industry
- 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
Management Commentary
"I am pleased to report that we have had an excellent start to the year as we executed on multiple global and domestic pipeline development objectives." commented, Patrick White, VerifyMe's Chief Executive Officer. "All of our hard work and innovation on our security and authentication technology is being recognized by industry experts, partners and clients. Partners such as HP Indigo, Micro Focus, S-One LP and others, are now helping us in driving market adoption."
Mr. White concluded, "Our recently announced contracts and partnerships with Arca Etichette, Niagra Label and Covectra validate our proprietary, patented and disruptive technology solutions for the global anti-counterfeit, piracy and brand protection markets. The late-2018 FDA mandate for serialization, track and trace for all pharmaceutical packaging and label has spurred great interest for our technology solutions in the pharmaceutical industry. We are exctited to now be in the commercializtion phase and look forward to ramping our revenue. Given our business model involves royalty rates based on volume of impressions and software in the cloud, we are targeting gross margins in the 70-80% range for 2019. Watch for additional announcments concerning new significant clients and global market expansion."
In conjunction with the smart phone reading device, the VeriPAS cloud-based software gives brand owners the ability to monitor, control and protect their products life cycle. This software resides in the cloud and brand owners can access it over the internet. The software generates serialization codes which the brand owner purchases from VerifyMe. These codes are then printed on labels and packaging in both visible codes for consumers to engage and invisible codes known as RainbowSecure which trained brand inspectors can review with VerifyMe's smart phone reading device.
Arca Etichette ("Arca") - April 16
Arca Etichette, a leading label and packaging company based in Milan, Italy, signed a license agreement for Arca to incorporate VerifyMe's brand protection technology solutions to brand owners throughout Europe.
This agreement launches VerifyMe's digital security, authentication and tracking solutions in Europe. The contract is the first leasing of VerifyMe's patented smart phone authentication devices which reads invisible codes into the cloud and are recorded in the Company's serialization, track & trace software platform called VeriPAS. VerifyMe's devices will be leased to brand owners by Arca and in exchange for recurring revenue.
Arca's business covers a wide range of industries, including Pharmaceuticals, Cosmetics, Toiletries, Food, Automotive, Domestic Appliances and Mechanical Components with National and Multinational Companies. Its global customer base of brand owners have increasingly experienced counterfeiting and product diversion of their products and have expressed a desire for a technology solution to mediate these issues to protect their brand and improve their profitability.
This global agreement provides Arca with the ability to place VerifyMe's digital security, authentication and tracking technology solutions in the hands of brand owners who seek to secure their products and goods from counterfeiters and product diversion. This contract entails the first leasing of VerifyMe's smartphone authentication devices, which read the invisible RainbowSecure™ codes into the cloud and are recorded in the Company's serialization, track and trace software platform called, "VeriPAS". These devices are expected to be leased to brand owners and investigators, which will result in a recurring leasing revenue business model for VerifyMe.
Niagra Label ("Niagra") - April 24
Niagara Label, a western New York label manufacturer with 33 years experience signed a license agreement for Niagara to incorporate VerifyMe's brand protection technology solutions to brand owners throughout the United States.
Niagara is headquartered near Buffalo N.Y. and is strongly positioned and conveniently located to the Northeast, Midwest and Mid-Atlantic regions, specializing in the food & beverage markets.
Niagara works with brand owners in the following industries:
- Wine, Beer & Spirits
- Food & Beverage
- Cannabis
- Health & Beauty
- Industrial/Chemical
This global agreement will place VerifyMe's digital security, authentication and tracking technology solutions in the hands of brand owners who seek to secure and track their products and goods from counterfeiters. The contract entails the leasing of VerifyMe's Smart Phone authentication devices, which read the invisible RainbowSecure codes into the cloud and are recorded in the Company's serialization, track and trace software platform called, VeriPAS. These devices are expected to be leased by Niagara Label brand owners and investigators, which will result in a recurring revenue and high gross margin business model for VerifyMe.
Covectra - May 6
Covectra, Inc., a multi-layered brand protection company, executed a strategic partnership agreement with VerifyMe. The Cross-Selling Agreement has been signed as a Memorandum of Understanding giving VerifyMe the ability to sell and create a distribution channel to the Pharmaceutical, Food & Beverage, Tobacco and other industries. The Agreement addresses the Pharmaceutical industry's new Serialization, Track and Trace technology requirements mandated by the FDA in November 2018.
The strategic partnership agreement enables the integration and cross-selling of both companies' products with each other, specifically:
- Integrate Covectra's serialization code generation and management, packaging line serialization system, and authentication engine ("AuthentiTrack") with VerifyMe's VeriPAS covert authentication system.
- Covectra will market and sell AuthentiTrack with the VeriPAS integration as part of its product offering to customers and potential customers who are seeking covert marking products and services.
- VerifyMe will market and sell VeriPAS with the AuthentiTrack integration, as well as Covectra's integration services to customers and potential customers who are seeking turnkey solutions integrated into their packaging lines.
- The two companies will work together to commercialize Covectra's StellaGuard solution for use with the HP Indigo digital printing presses that dispense VerifyMe's RainbowSecure ink, and to integrate the solution with VeriPAS so that customers can use one application to read both the StellaGuard "stars" and VerifyMe's covert RainbowSecure ink.
- VerifyMe will be the exclusive reseller of the StellaGuard product for use with the HP Indigo digital printing presses and will be a non-exclusive reseller of the StellaGuard product for all other potential uses.
- Will add additional mutually-agreed upon sales channel relationships to the partnership if and when they become available.
Financial Results for the Three Months Ended March 31, 2019:
Revenue for the three months ended March 31, 2019 was $46,454, compared to $0 for the three months ended March 31, 2018. The revenue relates to an order for the printing of labels with our authentication serialization technology for a large global brand owner.
Gross profit for the three months ended March 31, 2019 was $31,687, compared to $0 for the three months ended March 31, 2018. The resulting gross margin was 68.2% for the three months ended March 31, 2019.
General and administrative expenses for the three months ended March 31, 2019 were $232,682, a decrease of $262,892 or 53%, compared to $495,574 for the three months ended March 31, 2018.
Legal and accounting expenses for the three months ended March 31, 2019 were $62,364, a decrease of $71,340 or 53%, compared to $133,704 for the three months ended March 31, 2018.
Payroll expenses for the three months ended March 31, 2019 were $104,789, an increase of $12,738 or 14%, compared to $92,951 for the three months ended March 31, 2018.
Research and development expenses for the three months ended March 31, 2019 were $3,643, a decrease of $8,553 or 70%, compared to $12,196 for the three months ended March 31, 2018.
Sales and marketing expenses for the three months ended March 31, 2019 were $143,933, an increase of $135,891, compared to $8,042 for the three months ended March 31, 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 March 31, 2019 was $514,934, a decrease of $226,633, or 31%, compared to $741,567 for the three months ended March 31, 2018.
Adjusted EBITDA loss for the three months ended March 31, 2019 was $420,142 an increase of $371,237 as compared to $48,905 for the three months ended March 31, 2018.
Net loss for the three months ended March 31, 2019 was $513,306, a decrease of $610,327, or 54%, compared to $1,123,633 for the three months ended March 31, 2018. The resulting EPS loss for the three months ended March 31, 2019 was $(0.01) per diluted share, compared to $(0.01) per diluted share for the three months ended March 31, 2018.
Non-GAAP - Financial Measure:
This press release includes both a financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as a non-GAAP financial measure. 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 net income (loss), operating income (loss), and cash flow from operating activities, liquidity or any other 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.
Our management uses and relies on Adjusted EBITDA which is a non-GAAP financial measure. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measure in planning, forecasting and analyzing future periods. Our management uses this non-GAAP financial measure in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measure has inherent limitations because of the excluded items described below.
VerifyMe defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below. VerifyMe excludes these expenses because they are non-cash or non-recurring in nature.
We have included a reconciliation of our non-GAAP financial measure to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measure, 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.
The following table presents a reconciliation of Adjusted EBITDA to net loss allocable to common shareholders, a GAAP financial measure:
| Three Month Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net loss | $ | (513,306 | ) | $ | (1,123,633 | ) | ||
| Interest expense (income), net | (1,628 | ) | 791 | |||||
| Amortization and depreciation | 5,707 | 5,034 | ||||||
| Total EBITDA (Non-GAAP) | (509,227 | ) | (1,117,808 | ) | ||||
| Adjustments: | ||||||||
| Stock based compensation | - | 32,644 | ||||||
| Fair value of options and warrants issued in exchange for services | 123,711 | 205,969 | ||||||
| Fair value of restricted stock and restricted stock units issued in exchange for services | (34,626 | ) | 51,290 | |||||
| Common stock and warrants issued for services | - | - | ||||||
| Share-based payment for settlement agreement with shareholders | - | 279,000 | ||||||
| Cash payment for settlement agreement with shareholders | - | 500,000 | ||||||
| Total Adjusted EBITDA (Non-GAAP) | $ | (420,142 | ) | $ | (48,905 | ) | ||
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 accelerating revenue growth, 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 | ||||||||
| March 31, 2019 | December 31, 2018 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,055,585 | $ | 1,673,201 | ||||
| Accounts Receivable | 28,262 | 30,373 | ||||||
| Deposits on Equipment | 163,090 | - | ||||||
| Prepaid expenses and other current assets | 22,781 | 25,781 | ||||||
| Inventory | 30,374 | 41,982 | ||||||
| TOTAL CURRENT ASSETS | 1, 307,292 | 1,771,337 | ||||||
| INTANGIBLE ASSETS | ||||||||
| Patents and Trademarks, net of accumulated amortization of | ||||||||
| $264,001 and $258,294 as of March 31, 2019 and December 31, 2018 | 227,777 | 209,049 | ||||||
| Capitalized Software Costs | 70,231 | 70,231 | ||||||
| TOTAL ASSETS | $ | 1,605,300 | $ | 2,050,617 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and other accrued expenses | $ | 377,786 | $ | 411,211 | ||||
| Accrued Payroll | 81,370 | 69,041 | ||||||
| TOTAL CURRENT LIABILITIES | 459,156 | 480,252 | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares | ||||||||
| authorized; 264,778 shares issued and outstanding as of March 31, 2019 and | ||||||||
| 304,778 shares issued and outstanding as of December 31, 2018 | 265 | 305 | ||||||
| Series B Convertible Preferred Stock, $.001 par value; 85 shares | ||||||||
| authorized; 0.85 shares issued and outstanding as of March 31, 2019 and 2018 | - | - | ||||||
| Common stock of $.001 par value; 675,000,000 authorized; 103,993,706 and 102,553,706 issued, 103,643,166 and 102,203,166 shares outstanding as of March 31, 2019 and December 31, 2018 | 103,643 | 102,203 | ||||||
| Additional paid in capital | 60,932,481 | 60,844,796 | ||||||
| Treasury stock as cost (350,540 shares at March 31, 2019 and December 31, 2018) | (113,389 | ) | (113,389 | ) | ||||
| Accumulated deficit | (59,776,856 | ) | (59,263,550 | ) | ||||
| STOCKHOLDERS' EQUITY | 1,148,644 | 1,570,365 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,605,300 | $ | 2,050,617 | ||||
VerifyMe, Inc.
Statements of Operations
(Unaudited)
| Three months ended | ||||||||
| March 31, 2019 | March 31, 2018 | |||||||
| NET REVENUE | ||||||||
| Sales | $ | 46,454 | $ | - | ||||
| COST OF SALES | 14,767 | - | ||||||
| GROSS PROFIT | 31,687 | - | ||||||
| OPERATING EXPENSES | ||||||||
| General and administrative (a) | 232,682 | 495,574 | ||||||
| Legal and accounting | 62,364 | 133,704 | ||||||
| Payroll expenses (a) | 104,789 | 92,051 | ||||||
| Research and development | 3,643 | 12,196 | ||||||
| Sales and marketing (a) | 143,143 | 8,042 | ||||||
| Total Operating expenses | 546,621 | 741,567 | ||||||
| LOSS BEFORE OTHER INCOME (EXPENSE) | (514,934 | ) | (741,567 | ) | ||||
| OTHER (EXPENSE) INCOME | ||||||||
| Interest income (expenses), net | 1,628 | (791 | ) | |||||
| Settlement agreement with shareholders | - | (779,000 | ) | |||||
| Gain on accounts payable forgiveness | - | 397,725 | ||||||
| 1,628 | (382,066 | ) | ||||||
| NET LOSS | $ | (513,306 | ) | $ | (1,123,633 | ) | ||
| LOSS PER SHARE | ||||||||
| BASIC | $ | (0.01 | ) | $ | (0.01 | ) | ||
| DILUTED | $ | (0.01 | ) | $ | (0.01 | ) | ||
| WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | ||||||||
| BASIC | 94,092,049 | 76,278,102 | ||||||
| DILUTED | 94,092,049 | 76,278,102 | ||||||
VerifyMe, Inc.
Statements of Cash Flows
(Unaudited)
| Three months ended | ||||||||
| March 31, 2019 | March 31, 2018 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (513,306 | ) | $ | (1,123,633 | ) | ||
| Adjustments to reconcile net loss to net cash used in | ||||||||
| operating activities: | ||||||||
| Stock based compensation | - | 32,644 | ||||||
| Fair value of options and warrants issued in exchange for services | 123,711 | 205,969 | ||||||
| Fair value of restricted stock and restricted stock units issued in exchange for services | (34,626 | ) | 51,290 | |||||
| Gain on accounts payable forgiveness | - | (397,725 | ) | |||||
| Share-based payment for settlement agreement with shareholders | - | 279,000 | ||||||
| Amortization and depreciation | 5,707 | 5,034 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts Receivable | 2,111 | - | ||||||
| Deposit on Equipment | (163,090 | ) | - | |||||
| Inventory | 11,608 | (9,768 | ) | |||||
| Prepaid expenses and other current assets | (4,200 | ) | (12,566 | ) | ||||
| Accounts payable and accrued expenses | (21,096 | ) | (12,286 | ) | ||||
| Net cash used in operating activities | (593,181 | ) | (982,041 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of Patents | (24,435 | ) | (825 | ) | ||||
| Net cash used in investing activities | (24,435 | ) | (825 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from exercise of warrants | - | 1,476,489 | ||||||
| Proceeds from sale of common stock | - | 1,154,777 | ||||||
| Net cash provided by financing activities | - | 2,631,266 | ||||||
| NET INCREASE IN CASH AND | ||||||||
| CASH EQUIVALENTS | (617,616 | ) | 1,648,400 | |||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 1,673,201 | 693,001 | ||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 1,055,585 | $ | 2,341,401 | ||||
| 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 | $ | 800 | $ | 400 | ||||
| Series B Convertible Preferred Stock converted to common stock | $ | - | $ | 599 | ||||
| Cashless Exercise of Warrants | $ | - | $ | 4,028 | ||||
| Common Stock and Warrants Issued for Common Stock Payable | $ | - | $ | 122,478 | ||||
SOURCE: VerifyMe
View source version on accesswire.com:
https://www.accesswire.com/545464/VerifyMe-Reports-First-Quarter-2019-Results
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