VerifyMe Reports 2017 Financial Results and Provides Corporate Overview and Business Outlook
VerifyMe Reports 2017 Financial Results and Provides Corporate Overview and Business Outlook
Company turnaround well underway with several key agreements signed with major corporations, creating pathway for revenue growth during FY18
Announces Removal of Auditor's "Going Concern" Opinion from Its 2017 Form 10-K
Non-GAAP Adjusted EBITDA Improves 38%
ROCHESTER, N.Y., April 17, 2018 /PRNewswire/ -- VerifyMe, Inc. (OTCQB: VRME), a technology solutions company that markets proprietary products that provide identifiers and serialization for authenticating, tracking and tracing functions for labels, packaging, products, people and financial transactions, announced Fiscal Year 2017 results and that the going concern paragraph has been removed from its audit opinion contained in its filing of Form 10-K for the year ended December 31, 2017.
"Having the going concern issue removed from our audit opinion for the first time in the company's history is a significant accomplishment further affirming VerifyMe's successful transformation to a well-funded technology service provider," noted Patrick White, Chief Executive Officer. "Having the stigma of the going concern opinion removed restores confidence, not only in our stockholders, but also in the capital markets, customers and investing public in general. The Board is committed to maintain a solid financial foundation. We remain absolutely focused in executing our long-term strategy to grow the Company," further remarked Mr. White.
Recent Highlights (subsequent to the end of Fiscal Year 2017)
-- Signed technology licensing agreement with a NASDAQ listed leading
global label solution provider;
-- Appointed Mr. Carl E. Berg, a renowned investor and businessman to the
board of directors;
-- Appointed Mr. Jay Cardwell as the Company's Chief Financial Officer;
-- Announced reseller agreement with NYSE listed Micro Focus for global
product authentication software cloud services;
-- Entered into a global strategic sales, marketing and support partnership
with S-One Labels & Packaging, a division of S-One Holdings Corporation;
-- Signed Technology Licensing Agreement with Intelligent RFID Packaging
Solutions Provider eAgile
Fiscal Year 2017 Highlights
-- Entered into a major, global 5-year contract with HP Indigo in September
2017, which enables HP Indigo to enable its worldwide 6000 model
machines to print with VerifyMe's RainbowSecure(TM) inks
-- Restructuring and recapitalization plan implemented with substantial
cash invested by newly appointed members of the Company's board of
directors
-- Appointment of Patrick White as President and Chief Executive Officer,
former American Bank Note executive officer, Keith Goldstein as Chief
Operating Officer and Sandy Fliderman as Chief Technology Officer.
-- Our financial statements are no longer subject to a 'Going Concern'
opinion for the first time in seven years; due to a strengthening of the
Company's current balance sheet.
Financial Highlights
-- Operating expenses lower by 24.3% compared to Fiscal Year 2016;
-- Operating losses for Fiscal Year 2017 was $2.8 million compared to $3.7
million for Fiscal Year 2016;
-- Cash balance at the end of December 2017 was $693,001 compared to
$22,644 at the end of Fiscal Year 2016; (April 16(th), 2018 cash
position = $2.3 million)
-- Year over year Non-GAAP Adjusted EBITDA improves 38%
Management Discussion
Patrick White, President and Chief Executive Officer of VerifyMe, stated, "Fiscal 2017 was a pivotal year for the company, as we expanded our board by adding highly successful, experienced and seasoned businessmen and added new executives, including myself which improved the financial and operational structures of our organization. I am pleased to report that during Fiscal Year 2017 we were able to make significant improvements to the company's financials as we reduced our liabilities and increased our cash position. These activities coupled with the multi-billion-dollar authentication industry opportunity has created the foundation to put the company on a growth track for years to come. The most significant accomplishment of the year was that we were able to secure a 5-year contract with HP Indigo to include our RainbowSecure ink technologies in HP Indigo's digital printing machines. This will allow HP Indigo's 6000 model owners to seamlessly incorporate authentication measures on printed labels and packaging for brand owners. One of our biggest challenges was that HP is a global company and VerifyMe therefore needs to sell, service and support a global clientele. This was achieved with our recently announced marketing, sales and support contract with S-One corporation. They will market and handle all of the necessary needs of our global new client base on our behalf."
Mr. White concluded, "While we still have lots more to do, I am pleased with the accomplishments we secured in a short amount of time since I joined last summer. The HP Indigo contract has literally opened the door for VerifyMe in several instances and the proof is seen in the several key relationships we recently announced. I am also pleased with the progress in our digital biometric development and believe the Company has a viable future ahead in the biometric "people verification" segment. Various opportunities have presented themselves and we are in the midst of filling our sales pipeline with deal flow, which is at various stages - both on the physical and digital/biometrics sides of the business. Given the deal flow we've recently achieved, we expect revenue to commence ramping up during the second half of fiscal 2018. We expect HP to begin the global product rollout later this year as well as the S-One global marketing process. Both initiatives should enhance our product reach 10-fold. Our business sales cycle is long, but it will be expedited with the help and support of HP and S-One. In the coming months, investors should expect to see VerifyMe achieve a number of value-driving milestones and I look forward to sharing these developments with our shareholders as they transpire."
Printing Technology Milestones:
-- HP/S-One Global Sales and Marketing Rollout of our RainbowSecure(TM)
Technology
-- New Licensee Announcements with Major Brand Owners and Integrators
-- First Revenue Generation
Digital Technology Milestones:
-- New Installations of VerifyMe Multi-Factor Authentication Systems
-- New Licensee Announcements with Secure Data/Financial Transaction
Systems
-- First Revenue Generation
The following table presents a reconciliation of Net Loss to Adjusted EBITDA, a Non-GAAP financial measure:
Year Ended
December 31,
------------
2017 2016
---- ----
Net Loss $(3,123,929) $(1,603,185)
Interest $218,316 $12,871
Amortization and Depreciation: $43,095 $30,199
Stock based compensation $139,808 -
Fair Value of options issued in exchange for services $1,295,741 $1,405,877
Fair value of restricted stock issued in exchange for services $66,825 -
Common stock and warrants issued for services $297,807 $20,775
Loss on conversion of related party notes payable and accrued interest $331,912 -
Change in fair value of warrant liability - $(1,407,631)
Change in fair value of embedded derivative liability - $(698,303)
Amortization of deferred compensation $683,251
Total Adjusted EBITDA (Non-GAAP) $(991,836) $(1,599,216)
========= ===========
This press release includes both 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. The non-GAAP financial measure should be viewed as supplemental to, and should not be considered as alternatives to net income, operating income, 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 the non-GAAP financial measure 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 comparison. Our management recognizes that the non-GAAP financial measure has inherent limitations because of the excluded items described in the table above.
VerifyMe defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table above. 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 measure 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.
About VerifyMe, Inc.
VerifyMe, Inc., is a technology solutions company that markets proprietary products that provide identifiers and serialization for authenticating, tracking and tracing functions for labels, packaging, products, people and financial transactions. VerifyMe's physical technology authenticates packaging, labels & documents with a suite of proprietary security inks and pigments. The company's digital technologies authenticate people by performing strong, multi-factor verification via its patented digital software platforms. To learn more, visit www.verifyme.com
Forward Looking Statements
Certain statements in this press release include forward-looking statements including statements regarding our growth track, our expected revenues, milestones, the HP Indigo global product rollout, beginning the S-One global marketing and our position in the biometric identification market. 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 risk factors contained in our Form 10-K which we filed on April 16, 2018. 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: IR@verifyme.com
Website: http://www.verifyme.com
For investors contact:
Lytham Partners
Adam Lowensteiner or Robert Blum
646-829-9700 - New York
602-889-9700 - Phoenix
vrme@lythampartners.com
VerifyMe, Inc.
Balance Sheets
Year Ended
December 31, 2017 December 31, 2016
----------------- -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $693,001 $22,644
Prepaid expenses and other current
assets 18,668 9,425
Inventory - 17,093
TOTAL CURRENT ASSETS 711,669 49,162
------- ------
OTHER ASSETS
Patents and Trademarks, net of
accumulated amortization of $237,331
and $194,236 as of December 31, 2017
and December 31, 2016 191,507 231,952
TOTAL ASSETS $903,176 $281,114
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $923,202 $867,436
Notes payable net of discount of $0 and
$60,931, as of December 31, 2017 and
December 31, 2016 50,000 68,069
Common stock payable - related party 122,478
Embedded derivative liability - 228,718
Warrant liability - 394,744
--- -------
TOTAL CURRENT LIABILITIES 1,095,680 1,558,967
STOCKHOLDERS' DEFICIT
Series A Convertible Preferred Stock,
$.001 par value, 37,564,767 shares
authorized; 324,778 shares issued and
outstanding as of December 31, 2017
and 397,778 shares issued and
outstanding as of December 31, 2016 325 398
Series B Convertible Preferred Stock,
$.001 par value; 85 shares authorized;
0.92 shares issued and outstanding as
of December 31, 2017 and December 31,
2016 - -
Series C Convertible Preferred Stock,
$.001 par value; 7,500,000 shares
authorized, 0 shares issued and
outstanding as of December 31, 2017
and 1,912,500 issued and outstanding
as of December 31, 2016 - 1,913
Series D Convertible Preferred Stock,
$.001 par value; 6,000,000 shares
authorized; 0 shares issued and
outstanding as of December 31, 2017
and 166,750 issued and outstanding as
of December 31, 2016 - 167
Common stock of $.001 par value;
675,000,000 authorized; 53,873,872 and
8,681,236 issued, 53,523,332 and
8,330,696 shares outstanding as of
December 31, 2017 and December 31,
2016 53,522 8,331
Additional paid in capital 56,198,126 40,469,272
Treasury stock at cost (350,540 shares
at December 31, 2017 and December 31,
2016) (113,389) (113,389)
Accumulated deficit (56,331,088) (41,644,545)
STOCKHOLDERS' DEFICIT (192,504) (1,277,853)
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $903,176 $281,114
======== ========
VerifyMe, Inc.
Statements of Operations
Year Ended
----------
December 31, December 31,
2017 2016
---- ----
NET REVENUE
Sales $ - $37,055
--- --- -------
TOTAL NET REVENUE - 37,055
COST OF SALES - 24,363
GROSS PROFIT - 12,692
--- ------
OPERATING EXPENSES
General and administrative (a) 1,689,883 1,010,648
Legal and accounting 246,520 414,032
Payroll expenses (a) 767,257 1,789,303
Research and development 128,044 250,180
Sales and marketing 3,800 282,867
----- -------
Total Operating expenses 2,835,504 3,747,030
--------- ---------
LOSS BEFORE OTHER INCOME (EXPENSE) (2,835,504) (3,734,338)
OTHER (EXPENSE) INCOME
Interest expenses (218,316) (12,871)
Loss on settlement of related party
notes payable (331,912) -
Other income 392 -
Loss on disposition of fixed assets - (4,981)
Change in fair value of warrants - 3,357,149
Change in fair value of embedded
derivative liability - 698,303
Fair value of warrants in excess of
consideration for convertible
preferred stock - (1,949,517)
--- ----------
(549,836) 2,088,083
-------- ---------
NET LOSS $(3,385,340) $(1,646,255)
----------- -----------
Deemed dividend on convertible
preferred shares (596,878) -
NET LOSS ATTRIBUTABLE TO COMMON
SHAREHOLDERS $(3,982,218) $(1,646,255)
----------- -----------
LOSS PER SHARE
BASIC $(0.14) $(0.24)
====== ======
DILUTED $(0.14) $(0.24)
====== ======
WEIGHTED AVERAGE COMMON SHARE
OUTSTANDING
BASIC 28,244,361 6,860,955
========== =========
DILUTED 28,244,361 6,860,955
========== =========
(a) Includes share based compensation of
$1,800,181 and $1,405,877 for the
years ended December 31, 2017 and
2016, respectively.
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SOURCE VerifyMe, Inc.
