VerifyMe Reports Third Quarter Financial Results
ROCHESTER, N.Y., Nov. 14, 2018 /PRNewswire/ -- VerifyMe, Inc. (OTCQB: VRME), a technology solutions company that markets a portfolio of proprietary products in the field of counterfeiting prevention, authentication, track and trace, serialization and multi-factor biometric verification solutions today announced their financial results for the period ended September 30, 2018.
Highlights
-- Revenue Grew 7,113% Over the Prior Year's Quarter and 315% Over the
Second Quarter 2018;
-- Cash & Cash Equivalents of $2.1 Million with No Debt;
-- The Company announced an initial order for product labels annually from
a well-known international brand owner; production has begun and is
expected to be on-going;
-- Hired Former De La Rue Executive, Keith Cutri as VP- Global Business
Development;
-- Contractual partnerships with HP Indigo, Micro Focus and S-One LP are
progressing and expanding with some key growth oriented initiatives
taking place;
-- Roll-Out of Smartphone Enabled New Cloud Connected Authentication
Devices
Financial
-- Revenue for the three-month period ended September 30, 2018 was $28,273,
an increase of 7,113% over the third quarter 2018, and 315% over the
second quarter of 2018. Revenue year to date was $35,072, an increase of
8,847% over the revenue for the same period in 2017.
-- Operating Loss was $567,227 for the quarter ended September 30, 2018,
compared to an Operating Loss of $382,766 for the third quarter of 2017.
Cumulative year to date Operating Loss was $2,109,586 through the third
quarter of 2018, compared to Operating Loss of $1,163,710 for the
comparable period of 2017, which was principally due to an increase in
non-cash charges related to restricted stock awards and stock options as
well as increases in some non-recurring product development expenses
related to activities that will expand our operations.
-- Net Cash Used in Operations for the quarter amounted to $479,476,
compared to $345,294 for the third quarter of 2017. Net Cash Used in
Operations year to date was $1,987,465 as compared to $626,743 in the
same period in 2017. The increase primarily related to a one-time
settlement payment of $500,000 to certain shareholders of the Company as
well as increases in expenses related to activities that will expand our
operations.
-- Net loss increased to $479,476 in the third quarter 2018 from a net loss
of $384,983 in the third quarter of 2017. Our year to date Net Loss of
$2,398,304 compared to a $1,198,079 Net Loss in the comparable period
ended September 30, 2017.
-- Adjusted EBITDA (in the attached table), which we believe is a
meaningful supplemental disclosure that may be indicative of how
management and our Board of Directors evaluates Company performance,
adjusts Income or Loss for non-cash charges such as depreciation &
amortization, stock based compensation, transactions outside the normal
course of business for the three-month periods ended September 30, 2018
and 2017 was $(271,297) and $(258,520). Year to date Adjusted EBITDA was
$(894,803) as compared to $(698,163) for the comparable period of 2017.
-- Cash balance as of September 30, 2018 was $2,124,272 compared to
$693,001 as of December 31, 2017, and $759,698 as of September 30, 2017.
The Company has no Long-Term Debt as of September 30, 2018.
Important Milestones to Watch For:
-- New RainbowSecure(TM) Identifier Authentication Technology Revenue
Generating Projects
-- Revenue from VerifyMe's VeriPAS(TM) Serialization, Track and Trace Cloud
Solutions
-- Additional Licensing Contracts with Label and Packaging Print Providers;
-- Expansion of VerifyMe Technology to Additional Larger Format HP Indigo
Digital Presses
-- Expansion of VerifyMe Technology to Inkjet and Flexographic Printing
Presses
-- Expansion of VerifyMe Technology to Thermal Transfer Printers
Management Discussion
Patrick White, President and Chief Executive Officer of VerifyMe, stated, "It took a lot of effort but we are now positioned for revenue growth as well as fulfilling "meeting requests" we have received from over 50 prospects which includes some of the largest names in the Fortune 500 from all parts of the globe that have inquired about our products and technology." White continued, "Watch for new announcements concerning new revenue wins, market penetration and key technology expansion offerings in the coming months."
Non-GAAP Financial Measures:
This press release includes both financial measures in accordance with Generally Accepted Accounting Principles, or 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. The non-GAAP financial measures 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 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 measures in planning, forecasting and analyzing future periods. Our management uses this non-GAAP financial measures 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 have inherent limitations because of the excluded items described in the table below.
VerifyMe defines EBITDA and Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table above. VerifyMe excludes these expenses from Adjusted EBITDA because they are non-cash or non-recurring in nature.
We have included in the table attached 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 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.
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, products. The company also markets multi-factor biometric verification solutions to verify people. VerifyMe's physical technology authenticates packaging, labels & documents with a suite of proprietary security inks and pigments which work in conjunction with serialization, 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 revenue opportunities, additional licensing contracts, business projects and acquisition of additional printers which involve uncertainty and risk. 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 larger partners in selling its technologies to large businesses, production difficulties, research and development issues, inability to purchase additional equipment or supplies, and issues which may affect the reluctance of large companies to change their purchasing of our products and their acceptance of our technologies. 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, 2017. 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.
Interested brand owners, label and packaging printers should contact VerifyMe at:
Email: Sales@verifyme.com
Phone: 585-736-9400
For Investor information contact:
Company: VerifyMe, Inc.
Email: IR@verifyme.com
Website: http://www.verifyme.com
VerifyMe, Inc.
Balance Sheets
As of
September 30, December 31,
2018 2017
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $
2,124,272 $
693,001
Accounts Receivable 28,462
Prepaid expenses and other current assets 18,668 18,668
Inventory 35,102
TOTAL CURRENT ASSETS 2,206,504 711,669
OTHER ASSETS
Patents and Trademarks, net of accumulated amortization of
$253,259 and $237,331 as of September 30, 2018 and December 31, 2017 192,269 191,507
Capitalized Software 30,223
TOTAL ASSETS $
2,428,996 $
903,176
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $
442,737 $
923,202
Notes payable 50,000
Common Stock payable 122,478
TOTAL CURRENT LIABILITIES 442,737 1,095,680
STOCKHOLDERS' EQUITY (DEFICIT)
Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares
authorized; 304,778 shares issued and outstanding as of September 30, 2018 and
324,778 shares issued and outstanding as of December 31, 2017 305 325
Series B Convertible Preferred Stock, $.001 par value; 85 shares
authorized; 0.85 shares issued and outstanding as of September 30, 2018 and
0.92 shares issued and outstanding as of December 31, 2017
Common stock of $.001 par value; 675,000,000 authorized; 102,546,708 and 102,196 53,522
53,873,872 issued, 102,196,168 and 53,523,332 shares outstanding as of
September 30, 2018 and December 31, 2017
Additional paid in capital 60,726,539 56,198,126
Treasury stock as cost (350,540 shares at September 30, 2018 and (113,389) (113,389)
December 31, 2017)
Accumulated deficit (58,729,392) (56,331,088)
STOCKHOLDERS' EQUITY (DEFICIT) 1,986,259 (192,504)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $
2,428,996 $
903,176
VerifyMe, Inc.
Statements of Operations
(Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
NET REVENUE
Sales $
28,273 $
392 $
35,072 $
392
COST OF SALES 12,281 14,281
GROSS PROFIT 15,992 392 20,791 392
OPERATING EXPENSES
General and administrative (a) 357,665 242,401 1,378,999 872,767
Legal and accounting 64,897 51,926 362,371 143,132
Payroll expenses (a) 77,664 71,898 269,518 114,960
Research and development 73,843 15,933 102,272 33,243
Sales and marketing 9,150 17,217
Total Operating expenses 583,219 382,158 2,130,377 1,164,102
LOSS BEFORE OTHER INCOME (567,227) (381,766) (2,109,586) (1,163,710)
(EXPENSE)
OTHER (EXPENSE) INCOME
Interest (expenses) income, net 1,084 (5,000) 1,367 (217,316)
Gain on derecognition of note
payable and 86,667 86,667
accrued interest
Settlement agreement with
shareholders (779,000)
Gain on accounts payable
forgiveness 402,248
Change in fair value of warrants 1,783 103,527
Change in fair value of embedded
derivative 79,420
liability
87,751 (3,217) (288,718) (34,369)
NET LOSS $
(479,476) $
(384,983) $
(2,398,304) $
(1,198,079)
LOSS PER SHARE
BASIC $
(0.00) $
(0.01) $
(0.03) $
(0.06)
DILUTED $
(0.00) $
(0.01) $
(0.03) $
(0.06)
WEIGHTED AVERAGE COMMON SHARE
OUTSTANDING
BASIC 101,186,416 42,642,914 91,453,702 21,355,120
DILUTED 101,186,416 42,642,914 91,453,702 21,355,120
(a) Includes share-based compensation of $204,227 and $709,940 for the three and nine months ended September 30, 2018 and $101,229 and $452,949 for the three and nine months ended September 30, 2017.
VerifyMe, Inc.
Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30, 2018 September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $
(2,398,304) $
(1,198,079)
Adjustments to reconcile net loss to net cash used in
operating activities:
Stock based compensation 44,120 12,285
Fair value of options and warrants issued in exchange for services 270,339 440,664
Fair value of restricted stock and restricted stock units issued in exchange for 395,481
services
Gain on accounts payable forgiveness (402,248)
Share-based payment for settlement agreement with shareholders 279,000
Gain on derecognition of note payable and accrued interest (86,667)
Accretion of discount on notes payable 204,516
Change in fair value of warrant liability (103,527)
Change in fair value of embedded derivative liability (79,420)
Amortization and depreciation 15,928 12,598
Changes in operating assets and liabilities:
Accounts Receivable (28,462)
Inventory (35,102) (14,904)
Prepaid expenses (12,348)
Accounts payable and accrued expenses (41,550) 111,472
Net cash used in operating activities (1,987,465) (626,743)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Patents (16,690)
Capitalized Software Costs (30,223)
Net cash used in investing activities (46,913)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of warrants 2,311,438
Proceeds from issuance of notes payable 281,000
Proceeds from sale of common stock 1,154,211 1,100,250
Stock issuance costs (17,453)
Net cash provided by financing activities 3,465,649 1,363,797
NET INCREASE IN CASH AND
CASH EQUIVALENTS 1,431,271 737,054
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 693,001 22,644
CASH AND CASH EQUIVALENTS - END OF PERIOD $
2,124,272 $
759,698
NON-GAAP FINANCIAL INFORMATION
Three Months Ended Nine Months Ended
September 30,
September 30,
ADJUSTED EBITDA 2018 2017 2018 2017
(Non-GAAP)
Net loss $
(479,476) $
(384,983) $
(2,398,304) $
(1,198,079)
Interest expenses (income), net (1,084) 5,000 (1,367) 217,316
Amortization and 5,034 6,267 15,928 12,598
depreciation
Total EBITDA (Non- (475,526) (373,716) (2,383,743) (968,165)
GAAP)
Adjustments:
Stock based 1 12,285 44,120 12,285
compensation
Fair value of options and 44,151 104,694 270,339 440,664
warrants issued in exchange
for services
Fair value of restricted stock 160,077 395,481
and restricted stock units
issued in exchange for
services
Change in fair value of (1,783) (103,527)
warrants
Change in fair value of (79,420)
embedded derivative
liability
Share-based payment for 279,000
settlement agreement with
shareholders
Cash payment for settlement 500,000
agreement with
shareholders
Total Adjusted EBITDA $
(271,297) $
(258,520) $
(894,803) $
(698,163)
(Non-GAAP)
Investors should read the discussion in the section of this press release entitled Non-GAAP Financial Information.
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SOURCE VerifyMe, Inc.
