UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39332

VERIFYME, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		23-3023677
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Clinton Square, 75 S. Clinton Ave, Suite 510 Rochester, NY		14604
(Address of Principal Executive Offices)		(Zip Code)

(585) 736-9400
(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which

Registered

Common Stock, par value $0.001 per share

VRME

The Nasdaq Capital Market

Warrants to Purchase Common Stock

VRMEW

The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T § 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company,” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 8,467,046 shares of common stock outstanding at August 10, 2022.

PART I - FINANCIAL INFORMATION

ITEM 1.	Financial Statements	4
Consolidated Balance Sheets (Unaudited)		4
Consolidated Statements of Operations (Unaudited)		5
Consolidated Statements of Cash Flows (Unaudited)		6
Consolidated Statements of Stockholders' Equity (Unaudited)		7
Notes to Consolidated Financial Statements (Unaudited)		9
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	32
ITEM 4.	Controls and Procedures	32

PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	33
ITEM 1A.	Risk Factors	33
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
ITEM 3.	Defaults Upon Senior Securities	38
ITEM 4.	Mine Safety Disclosures	38
ITEM 5.	Other Information	38
ITEM 6.	Exhibits	38
SIGNATURES		39

Table of Contents

FINANCIAL STATEMENTS

ITEM 1.

VerifyMe, Inc.

Consolidated
Balance Sheets

(In thousands, except share data)


	As of
	June 30, 2022			December 31, 2021
	(Unaudited)

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	3,751		$	9,422
Accounts Receivable, net of allowance for credit loss reserve, $13 and $0 as of June 30, 2022 and December 31, 2021, respectively		1,738			297
Unbilled revenue		622			-
Prepaid expenses and other current assets		234			152
Short term Investments		94			88
Inventory		59			52
TOTAL CURRENT ASSETS		6,498			10,011

INVESTMENTS
Equity investment	$	-		$	10,964

PROPERTY AND EQUIPMENT, NET		351			204

RIGHT OF USE ASSET		531			-

INTANGIBLE ASSETS, NET		6,517			509

GOODWILL		4,092			-

OTHER ASSETS		106			-

TOTAL ASSETS	$	18,095		$	21,688

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current portion of debt	$	500		$	-
Accounts payable		1,406			341
Other accrued expenses		567			109
Lease liability- current		116			-
TOTAL CURRENT LIABILITIES		2,589			450

LONG-TERM LIABILITIES
Long-term portion of debt	$	1,500		$	-
Long-term lease liability		416			-
Long term derivative liability		-			71

TOTAL LIABILITIES	$	4,505		$	521

STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares
authorized; 0 shares issued and outstanding as of June 30, 2022 and
0 shares issued and outstanding as of December 31, 2021		-			-

Series B Convertible Preferred Stock, $.001 par value; 85 shares
authorized; 0.85 shares issued and outstanding as of June 30, 2022 and
December 31, 2021, respectively		-			-

Common stock, $.001 par value; 675,000,000 authorized; 8,666,002 and 7,420,633 issued, 8,467,046 and 7,196,677 shares outstanding as of June 30, 2022 and December 31, 2021, respectively		9			7

Additional paid in capital		92,347			86,059

Treasury stock as cost; 198,956 and 223,956 shares at June 30, 2022 and December 31, 2021, respectively		(756	)		(838	)

Accumulated deficit		(78,010	)		(64,061	)

STOCKHOLDERS' EQUITY		13,590			21,167

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,095		$	21,688

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

VerifyMe, Inc.

Consolidated

Statements of Operations

(Unaudited)

(In thousands, except per share data)


	Three months ended						Six months ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021


NET REVENUE	$	4,497		$	124		$	4,658		$	312

COST OF REVENUE		2,812			26			2,850			69

GROSS PROFIT		1,685			98			1,808			243

OPERATING EXPENSES
General and administrative ^(a)		2,535			1,217			4,000			2,325
Research and development		25			12			34			17
Sales and marketing ^(a)		447			297			746			544
Total Operating expenses		3,007			1,526			4,780			2,886

LOSS BEFORE OTHER EXPENSE		(1,322	)		(1,428	)		(2,972	)		(2,643	)

OTHER (EXPENSE) INCOME
Interest income (expenses), net		(23	)		-			(22	)		-
Loss on equity investments		(11,210	)		-			(10,958	)

SEC Form 10-Q filed by VerifyMe Inc.