UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2026

¨	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.)

801 International Parkway, Fifth Floor Lake Mary, FL		32746
(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

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 ¨

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 ¨

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	¨	Accelerated filer	¨

Non-accelerated filer	x	Smaller reporting company	x

Emerging growth company	¨

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. ¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 13,165,196 shares of common stock outstanding at August 7, 2026.

PART I - FINANCIAL INFORMATION

ITEM 1.	Financial Statements	4
Consolidated Balance Sheets (Unaudited)		4
Consolidated Statements of Operations (Unaudited)		6
Consolidated Statements of Comprehensive Loss (Unaudited)		7
Consolidated Statements of Cash Flows (Unaudited)		8
Consolidated Statements of Stockholders' Equity (Unaudited)		10
Notes to Consolidated Financial Statements (Unaudited)		12
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	33
ITEM 3.	Defaults Upon Senior Securities	33
ITEM 4.	Mine Safety Disclosures	33
ITEM 5.	Other Information	33
ITEM 6.	Exhibits	34
SIGNATURES		35

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PART I - FINANCIAL STATEMENTS

ITEM 1.

VerifyMe, Inc.

Consolidated Balance Sheets

(In thousands, except share data)


	June 30, 2026		December 31, 2025
		(Unaudited)

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	5,092	$	4,353
Accounts receivable, net of allowance for credit loss reserve, $21 and $10 as of June 30, 2026 and December 31, 2025, respectively		558		857
Note receivable, net of allowance for credit loss reserve, $0 and $12 as of June 30, 2026 and December 31, 2025, respectively		-		1,988
Unbilled revenue		290		338
Prepaid expenses and other current assets		168		154
Inventory		41		37
TOTAL CURRENT ASSETS		6,149		7,727

PROPERTY AND EQUIPMENT, NET	$	13	$	20

INTANGIBLE ASSETS, NET		2,304		2,345

GOODWILL		2,926		2,926
TOTAL ASSETS	$	11,392	$	13,018

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	342	$	745
Other accrued expense		331		530
Convertible note – related party, current		400		400
Convertible note, current		350		350
TOTAL CURRENT LIABILITIES		1,423		2,025

TOTAL LIABILITIES	$	1,423	$	2,025

STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $0.001 par value, 37,564,767 shares authorized; 0 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		-		-

Series B Convertible Preferred Stock, $0.001 par value; 85 shares authorized; 0.85 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		-		-

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Common stock, $0.001 par value; 675,000,000 shares authorized; 13,626,076 and 13,553,049 shares issued, 13,165,196 and 13,071,601 shares outstanding as of June 30, 2026 and December 31, 2025, respectively		14			14

Additional paid in capital		102,192			102,059

Treasury stock at cost; 460,880 and 481,448 shares at June 30, 2026 and December 31, 2025, respectively		(475	)		(502	)

Accumulated deficit		(91,762	)		(90,578	)

STOCKHOLDERS' EQUITY		9,969			10,993

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	11,392		$	13,018

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

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VerifyMe, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share data)


	Three Months Ended						Six Months Ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025

NET REVENUE	$	1,908		$	4,520		$	3,680		$	8,975

COST OF REVENUE		887			2,929			1,699			5,894

GROSS PROFIT		1,021			1,591			1,981			3,081

OPERATING EXPENSES
Management and Technology^(a)		607			920			1,177			1,846
General and administrative ^(a)		815			716			1,831			1,572
Research and development		-			5			-			10
Sales and marketing ^(a)		155			272			296			568
Total Operating expenses		1,577			1,913			3,304			3,996

LOSS BEFORE OTHER INCOME (EXPENSE)		(556	)		(322	)		(1,323	)		(915	)

OTHER INCOME (EXPENSE)
Interest income, net		51			32			139			54
Other expense, net		-			(1	)		-			(1	)

TOTAL OTHER INCOME, NET		51			31			139			53

NET LOSS	$	(505	)	$	(291	)	$	(1,184	)	$	(862	)

LOSS PER SHARE
BASIC		(0.04	)		(0.02	)		(0.09	)		(0.07	)
DILUTED		(0.04	)		(0.02	)		(0.09	)		(0.07	)

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC		13,359,887			12,643,791			13,356,338			12,469,118
DILUTED		13,359,887			12,643,791			13,356,338			12,469,118

(a)

Includes share-based compensation of $111 thousand and $188 thousand for the three and six months ended June 30, 2026, respectively, and $259 thousand and $592 thousand for the three and six months ended June 30, 2025, respectively.

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

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VerifyMe, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended						Six Months Ended
	June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
NET LOSS	$	(505	)	$	(291	)	$	(1,184	)	$	(862	)

Change in fair value of interest rate, Swap		-			-			-			(12	)

Total Comprehensive Loss	$	(505	)	$	(291	)	$	(1,184	)	$	(874	)

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

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VerifyMe, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six months ended
	June 30, 2026			June 30, 2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,184	)	$	(862	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Allowance for expected credit losses		-			(5	)
Stock based compensation		-			86
Fair value of restricted stock awards and restricted stock units issued in exchange for services		188			506
Loss on disposal of equipment		-			1
Amortization and depreciation		280			572
Gain on partial lease termination		-			(6	)
Changes in operating assets and liabilities:
Accounts receivable		287			1,541
Unbilled revenue		48			409
Inventory		(4	)		13
Prepaid expenses and other current assets		(15	)		(216	)
Accounts payable, other accrued expenses and net change in operating leases		(602	)		(1,733	)
Net cash (used in) provided by operating activities		(1,002	)		306

CASH FLOWS FROM INVESTING ACTIVITIES
Collections on Note Receivable		2,000			-
Leasehold Improvements		-			(6	)
Capitalized software costs		(232	)		(326	)
Net cash (used in) provided by investing activities		1,768			(332	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Warrants Exercise		-			4,348
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered		(27	)		(50	)
Increase in treasury shares (share repurchase program)		-			(153	)
Repayment of debt and line of credit		-			(875	)

Net cash (used in) provided by financing activities		(27	)		3,270


NET INCREASE IN CASH AND CASH EQUIVALENTS		739			3,244
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		4,353			2,823
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	5,092		$	6,067

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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	30	$	40
Income taxes	$	-	$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Lease modification	$	-	$	7
Conversion of convertible note and accrued interest	$	-	$	360
Change in fair value of interest rate, swap	$	-	$	12

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

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VerifyMe, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share data)


	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common							Treasury
	Stock				Stock				Stock					Additional		Stock						Accumulated Other
	Number of				Number of				Number of					Paid-In		Number of						Comprehensive		Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount		Capital		Shares			Amount			Loss		Deficit			Total
Balance at March 31, 2025		-		-		0.85		-		12,414,772			13		101,225		251,120			(351	)		-		(86,244	)		14,643
Restricted stock awards		-		-		-		-		-			-		41		-			-			-		-			41
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		50,382			-		81		(41,849	)		70			-		-			151
Common stock issued for services		-		-		-		-		60,000			-		45		-			-			-		-			45
Repurchase of Common Stock		-		-		-		-		(201,486	)		-		-		201,486			(153	)		-		-			(153	)
Net loss		-		-		-		-		-			-		-		-			-			-		(291	)		(291	)
Balance at June 30, 2025		-		-		0.85		-		12,323,668			13		101,392		410,757			(434	)		-		(86,535	)		14,436


	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common						Treasury
	Stock				Stock				Stock				Additional		Stock
	Number of				Number of				Number of				Paid-In		Number of						Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Shares			Amount			Deficit			Total
Balance at March 31, 2026		-		-		0.85		-		13,119,065		14		102,096		462,177			(476	)		(91,257	)		10,377
Restricted stock awards		-		-		-		-		-		-		18		-			-			-			18
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		46,131		-		78		(1,297	)		1			-			79
Net loss		-		-		-		-		-		-		-		-			-			(505	)		(505	)
Balance at June 30, 2026		-		-		0.85		-		13,165,196		14		102,192		460,880			(475	)		(91,762	)		9,969

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VerifyMe, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share data)


	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common							Treasury
	Stock				Stock				Stock					Additional		Stock						Accumulated Other
	Number of				Number of				Number of					Paid-In		Number of						Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount		Capital		Shares			Amount			Loss			Deficit			Total
Balance at December 31, 2024		-		-		0.85		-		10,539,441			11		96,344		290,467			(480	)		12			(85,673	)		10,214
Warrants exercise		-		-		-		-		1,461,896			2		4,346		-			-			-			-			4,348
Convertible note		-		-		-		-		313,520			-		285		(22,359	)		75			-			-			360
Restricted stock awards		-		-		-		-		-			-		96		-			-			-			-			96
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		90,297			-		235		(58,837	)		124			-			-			359
Common stock issued for services		-		-		-		-		120,000			-		86		-			-			-			-			86
Repurchase of Common Stock		-		-		-		-		(201,486	)		-		-		201,486			(153	)		-			-			(153	)
Accumulated other comprehensive loss		-		-		-		-		-			-		-		-			-			(12	)		-			(12	)
Net loss		-		-		-		-		-			-		-		-			-			-			(862	)		(862	)
Balance at June 30, 2025		-		-		0.85		-		12,323,668			13		101,392		410,757			(434	)		-			(86,535	)		14,436


	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common						Treasury
	Stock				Stock				Stock						Stock
													Additional
	Number of				Number of				Number of				Paid-In		Number of						Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Shares			Amount			Deficit			Total
Balance at December 31, 2025		-		-		0.85		-		13,071,601		14		102,059		481,448			(502	)		(90,578	)		10,993
Restricted stock awards		-		-		-		-		-		-		36		-			-			-			36
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		93,595		-		97		(20,568	)		27			-			124
Net loss		-		-		-		-		-		-		-		-			-