10-Q 1 vm41921010q.htm

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 March 31, 2021

¨	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: 7,426,907 shares of common stock outstanding at May 11, 2020.

PART I - FINANCIAL INFORMATION

ITEM 1.	Consolidated 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 (Deficit) (Unaudited)		7
Notes to Consolidated Financial Statements (Unaudited)		8
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	21
ITEM 4.	Controls and Procedures	22

PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	23
ITEM 1A.	Risk Factors	23
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
ITEM 3.	Defaults Upon Senior Securities	23
ITEM 4.	Mine Safety Disclosures	23
ITEM 5.	Other Information	23
ITEM 6.	Exhibits	24
SIGNATURES		25

	As of
	March 31, 2021			December 31, 2020
ASSETS	(Unaudited)

CURRENT ASSETS
Cash and cash equivalents	$	15,351		$	7,939
Accounts Receivable		163			31
Prepaid expenses and other current assets		190			177
Deferred Offering Costs		60			-
Inventory		49			54
TOTAL CURRENT ASSETS		15,813			8,201

PROPERTY AND EQUIPMENT
Equipment for lease, net of accumulated amortization of
$61 and $50 as of March 31, 2021 and December 31, 2020, respectively		234			200

INTANGIBLE ASSETS
Patents and Trademarks, net of accumulated amortization of
$327 and $320 as of March 31, 2021 and December 31, 2020, respectively		330			293
Capitalized Software Costs, net of accumulated amortization of
$25 and $20 as of March 31, 2021 and December 31, 2020, respectively		117			80
TOTAL ASSETS	$	16,494		$	8,774

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and other accrued expenses	$	433		$	383
TOTAL CURRENT LIABILITIES		433			383

LONG-TERM LIABILITIES
Term Note	$	72		$	72

TOTAL LIABILITIES	$	505		$	455

STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares
authorized; 0 shares issued and outstanding as of March 31, 2021 and
0 shares issued and outstanding as of December 31, 2020		-			-

Series B Convertible Preferred Stock, $.001 par value; 85 shares
authorized; 0.85 shares issued and outstanding as of March 31, 2021 and		-			-
December 31, 2020, respectively

Common stock, $.001 par value; 675,000,000 authorized; 7,366,053 and 5,603,888 issued, 7,359,042 and 5,596,877 shares outstanding as of March 31, 2021 and December 31, 2020, respectively		7			6

Additional paid in capital		84,983			76,099

Treasury stock as cost (7,011 shares at March 31, 2021 and December 31, 2020)		(113	)		(113	)

Accumulated deficit		(68,888	)		(67,673	)

STOCKHOLDERS' EQUITY		15,989			8,319

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	16,494		$	8,774

	Three Months Ended
	March 31, 2021			March 31, 2020

NET REVENUE
Sales	$	188		$	92

COST OF SALES		43			17

GROSS PROFIT		145			75

OPERATING EXPENSES
General and administrative (a)		789			538
Legal and accounting		126			69
Payroll expenses (a)		193			94
Research and development		5			-
Sales and marketing (a)		247			43
Total Operating expenses		1,360			744

LOSS BEFORE OTHER EXPENSE		(1,215	)		(669	)

OTHER EXPENSE, NET
Interest expenses, net		-			(143	)
Loss on extinguishment of debt		-			(280	)
TOTAL OTHER EXPENSE, NET		-			(423	)

NET LOSS	$	(1,215	)	$	(1,092	)

LOSS PER SHARE
BASIC	$	(0.19	)	$	(0.49	)
DILUTED	$	(0.19	)	$	(0.49	)

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC		6,561,222			2,240,285
DILUTED		6,561,222			2,240,285


	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common
	Stock				Stock				Stock				Additional
	Number of				Number of				Number of				Paid-In		Treasury			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2019		-		-		0.85		-		2,232,112		2		61,815		(113	)		(61,771	)		(67	)
Fair value of stock option		-		-		-		-		-		-		217		-			-			217
Restricted Stock Awards		-		-		-		-		-		-		65		-			-			65
Common stock issued for services		-		-		-		-		1,333		-		8		-			-			8
Common stock issued in relation to Bridge Financing		-		-		-		-		19,207		-		66		-			-			66
Beneficial Conversion feature in connection with convertible debt		-		-		-		-		-		-		650		-			-			650
Fair value of warrants issued in connection with convertible debt		-		-		-		-		-		-		1,063		-			-			1,063
Net loss		-		-		-		-		-		-		-		-			(1,092	)		(1,092	)
Balance at March 31, 2020		-		-		0.85		-		2,252,652		2		63,884		(113	)		(62,863	)		910

	Unvested Options

	Weighted - Average
	Number of Unvested			Grant Date
	Options			Exercise Price
Balance as of December 31, 2020		10,000		$	9.75

Granted		-			-

Vested		(10,000	)		9.75

Balance as of March 31, 2021		-		$	-

	Warrants Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted - Average Remaining Contractual Term in years)		Aggregate Intrinsic Value (in 000's) (1)
Balance as of December 31, 2020		3,779,243	$	5.89

Granted		-		-

Balance as of March 31, 2021		3,779,243	$	5.89		3.8

Exercisable as of March 31, 2021		3,779,243	$	5.89		3.8	$	-

Exhibit No.		Description
10.1*		Form of Restricted Stock Award Agreement (Employees) pursuant to the 2020 Equity Incentive Plan
10.2*		Form of Restricted Stock Award Agreement (Non-employees) pursuant to the 2020 Equity Incentive Plan
10.3*		Form of Restricted Stock Unit Award Agreement (Employees) pursuant to the 2020 Equity Incentive Plan
10.4*		Form of Restricted Stock Unit Award Agreement (Non-Employees) pursuant to the 2020 Equity Incentive Plan
10.5		Form of Indemnification Agreement (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 18, 2021)
10.6*		Amended and Restated Consulting Agreement dated March 17, 2021 for Keith Goldstein
31.1*		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

	VERIFYME, INC.

Date: May 13, 2021	By: /s/ Patrick White
	Patrick White
	Chief Executive Officer (Principal Executive Officer)

Date: May 13, 2021	By: /s/ Margaret Gezerlis
	Margaret Gezerlis
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

	Three Months Ended
	March 31, 2021			March 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,215	)	$	(1,092	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Stock based compensation		10			40
Fair value of options in exchange for services		85			218
Fair value of restricted stock awards issued in exchange for services		215			65
Fair value of restricted stock units issued in exchange for services		128			-
Loss on Extinguishment of Debt		-			281
Amortization of debt discount		-			124
Amortization and depreciation		23			23
Changes in operating assets and liabilities:
Accounts Receivable		(132	)		15
Deferred Offering Costs		(60	)		-
Inventory		5			(11	)
Prepaid expenses and other current assets		(13	)		(15	)
Accounts payable and accrued expenses		50			17
Net cash used in operating activities		(904	)		(335	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Patents		(44	)		(7	)
Purchase of Equipment for lease		(45	)		(22	)
Capitalized Software Costs		(42	)		-
Net cash used in investing activities		(131	)		(29	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from public offering of securities		8,447			-
Repayment of bridge financing and early redemption fee		-			(750	)
Proceeds from convertible debt, net of costs		-			1,747

Net cash provided by financing activities		8,447			997

NET INCREASE IN CASH AND
CASH EQUIVALENTS		7,412			633
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		7,939			253

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	15,351		$	886

SEC Form 10-Q filed by VerifyMe, Inc.