# EDGAR Filing Document

**Accession Number:** 0001104038
**File Stem:** 0001214659-26-006262
**Filing Date:** 2026-5
**Character Count:** 126943
**Document Hash:** 4fb01a798f8538bd39dd0cf142eb4cd7
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001214659-26-006262.hdr.sgml**: 20260515

**ACCESSION NUMBER**: 0001214659-26-006262

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 59

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260515

**DATE AS OF CHANGE**: 20260515

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** VerifyMe, Inc.
- **CENTRAL INDEX KEY:** 0001104038
- **STANDARD INDUSTRIAL CLASSIFICATION:** FINANCE SERVICES [6199]
- **ORGANIZATION NAME:** 09 Crypto Assets
- **EIN:** 233023677
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39332
- **FILM NUMBER:** 26982384

**BUSINESS ADDRESS:**
- **STREET 1:** 801 INTERNATIONAL PARKWAY
- **STREET 2:** FIFTH FLOOR
- **CITY:** LAKE MARY
- **STATE:** FL
- **ZIP:** 32746
- **BUSINESS PHONE:** 585-736-9400

**MAIL ADDRESS:**
- **STREET 1:** 801 INTERNATIONAL PARKWAY
- **STREET 2:** FIFTH FLOOR
- **CITY:** LAKE MARY
- **STATE:** FL
- **ZIP:** 32746

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LASERLOCK TECHNOLOGIES INC
- **DATE OF NAME CHANGE:** 20001004

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

<br> **FORM 10-Q**<br>

(Mark one)

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

**For the quarterly period ended March 31, 2026**

OR

---

| | |
|:---|:---|
| ◻ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> to <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>**

**Commission file number 001-39332** 

---

| |
|:---|
| **VERIFYME, INC.** |
| **(Exact Name of Registrant as Specified in Its Charter)** |

---

---

| | |
|:---|:---|
| **Nevada** | **23-3023677** |
| (State or Other Jurisdiction of<br> Incorporation or Organization) | (I.R.S. Employer<br> Identification No.) |
| **801 International Parkway, Fifth Floor**<br> **Lake Mary, FL**  | **32746** |
| (Address of Principal Executive Offices) | (Zip Code) |
| **(585) 736-9400** | **(585) 736-9400** |
| (Registrant's Telephone Number, Including Area Code) | (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<br> 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.&nbsp;&nbsp;&nbsp;&nbsp; Yes ⌧&nbsp;&nbsp;&nbsp;&nbsp; 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 ⌧ 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 | ⌧ | Smaller reporting company | ⌧ |
| 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).&nbsp;&nbsp;&nbsp;&nbsp;Yes ◻&nbsp;&nbsp;&nbsp;&nbsp; No ⌧

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 13,119,065 shares of common stock outstanding at May 12, 2026.

---

| | | |
|:---|:---|:---|
| **PART I - FINANCIAL INFORMATION** | **PART I - FINANCIAL INFORMATION** | **PART I - FINANCIAL INFORMATION** |
| ITEM 1. | [Financial Statements](#p1i1) | 4 |
| [Consolidated Balance Sheets (Unaudited)](#p1i1) | [Consolidated Balance Sheets (Unaudited)](#p1i1) | 4 |
| [Consolidated Statements of Operations (Unaudited)](#sop) | [Consolidated Statements of Operations (Unaudited)](#sop) | 6 |
| [Consolidated Statements of Comprehensive Loss (Unaudited)](#cs) | [Consolidated Statements of Comprehensive Loss (Unaudited)](#cs) | 7 |
| [Consolidated Statements of Cash Flows (Unaudited)](#cf) | [Consolidated Statements of Cash Flows (Unaudited)](#cf) | 8 |
| [Consolidated Statements of Stockholders' Equity (Unaudited)](#cf) | [Consolidated Statements of Stockholders' Equity (Unaudited)](#cf) | 10 |
| [Notes to Consolidated Financial Statements (Unaudited)](#notes) | [Notes to Consolidated Financial Statements (Unaudited)](#notes) | 11 |
| ITEM 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#p1i2) | 24 |
| ITEM 3. | [Quantitative and Qualitative Disclosures about Market Risk](#p1i3) | 32 |
| ITEM 4. | [Controls and Procedures](#p1i4) | 32 |
| **PART II - OTHER INFORMATION** | **PART II - OTHER INFORMATION** | **PART II - OTHER INFORMATION** |
| ITEM 1. | [Legal Proceedings](#p2i1) | 33 |
| ITEM 1A. | [Risk Factors](#p2i1a) | 33 |
| ITEM 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#p2i2) | 34 |
| ITEM 3. | [Defaults Upon Senior Securities](#p2i3) | 34 |
| ITEM 4. | [Mine Safety Disclosures](#p2i4) | 34 |
| ITEM 5. | [Other Information](#p2i5) | 34 |
| ITEM 6. | [Exhibits](#p2i6) | 35 |
| [SIGNATURES](#sig) | [SIGNATURES](#sig) | 36 |

---

[**Table of Contents**](#toc)

**PART I - FINANCIAL STATEMENTS**

**ITEM 1.**

VerifyMe, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
|  | (Unaudited) |  |
| &nbsp;&nbsp;&nbsp;ASSETS |  |  |
| CURRENT ASSETS |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $3519 | $4353 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for credit loss reserve, $21 and $10 as of March 31, 2026 and December 31, 2025, respectively | 818 | 857 |
| &nbsp;&nbsp;&nbsp;Note receivable, net of allowance for credit loss reserve, $12 and $12 as of March 31, 2026 and December 31, 2025, respectively | 1988 | 1988 |
| &nbsp;&nbsp;&nbsp;Unbilled revenue | 285 | 338 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 208 | 154 |
| &nbsp;&nbsp;&nbsp;Inventory | 31 | 37 |
| TOTAL CURRENT ASSETS | 6849 | 7727 |
| PROPERTY AND EQUIPMENT, NET | $16 | $20 |
| INTANGIBLE ASSETS, NET | 2325 | 2345 |
| GOODWILL | 2926 | 2926 |
| TOTAL ASSETS | $12116 | $13018 |
| &nbsp;&nbsp;&nbsp;LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
| CURRENT LIABILITIES |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $532 | $745 |
| &nbsp;&nbsp;&nbsp;Other accrued expense | 457 | 530 |
| &nbsp;&nbsp;&nbsp;Convertible note – related party, current | 400 | 400 |
| &nbsp;&nbsp;&nbsp;Convertible note, current | 350 | 350 |
| TOTAL CURRENT LIABILITIES | 1739 | 2025 |
| TOTAL LIABILITIES | $1739 | $2025 |
| STOCKHOLDERS' EQUITY |  |  |
| &nbsp;&nbsp;&nbsp;Series A Convertible Preferred Stock, $0.001 par value, 37,564,767 shares authorized; 0 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively |  |  |
| &nbsp;&nbsp;&nbsp;Series B Convertible Preferred Stock, $0.001 par value; 85 shares authorized; 0.85 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively |  |  |

---

[**Table of Contents**](#toc)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;Common stock, $0.001 par value; 675,000,000 shares authorized; 13,581,242 and 13,553,049 shares issued, 13,119,065 and 13,071,601 shares outstanding as of March 31, 2026 and December 31, 2025, respectively | 14 | 14 |
| &nbsp;&nbsp;&nbsp;Additional paid in capital | 102096 | 102059 |
| Treasury stock at cost; 462,117 and 481,448 shares at March 31, 2026 and December 31, 2025, respectively | (476) | (502) |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (91257) | (90578) |
| STOCKHOLDERS' EQUITY | 10377 | 10993 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12116 | $13018 |

---

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

[**Table of Contents**](#toc)

VerifyMe, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share data)

---

| | | |
|:---|:---|:---|
|  | Three Months Ended | Three Months Ended |
|  | March 31, 2026 | March 31, 2025 |
| NET REVENUE | $1772 | $4455 |
| COST OF REVENUE | 812 | 2965 |
| GROSS PROFIT | 960 | 1490 |
| OPERATING EXPENSES |  |  |
| &nbsp;&nbsp;&nbsp;Management and Technology<sup>(a)</sup> | 570 | 926 |
| &nbsp;&nbsp;&nbsp;General and administrative <sup>(a)</sup> | 1016 | 856 |
| &nbsp;&nbsp;&nbsp;Research and development |  | 5 |
| &nbsp;&nbsp;&nbsp;Sales and marketing <sup>(a)</sup> | 141 | 296 |
| &nbsp;&nbsp;&nbsp;Total Operating expenses | 1727 | 2083 |
| LOSS BEFORE OTHER INCOME (EXPENSE) | (767) | (593) |
| OTHER INCOME (EXPENSE) |  |  |
| &nbsp;&nbsp;&nbsp;Interest income, net | 88 | 22 |
| TOTAL OTHER INCOME, NET | 88 | 22 |
| NET LOSS | $(679) | $(571) |
| LOSS PER SHARE |  |  |
| &nbsp;&nbsp;&nbsp;BASIC | (0.05) | (0.05) |
| &nbsp;&nbsp;&nbsp;DILUTED | (0.05) | (0.05) |
| WEIGHTED AVERAGE COMMON SHARE OUTSTANDING |  |  |
| &nbsp;&nbsp;&nbsp;BASIC | 13352749 | 12292150 |
| &nbsp;&nbsp;&nbsp;DILUTED | 13352749 | 12292150 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Includes share-based compensation of $63 thousand and $333 thousand for the three months ended March 31, 2026 and March 31, 2025,
respectively.

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

[**Table of Contents**](#toc)

VerifyMe, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)

---

| | | |
|:---|:---|:---|
|  | Three months ended | Three months ended |
|  | March 31, 2026 | March 31, 2025 |
| NET LOSS | $(679) | $(571) |
| Change in fair value of interest rate, Swap |  | (12) |
| Total comprehensive loss | $(679) | $(583) |

---

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

[**Table of Contents**](#toc)

VerifyMe, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

---

| | | |
|:---|:---|:---|
|  | Three months ended | Three months ended |
|  | March 31, 2026 | March 31, 2025 |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(679) | $(571) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for expected credit losses | 11 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock based compensation |  | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value of restricted stock awards and restricted stock units issued in exchange for services | 77 | 292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization and depreciation | 132 | 286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on partial lease termination |  | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 27 | 1681 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unbilled revenue | 53 | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | 6 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (54) | (203) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, other accrued expenses and net change in operating leases | (284) | (2023) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (711) | (404) |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized software costs | (109) | (156) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (109) | (156) |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from Warrants Exercise |  | 4348 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax withholding payments for employee stock-based compensation in exchange for shares surrendered | (14) | (29) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of debt and line of credit | - | (875) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by financing activities | (14) | 3444 |
| NET (DECREASE) INCREASE CASH AND CASH EQUIVALENTS | (834) | 2884 |
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 4353 | 2823 |
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $3519 | $5707 |

---

[**Table of Contents**](#toc)

---

| | | |
|:---|:---|:---|
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest | $30 | $40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.

[**Table of Contents**](#toc)

VerifyMe, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share data)

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Series A | Series A | Series B | Series B | | | | | | | | |
|  | Convertible | Convertible | Convertible | Convertible | | | | | | | | |
|  | Preferred | Preferred | Preferred | Preferred | Common | Common | | Treasury | Treasury | | | |
|  | Stock | Stock | Stock | Stock | Stock | Stock | | Stock | Stock | | | |
|  |<br>Number of<br>Shares |<br>Amount |<br>Number of<br>Shares |<br>Amount |<br>Number of<br>Shares |<br>Amount |<br><br>Additional<br>Paid-In<br>Capital |<br>Number of<br>Shares |<br>Amount |<br><br>Accumulated Other<br>Comprehensive<br>Loss |<br><br><br>Accumulated<br>Deficit |<br><br><br>Total |
| Balance at December 31, 2024 |  |  | 0.85 |  | 10539441 | 11 | 96344 | 290467 | (480) | 12 | (85673) | 10214 |
| Warrants exercise |  |  |  |  | 1461896 | 2 | 4346 |  |  |  |  | 4348 |
| Convertible note |  |  |  |  | 313520 |  | 285 | (22359) | 75 |  |  | 360 |
| Restricted stock awards |  |  |  |  |  |  | 55 |  |  |  |  | 55 |
| Restricted stock units, net of shares withheld for employee tax |  |  |  |  | 39915 |  | 154 | (16988) | 54 |  |  | 208 |
| Common stock issued for services |  |  |  |  | 60000 |  | 41 |  |  |  |  | 41 |
| Accumulated other comprehensive loss |  |  |  |  |  |  |  |  |  | (12) |  | (12) |
| Net loss |  |  | - |  | - | - | - | - | - | - | (571) | (571) |
| Balance at March 31, 2025 |  |  | 0.85 |  | 12414772 | 13 | 101225 | 251120 | (351) | - | (86244) | 14643 |

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Series A | Series A | Series B | Series B | | | | | | | |
|  | Convertible | Convertible | Convertible | Convertible | | | | | | | |
|  | Preferred | Preferred | Preferred | Preferred | Common | Common | | Treasury | Treasury | | |
|  | Stock | Stock | Stock | Stock | Stock | Stock | | Stock | Stock | | |
|  |<br>Number of<br>Shares |<br>Amount |<br>Number of<br>Shares |<br>Amount |<br>Number of<br>Shares |<br>Amount |<br><br>Additional<br>Paid-In<br>Capital |<br>Number of<br>Shares |<br>Amount |<br><br><br>Accumulated<br>Deficit |<br><br><br>Total |
| Balance at December 31, 2025 |  |  | 0.85 |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13071601 | 14 | 102059 | 481448 | (502) | (90578) | 10993 |
| Restricted stock awards |  |  |  |  |  |  | 18 |  |  |  | 18 |
| Restricted stock units, net of shares withheld for employee tax |  |  |  |  | 47464 |  | 19 | (19271) | 26 |  | 45 |
| Net loss |  |  | - |  | - | - | - | - | - | (679) | (679) |
| Balance at March 31, 2026 |  |  | 0.85 |  | 13119065 | 14 | 102096 | 462177 | (476) | (91257) | 10377 |

---

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

[**Table of Contents**](#toc)

VerifyMe, Inc.

Notes to the Consolidated Financial Statements (unaudited)

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***<u>Nature of the Business</u>***

 ****

VerifyMe, Inc. ("VerifyMe," "we," "us," "our," or the "Company") was incorporated in the State of Nevada on November 10, 1999. VerifyMe, is based in Lake Mary, Florida and its common stock, par value $0.001 per share is traded on The Nasdaq Capital Market ("Nasdaq") under the trading symbol "VRME".

The Company is a logistics company that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions. The Company operates a single consolidated Precision Logistics segment which includes the operations of our subsidiary PeriShip Global, LLC ("PeriShip Global") in which we provide a value-added service for sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as pre-shipment weather analysis, flight-tracking, sort volumes, and traffic, delivered to customers via a secure portal. The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center. The Company's activities are subject to significant risks and uncertainties. See the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in this report.

***<u>Reclassifications</u>***

Certain amounts presented for the three months ended March 31, 2025, reflect reclassifications made to conform to the presentation in our current reporting period. These reclassifications had no effect on the previously reported net loss.

 ****

***<u>Basis of Presentation</u>***

The accompanying consolidated financial statements include the accounts of VerifyMe and its wholly owned subsidiaries PeriShip Global LLC and VRME Subsidiary Corp. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

***<u>Use of Estimates</u>***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

***<u>Recent Accounting Pronouncements</u>***

In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which introduces five targeted improvements to better align hedge accounting with entities' risk management activities. The update will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. We are assessing the effect of this update on our consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting Standards Codification 606. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption did not have a material impact on the Company's consolidated financial statements.

[**Table of Contents**](#toc)

Notes to the Consolidated Financial Statements (unaudited)

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220). This standard requires disclosure of specific information about costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.

***<u>Fair Value of Financial Instruments</u>***

The Company's financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses. The carrying value of accounts receivable, unbilled revenue, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable approximates fair value based on rates and other terms currently available to the Company for similar debt instruments.

The Company follows FASB Accounting Standard Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. ****

***<u>Segment Reporting</u>***

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method by which to allocate resources and assess performance. Prior to 2026, we reported two operating segments: Precision Logistics and Authentication. We are not actively pursuing authentication business but continue to service existing customers. As a result, beginning in the first quarter of 2026, we changed our internal reporting to the chief operating decision maker ("CODM"), who is our Chief Executive Officer, and combined Precision Logistics and Authentication into a single segment, leaving Precision Logistics. See Note 2 – Segment Reporting, for further discussion of the Company's segment reporting structure.

***<u>Revenue Recognition</u>***

The Company accounts for revenues according to ASC Topic 606, *Revenue from Contracts with Customers* which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

The Company applies the following five steps to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements.

&nbsp;&nbsp;&nbsp;&nbsp;· identify the contract with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;· identify the performance obligations in the contract;

&nbsp;&nbsp;&nbsp;&nbsp;· determine the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;· allocate the transaction price to performance obligations in the contract; and

&nbsp;&nbsp;&nbsp;&nbsp;· recognize revenue as the performance obligation is satisfied.

The Company generally considers completion of an agreement, or Statement of Work ("SOW") and/or purchase order as a customer contract, provided collection is considered probable.

Our Precision Logistics segment consists of two service lines, ProActive and Premium. Under our ProActive service line, clients pay us directly for carrier service coupled with our proactive logistics service. Terms typically range from 7 days to no longer than 30 days. The Company has determined it is the principal and recognizes shipment fees in gross revenue. Under our Premium service line, clients use our shipping monitoring, predictive analytics, or exception management services. Shippers use their own transportation rates, provided and charged directly by their carrier, with our added services charged (i) directly by the carrier, under a "white label" arrangement, which we refer to as our Premium service, or (ii) by us, which we refer to as our Direct Premium service. These services include customer web portal access, weather monitoring, temperature control, full-service center support, and last mile resolution.

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Notes to the Consolidated Financial Statements (unaudited)

Under both service lines in our Precision Logistics segment, our performance obligation is met, and revenue is recognized when the packages are delivered. The transaction fees consist of fixed consideration made up of amounts contractually billed to the customer. There are no variable considerations in the transaction fee, in either service line.

Beginning in 2026, the Company included Authentication revenue in the Precision Logistics segment. The Company is no longer actively pursuing the Authentication business but continues to service existing customers. Authentication revenue primarily consists of anti-counterfeit and brand protection. Terms typically range between 30 and 60 days. Our performance obligation is met, and revenue is recognized when our products are shipped or delivered depending on the specific agreement with the customer. The transaction fee is made up of fixed consideration based on the related purchase order or agreement.

***<u>Goodwill</u>***

 ****

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, *Intangibles-Goodwill and Other*, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test. The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events, and sustained decrease in share price.

***<u>Basic and Diluted Net Loss per Share of Common Stock</u>***

The Company follows ASC Topic 260, *Earnings Per Share*, when reporting earnings per share resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss for each of the periods presented, common stock equivalents, including preferred stock, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same.

For the three months ended March 31, 2026, and 2025, there were shares potentially issuable, that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company's losses during the periods presented. For the three months ended March 31, 2026, there were approximately 3,736,000 anti-dilutive shares consisting of 1,153,000 unvested performance restricted stock units, 232,000 restricted stock units and restricted stock awards 1,555,000 shares issuable upon exercise of warrants, 652,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three months ended March 31, 2025, there were approximately 7,534,000 anti-dilutive shares consisting of 1,504,000 unvested performance restricted stock units, 454,000 restricted stock units and restricted stock awards, 151,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 652,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock.

 **

***<u>Stock-Based Compensation</u>***

 **

We account for stock-based compensation under the provisions of ASC Topic 718, *Compensation—Stock Compensation*, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model include risk-free interest rates, expected volatility, and expected life of the stock options. Changes in these assumptions can materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line method. We recognize forfeitures as they occur with a reduction in compensation expense in the period of forfeiture. For performance restricted stock units ("RSU") with stock price appreciation targets (see Note 6 – Stock Options, Restricted Stock and Warrants), we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the RSU's contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal based on actual achievement during the period.

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Notes to the Consolidated Financial Statements (unaudited)

We account for stock-based compensation awards to non-employees in accordance with ASU No. 2018-07, *Compensation – Stock Based Compensation* (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions.

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity-based payments are recorded as an expense over the service period, as if we had paid cash for the services.

***<u>Merger Agreement</u>***

 ****

On February 11, 2026, we entered into an Agreement and Plan of Merger, as subsequently amended by the First Amendment (the "Merger Agreement") with VRME Subsidiary Corp., a Nevada corporation, and our wholly owned subsidiary (the "Merger Sub") and Open World Ltd., a Cayman Islands exempted company ("Open World"). Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will merge with and into Open World, Merger Sub will cease to exist and Open World will become our wholly-owned subsidiary (the "Merger"). At the effective time of the Merger (the "Effective Time"), (i) each holder of ordinary shares of Open World outstanding immediately prior to the Effective Time (excluding holders of Excluding Shares and Dissenting Shares, as defined in the Merger Agreement) will be entitled to receive the number of shares of our common stock, based on the Exchange Ratio as defined in the Merger Agreement (the "Exchange Ratio"), (ii) each investor in Open World Simple Agreements for Future Equity ("Open World SAFEs") outstanding immediately prior to the Effective Time will be entitled to receive a right to a number of shares of our common stock based on the Exchange Ratio and (iii) any outstanding option to purchase shares of Open World shall be converted into an option to purchase the number of shares of our common stock based on the Exchange Ratio.

Immediately following the closing of the Merger (the "Closing"), our pre-Closing stockholders are expected to collectively retain approximately 10% of the post-Closing aggregate number of shares of our common stock and holders of Open World ordinary shares and Open World SAFEs will receive as merger consideration newly issued shares of our common stock representing approximately 90% of the post-Closing aggregate number of shares of our common stock.

The Merger Agreement contains customary representations, warranties and covenants, including, among others, (i) covenants requiring each of us and Open World to conduct its business in the ordinary course during the period between the execution of the Merger Agreement and the Closing or earlier termination of the Merger Agreement, subject to certain exceptions, (ii) covenants prohibiting us and Open World from engaging in certain kinds of transactions during such period (without the prior written consent of the other), and (iii) a covenant restricting us and Open World from activities relating to the soliciting, initiating, encouraging, inducing or facilitating the communication, making, submission or announcement of any alternative acquisition proposals or inquiries.

Closing of the Merger is subject to various customary closing conditions, including, but not limited to, us causing our PeriShip subsidiary to terminate its current credit facility and us effectuating a reverse stock split upon the request of Open World. Open World's obligations to effect the Merger and otherwise consummate the contemplated transactions thereunder are further conditioned upon customary closing conditions as well as (i) us having Closing Net Cash, as defined in the Merger Agreement, of no less than $1 million, and (ii) our common stock having not been delisted from Nasdaq.

In connection with and subject to the Closing of the Merger, outstanding time-based and performance-based restricted stock awards and restricted stock units held by certain of our employees and directors at Closing will accelerate and vest, regardless of any performance conditions, at the Effective Time.

For additional details regarding the Merger Agreement, see the "Recent Developments" section in this report. The foregoing description of the Merger Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the Merger Agreement.

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Notes to the Consolidated Financial Statements (unaudited)

**NOTE 2 - SEGMENT REPORTING**

Prior to 2026, we reported two operating segments: Precision Logistics and Authentication. We are not actively pursuing authentication business but continue to service existing customers. As of January 1, 2026, the Authentication segment falls below segment reporting quantitative thresholds, and is therefore not required to be presented as a separate reportable segment. As a result, beginning in the first quarter of 2026, we changed our internal reporting to the CODM and combined Precision Logistics and Authentication into a single segment, leaving Precision Logistics. This represents a reduction in the number of reportable segments by aggregation, not a re-labeling. Following this change, the Company has one reportable consolidated segment. The CODM evaluates consolidated segment performance and makes resource allocation decisions based on consolidated results. Since the Company operates as one operating segment, financial segment information, including profit or loss and asset information, can be found in the consolidated financial statements.

**NOTE 3 – REVENUE**

***<u>Revenue by Category</u>***

The following table presents our revenue disaggregated by service lines (dollars in thousands)

---

| | | |
|:---|:---|:---|
|  | **Consolidated** | **Consolidated** |
| <u>Revenue</u> | **Three Months Ended<br> March 31,** | **Three Months Ended<br> March 31,** |
|  | 2026 | 2025 |
| Proactive services | $1040 | $3694 |
| Premium services | 708 | 735 |
| Other | 24 | 26 |
|  | $1772 | $4455 |

---

***<u>Contract Balances</u>***

The timing of revenue recognition, billings and cash collections results in unbilled revenue (contract assets) and deferred revenue (contract liabilities) on the consolidated balance sheets. Amounts charged to our clients become billable according to the contract terms, which usually consider the delivery completion. Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within twelve months. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the three-month period ended March 31, 2026, were not materially impacted by any other factors.

Applying the practical expedient in ASC Topic 606, we recognize the incremental costs of obtaining contracts (sales commissions) as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. As of March 31, 2026, we did not have any capitalized sales commissions.

For all periods presented, contract liabilities were not significant.

The following table provides information about contract assets from contracts with customers (dollars in thousands):

---

| | | |
|:---|:---|:---|
|  | **Contract Asset** | **Contract Asset** |
|  | **March 31,** | **March 31,** |
|  | **2026** | **2025** |
| Beginning balance, January 1 | $338 | $733 |
| &nbsp;&nbsp;&nbsp;Contract asset additions | 285 | 641 |
| &nbsp;&nbsp;&nbsp;Reclassification to accounts receivable, billed to customers | (338) | (733) |
| Ending balance, March 31 <sup>(1)</sup> | $285 | $641 |

---

______________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

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Notes to the Consolidated Financial Statements (unaudited)

**NOTE 4 – INTANGIBLE ASSETS AND GOODWILL**

*<u>Goodwill</u>*

 

Goodwill represents costs in excess of values assigned to the underlying net assets of acquired businesses. Intangible assets acquired are recorded at estimated fair value. Goodwill is deemed to have an indefinite life and is not amortized but is tested for impairment annually, and at any time when events suggest an impairment more likely than not has occurred. We test goodwill at the reporting unit level.

ASC Topic 350, "*Intangibles - Goodwill and Other"* ("Topic 350"), permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. Under Topic 350, an entity is not required to perform a quantitative goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying amount. A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S. GAAP.

 

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The timing and frequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. No impairment was recognized for the three months ended March 31, 2026 and 2025. We continue to monitor our goodwill for impairment and conduct formal tests when impairment indicators are present.

*<u>Intangible Assets Subject to Amortization</u>*

Our intangible assets include amounts recognized in connection with patents and trademarks, capitalized software and acquisitions, including tradenames, and developed technology. Intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Amortization is recognized on a straight-line basis over the estimated useful life of the intangible assets. Intangible assets with definite lives are reviewed for impairment if indicators of impairment arise. Except for goodwill, we do not have any intangible assets with indefinite useful lives.

ASC Topic 360-10,"*Impairment or disposal of long-lived assets"* ("Topic 360") provides guidance on accounting for the impairment and disposal of long-lived assets, covering both tangible and intangible finite-lived assets. The standard ensures that financial statements reflect the economic reality of assets by properly accounting for declines in value or disposals. Under Topic 360, an entity must perform an analysis to determine whether it is more likely than not that the fair value of a long-lived asset is less than its carrying amount based on estimates of future cash flows.

Determining the fair value of long-lived assets is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. Our fair value estimates are based on assumptions that we believe to be reasonable but are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The timing and frequency of our long-lived asset impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. No impairment was recognized for the three months ended March 31, 2026 and 2025. We continue to monitor our intangible assets for impairment and conduct formal tests when impairment indicators are present.

Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and their respective balances were as follows (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **March 31, 2026** | Gross<br> Carrying<br> Amount | Accumulated<br> Amortization | Net Carrying Amount | Weighted <br> Average<br> Remaining<br> Useful <br> Life (Years) |
| Patents and Trademarks | $699 | $(37) | $662 | 9 |
| Developed Technology | 795 | (156) | 639 | 2 |
| Internally Used Software | 1088 | (64) | 1024 | 5 |
| Total Intangible Assets | $2582 | $(257) | $2325 |  |
| **December 31, 2025** |  |  |  |  |
| Patents and Trademarks | $699 | $(18) | $681 | 9 |
| Developed Technology | 795 | (78) | 717 | 2 |
| Internally Used Software | 979 | (32) | 947 | 5 |
| Total Intangible Assets | $2473 | $(128) | $2345 |  |

---

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Notes to the Consolidated Financial Statements (unaudited)

Amortization expense for intangible assets was $129 thousand and $274 thousand for the three months ended March 31, 2026, and 2025, respectively.

*Patents and Trademarks*

As of March 31, 2026, our current patent and trademark portfolios consist of six granted U.S. patents and several foreign trademarks.

The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands):

---

| | |
|:---|:---|
| **Fiscal Year ending December 31,** | |
| 2026 (nine months remaining) | $385 |
| 2027 | 513 |
| 2028 | 297 |
| 2029 | 202 |
| 2030 | 202 |
| Thereafter | 726 |
| Total | $2325 |

---

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Notes to the Consolidated Financial Statements (unaudited)

**NOTE 5 – STOCKHOLDERS' EQUITY**

The Company expensed $18 thousand and $55 thousand related to restricted stock awards for the three months ended March 31, 2026, and 2025, respectively.

The Company expensed $59 thousand and $237 thousand related to restricted stock units for the three months ended March 31, 2026, and 2025, respectively.

On January 2, 2026, the Company issued 47,464 shares of common stock, of which 19,271 were issued from treasury, upon vesting of 70,773 restricted stock units, net of 23,309 shares withheld for taxes related to stock grants on January 1, 2025.

***Shares Held in Treasury***

As of March 31, 2026, and December 31, 2025, the Company had 462,177 and 481,448 shares, respectively, held in treasury with a value of approximately $476 thousand and $502 thousand, respectively.

**NOTE 6 – RESTRICTED STOCK AND WARRANTS**

On November 14, 2017, the Executive Committee of the Company's Board of Directors adopted the 2017 Equity Incentive Plan (the "2017 Plan") which covered the potential issuance of 260,000 shares of common stock. The 2017 Plan provided that directors, officers, employees, and consultants of the Company were eligible to receive equity incentives under the 2017 Plan at the discretion of the Board or the Board's Compensation Committee.

On August 10, 2020, the Company's Board of Directors adopted the 2020 Equity Incentive Plan (the "2020 Plan") and on September 30, 2020, the Company's stockholders approved the 2020 Plan, which authorizes the potential issuance of up to 1,069,110 shares of common stock. Upon effectiveness of the 2020 Plan the 2017 Plan was terminated. Shares of common stock underlying existing awards under the 2017 Plan may become available for issuance pursuant to the terms of the 2020 Plan under certain circumstances. Employees and non-employee directors of the Company or its affiliates, and other individuals who perform services for the Company or any of its affiliates, are eligible to receive awards under the 2020 Plan at the discretion of the Board of Directors or the Board's Compensation Committee.

On March 28, 2022, the Company's Board of Directors adopted the First Amendment to the 2020 Plan and on June 9, 2022, the Company's stockholders approved the First Amendment to the 2020 Plan, which increased the shares authorized for potential issuance under the 2020 Plan to 2,069,100 shares of common stock and extended the term of the 2020 Plan to June 9, 2023. On April 17, 2023, the Company's Board of Directors adopted the Second Amendment to the 2020 Plan and on June 6, 2023, the Company's stockholders approved the Second Amendment to the 2020 Plan, which increased the shares authorized for potential issuance under the 2020 Plan to 3,069,110 shares of common stock and extended the term of the 2020 Plan to June 6, 2033, and increased the annual cap on director compensation by $50 thousand. On March 18, 2024, the Company's Board of Directors adopted the Third Amendment to the 2020 Plan, which on June 4, 2024, was approved by the Company's stockholders, which increased the shares authorized for potential issuance under the 2020 Plan to 4,069,100 shares of common stock and extended the term of the 2020 Plan to June 4, 2034. On April 13, 2026, the Company's Board of Directors adopted the Fourth Amendment to the 2020 Plan, which will not be effected unless it is approved by the Company's stockholders. If effected, the Fourth Amendment would increase the shares authorized for potential issuance under the 2020 Plan by 16,182,541 shares of common stock and would extend the term of the 2020 Plan to the 10th anniversary of the date stockholder approval is obtained.

The 2020 Plan, as amended, is administered by the Compensation Committee which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

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Notes to the Consolidated Financial Statements (unaudited)

**Restricted Stock Awards and Restricted Stock Units**

The following table summarizes the unvested restricted stock awards as of March 31, 2026:

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| | | |
|:---|:---|:---|
|  |<br>**Number of**<br>**Award Shares** | **Weighted -**<br>**Average**<br>**Grant**<br>**Date Fair Value** |
| Unvested at December 31, 2025 | 70000 | $1.04 |
| Granted |  |  |
| Vested |  |  |
| Forfeited |  |  |
| Balance at March 31, 2026 | 70000 | $1.04 |

---

As of March 31, 2026, total unrecognized share-based compensation cost related to unvested restricted stock awards is $38 thousand.

The following table summarizes the unvested restricted stock units as of March 31, 2026:

---

| | | |
|:---|:---|:---|
|  |<br>**Number of**<br>**Unit Shares** | **Weighted -**<br>**Average**<br>**Grant**<br>**Date Fair Value** |
| Unvested at December 31, 2025 | 232801 | $1.32 |
| Granted |  |  |
| Vested | (70773) | 1.70 |
| Forfeited |  |  |
| Balance at March 31, 2026 | 162028 | $1.13 |

---

As of March 31, 2026, total unrecognized share-based compensation cost related to unvested time-based restricted stock units was $55 thousand, which is expected to be recognized over a weighted-average period of less than one year.

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Notes to the Consolidated Financial Statements (unaudited)

The following table summarizes the unvested performance-based restricted stock units as of March 31, 2026:

---

| | | |
|:---|:---|:---|
|  |<br>**Number of**<br>**Unit Shares** | **Weighted -**<br>**Average**<br>**Number of**<br>**Unit Shares** |
| Unvested at December 31, 2025 | 1321591 | $1.15 |
| Granted |  |  |
| Forfeited/Cancelled | (168183) | 1.55 |
| Balance at March 31, 2026 | 1153408 | $1.10 |

---

As of March 31, 2026, total unrecognized share-based compensation cost related to unvested performance based restricted stock units was $127 thousand, which is expected to be recognized over a weighted-average period of less than a year.

***<u>Warrants</u>***

The following table summarizes the activities for the Company's warrants as of March 31, 2026:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br> Warrant Shares** | **Weighted-**<br> **Average**<br> **Exercise**<br> **Price** | **Weighted -**<br> **Average**<br> **Remaining**<br> **Contractual**<br> **Term**<br> **(in years)** | **Aggregate**<br> **Intrinsic**<br> **Value**<br> **(in thousands)<sup>(1)</sup>** |
| Balance as of December 31, 2025 | 1555207 | 3.95 | 4.4 |  |
| Issued |  |  |  |  |
| Exercised |  |  |  |  |
| Expired | - | - |  |  |
| Balance as of March 31, 2026 | 1555207 | $3.95 | 4.1 |  |
| Exercisable as of March 31, 2026 | 1555207 | $3.95 | 4.1 | $- |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying
warrants and the closing stock price of $0.81 for our common stock on March 31, 2026.

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Notes to the Consolidated Financial Statements (unaudited)

***At-the-Market Equity Offering Program***

On March 6, 2025, the Company entered into a now terminated At-The-Market Sales Agreement ("Sales Agreement") with Roth Capital Partners, LLC ("Roth"), pursuant to which the Company could issue and sell, from time to time, shares of its common stock up to an aggregate offering price of $15.8 million ("ATM Program"). Roth acted as the Company's sales agent and was entitled to a 3.0% commission on gross proceeds from sales under the ATM Program.

During the year ended December 31, 2025, and through the termination of the ATM Program, the Company sold an aggregate of 628,432 shares of its common stock pursuant to the ATM program for net proceeds of $483 thousand, after deducting $15 thousand in offering costs. On February 11, 2026, the Company provided Roth written notice of its decision to terminate the ATM Program and pursuant to Section 12(b) of the Sales Agreement, the ATM Program and Sales Agreement terminated on February 16, 2026.

**NOTE 7—DEBT**

PeriShip Global is a party to a debt facility with PNC Bank, National Association (the "PNC Facility"). The PNC Facility includes a $1 million revolving line of credit (the "RLOC"). The RLOC has no scheduled payments of principal until maturity, and bears interest per annum at a rate equal to the sum of Daily SOFR plus 2.85% with monthly interest payments.

The PNC Facility includes a number of affirmative and restrictive covenants applicable to PeriShip Global, including, among others, a financial covenant to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year, affirmative covenants regarding delivery of financial statements, payment of taxes, and establishing primary depository accounts with PNC Bank, and restrictive covenants regarding dispositions of property, acquisitions, incurrence of additional indebtedness or liens, investments and transactions with affiliates. PeriShip Global is also restricted from paying dividends or making other distributions or payments on its capital stock if an event of default (as defined in the PNC Facility) has occurred or would occur upon such declaration of dividend.

. On August 8, 2025, the Company extended the line of credit to September 30, 2026. On March 26, 2026, we received a waiver as of December 31, 2025, for certain events of default. The PNC Facility includes a four-year Term Note for $2 million which matures in September of 2026 and requires equal quarterly payments of principal and interest. The Term Note incurs interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%. The PNC Facility is guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe. In connection with the Merger Agreement (as defined herein) we have agreed that PeriShip Global will not utilize the PNC Facility or RLOC from the execution of the Merger Agreement. Additionally, we have agreed that at least three business days prior to closing of the merger to cause PeriShip Global to use its reasonable best efforts to obtain and deliver to Open World, a customary payoff letter with respect to the PNC Facility. As such, we do not expect to be able to utilize the PNC Facility or RLOC unless the merger is not completed pursuant to the terms of the merger agreement. As of January 21, 2025, the Term Note balance of $875 thousand was paid in full and no future principal payments are due.

As of March 31, 2026, $0 was outstanding on the RLOC.

*<u>Convertible Debt</u>*

On August 25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory notes for the aggregate principal amount of $1,100 thousand of which $475 thousand was purchased by related parties including certain members of management and the Board of Directors. As of March 31, 2026 and December 31, 2025, $400 thousand was held by related parties. The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024. The notes will mature on August 25, 2026, unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock. The Company may not redeem the notes prior to the maturity date. For the three months ended March 31, 2026 and March 31, 2025, interest expense related to the convertible debt was $15 thousand and $15 thousand, respectively. As of January 21, 2025, $350 thousand was converted to common stock, none of which was related parties. As of March 31, 2026 and December 31, 2025, the amount outstanding on the convertible debt was $750 thousand included in Convertible note and Convertible note related party on the accompanying Consolidated Balance Sheets.

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Notes to the Consolidated Financial Statements (unaudited)

 

**NOTE 8—NOTE RECEIVABLE**

*<u>ZenCredit Agreement</u>*

On August 8, 2025, we entered into a Master Loan Agreement and Promissory Note (the "Loan Agreement") with ZenCredit Ventures, LLC ("ZenCredit"). Pursuant to the Loan Agreement, we agreed to loan ZenCredit up to $2 million. Pursuant to the terms of the Loan Agreement, ZenCredit will pay us regular quarterly interest payments at an annual interest rate of 16%. The term of the initial promissory note is nine months at which time all accrued principal and interest is due to us unless we elect to make an Additional Loan (as such term is defined in the Loan Agreement) subject to the terms of the Loan Agreement. On August 11, 2025, we loaned ZenCredit $2 million in exchange for a promissory note issued pursuant to the Loan Agreement. As of March 31, 2026, the Company reserved $12 thousand allowance for credit loss on the note. The promissory note matures and becomes due and payable on May 11, 2026.

**NOTE 9—INCOME TAXES**

There are no taxes payable as of March 31, 2026, or December 31, 2025.

Some of the federal tax carry forwards will expire at various dates through 2037. Generally, these can be carried forward and applied against future taxable income at the tax rate applicable at that time. We are currently using an effective income tax rate of 21% for our projected available net operating loss carry-forward. No tax benefit has been recognized in the three months ending March 31, 2026, due to the uncertainty surrounding the realizability of the benefit. As of March 31, 2026, the Company had no unrecognized tax benefits.

Utilization of the net operating losses (NOL) carryforwards may be subject to a substantial annual limitation as required by Section 382 of the IRC, due to ownership change of the company that could occur in the future, as well as similar state provisions. In general, an "ownership change" as defined by Section 382 results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income. Assuming the merger contemplated by the Agreement and Plan of Merger, dated February 11, 2026, as amended by the First Amendment to Agreement and Plan of Merger, effective April 13, 2026 (the "First Amendment" and collectively the "Merger Agreement") between the Company, VRME Subsidiary Corp., a Nevada corporation and wholly owned subsidiary of the Company ("Merger Sub") and Open World Ltd., a Cayman Islands exempted company ("Open World"), pursuant to which Merger Sub will merge with and into Open World, Merger Sub will cease to exist and Open World will become a wholly-owned subsidiary of the Company (the "Merger"), is consummated in accordance with the terms of the Merger Agreement, these limitations will apply for tax periods following the Merger.

In accordance with ASC Topic 740, *Income Taxes*, valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all of the deferred tax assets may or will not be realized. The Company did not utilize any NOL deductions for the three months ended March 31, 2026.

**NOTE 10– LEASES**

The Company accounts for its leases under ASC Topic 842, *Leases*. The Company determines at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. We have elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less.

In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred.

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Notes to the Consolidated Financial Statements (unaudited)

During 2025, we maintained operating leases for office facilities. We do not have any finance leases. In January 2026, we entered into a lease amendment to terminate a facility lease effective February 15, 2026, and adjusted our right-of-use assets and liabilities.

Lease expense is included in Management and Technology Expenses on the accompanying Consolidated Statements of Operations. The components of lease expense were as follows (in thousands):

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| | | |
|:---|:---|:---|
|  | Three months ended March 31, | Three months ended March 31, |
|  | 2026 | 2025 |
| Operating lease cost | $- | $26 |
| Short-term lease cost | - | 4 |
| Total lease costs | $- | $30 |

---

Supplemental information related to leases was as follows (dollars in thousands):

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
| Operating Lease right-of-use asset | $- | $- |
| Current portion of operating lease liabilities |  |  |
| Non-current portion of operating lease liabilities | - | - |
| Total operating lease liabilities | $- | $- |
| Cash paid for amounts included in the measurement of operating lease liabilities | $- | $65 |
| Right-of-use assets obtained in exchange for operating lease liabilities | $- | $- |
| Weighted-average remaining lease term for operating leases (years) |  |  |
| Weighted average discount rate for operating leases |  |  |

---

**NOTE 11– CONCENTRATIONS**

For the three months ended March 31, 2026 and 2025, one customer represented 10% and 15% of revenues, respectively.

During the three months ended March 31, 2026, and 2025, one vendor accounted for 99% of transportation cost in our Precision Logistics segment.

As of March 31, 2026, two customers made up 51% of accounts receivable, net. As of December 31, 2025, two customers made up 50% of accounts receivable.

**NOTE 12 – SUBSEQUENT EVENTS**

On May 11, 2026, our $2.0 million promissory note issued under our Loan Agreement with ZenCredit matured and became due and payable. On May 11, 2026, we received from ZenCredit the principal balance of $2.0 million plus the final quarterly interest payment of $80 thousand, and we reversed a credit loss reserve of $12 thousand.

On April 15, 2026, we entered into the First Amendment, effective as of April 13, 2026, pursuant to which the outside date set forth in the Merger Agreement was extended from June 30, 2026 to August 31, 2026.

On April 17, 2026, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock for the last 30 consecutive business days, the Company no longer meets Nasdaq Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of at least $1 per share. The Nasdaq Listing Rules provided us a compliance period of 180 calendar days, or until October 14, 2026, in which to regain compliance with the Minimum Bid Price Rule. See the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in this report.

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**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**

The information in this Management's Discussion and Analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and notes.

**Cautionary Note Regarding Forward-Looking Statements**

This report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. The words "believe," "may," "estimate," "continue," "intended," "plan," "could," "target," "potential," "will," "would," "expect" and similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts contained in this report, including among others, our strategy, future operations, future financial position, future revenue, sources of future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements.

Our actual results and financial condition may differ materially from those expressed or implied in such forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in this report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and our other filings with the Securities and Exchange Commission (the "SEC"). All forward-looking statements in this report are made only as of the date hereof or as indicated and represent our views as of the date of this report. 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 or revise any forward-looking statements, whether as the result of new information, future events or otherwise, except as required by law.

**Overview**

VerifyMe, Inc. ("VerifyMe," the "Company," "we," "us," or "our"), is a logistics company that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions. Prior to 2026, we reported two operating segments: Precision Logistics and Authentication. We are not actively pursuing authentication business but continue servicing existing customers. As of January 1, 2026, the Authentication segment falls below segment reporting quantitative thresholds, and is therefore not required to be presented as a separate reportable segment. As a result, beginning in 2026, we changed our internal reporting to the chief operating decision maker who is our Chief Executive Officer, and combined Precision Logistics and Authentication into a single segment, leaving Precision Logistics. This represents a reduction in the number of reportable segments by aggregation, not a re-labeling. Through our Precision Logistics segment, we provide a value-added service for sensitive parcel management driven by a proprietary software platform that provides predictive analytics from key metrics such as pre-shipment weather analysis, flight-tracking, sort volumes, and traffic, delivered to customers via a secure portal. The portal provides real-time visibility into shipment transit and last-mile events which is supported by a service center.

The Precision Logistics segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive perishable products. We manage complex industry-specific shipping logistic processes that require critical time, temperature control, and handling to prevent spoilage and delayed delivery times and brand impairment. Utilizing predictive analytics from multiple data sources including flight-tracking, weather, traffic, major carrier feeds, and time of day data, we provide our clients an end-to-end vertical approach for their most critical service delivery needs. Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, as well as delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

Through our proprietary PeriTrack® customer dashboard, we provide an integrated tool that gives our customers an in-depth look at their shipping activities and allows them access to critical information in support of the specific needs of the supply chain stakeholders. We offer post-delivery services such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.

Precision Logistics generates revenue from two business service models.

&nbsp;&nbsp;&nbsp;&nbsp;· **ProActive Service** – clients pay us directly for carrier service coupled with our proactive
logistics assistance.

&nbsp;&nbsp;&nbsp;&nbsp;· **Premium Services** – clients use our shipping monitoring,
predictive analytics, or exception management services. Shippers use their own transportation rates, provided and charged directly by
their carrier, with our added services charged (i) directly by the carrier, under a "white label"
arrangement, which we refer to as our Premium service, or (ii) by us, which we refer to as our Direct Premium service. These services
include customer web portal access, weather monitoring, temperature control, full-service center support, and last mile resolution.

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As discussed in the section "Partnerships" below, we ceased providing ProActive services to our prior carrier partner in September 2025. In February 2026, we ceased providing Premium services to our prior carrier partner. While we no longer provide ProActive and Premium services to our prior carrier partner, we continue to provide Direct Premium services to our customers who use our prior carrier partner for their shipping needs.

Beginning in September 2025, we began providing ProActive services to our new Strategic Partner. We are currently establishing the ability to offer our Premium services to our Strategic Partner. We expect to begin broadly offering Premium and Direct Premium services to customers of our new Strategic Partner in the second quarter of 2026.

**Products:** The Precision Logistics segment includes the following bundled services as part of our service offerings to our customers:

&nbsp;&nbsp;&nbsp;&nbsp;· **PeriTrack®**: Our proprietary PeriTrack® customer dashboard was developed utilizing our extensive
logistics operational knowledge. This integrated web portal tool gives our customers an in-depth look at their shipping activities based
on real-time data. The PeriTrack® dashboard was designed to provide critical information in support of the specific needs of supply
chain stakeholders and gives our customer resolution specialists a 360° view of shipping activity. PeriTrack® features tools tailored
for shippers of perishable goods, which includes the In-Transit Shipment Tracker. This tool provides details on the unique shipper's
in-transit shipments, with the ability to select and analyze data on individual shipments.

&nbsp;&nbsp;&nbsp;&nbsp;· **Service Center**: We have assembled a team of customer resolution specialists based in the U.S. This
service team resolves shipping problems on behalf of our customers. The service center acts as a help desk and monitors shipping to delivery
for our customers.

&nbsp;&nbsp;&nbsp;&nbsp;· **Pre-Transit Service**: We help clients prepare their products for shipments by advising clients on
packaging requirements for various types of perishable products. Each product type requires its own particular packaging to protect it
during shipment, and we utilize our extensive knowledge and research to provide our customers with packaging recommendations to meet their
unique needs.

&nbsp;&nbsp;&nbsp;&nbsp;· **Post-Delivery**: We provide customized reporting for trend analysis, system performance reports,
power outage maps, and many other reports to help our customers improve their processes and customer service outcomes.

&nbsp;&nbsp;&nbsp;&nbsp;· **Weather/Traffic Service**: We have full-time meteorologists on staff to monitor weather. A package
may experience a variety of weather conditions between the origin and destination, and our team actively monitors these conditions to
maximize the number of timely and safely transmitted shipments. Similarly, traffic and construction also create unpredictable delays which
our team works diligently to mitigate. If delays or other issues occur, we inform clients and work with them to proactively resolve such
shipment issues.

**Recent Developments**

***Zen Credit Note Repayment***

On May 11, 2026, our $2.0 million promissory note issued under our Loan Agreement with ZenCredit matured and became due and payable. On May 11, 2026, we received from ZenCredit our principal balance of $2.0 million plus our final quarterly interest payment of $80 thousand, and we reversed a credit loss reserve of $12 thousand.

***Nasdaq Delisting Notice***

On April 17, 2026, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based on the closing bid price of our common stock for 30 consecutive business days, we no longer meet Nasdaq Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of at least $1 per share (the "Minimum Bid Price Rule"). The Nasdaq Listing Rules provided us a compliance period of 180 calendar days, or until October 14, 2026, in which to regain compliance with the Minimum Bid Price Rule. See the "Risk Factors" section in this report.

**Merger Agreement**

On February 11, 2026, we entered into the Merger Agreement with the Merger Sub and Open World. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will merge with and into Open World, Merger Sub will cease to exist and Open World will become our wholly-owned subsidiary. At the Effective Time, (i) each holder of ordinary shares of Open World outstanding immediately prior to the Effective Time (excluding holders of Excluding Shares and Dissenting Shares, as defined in the Merger Agreement) will be entitled to receive the number of shares of our common stock, based on the Exchange Ratio, (ii) each investor in Open World SAFEs outstanding immediately prior to the Effective Time will be entitled to receive a right to a number of shares of our common stock based on the Exchange Ratio and (iii) any outstanding option to purchase shares of Open World shall be converted into an option to purchase the number of shares of our common stock based on the Exchange Ratio.

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Immediately following the Closing, our pre-Closing stockholders are expected to collectively retain approximately 10% of the post-Closing aggregate number of shares of our common stock and holders of Open World ordinary shares and Open World SAFEs will receive as merger consideration newly issued shares of our common stock representing approximately 90% of the post-Closing aggregate number of shares of our common stock.

The Merger Agreement contains customary representations, warranties and covenants, including, among others, (i) covenants requiring each of us and Open World to conduct its business in the ordinary course during the period between the execution of the Merger Agreement and the Closing or earlier termination of the Merger Agreement, subject to certain exceptions, (ii) covenants prohibiting us and Open World from engaging in certain kinds of transactions during such period (without the prior written consent of the other), and (iii) a covenant restricting us and Open World from activities relating to the soliciting, initiating, encouraging, inducing or facilitating the communication, making, submission or announcement of any alternative acquisition proposals or inquiries.

The Merger Agreement also requires us, in cooperation with the Open World, to prepare and file with the SEC a registration statement on Form S-4 that will contain a proxy statement relating to a Company stockholder meeting to be held in connection with the Merger (the "Registration Statement") and pursuant to which our shares of common stock will be registered under the Securities Act of 1933, as amended (the "Securities Act"), to be issued by virtue of the Merger and the contemplated transactions thereunder. We shall use its reasonable best efforts to (i) cause the Registration Statement to comply with applicable rules and regulations promulgated by the SEC, (ii) cause the Registration Statement to become effective as promptly as practicable, and (iii) keep the Registration Statement effective as long as is necessary to consummate the Merger and the contemplated transactions thereunder. In addition, under the Merger Agreement, the parties agreed to other customary provisions including (i) obtaining requisite stockholder approval to consummate the Merger and the contemplated transactions thereunder, (ii) obtaining regulatory approvals from relevant governmental authorities, (iii) indemnifying our directors and officers for a period of six years following the Closing, (iv) completing certain disclosure obligations required by the SEC and listing requirements promulgated by the Nasdaq Capital Market ("Nasdaq"), (v) electing or appointing to the positions of officers and directors of Company and the surviving corporation certain persons designated by Open World, and (vi) executing employment agreements between us and Adam Stedham and Jennifer Cola.

Pursuant to Merger Agreement, we have also agreed to enter into a Registration Rights Agreement and an Exchange Agent Agreement in forms reasonably acceptable to us and Open World at Closing.

Closing of the Merger is subject to various customary closing conditions. Each party's obligations to effect the Merger and otherwise consummate the contemplated transactions thereunder are conditioned upon (i) the effectiveness of the Registration Statement on Form S-4, (ii) expiration or termination of applicable regulatory waiting periods, (iii) no restraints from any governmental authority preventing the consummation of the contemplated transactions under the Merger Agreement, (iv) us and Open World obtaining the respective requisite stockholder votes to consummate the transactions contemplated by the Merger Agreement, (v) us causing our PeriShip subsidiary to terminate its current credit facility, (vi) us effectuating a reverse stock split upon the request of Open World, (vii) Nasdaq's approval of our Nasdaq listing application for the post-Merger entity, (viii) receipt of written approval of the Merger by the Cayman Islands Trade and Business Licensing Board, and (ix) execution of the Registration Rights Agreement. Our and Merger Sub's obligations to effect the Merger and otherwise consummate the contemplated transactions thereunder are further conditioned upon customary closing conditions. Open World's obligations to effect the Merger and otherwise consummate the contemplated transactions thereunder are further conditioned upon customary closing conditions as well as (i) us having Closing Net Cash, as defined in the Merger Agreement, of no less than $1 million, and (ii) our common stock having not been delisted from Nasdaq.

In connection with and subject to the Closing of the Merger, outstanding time-based and performance-based restricted stock awards and restricted stock units held by certain of our employees and directors at Closing will accelerate and vest, regardless of any performance conditions, at the Effective Time.

At the Closing of the Merger, pursuant to the Merger Agreement, each of David Edmonds, Marshall Geller, Howard Goldberg, and Adam Stedham are expected to resign as directors of our Board of Directors.

The foregoing description of the Merger Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the Merger Agreement.

On April 15, 2026, we entered into the First Amendment to Agreement and Plan of Merger, effective April 13, 2026 (the "First Amendment"), with the Merger Sub and Open World, pursuant to which the outside date in the Merger Agreement, defined below, was extended from June 30, 2026 to August 31, 2026. The foregoing description of the First Amendment does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the First Amendment.

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**Opportunities**

Traditionally, most shipping businesses utilize the carrier's data platform for tracking which generally informs the shipping enterprise, and their customers, when a package is in transit, when a package has been delivered, and some level of detail of the path which a package traveled. We believe taking the data feeds from a carrier and adding real-time visibility with predictive analytics and the human intervention factor of our service center agents give us a competitive advantage against other third-party platforms that solely rely on the carrier's data feeds. We utilize a variety of input sources beyond the carrier's data feed. Our proprietary "Predictive Analytics" technology is fed real-time meteorology data, traffic and road construction data, and power grid information to help predict issues before they happen. If an alert is created the shipper and our service center agents work to address the issue saving the perishable product from spoiling, while saving the shipper significant costs and reducing the need to replace products that are no longer viable. We have meteorologists on staff that track world-wide weather patterns to address predicted issues before they happen. We believe the company has two significant areas of opportunity. First, our services are specifically designed to address the needs of small and medium-sized health care, agriculture, food and beverage companies. Second, the pharmaceutical and healthcare industries represent significant opportunities due to the enhanced tracking and customer service associated with distribution of these products. We are focusing our sales emphasis on those industries and discovering other industries that need a "high touch", "white glove" exception management team.

Building logistics infrastructure is a capital-intensive process as the investment is locked in for a considerably long period. Due to the current economic environment, and our cost competitive offering, we believe companies may opt to outsource their precision logistics services to reduce their operational costs. The outsourcing of supply chain related and other logistics operations to service providers such as ours allows companies to improve the efficiency of their businesses by focusing their resources on core competencies. We believe outsourcing this function to our Precision Logistics segment provides the ideal solution for all parties involved.

**Partnerships**

On August 26, 2025, our prior carrier partner, notified providers, including PeriShip Global, that it would be providing preferred shipping services through its own internal platform and that the providers would no longer be approved as preferred shippers effective September 24, 2025. As such, PeriShip Global is no longer a preferred shipper for our prior carrier partner and our Precision Logistics segment ceased providing ProActive services to our prior carrier partner's customers in September 2025. We continued to provide Premium services to our prior carrier partner until we ceased providing Premium services in February 2026. While we no longer provide ProActive and Premium services to our prior carrier partner, we continue to provide Direct Premium services to our customers who use our prior carrier partner for their shipping needs.

On September 24, 2025, we began offering ProActive services to the customers of an alternative Preferred Shipping Partner. We are currently establishing the ability to offer our Premium services to our Strategic Partner. We expect to begin broadly offering Premium and Direct Premium services to customers of our new Strategic Partner in the second quarter of 2026.

**Current Economic Environment**

We have seen a softening in demand for some services related to high-end perishable items which seem to be impacted by reduced discretionary spending by U.S. consumers. In response to uncertainty in the global market and lower demand some carriers have implemented strategies to address a potential global recession. Additional changes in U.S. or international trade policy, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions. Additionally, inflation and uncertainty and instability in the global economy and geopolitical events such as a war in Iran and unrest in areas of the world that are dependent upon fuel production can negatively affect transportation costs and further reduce consumer spending leading to fewer goods being transported globally. We can provide no assurances that a decline in discretionary consumer spending for these or any reasons will not have a negative impact on our revenues and results of operations.

**Seasonality**

We typically experience seasonal fluctuations in our net revenues from sales in our Precision Logistics segment. Revenues from sales are generally higher in the fourth quarter than in other quarters due to increased holiday shipments. While the fourth quarter is historically our highest revenue quarter, revenues from ProActive services declined in the quarter ended December 31, 2025 as compared to the quarter ended December 31, 2024 due to the previously disclosed loss of our prior carrier partner as a shipping supplier integrating our service offerings, and larger shippers not wanting to change shipping suppliers during the peak season. We anticipate that the historical seasonality trends of the business will return in 2026.The seasonality of our business may cause fluctuations in our quarterly operating results.

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**Results of Operations**

**Comparison of the three months ended March 31, 2026, and 2025**

The following discussion analyzes our results of operations for the three months ended March 31, 2026 and 2025.

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| | | |
|:---|:---|:---|
|  | Three Months Ended | Three Months Ended |
|  | March 31, | March 31, |
|  | 2026 | 2025 |
| NET REVENUE | $1772 | $4455 |
| COST OF REVENUE | 812 | 2965 |
| GROSS PROFIT | 960 | 1490 |
| OPERATING EXPENSES |  |  |
| Management and technology | 570 | 926 |
| General and administrative | 1016 | 856 |
| Research and development |  | 5 |
| Sales and marketing | 141 | 296 |
| Total Operating expenses | 1727 | 2083 |
| LOSS BEFORE OTHER INCOME (EXPENSE) | (767) | (593) |
| TOTAL OTHER INCOME, NET | $88 | $22 |
| NET LOSS | $(679) | $(571) |

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*<u>Revenue</u>*

Revenue decreased $2,683 thousand or 60% during the first quarter of 2026 compared to the first quarter of 2025. The decrease in revenue primarily relates to the termination of our agreement, effective September 24, 2025, with our prior carrier partner to offer our ProActive services.

*<u>Gross Profit</u>*

Gross profit for the three months ended March 31, 2026, was $960 thousand, compared to $1,490 thousand for the three months ended March 31, 2025. The resulting gross margin was 54% for the three months ended March 31, 2026, compared to 33% for the three months ended March 31, 2025. The gross profit percentage increase relates to the mix of ProActive and Premium services provided during the quarter, and process improvements implemented to increase ProActive services margins.

*<u>Management and Technology</u>*

Management and technology expenses decreased by $356 thousand to $570 thousand for the three months ended March 31, 2026, compared to $926 thousand for the three months ended March 31, 2025. The decrease primarily relates to lower amortization of intangible assets as a result of the previously reported asset impairment in the third quarter of 2025, and a decrease in wages from reduced headcount.

 

*<u>General and Administrative Expenses</u>*

General and administrative expenses increased by $160 thousand to $1,016 thousand for the three months ended March 31, 2026, compared to $856 thousand for the three months ended March 31, 2025. The increase relates to legal expenses associated with the Company's proposed merger with Open World, partially offset by a decrease in stock compensation and wages.

*<u>Research and Development</u>*

Research and development expenses were $0 and $5 thousand for the three months ended March 31, 2026 and March 31, 2025, respectively.

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*<u>Sales and Marketing</u>*

Sales and marketing expenses decreased by $155 thousand to $141 thousand for the three months ended March 31, 2026, compared to $296 thousand for the three months ended March 31, 2025. The decrease primarily relates to a decrease in headcount.

*<u>Interest Income, net</u>*

 

Interest income, net was $88 thousand for the three months ended March 31, 2026, compared to $22 thousand for the three months ended March 31, 2025. This increase primarily relates to a reduction of interest expense resulting from the repayment of the Term Note in the first quarter of 2025, offset by interest income earned on the promissory note with ZenCredit entered on August 8, 2025.

*<u>Net Loss</u>*

Net loss for the three months ended March 31, 2026 and 2025 was $679 thousand and $571 thousand, respectively. The increased loss primarily relates to the decrease in revenues resulting from the previously disclosed loss of the Company's former carrier partner. The resulting consolidated loss per share for the three months ended March 31, 2026, and three months ended March 31, 2025, was $0.05 and $0.05 per basic and diluted share, respectively.

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**Liquidity and Capital Resources**

Cash used in operations was $711 thousand during the three months ended March 31, 2026, compared to $404 thousand during the three months ended March 31, 2025.

Cash used in investing activities was $109 thousand during the three months ended March 31, 2026, compared to $156 thousand during the three months ended March 31, 2026.

Cash used in financing activities during the three months ended March 31, 2026, was $14 thousand, compared to cash provided by financing activities during the three months ended March 31, 2025, of $3,444 thousand. The decrease primarily relates to one-time proceeds received from the exercise of warrants during the three months ended March 31, 2025.

On August 8, 2025, we entered into the Loan Agreement with ZenCredit. Pursuant to the Loan Agreement, we agreed to loan ZenCredit up to $2 million and on August 11, 2025 we loaned ZenCredit $2 million in exchange for a promissory note issued pursuant to the Loan Agreement that matures on May 11, 2026. Pursuant to the terms of the Loan Agreement, ZenCredit will pay us regular quarterly interest payments at an annual interest rate of 16%. The term of the initial promissory note is nine months at which time all accrued principal and interest is due to us subject to the terms of the Loan Agreement. As of March 31, 2026, we reserved $12 thousand allowance for expected credit loss on the Note.

On January 13, 2025, we entered into an Inducement Letter Agreement with an institutional investor and holder of existing warrants to purchase up to 1,461,896 shares of our common stock for $4.7 million in gross proceeds. The existing warrants were originally issued on April 14, 2022, with an exercise price of $3.215 per share, and became exercisable six months following issuance. Pursuant to the Inducement Letter Agreement, the holder agreed to exercise the existing warrants for cash at the exercise price of $3.215 per share in consideration for our agreement to issue a new unregistered warrant to purchase up to an aggregate of 1,461,896 shares of common stock at an exercise price of $4.00 per share. The new warrant was immediately exercisable upon issuance and has a term of five and one-half years from the issuance date.

The Company recognized the fair value of the new warrants, calculated using the Black-Scholes option pricing model, as $3,971 thousand. The transaction was treated as an equity issuance, and the fair value of the new warrants was recorded in additional paid-in capital. Direct transaction costs totaling approximately $352 thousand, including legal fees and placement agent commissions, were also recorded as a reduction to additional paid-in capital.

On August 25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory notes for the aggregate principal amount of $1,100 thousand of which $475 thousand was purchased by related parties including certain members of management and the Board of Directors. As of December 31, 2025, $400 thousand was held by related parties. The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024. The notes will mature on August 25, 2026, unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock. The Company may not redeem the notes prior to the maturity date. For the year ended December 31, 2025, interest expense related to the convertible debt was $61 thousand. As of January 21, 2025, $350 thousand was converted to common stock, none of which was related parties. As of March 31, 2026, the amount outstanding on the convertible debt was $750 thousand and included in Convertible note and Convertible note related party on the accompanying Consolidated Balance Sheets.

On September 22, 2022, we entered into the PNC Facility with PNC Bank, National Association. The PNC Facility includes a $1 million RLOC. The RLOC has no scheduled payments of principal until maturity, and bears interest per annum at a rate equal to the sum of Daily SOFR plus 2.85% with monthly interest payments. The RLOC is guaranteed by the Company and secured by the assets of PeriShip Global and the Company. On August 8, 2025, the Company extended the line of credit to September 30, 2026. As of March 31, 2026, $0 was outstanding on the RLOC.

The PNC Facility included a four-year Term Note for $2 million which matured in September of 2026 and required equal quarterly payments of principal and interest. The Term Note incurred interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%. The PNC Facility is guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe. As of January 21, 2025, the Term Note was paid in full and no future principal payments are due.

In connection with the Merger Agreement we have agreed that PeriShip Global will not utilize the PNC Facility or RLOC from the execution of the Merger Agreement. Additionally, we have agreed that at least three business days prior to closing of the merger to cause PeriShip Global to use its reasonable best efforts to obtain and deliver to Open World, a customary payoff letter with respect to the PNC Facility. As such, we do not expect to be able to utilize the PNC Facility or RLOC unless the merger is not completed pursuant to the terms of the merger agreement.

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We believe that our cash and cash equivalents, together with the proceeds from the warrant inducement and loan agreement, will fund our operations for the next 12 months including expected capital expenditures.

**Off-Balance Sheet Arrangements**

None.

**Critical Accounting Policies and Estimates**

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. Management has determined that there are no critical accounting estimates that require disclosure.

We have identified below the critical accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management. We believe estimates and assumptions related to these accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial position, results of operations or cash flows.

***<u>Revenue Recognition</u>***

 ****

We recognize revenue based on the principals established in the Financial Accounting Standards Board Accounting Standard Codification ("ASC") Topic 606, *Revenue from Contracts with Customers*. The timing of revenue recognition, billings and cash collections results in unbilled revenue (contract assets) and deferred revenue (contract liabilities) on the consolidated balance sheets. Amounts charged to our clients become billable according to the contract terms, which usually consider the delivery completion. Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within twelve months. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the three-month period ended March 31, 2026, were not materially impacted by any other factors.

Applying the practical expedient in ASC Topic 606, we recognize the incremental costs of obtaining contracts (sales commissions) as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. As of March 31, 2026, we did not have any capitalized sales commissions.

 ****

**<u>Recently Adopted Accounting Pronouncements</u>** 

Recently adopted accounting pronouncements are discussed in Note 1 – Summary of Significant Accounting Policies in the notes accompanying the financial statements.

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**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

Not Applicable.

**ITEM 4. CONTROLS AND PROCEDURES.**

**(a) Evaluation of Disclosure Controls and Procedures**

Our disclosure controls and procedures are designed to ensure information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms. The Company's Chief Executive Officer, our principal executive officer, and Chief Financial Officer, our principal financial officer, have evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of March 31, 2026, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2026, our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

**(b) Changes in Internal Control over Financial Reporting**

There have been no other changes in our internal controls over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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**PART II - OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS.**

None.

**ITEM 1A. RISK FACTORS.** 

For a discussion of the Company's potential risks or uncertainties, please see "Part I—Item 1A—Risk Factors" and "Part II—Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC, and "Part I—Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations" herein. There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, except as set forth below.

 ****

***We are not currently in compliance with the Nasdaq continued listing requirements. If we are unable to regain compliance with Nasdaq's listing requirements, our common stock will be delisted, which would negatively impact our common stock's market price and liquidity and reduce our ability to raise capital.***

On April 17, 2026, we received a deficiency letter from Nasdaq notifying us that, because the bid price of our common stock closed below $1.00 per share for 30 consecutive business days, we were no longer in compliance with the Nasdaq's Minimum Bid Price Rule, which is a requirement for continued listing on Nasdaq.

We cannot assure you that we will be able to regain compliance with the Minimum Bid Price Rule and maintain compliance with Nasdaq's other continued listing standards. Accordingly, our common stock could be delisted from Nasdaq. We and holders of our common stock could be materially adversely impacted if our common stock is delisted from Nasdaq. In particular:

● we may be unable to raise equity capital on acceptable terms or at all;

● we may lose the confidence of our business partners, which would jeopardize our ability to continue our business as currently conducted;

● the price of our common stock will likely decrease as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws;

● holders may be unable to sell or purchase our common stock when they wish to do so;

● we may become subject to stockholder litigation;

● we may lose the interest of institutional investors in our common stock;

● we may lose media and analyst coverage;

● our common stock could be considered a "penny stock," which would likely limit the level of trading activity in the secondary market for our common stock; and

● we would likely lose any active trading market for our common stock, as it may only be traded on one of the over-the-counter markets, if at all.

***The Merger is subject to closing conditions and may not be completed, the Merger Agreement may be terminated in accordance with its terms, and we may be required to pay a termination fee upon termination.***

The Merger is subject to customary closing conditions that must be satisfied or waived prior to the consummation of the Merger, including, among other things: (i) approval by our stockholders and Open World's shareholders necessary to consummate the Merger and the contemplated transactions thereunder having been duly obtained; (ii) a registration statement on Form S-4 having been declared effective under the Securities Act and not being subject to any stop order; (iii) our common stock issuable in the Merger having been approved for listing on Nasdaq; (iv) any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") having expired or been terminated, and all other required regulatory approvals having been obtained; (v) Open World having received written approval of the Merger by the Cayman Islands Trade and Business Licensing Board; (vi) the absence of any order by a governmental authority permanently enjoining or otherwise prohibiting consummation of the Merger; (vii) the accuracy of the respective representations and warranties of each party, subject to certain materiality qualifications; (viii) compliance by the parties with their respective covenants; and (ix) the absence of any material adverse effect with respect to either party.

No assurance can be given that the required stockholder and shareholder approvals will be obtained or that the required conditions to closing will be satisfied or waived, and, if all required approvals are obtained and the conditions are satisfied or waived, no assurance can be given as to the terms, conditions, and timing of such approvals. Any delay in completing the Merger could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that the parties expect to achieve if the Merger is successfully completed within the expected time frame.

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Additionally, either party may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the Merger is not completed by August 31, 2026, subject to certain conditions. In the event the Merger Agreement is terminated by us under specified circumstances, we may be required to pay Open World a termination fee of $500,000 or an expense reimbursement fee of $400,000, as applicable.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**

None.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES.**

None.

**ITEM 4. MINE SAFETY DISCLOSURES.**

Not applicable.

**ITEM 5. OTHER INFORMATION.**

During the three months ended March 31, 2026, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

[**Table of Contents**](#toc)

**ITEM 6. EXHIBITS**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 2.1+ | [Agreement and Plan of Merger dated February 11, 2026, by and among VerifyMe, Inc., VRME Subsidiary Corp., and Open World, Ltd. (incorporated herein by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K filed on February 12, 2026)](https://www.sec.gov/Archives/edgar/data/1104038/000121465926001529/ex2_1.htm) |
| 2.2 | [First Amendment to the Agreement and Plan of Merger dated April 13, 2026, by and among VerifyMe, Inc., VRME Subsidiary Corp., and Open World, Ltd., (incorporated herein by reference from Exhibit 2.2 to the Company's Registration Statement on Form S-4, filed on April 15, 2026).](https://www.sec.gov/Archives/edgar/data/1104038/000121465926004702/ex2_2.htm) |
| 10.1\*†+ | [Digital Channel Program Agreement (incorporated herein by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025).](https://www.sec.gov/Archives/edgar/data/1104038/000121465925016707/ex10_1.htm) |
| 10.2\*†+ | [Partner API Access Agreement (incorporated herein by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025).](https://www.sec.gov/Archives/edgar/data/1104038/000121465925016707/ex10_2.htm) |
| 10.3\* | [Master Loan Agreement and Promissory Note with ZenCredit Ventures, LLC (incorporated herein by reference from Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025).](https://www.sec.gov/Archives/edgar/data/1104038/000121465925016707/ex10_3.htm) |
| 10.4\* | [Promissory Note to ZenCredit Ventures, LLC (incorporated herein by reference from Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025).](https://www.sec.gov/Archives/edgar/data/1104038/000121465925016707/ex10_4.htm) |
| 10.5 | [Letter of Intent, dated January 2, 2026, between VerifyMe, Inc. and Open World Ltd.(incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 5, 2026).](https://www.sec.gov/Archives/edgar/data/1104038/000121465926000068/ex10_1.htm) |
| 10.6+ | [Form of Company Stockholder Support Agreement dated February 11, 2026 (incorporated herein by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 12, 2026).](https://www.sec.gov/Archives/edgar/data/1104038/000121465926001529/ex10_1.htm) |
| 10.7#+ | [Amended and Restated Employment Agreement with Adam Stedham dated February 11, 2026 and subject to effectiveness (incorporated herein by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K filed on February 12, 2026).](https://www.sec.gov/Archives/edgar/data/1104038/000121465926001529/ex10_2.htm) |
| 10.8#+ | [Employment Agreement with Jennifer Cola dated February 11, 2026 and subject to effectiveness (incorporated herein by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K filed on February 12, 2026).](https://www.sec.gov/Archives/edgar/data/1104038/000121465926001529/ex10_3.htm) |
| 10.9\* | [Waiver and Amendment to Loan Documents between PeriShip Global LLC and PNC Bank, National Association, effective December 31, 2025 (incorporated herein by reference from Exhibit 10.29 to the Company's Annual Report on Form 10-K filed on March 31, 2026).](https://www.sec.gov/Archives/edgar/data/1104038/000121465926004051/ex10_29.htm) |
| 31.1\* | [Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex31_1.htm) |
| 31.2\* | [Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex31_2.htm) |
| 32.1\*\* | [Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex32_1.htm) |
| 101.INS\* | XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 104\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

\*Filed herewith

\*\*Furnished herewith

# Denotes management compensation plan or contract

+ Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K of the Securities Act of 1933, as amended. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

† Certain portions of this exhibit have been omitted (indicated by asterisks) pursuant to Item 601(b) of Regulation S-K of the Securities Act of 1933, as amended, because such omitted information is (i) not material and (ii) would be competitively harmful if publicly disclosed.

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**SIGNATURE**S

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | |
|:---|:---|
|  | **VERIFYME, INC.** |
| Date: May 15, 2026 | <u>By: /s/ Adam Stedham</u> |
|  | Adam Stedham |
|  | Chief Executive Officer<br> and President<br> (Principal Executive Officer) |
| Date: May 15, 2026 | <u>By: /s/ Jennifer Cola</u> |
|  | Jennifer Cola |
|  | Chief Financial Officer<br> (Principal Financial Officer and Principal Accounting<br> Officer) |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER**

I, Adam Stedham, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of VerifyMe, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 15, 2026

---

| |
|:---|
| /s/ Adam Stedham |
| Adam Stedham<br> Chief Executive Officer and President<br> (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER**

I, Jennifer Cola, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of VerifyMe, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 15, 2026

---

| |
|:---|
| /s/ Jennifer Cola |
| Jennifer Cola<br> Chief Financial Officer<br> (Principal Financial Officer and Principal Accounting Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,**

 **AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the quarterly report of VerifyMe, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof, I, Adam Stedham, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The quarterly report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the quarterly report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

---

| |
|:---|
| /s/ Adam Stedham |
| Adam Stedham<br> Chief Executive Officer and President<br> (Principal Executive Officer) |

---

Date: May 15, 2026

In connection with the quarterly report of VerifyMe, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof, I, Jennifer Cola, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The quarterly report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the quarterly report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

---

| |
|:---|
| /s/ Jennifer Cola |
| Jennifer Cola<br> Chief Financial Officer<br> (Principal Financial Officer and Principal Accounting Officer) |

---

Date: May 15, 2026

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to VerifyMe, Inc. and will be retained by VerifyMe, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.