Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2024

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

For the transition period from to

Commission file number 001-39332

VERIFYME, INC.

(Exact Name of Registrant as Specified in Its Charter)

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

801 International Parkway, Fifth Floor Lake Mary, FL		32746
(Address of Principal Executive Offices)		(Zip Code)

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

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which

Registered

Common Stock, par value $0.001 per share

VRME

The Nasdaq Capital Market

Warrants to Purchase Common Stock

VRMEW

The Nasdaq Capital Market

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

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

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

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

Emerging growth company	o

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 10,384,698 shares of common stock outstanding at August 6, 2024.

PART I - FINANCIAL INFORMATION

ITEM 1.	Financial Statements	4
Consolidated Balance Sheets (Unaudited)		4
Consolidated Statements of Operations (Unaudited)		6
Consolidated Statements of Comprehensive Loss (Unaudited)		7
Consolidated Statements of Cash Flows (Unaudited)		8
Consolidated Statements of Stockholders' Equity (Unaudited)		10
Notes to Consolidated Financial Statements (Unaudited)		12
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	37
ITEM 4.	Controls and Procedures	37

PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	38
ITEM 1A.	Risk Factors	38
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
ITEM 3.	Defaults Upon Senior Securities	39
ITEM 4.	Mine Safety Disclosures	39
ITEM 5.	Other Information	39
ITEM 6.	Exhibits	40
SIGNATURES		41

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PART I - FINANCIAL STATEMENTS

ITEM 1.

VerifyMe, Inc.

Consolidated Balance Sheets

(In thousands, except share data)


	As of
	June 30, 2024		December 31, 2023
	(Unaudited)

ASSETS

CURRENT ASSETS
Cash and cash equivalents including restricted cash	$	2,900	$	3,095
Accounts receivable, net of allowance for credit loss reserve, $156 and $165 as of June 30, 2024 and December 31, 2023, respectively		1,214		3,017
Unbilled revenue		751		1,282
Prepaid expenses and other current assets		210		254
Inventory		23		38
TOTAL CURRENT ASSETS		5,098		7,686

PROPERTY AND EQUIPMENT, NET	$	184	$	240

RIGHT OF USE ASSET		378		468

INTANGIBLE ASSETS, NET		6,539		6,927

GOODWILL		5,334		5,384

TOTAL ASSETS	$	17,533	$	20,705

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Term note, current	$	500	$	500
Accounts payable		1,331		3,310
Other accrued expense		808		988
Lease liability- current		165		170
Contingent liability- current		123		173
TOTAL CURRENT LIABILITIES		2,927		5,141

LONG-TERM LIABILITIES
Contingent liability, non-current	$	401	$	751
Long-term lease liability		223		307
Term note		625		875
Convertible Note – related party		475		475
Convertible Note		625		625
TOTAL LIABILITIES	$	5,276	$	8,174

STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $.001 par value, 37,564,767 shares authorized; 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		-		-

Series B Convertible Preferred Stock, $.001 par value; 85 shares authorized; 0.85 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		-		-

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Common stock, $0.001 par value; 675,000,000 authorized; 10,655,065 and 10,453,315 issued, 10,384,698 and 10,123,964 shares outstanding as of June 30, 2024 and December 31, 2023, respectively		11			10

Additional paid in capital		95,504			95,031

Treasury stock at cost; 270,367 and 329,351 shares at June 30, 2024 and December 31, 2023, respectively		(464	)		(659	)

Accumulated deficit		(82,748	)		(81,849	)

Accumulated other comprehensive loss		(46	)		(2	)

STOCKHOLDERS' EQUITY		12,257			12,531

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,533		$	20,705

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

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VerifyMe, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share data)


	Three Months Ended						Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023

NET REVENUE	$	5,352		$	5,335		$	11,111		$	10,996

COST OF REVENUE^(a)		3,262			3,749			6,761			7,889

GROSS PROFIT		2,090			1,586			4,350			3,107

OPERATING EXPENSES
Segment management and Technology^(a)		1,517			1,251			2,860			2,356
General and administrative ^(a)		894			836			2,015			2,249
Research and development		5			10			60			18
Sales and marketing ^(a)		210			527			598			1,026
Total Operating expenses		2,626			2,624			5,533			5,649

LOSS BEFORE OTHER INCOME (EXPENSE)		(536	)		(1,038	)		(1,183	)		(2,542	)

OTHER (EXPENSE) INCOME
Interest expenses, net		(42	)		(46	)		(80	)		(88	)
Unrealized gain (loss) on equity investment		-			30			-			(2	)
Change in fair value of contingent consideration		232			172			364			172
Other expense, net		-			-			-			(2	)
TOTAL OTHER INCOME (EXPENSE), NET		190			156			284			80

NET LOSS	$	(346	)	$	(882	)	$	(899	)	$	(2,462	)

LOSS PER SHARE
BASIC		(0.03	)		(0.09	)		(0.09	)		(0.26	)
DILUTED		(0.03	)		(0.09	)		(0.09	)		(0.26	)

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC		10,238,717			9,765,452			10,156,081			9,614,183
DILUTED		10,238,717			9,765,452			10,156,081			9,614,183

(a)

Includes share-based compensation of $239 thousand and $697 thousand for the three and six months ended June 30, 2024, respectively, and $315 thousand and $601 thousand for the three and six months ended June 30, 2023 respectively.

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

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VerifyMe, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended						Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
NET LOSS	$	(346	)	$	(882	)	$	(899	)	$	(2,462	)

Change in fair value of interest rate, Swap		2			2			5			1

Foreign currency translation adjustments		18			(46	)		(49	)		(48	)

Total Comprehensive Loss	$	(326	)	$	(926	)	$	(943	)	$	(2,509	)

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

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VerifyMe, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six months ended
	June 30, 2024			June 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(899	)	$	(2,462	)
Adjustments to reconcile net loss to net cash used in operating activities :
Allowance for bad debt		9			4
Stock based compensation		89			41
Unrealized loss on equity investment		-			2
Change in fair value of contingent consideration		(364	)		(172	)
Fair value of restricted stock awards and restricted stock units issued in exchange for services		608			560
Loss on disposal of equipment		-			2
Impairments		13			34
Amortization and depreciation		599			540
Unrealized loss on foreign currency transactions		30			10
Changes in operating assets and liabilities:
Accounts receivable		1,790			3,156
Unbilled revenue		530			451
Inventory		15			34
Prepaid expenses and other current assets		47			46
Accounts payable, other accrued expenses and net change in operating leases		(2,155	)		(2,709	)
Net cash provided by (used) in operating activities		312			(463	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of patents		(12	)		(42	)
Purchase of office equipment		(5	)		(24	)
Cash paid in business combination		-			(363	)
Deferred implementation costs		-			(56	)
Capitalized software costs		(174	)		(373	)
Net cash used in investing activities		(191	)		(858	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit		-			800
Proceeds from SPP Plan		21			71
Contingent consideration payments		(36	)		-
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered		(47	)		(3	)
Increase in treasury shares (share repurchase program)		(1	)		(10	)
Repayment of debt and line of credit		(250	)		(250	)

Net cash (used in) provided by financing activities		(313	)		608

Effect of exchange rate changes on cash		(3	)		(1	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(195	)		(714	)
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- BEGINNING OF PERIOD		3,095			3,411
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- END OF PERIOD	$	2,900		$	2,697

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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	94	$	68
Income taxes	$	-	$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Change in fair value of interest rate, swap	$	5	$	1

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

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VerifyMe, Inc.

Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share data)


	Series A Convertible				Series B Convertible
	Preferred				Preferred				Common						Treasury
	Stock				Stock				Stock				Additional		Stock
	Number of				Number of				Number of				Paid-In		Number of						Accumulated Other			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Shares			Amount			Comprehensive Loss			Deficit			Total

Balance at March 31, 2023		-		-		0.85		-		9,348,914		10		93,790		348,075			(793	)		(6	)		(80,039	)		12,962
Restricted stock awards, net of shares withheld for employee tax		-		-		-		-		485,444		-		146		-			-			-			-			146
Restricted Stock Units, net of shares withheld for employee tax		-		-		-		-		-		-		148		-			-			-			-			148
Common stock issued in relation to Stock Purchase Plan		-		-		-		-		8,407		-		27		(407	)		1			-			-			28
Accumulated Other Comprehensive Loss		-		-		-		-		-		-		-		-			-			(44	)		-			(44	)
Net loss		-		-		-		-		-		-		-		-			-			-			(882	)		(882	)
Balance at June 30, 2023		-		-		0.85		-		9,842,765		10		94,111		347,668			(792	)		(50	)		(80,921	)		12,358

	Series A Convertible				Series B Convertible
	Preferred				Preferred				Common							Treasury
	Stock				Stock				Stock				Additional			Stock
	Number of				Number of				Number of				Paid-In			Number of						Accumulated Other			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Shares			Amount			Comprehensive Loss			Deficit			Total

Balance at March 31, 2024		-		-		0.85		-		10,176,603		10		95,438			308,462			(589	)		(66	)		(82,402	)		12,391
Restricted stock awards		-		-		-		-		140,000		1		127			-			-			-			-			128
Restricted Stock Units, net of shares withheld for employee tax		-		-		-		-		38,095		-		(103	)		(38,095	)		125			-			-			22
Common stock issued for services		-		-		-		-		30,000		-		42															42
Accumulated Other Comprehensive Income		-		-		-		-		-		-		-			-			-			20			-			20
Net loss		-		-		-		-		-		-		-			-			-			-			(346	)		(346	)
Balance at June 30, 2024		-		-		0.85		-		10,384,698		11		95,504			270,367			(464	)		(46	)		(82,748	)		12,257

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	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common								Treasury
	Stock				Stock				Stock					Additional			Stock						Accumulated Other
	Number of				Number of				Number of					Paid-In			Number of						Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount		Capital			Shares			Amount			Loss			Deficit			Total
Balance at December 31, 2022		-		-		0.85		-		8,951,035			10		92,987			389,967			(949	)		(3	)		(78,459	)		13,586
Restricted stock awards, net of shares withheld for employee tax		-		-		-		-		485,444			-		147			-			-			-			-			147
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		1,750			-		410			-			-			-			-			410
Common stock issued in relation to Stock Purchase Plan		-		-		-		-		57,245			-		(58	)		(48,500	)		167			-			-			109
Common stock issued in relation to Acquisition		-		-		-		-		353,492			-		625			-			-			-			-			625
Repurchase of common stock		-		-		-		-		(6,201	)		-		-			6,201			(10	)		-			-			(10	)
Accumulated other comprehensive loss		-		-		-		-		-			-		-			-			-			(47	)		-			(47	)
Net loss				-		-		-		-			-		-			-			-			-			(2,462	)		(2,462	)
Balance at June 30, 2023		-		-		0.85		-		9,842,765			10		94,111			347,668			(792	)		(50	)		(80,921	)		12,358

	Series A				Series B
	Convertible				Convertible
	Preferred				Preferred				Common								Treasury
	Stock				Stock				Stock					Additional			Stock						Accumulated Other
	Number of				Number of				Number of					Paid-In			Number of						Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount		Capital			Shares			Amount			Loss			Deficit			Total
Balance at December 31, 2023		-		-		0.85		-		10,123,964			10		95,031			329,351			(659	)		(2	)		(81,849	)		12,531
Restricted stock awards		-		-		-		-		140,000			1		275			-			-			-			-			276
Restricted stock units, net of shares withheld for employee tax		-		-		-		-		39,845			-		160			(38,095	)		125			-			-			285
Common stock issued in relation to Stock Purchase Plan		-		-		-		-		21,889			-		(46	)		(21,889	)		71			-			-			25
Common stock issued for services		-		-		-		-		60,000			-		84			-			-			-			-			84
Repurchase of Common Stock		-		-		-		-		(1,000	)		-		-			1,000			(1	)		-			-			(1	)
Accumulated other comprehensive loss		-		-		-		-		-			-		-			-			-			(44	)		-			(44	)
Net loss				-		-		-		-			-		-			-			-			-			(899	)		(899	)
Balance at June 30, 2024		-		-		0.85		-		10,384,698			11		95,504			270,367			(464	)		(46	)		(82,748	)		12,257

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

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VerifyMe, Inc.

Notes to the Consolidated Financial Statements (unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

VerifyMe, Inc. (“VerifyMe”) was incorporated in the State of Nevada on November 10, 1999. VerifyMe, together with its subsidiaries, including Trust Codes Global Limited (“Trust Codes Global”) and PeriShip Global LLC (“PeriShip Global”), (together the “Company,” “we,” “us,” or “our”) is based in Lake Mary, Florida and its common stock, par value $0.001 per share, and warrants to purchase common stock are traded on The Nasdaq Capital Market (“Nasdaq”) under the trading symbols “VRME” and “VRMEW,” respectively.

VerifyMe, is a traceability and customer support services provider using specialized software and process technology. The Company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions. 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. Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones. 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.

Reclassifications

Certain amounts presented for the three and six months ended June 30, 2023, reflect reclassifications made to conform to the presentation in our current reporting period. These reclassifications had no effect on the previously reported net loss.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements (the “Interim Statements”) include the accounts of VerifyMe and its wholly owned subsidiaries PeriShip Global and Trust Codes Global. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The Interim Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2024. The accompanying Interim Statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The interim results for the three and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future interim periods.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows (dollars in thousands):


	As of
	June 30, 2024		December 31,2023

Cash and cash equivalents	$	2,900	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,900	$	3,095

The Company classifies cash and cash equivalents that are restricted from operating use for the next twelve months as restricted cash. No cash was subject to restriction as of June 30, 2024. As of December 31, 2023, the Company held $63 thousand subject to restrictions.

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Segment Reporting

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. The Company has two reportable segments, namely, (i) Precision Logistics and (ii) Authentication. See Note 11 - Segment Reporting, for further discussion of the Company’s segment reporting structure.

Foreign Currency Translation

The functional currency of our New Zealand operations is the local currency, New Zealand dollar (NZD). The translation of the foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the weighted average exchange rates prevailing during the year. The unrealized gains and losses resulting from such translation are included as a component of comprehensive income. Translation gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in “General and administrative” on our Consolidated Statements of Operations. The foreign currency transaction for the three and six months ended June 30, 2024, was a $16 thousand gain and $46 thousand loss, respectively. The foreign currency transaction losses for the three and six months ended June 30, 2023, were immaterial.

Use of Estimates

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.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): “Improvements to Reportable Segment Disclosures”, which requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment's profit or loss to assess performance and decide how to allocate resources. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company adopted the new standard beginning January 1, 2024. Note 11 – Segment Reporting has been updated to reflect the new disclosure requirements and certain amounts have been reclassified in the Consolidated Statement of Operations. There is no other impact of adoption of this standard on the Company’s consolidated financial statements and disclosures.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, contingent consideration and long-term derivative assets or liabilities. The carrying value of accounts receivable, 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 ASC 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.

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The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of June 30, 2024 and December 31, 2023.

Amounts in Thousands ('000)


	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)

Balance as of December 31, 2023	$	4	$	(924	)

Change in fair value of Contingent Consideration		-		364

Payments		-		36

Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		5		-

Balance at June 30, 2024	$	9	$	(524	)

Revenue Recognition

The Company accounts for revenues according to Accounting Standards Codification (“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.

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The Company applies the following five steps, separated by reportable segments, in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements.

identify the contract with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

For more detailed information about reportable segments, see Note 11 – Segment reporting. 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.

Precision Logistics

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 7 days and 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, we provide complete white-glove shipping monitoring and predictive analytics services. This service includes customer web portal access, weather monitoring, temperature control, full service center support and last mile resolution. Payment terms are typically 30-45 days.

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.

Authentication

Our Authentication segment primarily consists of our brand protection service line which consists of a custom suite of products that offer clients traceability and brand solutions. Terms typically range between 30 and 90 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. Warranties and other variable considerations are analyzed by the Company, in terms of historical warranties, current economic trends, and changes in customer demand, and have been determined to be insignificant in the three and six months ended June 30, 2024.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, 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 assesses 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.

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Basic and Diluted Net Loss per Share of Common Stock

The Company follows FASB ASC 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 and six months ended June 30, 2024, and 2023, 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 and six months ended June 30, 2024, there were approximately 8,208,000 anti-dilutive shares consisting of 2,177,000 unvested performance restricted stock units, restricted stock units, and restricted stock awards, 301,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock. For the three and six months ended June 30, 2023, there were approximately 7,108,000 anti-dilutive shares consisting of 1,998,000 unvested performance restricted stock units, restricted stock units, restricted stock awards and options under the stock purchase plan, 337,000 shares issuable upon exercise of stock options, 4,629,000 shares issuable upon exercise of warrants, and 144,000 shares issuable upon conversion of preferred stock.

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Stock-Based Compensation

We account for stock-based compensation under the provisions of FASB ASC 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 options 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. For performance restricted stock units 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 restricted stock unit’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.

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. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, “Equity – Equity-Based Payments to Non-Employees”.

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. At the end of each financial reporting period, prior to vesting or prior to the completion of the services, the fair value of the equity-based payments will be re-measured, and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity-based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity-based payments are fully vested or the service completed.

NOTE 2 – REVENUE

Revenue by Category

The following series of tables present our revenue disaggregated by various categories (dollars in thousands).

Schedule of disaggregation of revenue
	Authentication				Precision Logistics				Consolidated
Revenue	Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2024		2023		2024		2023		2024		2023

Proactive services	$	-	$	-	$	3,945	$	4,200	$	3,945	$	4,200
Premium services		-		-		1,299		1,014		1,299		1,014
Brand protection services		108		121		-		-		108		121
	$	108	$	121	$	5,244	$	5,214	$	5,352	$	5,335


	Authentication				Precision Logistics				Consolidated
Revenue	Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023		2024		2023

Proactive services	$	-	$	-	$	8,170	$	8,704	$	8,170	$	8,704
Premium services		-		-		2,688		1,924		2,688		1,924
Brand protection services		253		368		-		-		253		368
	$	253	$	368	$	10,858	$	10,628	$	11,111	$	10,996

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Contract Balances

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 six-month period ended June 30, 2024, were not materially impacted by any other factors.

Applying the practical expedient in ASC Topic 606, we recognize the incremental costs of obtaining contracts (i.e. 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 June 30, 2024, 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:


	Contract Asset
	June 30,
In Thousands	2024			2023
Beginning balance, January 1	$	1,282		$	1,185
Contract asset additions		4,329			3,326
Reclassification to accounts receivable, billed to customers		(4,860	)		(3,777	)
Ending balance ⁽¹⁾	$	751		$	734

______________

(1)

Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

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NOTE 3 – BUSINESS COMBINATIONS

Trust Codes Global Limited

On March 1, 2023, we acquired, through Trust Codes Global, the business and certain assets of Trust Codes Limited (“Trust Codes”), specializing in brand protection, anti-counterfeiting, and consumer engagement technology with an expertise in the food and agriculture industry. Trust Codes Global uses unique QR codes or IoT, coupled with GS1 standards to deliver cloud-based brand protection based on a unique per-item digital identity to protect brand and product authenticity, increase data visualization of a product through the end to end supply chain, and creates a data-drive engine to inform and educate consumers of the product. The Company accounted for the transaction as an acquisition of a business under ASC 805 – Business Combination. The purchase price was approximately $1.0 million which consisted of $0.36 million in cash paid at closing and 353,492 shares of common stock of the Company, representing $0.65 million in stock consideration. In addition, the purchase agreement requires consideration contingent upon the achievement of earnings targets during a five-year period subsequent to the closing of the acquisition. The earn-out consideration is estimated at $1.1 million at the acquisition date, however the maximum amount of the payment is unlimited. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. All of the goodwill recorded for financial statement purposes is deductible for tax purposes. The Company incurred $278 thousand in relation to acquisition related costs which have been included in General and administrative in the six months ended June 30, 2023, in the accompanying Consolidated Statements of Operations. Trust Codes Global is included in the Authentication segment and the results of its operations have been included in the consolidated financial statements beginning March 1, 2023. The pro-forma financial information for Trust Codes is immaterial to our results of operations and impractical to provide.

The following table summarizes the purchase price allocation for the acquisition (dollars in thousands).

Schedule of business acquisitions
Cash	$	363
Fair value of contingent consideration		1,125
Stock (issuance of 353,492 shares of common stock) ^(a)		625
Total purchase price	$	2,113

				Amortization
				Period
Purchase price allocation:
Prepaid expenses	$	25
Property and Equipment, net		18
ROU Asset		171
Developed Technology		485		8 years
Trade Names/Trademarks		148		18 years
Customer Relationships		68		10 years
Goodwill		1,383
Accounts payable and other accrued expenses		(14	)
Current lease liability		(63	)
Long term lease liability		(108	)
	$	2,113

(a)

Stock issued was calculated based on the 15 day volume-weighted average price (“VWAP”) through February 28, 2023 calculated at $1.8388.

Contingent Consideration

ASC Topic 805 requires that contingent consideration to be recognized at fair value on the acquisition date and be re-measured each reporting period with subsequent adjustments recognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to, and volatility in, our results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.

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As of June 30, 2024, contingent consideration presented as current liability totaled $123 thousand. As of June 30, 2024, we also had accrued long term contingent consideration totaling $401 thousand related to the acquisition of Trust Codes on the consolidated balance sheets and represents the portion of contingent consideration estimated to be payable greater than twelve months from the balance sheet date. On May 15, 2024, a payment of $36 thousand was paid for contingent consideration.

NOTE 4 – INTANGIBLE ASSETS AND GOODWILL

Goodwill

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” (“ASC 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 ASC 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. We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present.

Each of our two reportable segments represents an operating segment under ASC Topic 280, Segment Reporting. We test our goodwill at the reporting unit level, or one level below an operating segment, under ASC Topic 350, “Intangibles - Goodwill and Other”. We determined that we have two reporting units for purposes of goodwill impairment testing, which represent our two reportable business segments, as discussed below.

Changes in the carrying amount of goodwill by reportable business segment for the six months ended June 30, 2024, were as follows (in thousands):


	Authentication			Precision Logistics		Total
Net book value at
January 1, 2024	$	1,396		$	3,988	$	5,384

2024 Activity
Foreign currency translation		(50	)		-		(50	)
Net book value at
June 30, 2024	$	1,346		$	3,988	$	5,334

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Intangible Assets Subject to Amortization

Our intangible assets include amounts recognized in connection with patents and trademarks, capitalized software and acquisitions, including customer relationships, tradenames, developed technology and non-compete agreements. 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.

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):


June 30, 2024	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,766	$	(394	)	$	1,372		12
Capitalized Software		161		(125	)		36		2
Customer Relationships		1,905		(412	)		1,493		8
Developed Technology		3,614		(1,227	)		2,387		5
Internally Used Software		1,087		(108	)		979		6
Non-Compete Agreement		191		(84	)		107		3
Deferred Implementation		198		(33	)		165		9
Total Intangible Assets	$	8,922	$	(2,383	)	$	6,539
December 31, 2023
Patents and Trademarks	$	2,002	$	(564	)	$	1,438		13
Capitalized Software		161		(109	)		52		2
Customer Relationships		1,908		(317	)		1,591		9
Developed Technology		3,632		(938	)		2,694		5
Internally Used Software		914		(62	)		852		6
Non-Compete Agreement		191		(65	)		126		3
Deferred Implementation		198		(24	)		174		9
Total Intangible Assets	$	9,006	$	(2,079	)	$	6,927

Amortization expense for intangible assets was $540 thousand and $495 thousand for the six months ended June 30, 2024, and 2023, respectively. During the six months ended June 30, 2024, the Company impaired certain assets related to its Patents by $13 thousand, to bring the gross carrying amount related to these assets to zero, as these technologies are no longer in use.

Patents and Trademarks

As of June 30, 2024, our current patent and trademark portfolios consist of eight granted U.S. patents and two granted European patents (one validated in four countries of France, Germany, United Kingdom, and Italy and one validated in three countries of France, Germany and United Kingdom), three pending U.S. and foreign patent applications, twenty-three registered U.S. trademarks, two EU trademark registrations, one Colombian trademark registration, one Australian trademark registration, one Japanese trademark registration, one Mexican trademark registration, one Singaporean trademark registration, two UK trademark registrations, seven NZ trademark registration, one OAPI (African Intellectual Property Organization) trademark registration, and one pending US and one foreign trademark application in Nigeria. The Company abandoned one patent during the six months ended June 30, 2024.

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

Schedule of future amortization expense
Fiscal Year ending December 31,
2024 (six months remaining)	$	572
2025		1,109
2026		1,104
2027		1,070
2028		696
Thereafter		1,988
Total	$	6,539

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NOTE 5 – STOCKHOLDERS’ EQUITY

The Company expensed $127 thousand and $275 thousand related to restricted stock awards for the three and six months ended June 30, 2024, respectively. The Company expensed $147 thousand and $148 thousand related to restricted stock awards for the three and six months ended June 30, 2023, respectively.

The Company expensed $69 thousand and $333 thousand related to restricted stock units for the three and six months ended June 30, 2024, and $149 thousand and $412 thousand related to restricted stock units for the three and six months ended June 30, 2023.

During the six months ended June 30, 2024, the Company issued 1,750 shares of common stock upon vesting of restricted stock units, and 38,095 shares of common stock from treasury shares, net of common stock withheld for taxes.

On March 31, 2024, the Company issued 30,000 of restricted common stock, vesting immediately, with a value of $42 thousand, for consulting services. On June 30, 2024, the Company issued an additional 30,000 of restricted common stock, vesting immediately, with a value of $42 thousand, for consulting services.

Non-Qualified Stock Purchase Plan

On June 10, 2021, the stockholders of the Company approved a non-qualified stock purchase plan (the “2021 Plan”). The 2021 Plan provides eligible participants, including employees, directors and consultants of the Company, the opportunity to purchase shares of the Company’s common stock thereby increasing their interest in the Company’s continued success. The maximum number of common stock reserved and available for issuance under the 2021 Plan is 500,000 shares. The purchase price of shares of common stock acquired pursuant to the exercise of an option will be the lesser of 85% of the fair market value of a share (a) on the enrollment date, and (b) on the exercise date. The 2021 Plan is not intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company applied FASB ASC 718, “Compensation-Stock Compensation” and estimated the fair value using the Black-Scholes model, as the 2021 Plan is considered compensatory. In relation to the 2021 Plan the Company expensed $0 and $4 thousand for the three and six months ended June 30, 2024, respectively. During the six months ended June 30, 2024 the Company received $21 thousand in proceeds related to the 2021 Plan. The Company has currently suspended new offering periods under the 2021 Plan.

Shares Held in Treasury

As of June 30, 2024, and December 31, 2023, the Company had 270,367 and 329,351 shares, respectively, held in treasury with a value of approximately $464 thousand and $659 thousand, respectively.

On February 29, 2024, seven participants exercised their option under the Company’s non-qualified stock purchase plan, and as a result, 21,889 shares were issued from treasury, with an exercise price of $0.97 per share.

Shares Repurchase Program

In December 2023, the Company’s Board of Directors approved a new share repurchase program to allow the Company to spend up to $0.5 million to repurchase shares of its common stock so long as the price per share does not exceed $1.00 until December 14, 2024. During the six months ended June 30, 2024, the Company repurchased 1,000 shares of common stock for $1 thousand under the Company’s current program.

NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

During 2013, the Company adopted the 2013 Omnibus Equity Compensation Plan (the “2013 Plan”). Under the 2013 Plan, the Company is authorized to grant awards of stock options, restricted stock, restricted stock units and other stock-based awards up to an aggregate of 400,000 shares of common stock. The 2013 Plan is intended to permit certain stock options granted to employees under the 2013 Plan to qualify as incentive stock options. All options granted under the 2013 Plan, which are not intended to qualify as incentive stock options are deemed to be non-qualified stock options.

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.

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On August 10, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”), subject to stockholder approval, which authorizes the potential issuance of up to 1,069,110 shares of common stock. On September 30, 2020, the Company’s stockholders approved the 2020 Plan, and upon such approval the 2020 Plan became effective and 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, subject to stockholder approval, 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 June 9, 2022, the Company’s stockholders approved the First Amendment to the 2020 Plan. On April 17, 2023, the Company’s Board of Directors adopted the Second Amendment to the 2020 Plan, subject to stockholder approval, which increased the shares authorized for potential issuance under the 2020 Plan to 3,069,100 shares of common stock and extended the term of the 2020 Plan to June 6, 2033. On June 6, 2023, the Company’s stockholders approved the Second Amendment to the 2020 Plan. On March 18, 2024, the Company’s Board of Directors adopted the Third Amendment to the 2020 Plan, subject to stockholder approval, 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, 2033. On June 4, 2024, the Company’s stockholders approved the Third Amendment to the 2020 Plan.

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.

In connection with incentive stock options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock with respect to which incentive stock options are exercisable for the first time by any individual during any calendar year (under all plans of the Company and its affiliates) shall not exceed $100 thousand, and the options in excess of $100 thousand shall be deemed to be non-qualified stock options, including prices, duration, transferability and limitations on exercise. The maximum number of shares of common stock that may be issued under the 2020 Plan pursuant to incentive stock options may not exceed, in the aggregate, 1,000,000.

The Company has issued non-qualified stock options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgements.

Stock Options

The following table summarizes the activities for the Company’s stock options as of June 30, 2024:

Schedule of stock options
	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in thousands)⁽¹⁾
Balance as of December 31, 2023		301,471		$	4.56

Granted		-			-

Forfeited/Cancelled/Expired		(471	)	$	212.50

Balance as of June 30, 2024		301,000		$	4.24

Exercisable as of June 30, 2024		301,000		$	4.24		0.7	$	-

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period.

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As of June 30, 2024, the Company had no unvested stock options.

During the six months ended June 30, 2024, and 2023, the Company expensed $0 thousand, with respect to options.

As of June 30, 2024, there was $0 unrecognized compensation cost related to outstanding stock options.

Restricted Stock Awards and Restricted Stock Units

The following table summarizes the unvested restricted stock awards as of June 30, 2024:


				Weighted -
				Average
	Number of			Grant
	Award Shares			Date Fair Value

Unvested at December 31, 2023		416,669			1.44

Granted		140,000			1.60

Vested		(416,669	)		1.44

Balance at June 30, 2024		140,000		$	1.60

As of June 30, 2024, total unrecognized share-based compensation cost related to unvested restricted stock awards is $209 thousand, which is expected to be recognized over a weighted-average period of less than one year.

The following table summarizes the unvested time based restricted stock units as of June 30, 2024:


				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2023		371,253			1.32

Granted		35,000			1.60

Vested		(70,527	)		1.33

Forfeited		(25,334	)		1.23

Balance at June 30, 2024		310,392		$	1.34

As of June 30, 2024, total unrecognized share-based compensation cost related to unvested restricted stock units was $206 thousand, which is expected to be recognized over a weighted-average period of 1.2 years.

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The following table summarizes the unvested performance restricted stock units as of June 30, 2024:


				Weighted -
				Average
	Number of			Number of
	Unit Shares			Unit Shares
Unvested at December 31, 2023		1,438,760			1.51

Granted		480,000			1.12

Forfeited/Cancelled		(192,100	)		1.78

Balance at June 30, 2024		1,726,660		$	1.37

For restricted stock units with stock price appreciation targets, we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value of each grant 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 derived service period and there is no ongoing adjustment or reversal based on actual achievement during the period.

As of June 30, 2024, total unrecognized share-based compensation cost related to unvested performance restricted stock units was $1,162 thousand, which is expected to be recognized over a weighted-average period of 1.4 years.

Warrants

The following table summarizes the activities for the Company’s warrants as of June 30, 2024:

Schedule of warrants outstanding
	Number of Warrant Shares		Weighted- Average Exercise Price		Weighted - Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)⁽¹⁾
Balance as of December 31, 2023		4,628,586	$	4.13

Granted		-		-

Expired		-		-

Balance as of June 30, 2024		4,628,586	$	4.13		1.8

Exercisable as of June 30, 2024		4,628,586	$	4.13		1.8	$	-

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.41 for our common stock on June 30, 2024.

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”) with a term of one-year which expires in September 2024. 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 also includes a four-year term note (the “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 RLOC and Term Note are guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe.

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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. PeriShip Global was in compliance with all affirmative and restrictive covenants under the PNC Facility at June 30, 2024.

As of June 30, 2024, our short-term debt outstanding under the Term Note was $0.5 million and total long-term debt outstanding under the Term Note was $0.6 million. During the six months ended June 30, 2024, the Company made a repayment of $250 thousand towards the principal of the outstanding Term Note.

As of June 30, 2024, $0 was outstanding on the RLOC.

Effective October 17, 2022, the Company entered into an interest rate swap agreement, with a notional amount of $1,958 thousand, effectively fixing the interest rate on the Company’s outstanding debt at 7.602%. The Company has designated the intertest rate swap, expiring September 2026, as a cash flow hedge and have applied hedge accounting. The fair value of the derivative asset and liability associated with the interest rate swap are not significant as of June 30, 2024, and as of December 31, 2023, respectively.

Convertible Debt

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. 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 six months ended June 30, 2024 interest expense related to the convertible debt was $44 thousand. As of June 30, 2024 the principal amount outstanding on the convertible debt was $1,100 thousand and is included in Convertible debt and Convertible debt-related party on the accompanying Consolidated Balance Sheets.

NOTE 8—INCOME TAXES

There are no taxes payable as of June 30, 2024, or December 31, 2023.

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 six months ending June 30, 2024, due to the uncertainty surrounding the realizability of the benefit.

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 changes 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.

In accordance with FASB ASC 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 six months ended June 30, 2024.

NOTE 9– LEASES

The Company accounts for its leases under Accounting Standard Codification (“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. Our current long-term leases include an option to extend the term of the lease prior to the end of the initial term. It is not reasonably certain that we will exercise the option and have not included the impact of the option in the lease term for purposes of determining total future lease payments. As our lease agreement does not explicitly state the discount rate implicit in the lease, we use our promissory note borrowing rate to calculate the present value of future payments.

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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 our 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.

We have operating leases for office facilities. We do not have any finance leases.

Lease expenses are included in General & administrative expenses on the accompanying Consolidated Statements of Operations. The components of lease expense were as follows (in thousands):

Schedule of components of lease expense
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	48	$	48	$	95	$	85
Short-term lease cost		4		9		9		18
Total lease costs	$	52	$	57	$	104	$	103

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


	June 30, 2024			December 31, 2023
Operating Lease right-of-use asset	$	378		$	468

Current portion of operating lease liabilities	$	165		$	170
Non-current portion of operating lease liabilities		223			307
Total operating lease liabilities	$	388		$	477

Cash paid for amounts included in the measurement of operating lease liabilities	$	94		$	177

Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-

Weighted-average remaining lease term for operating leases (years)		2.7

Weighted average discount rate for operating leases		6.4	%

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of June 30, 2024 (in thousands):


Year ending December 31,
2024 (six months remaining)	$	95
2025		193
2026		139
2027		45
Total future lease payments		472
Less: imputed interest		(84	)
Present value of future lease payments		388
Less: current portion of lease liabilities		(165	)
Long-term lease liabilities	$	223

NOTE 10– CONCENTRATIONS

For the three months ended June 30, 2024, one customer represented 22% of revenues and one customer represented 16% of revenues for the three months ended June 30, 2023. For the six months ended June 30, 2024, one customer represented 22% of revenues and one customer represented 15% of revenues for the six months ended June 30, 2023.

As of June 30, 2024, one customer made up 18% of accounts receivable.

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During the three and six months ended June 30, 2024, one vendor accounted for 99% of transportation cost, in our Precision Logistics segment.

NOTE 11 – SEGMENT REPORTING

As of June 30, 2024, we operated through two reportable business segments: (i) Precision Logistics and (ii) Authentication.

Precision Logistics:

This segment offers a value-added service provider for time and temperature sensitive parcel management. Through logistics management from a sophisticated IT platform with proprietary databases, package and flight-tracking software, weather, traffic, as well as dynamic dashboards with real-time visibility into shipment transit and last-mile events that are managed by a service center 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, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

Authentication:

This segment specializes in solutions that connect brands with consumers through their products. Consumers can authenticate products with their smart phone prior to usage, and brand owners have the ability to gather business intelligence while engaging directly with their consumers. Our Authentication segment also provides brand protection and supply chain functions such as counterfeit prevention.

We do not allocate the following items to the segments: general & administrative expenses, research and development and other income (expense).

The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated loss before income tax expense (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Precision Logistics	$	5,244		$	5,214		$	10,858		$	10,628
Authentication		108			121			253			368
Total Revenue	$	5,352		$	5,335		$	11,111		$	10,996

Gross Profit:
Precision Logistics	$	1,997		$	1,485		$	4,126		$	2,839
Authentication		93			101			224			268
Total Gross Profit		2,090			1,586			4,350			3,107

Segment Management and Technology - Precision Logistics		1,171			962			2,246			1,866
Segment Management and Technology - Authentication		346			289			614			490
Sales and marketing - Precision Logistics		114			290			337			552
Sales and marketing - Authentication		96			237			261			474
General and administrative		894			836			2,015			2,249
Research and development		5			10			60			18
LOSS BEFORE OTHER INCOME (EXPENSE)		(536	)		(1,038	)		(1,183	)		(2,542	)
OTHER INCOME (EXPENSE)		190			156			284			80
NET LOSS	$	(346	)	$	(882	)	$	(899	)	$	(2,462	)

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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,” “should,” “plan,” “could,” “target,” “potential,” “will,” “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, 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, 2023, 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”) together with its subsidiaries, including Trust Codes Global Limited (“Trust Codes Global”) and PeriShip Global, LLC (“PeriShip Global”), (together the “Company,” “we,” “us,” or “our”), is a traceability and customer support services provider using specialized software and process technology. The company operates a Precision Logistics Segment and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions. 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. Through our Authentication segment our technologies enable brand owners to gather business intelligence through the supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique dynamic codes which are read by consumers with their smart phones. Further information regarding our business segments is discussed below:

Precision Logistics: 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 extreme 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.

ProActive Service – clients pay us directly for carrier service coupled with our proactive logistics assistance.

Premium Service – clients pay us directly or through our carrier partner for our complete white-glove shipping monitoring and predictive analytics service. This service includes customer web portal access, weather monitoring, temperature control, full service center support and last mile resolution.

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

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.

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.

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.

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.

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.

Authentication: The Authentication segment specializes in traceability to connect brands with consumers through their product. This is critical in the current landscape of increased regulations, as well as increased counterfeit activity and product diversion. The ability to detect fraud or abnormal behavior while tracing an item’s journey from production through to the consumer’s hands provides consumers and brands the assurance they require. VerifyMe has custom software, patented technologies, and a cloud environment that combines machine learning and data science to meet the needs of consumers and brands. In addition, the personalized consumer experience with the brand creates a connection that increases brand perception and loyalty.

Products: We have a custom suite of products that offer clients traceability and brand solutions. These products are combined with “software as a service” or “SaaS” which is stored in the cloud and accessed through the internet.

VerifyMe Engage™ for brand enhancement allowing the brand owner to gather business intelligence and engage with customers

VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packaging and products

VerifyMe Track & Trace™ for unit level traceability and supply chain control

Opportunities

Precision Logistics: 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 gives 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 will work to address the issue and save the perishable product from spoiling, 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 size 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.

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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.

Authentication: We believe the products in our Authentication segment have applications in many areas. Currently, we are aggressively marketing opportunities in the following areas:

Agriculture, Food and Beverage – Food safety is becoming more common as supply chains become more global and as imaging and manufacturing technology become more accessible. Food traceability, sustainability and carbon neutral production is becoming a significant consideration for brand and governments. We believe our unit level traceability and authentication solutions can help brands tell their story about sustainability and battle against tainted or substandard foods and beverages.

Pharmaceuticals/nutraceuticals – We believe counterfeit prescription pharmaceuticals and nutraceuticals are a growing problem, widely recognized as a public health risk and a serious concern to public health officials, private companies, and consumers. Counterfeiting can apply to both branded and generic products and counterfeit pharmaceuticals may include products with the correct ingredients but fake packaging, with the wrong ingredients, without active ingredients or with insufficient active ingredients. The United States enacted legislation requiring the implementation of a comprehensive system designed to combat counterfeit, diluted or falsely labelled pharmaceuticals, referred to as serialization or electronic pedigree (e-Pedigree). Our consumer facing visible codes and unique pigments embedded in the ink of a unique serialized barcode can provide a layered security foundation for a customer solution in this market. We are seeking to expand our business in this market and believe that as additional pharmaceutical companies seek to comply with the legislation, our products will provide attractive alternatives to address the need for product identifiers.

Consumer Products – We believe our technology solutions are particularly suited for the cosmetics, health and beauty and apparel industries. We give the consumer the ability to test a product’s authenticity instantly with a smartphone. We can protect brand owners from liability litigation, product diversion and lost financial sales with our consumer facing visible codes and unique ink pigments which can be incorporated in dyes and used by manufacturers in these industries to combat counterfeiting and piracy of actual physical goods. Our pigments expressed as inks can also be used on packaging, as well as to track products that have been lost in transit, whether misplaced or stolen.

In addition, in each of these markets, our SaaS software allows brand owners and consumers to track the products and will alert the consumer or brand owner of product diversion with 24/7 monitoring. As each product has a unique code, this allows consumers and brand owners to authenticate the product in real time and link directly to the brand owner’s website for additional product information, discounts, and more.

Synergies: We believe that Precision Logistics and Authentication segments have synergistic product centric technology platforms and combined have a compelling technology offering for brand owners. For example, currently our Precision Logistics segment ships vaccines for major pharmaceutical companies. With the addition of our Authentication technology, we can add unit level traceability and authentication to protect clients’ vaccines from product diversion and sub-standard counterfeits. In addition, our Authentication segment brand enhancement solutions could give the Precision Logistics food and beverage clients the ability to gather rich business intelligence and build customer loyalty with engagement functions like videos, discounts, contests, recipes, etc.

Partnerships:

Precision Logistics has a direct partnership with a major global carrier company and has data feeds directly from the carrier into our proprietary logistics optimization software which provides shippers much more detailed information and predictive analytics on their shipment versus a standard shipping code look up which is provided by the carrier. In addition to relying on this strategic partner for shipping services we have a service agreement pursuant to which this strategic partner resells our services to its customers under a “white label” arrangement. Under this arrangement we provide our logistics services to our strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Our strategic partner has begun to provide its own service offerings to its customers and while we will continue to offer our premium services, we expect a reduction in business for this service offering over time. This does not affect our proactive services, and we expect to see growth under that service offering as we focus on providing proactive services to customers directly.

Our Authentication segment has a contract with HP Indigo, and a strategic partnership with INX, the third largest producer of inks in North America. We believe these partnerships can be used to enable brand owners to securely prevent counterfeiting, prevent product diversion and authenticate labels, packaging and products alleviating liability from counterfeit products that harm consumers.

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Current Economic Environment

In response to market conditions and lower demand some carriers have implemented strategies to address a potential global recession. In April 2023, the major carrier that PeriShip Global partners with laid out steps it was taking to slash $4 billion in permanent costs by the end of its 2025 fiscal year in response to these market conditions and lower demand. In June 2023, the major carrier stated that due to ongoing demand, it plans to ground 29 more aircraft in its fiscal year that started in June 2024. In mid-December 2023, the carrier forecasted a low single digit percentage decline in revenue year over year for 2024.

We have seen a softening in demand for some services related to high-end perishable items and cannabis products which seem to be impacted by reduced discretionary spending by U.S. consumers. While a recession, whether global or more localized to the U.S., may decrease the demand for our services that are more discretionary in nature, we believe that the internal cost cutting measures, if implemented by the major global carrier may benefit out-sourced service providers. We are working with this major global carrier to address their small and medium-sized business clients, which we believe is an underserved market and presents considerable growth opportunities for our Precision Logistics segment. However, we can provide no assurances that a decline in discretionary consumer spending will not have a negative impact on our revenues and results of operations.

Seasonality

We 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. The seasonality of our business may cause fluctuations in our quarterly operating results.

Results of Operations

Comparison of the three months ended June 30, 2024, and 2023

The following discussion analyzes our results of operations for the three months ended June 30, 2024 and 2023.

Revenue	Three Months Ended June 30,
	2024		2023

Precision Logistics	$	5,244	$	5,214
Authentication		108		121
Total Revenue	$	5,352	$	5,335

Consolidated revenue increased $17 thousand during the second quarter of 2024 compared to the second quarter of 2023 primarily due to an increase in organic growth in our premium services in the Precision Logistics segment offsetting a decline in our proactive services due to decline in volumes for customers. Revenue in our Authentication segment decreased due to the timing of shipments delayed until the third quarter of 2024.

Gross Profit	Three Months Ended June 30,
	2024					2023
			% of Revenue					% of Revenue
Precision Logistics	$	1,997		38	%	$	1,485		28	%
Authentication		93		86	%		101		83	%
Total Gross Profit	$	2,090		39	%	$	1,586		30	%

Gross profit for the three months ended June 30, 2024, was $2,090 thousand, compared to $1,586 thousand for the three months ended June 30, 2023. The resulting gross margin was 39% for the three months ended June 30, 2024, compared to 30% for the three months ended June 30, 2023. The gross profit increase relates to the increased premium services revenue which has higher margins as well as process improvements to increase proactive services margins in the Precision Logistics segment.

Segment Management and Technology

Segment management and technology expenses increased by $266 thousand to $1,517 thousand for the three months ended June 30, 2024, compared to $1,251 thousand for the three months ended June 30, 2023. The increase relates primarily to severance expense of $129 thousand which is expected to be paid by the end of 2024 and lower capitalized labor costs. Amortization and depreciation expense of $300 thousand for the three months ended June 30, 2024 compared to $258 thousand for the three months ended June 30, 2023.

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General and Administrative Expenses

General and administrative expenses increased by $58 thousand to $894 thousand for the three months ended June 30, 2024, compared to $836 for the three months ended June 30, 2023. The increase relates primarily to an increase in stock compensation.

Research and Development

Research and development expenses were $5 thousand and $10 thousand for the three months ended June 30, 2024, and 2023, respectively.

Sales and Marketing

Sales and marketing expenses decreased by $317 thousand to $210 thousand for the three months ended June 30, 2024, compared to $527 thousand for the three months ended June 30, 2023. The decrease is primarily related to a reduction in employees and consultants in the Authentication segment, a reduction in stock compensation in Precision Logistics, partially offset by an increase in employees in Precision Logistics.

Interest Expense, net

Interest expense, net was $42 thousand for the three months ended June 30, 2024, compared to $46 thousand for the three months ended June 30, 2023.

Net Loss

Consolidated net loss for the three months ended June 30, 2024, and 2023 was $346 thousand and $882 thousand, respectively. The decreased loss was primarily related to an increase in gross profit. The resulting consolidated loss per share for the three months ended June 30, 2024, and three months ended June 30, 2023, was $0.03 and $0.09 per diluted share, respectively.

Comparison of the six months ended June 30, 2024, and 2023

The following discussion analyzes our results of operations for the six months ended June 30, 2024, and 2023.

Revenue	Six Months Ended June 30,
	2024		2023

Precision Logistics	$	10,858	$	10,628
Authentication		253		368
Total Revenue	$	11,111	$	10,996

Consolidated revenue increased $115 thousand for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase is primarily due to the increase in premium revenue in Precision Logistics, partially offset by a decline in our proactive services related to a discontinued relationship with some lower margin customers and a decrease in our Authentication segment.

Gross Profit	Six Months Ended June 30,
	2024					2023
			% of Revenue					% of Revenue
Precision Logistics		4,126		38	%		2,839		27	%
Authentication		224		89	%		268		73	%
Total Gross Profit	$	4,350		39	%	$	3,107		28	%

Gross profit for the six months ended June 30, 2024, was $4,350 thousand, compared to $3,107 thousand for the six months ended June 30, 2023. The resulting gross margin was 39% for the six months ended June 30, 2024, compared to 28% for the six months ended June 30, 2023. The gross profit increase relates to the increased premium services revenue which has higher margins as well as process improvements to increase proactive services margins in the Precision Logistics segment.

Segment Management and Technology

Segment management and technology expenses increased by $504 thousand to $2,860 thousand for the six months ended June 30, 2024, compared to $2,356 thousand for the six months ended June 30, 2023. The increase relates primarily to the acquisition of Trust Codes Global in March 2023, lower capitalized labor costs and severance expense of $129 thousand. Amortization and depreciation expense of $599 thousand for the six months ended June 30, 2024 compared to $540 thousand for the six months ended June 2023.

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General and Administrative Expenses

General and administrative expenses decreased by $234 thousand to $2,015 thousand for the six months ended June 30, 2024, compared to $2,249 thousand for the six months ended June 30, 2023. The decrease relates primarily to the deal costs related to the acquisition of the Trust Codes Global business of $278 thousand, as well as severance expense in 2023, partially offset by an increase in stock-based compensation for the six months ended June 30, 2024.

Research and Development

Research and development expenses were $60 thousand and $18 thousand for the six months ended June 30, 2024, and 2023, respectively.

Sales and Marketing

Sales and marketing expenses decreased by $428 thousand to $598 thousand for the six months ended June 30, 2024, compared to $1,026 thousand for the six months ended June 30, 2023. The decrease is primarily related to a reduction in employees and consultants in the Authentication segment, a reduction in stock compensation in Precision Logistics, partially offset by an increase in employees in Precision Logistics.

Interest Expense

Interest expense was $80 thousand for the six months ended June 30, 2024, compared to interest expense of $88 thousand for the six months ended June 30, 2023.

Net Loss

Consolidated net loss for the six months ended June 30, 2024, and 2023 was $899 thousand and $2,462 thousand, respectively. The decreased loss was primarily related to an improvement in gross profit and a gain relating to the change in the fair value of the contingent consideration related to the acquisition of Trust Codes Global. The resulting consolidated loss per share for the six months ended June 30, 2024, and six months ended June 30, 2023, was $0.09 and $0.26 per diluted share, respectively.

Liquidity and Capital Resources

Cash provided by operating activities was $312 thousand during the six months ended June 30, 2024, compared to cash used by operating activities of $463 thousand during the comparable period in 2023. The increase in cash is primarily due to the decreased net loss and non-cash add backs to net loss.

Cash used in investing activities was $191 thousand during the six months ended June 30, 2024, compared to $858 thousand during the six months ended June 30, 2023. The decrease in spending in investing activities related to a decrease in capitalized software costs and a decrease in acquisition costs. The acquisition of the Trust Codes Global business was in March 2023.

Cash used in financing activities during the six months ended June 30, 2024, was $313 thousand compared to cash provided by financing activities during the six months ended June 30, 2023 of $608 thousand. The decrease relates mainly to the proceeds from the line of credit of $800 thousand that occurred in the six months ended June 30, 2023.

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 relating parties including certain members of management and the Board of Directors. 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. As of June 30, 2024 the amount outstanding on the convertible debt was $1,100 thousand and included in Convertible Note, and Convertible Note – related party on the accompanying Consolidated Balance Sheets. The Company has accrued interest expense of $31 thousand as of June 30, 2024.

On September 22, 2022, PeriShip Global became a party to the PNC Facility with PNC Bank, National Association. The PNC Facility includes a $1 million RLOC with a term of one-year, which was extended to December 14, 2023. We also entered into an amended and restated loan agreement with PNC effective October 31, 2023, which provided amendments to a number of affirmative and restrictive covenants applicable to PeriShip Global and extended the RLOC to September 30, 2024. 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. As of June 30, 2024, we had no borrowings under the RLOC.

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The PNC Facility also 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 RLOC and Term Note are guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe.

Of the proceeds of $2.0 million from the Term note, we used $1.8 million to settle debt outstanding issued in connection with the PeriShip Global acquisition, including the redemption of 61,000 shares of our common stock. As of June 30, 2024, our short-term debt outstanding under the Term note was $0.5 million and total long-term debt outstanding under the Term note was $0.6 million.

Effective October 17, 2022, we entered into an interest rate swap agreement, with a notional amount of $1,958 thousand, effectively fixing the interest rate on our outstanding debt at 7.602%.

We believe that our cash and cash equivalents will fund our operations for the next 12 months. We may issue additional debt or equity as we grow our business which we expect to grow organically, and if the opportunity arises, through key acquisitions that will help accelerate the growth of our business.

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. We have identified below the 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 critical 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.

Revenue Recognition

Our revenue transactions include logistics management for time and temperature sensitive packages, sales of our ink canisters, software, licensing, pre-printed labels, integrated solutions, and leasing of our equipment. We recognize revenue based on the principals established in ASC Topic 606, “Revenue from Contracts with Customers.” Revenue recognition is made when our performance obligation is satisfied. Our terms vary based on the solutions we offer and are examined on a case-by-case basis. For licensing our VerifyInk^TM technology we depend on the integrity of our clients’ reporting.

Goodwill

We have recorded goodwill as part of our acquisitions, which represents the excess of purchase price over the fair value of net assets acquired in the business combinations. Pursuant to ASC 350, the Company will test 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.

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Stock-based Compensation

For restricted stock units with stock price appreciation targets, we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’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.

We account for stock-based compensation awards to non-employees in accordance with ASU No. 2018-07, which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, “Equity – Equity-Based Payments to Non-Employees”.

Recently Adopted Accounting Pronouncements

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 June 30, 2024, 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 June 30, 2024, 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 June 30, 2024 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, 2023, 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, 2023, and subsequent Quarterly Reports on Form 10-Q, except as noted herein.

Our Precision Logistics segment relies on one key strategic partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues.

Our business is dependent, and we believe that it will continue to depend on our relationship with one strategic partner. PeriShip Global partners with one major global carrier for all its customers’ shipping needs. While we work closely with this key strategic partner and have transportation services and pricing agreements in place covering the shipping services they provide to our customers, such agreements are subject to termination or modification from time to time. If our strategic partner is unwilling or unable to supply to us the shipping services we market and sell on acceptable terms, or at all, or otherwise elects to terminate its business relationship with us, we may not be able to obtain alternative shipping services from other providers on acceptable terms, in a timely manner, or at all, and our business may be materially and adversely impacted. We do not currently have any alternative shipping service suppliers from which we can obtain the shipping services we currently receive from our strategic partner. Establishing the necessary information technology infrastructure and business relationship with another shipping services provider would be costly and time consuming and may ultimately not be successful or cost-effective. Further, any increase in the prices charged by our single strategic partner or failure to perform by our strategic partner could cause our costs to increase or could cause us to experience short-term unavailability of shipping services on which our business relies.

In particular, delays and other shipping disruptions at our strategic partner significantly negatively impact our business. Our business involves the shipment of time and temperature sensitive goods, so our customers are significantly negatively impacted by delays and other shipping disruptions that cause product loss, spoilage and reputational harm. An increase in delays and other shipping disruptions on the part of our strategic partner could cause our clients to seek shipping solutions from our competitors who use alternative shipping service providers. If these events occur, it may reduce our profitability or may cause us to increase our prices. In addition, any material interruptions in shipping services by this strategic partner may result in significant cost increases and reduce sales, which could harm our business, financial condition and results of operations and may have a material adverse impact on our business.

In addition to relying on this strategic partner for shipping services, a material portion of our revenue has been generated through a service agreement pursuant to which this strategic partner resells our services to its customers under a “white label” arrangement. Under this arrangement we provide our logistics services to our strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Sales through our strategic partner accounted for approximately 17% of revenue of our Precision Logistics segment for the year ended December 31, 2023, and 18% for the six months ended June 30, 2024. Our strategic partner has begun to provide its own service offerings to its customers, and we expect revenue from our Premium Services in our Precision Logistics segment will begin to decrease as we experience a reduction in business for these services. If we fail to offset a reduction in business for our Premium Services in our Precision Logistics segment through our ProActive Services or other service offerings, our business, financial condition and results of operations could be materially adversely affected.

We depend on key personnel for our continued operations and future success and a loss of certain key personnel could significantly hinder our ability to effectively execute our business strategy.

Our future success depends on our ability to attract, retain and motivate qualified personnel, including our senior management team. The loss of the services of one or more of our key employees, or our inability to attract, retain and motivate qualified personnel could have a material adverse effect on our business, financial condition and operating results.

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

On June 30, 2024 the Company issued 30,000 shares of common stock for services rendered to the Company pursuant to a Consulting Agreement between the Company and Pentant LLC, effective November 15, 2023, as amended June 30, 2024 (the “Consulting Agreement”). The securities issued pursuant to the Consulting Agreement were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.

Share Repurchase Plan

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Units)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs⁽¹(In thousands)
04/01/2024-04/30/2024	-	-	-	-

05/01/2024-05/31/2024	-	-	-	-

06/01/2024-06/30/2024	-	-	-	-
Total	-	-	-	$499

(1) Purchases made pursuant to the Company’s share repurchase program announced on December 8, 2024, pursuant to which the Company is authorized to purchase up to $0.5 million worth of shares of its common stock so long as the price per share does not exceed $1.00. Under the repurchase program, shares of the Company’s common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of shares repurchased depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be suspended or discontinued at any time until it expires on December 14, 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

During the three months ended June 30, 2024, 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.

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ITEM 6. EXHIBITS

Exhibit No.		Description
10.1#		Third Amendment to the VerifyMe, Inc. 2020 Equity Incentive Plan (incorporated herein by reference from Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 25, 2024).
10.2*		Consulting Agreement with Pentant LLC effective as of November 15, 2023
10.3*		First Amendment to Consulting Agreement with Pentant LLC effective June 30, 2024
31.1*		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document. 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

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SIGNATURES

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: August 13, 2024	By: /s/ Adam Stedham

	Adam Stedham
	Chief Executive Officer and President (Principal Executive Officer)

Date: August 13, 2024	By: /s/ Nancy Meyers
	Nancy Meyers Executive Vice President and
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Exhibit 10.2

CONSULTING AGREEMENT

This Consulting Agreement (the "Agreement") is effective as of November 15, 2023 (the "Effective Date") by and among VerifyMe, Inc., a Nevada corporation with its principal office at 801 International Parkway, Fifth Floor, Lake Mary, Florida 32746 (the "Company") and Pentant LLC, a Connecticut limited liability corporation with its principal office at 680 E Main Street, Suite 626, Stamford, Connecticut 06901 ("Consultant").

WHEREAS, the Company desires to engage Consultant to provide certain services; and

WHEREAS, Consultant will be provided with and maintain access to trade secrets, proprietary information and other confidential information regarding the Company, which the Company desires to protect.

NOW, THEREFORE, in consideration of the promises and the consideration stated in this Agreement, the parties hereby agree as follows.

1. Term of Agreement., Termination.

(a) Effective on the Effective Date, the Company hereby engages Consultant, and Consultant hereby agrees to provide the Services (defined below) to the Company pursuant to this Agreement. This Agreement shall continue for a period commencing on the Effective Date and continuing until December 31, 2024 (the "Initial Term"). If neither the Company nor Consultant provides a written note of non-renewal to the other party at least ninety (90) days prior to the end of the Initial Term, then this Agreement shall automatically renew on a quarterly, three (3) month basis until terminated as set forth below. The entire period of Consultant's engagement with the Company, including the Initial Term, is referred to herein as the "Consulting Term."

(b) If not otherwise terminated pursuant to the clause above, following the Initial Term either party may terminate this Agreement upon ninety (90) days' written notice for any reason.

(c) Should either party default in the performance of this Agreement or materially breach any of its obligations under this Agreement, the non-breaching party may terminate this Agreement immediately if the breaching party fails to cure the breach within seven (7) business days after having received written notice by the non-breaching party of the breach or default.

(d) This Agreement shall terminate automatically in the event that Nick Spencer, the Managing Partner of Consultant dies, becomes incapacitated, or is otherwise unable to perform the Services.

(e) This Agreement shall terminate upon the Company's written notice to Consultant in the event (i) Consultant or any of its designees, including but not limited to Nick Spencer, are convicted of, or plead guilty or nolo contendere to, a felony, or (ii) in carrying out their duties hereunder, acted with gross negligence, bad faith, or intentional misconduct resulting, in any case, in material harm to the Company (collectively, "For Cause").

(f) In the event of termination for any reason other than For Cause, Consultant shall be paid for any portion of the Services that have been performed prior to the termination.

2. Consulting Services.

(a) Consultant shall perform the services described on Schedule A (the "Services").

(b) Consultant represents that Consultant has the qualifications, experience and ability to properly perform the Services. Consultant shall perform the Services in a professional manner in accordance with customary industry standards for similar services.

(c) Consultant shall be, and for all purposes shall be deemed to be, an independent contractor with respect to the Company. Nothing in this Agreement shall be construed as creating a joint venture, partnership, agency, employment relationship or other enterprise among the parties. The Company shall not be responsible for withholding or paying any income, payroll, Social Security or other federal, state or local taxes, making any insurance contributions, including unemployment or disability, or obtaining worker's compensation insurance on Consultant's behalf. Consultant shall be solely responsible for all taxes, estimated or otherwise, federal, state, and local, due with respect to Consultant's performance of services (or the payment of fees or other amounts) hereunder, and shall pay such taxes when due.

(d) As an independent contractor, Consultant agrees and understands that, apart from the Shares (defined below), Consultant is not entitled to any other compensation, benefits or privileges established for Company employees, such as life, accident or health insurance, vacation and sick leave with pay, paid holidays, bonus plan participation, or severance pay upon termination of this Agreement for any reason.

(e) Consultant acknowledges and agrees that Consultant has no authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company.

(f) All of the Services to be performed by Consultant will be as agreed between Consultant and the Company's Chief Executive Officer or other member of the Company's management team as designated in writing to Consultant (email shall suffice) ("Company Contact"). Consultant will be required to report to the Company Contact concerning the Services performed under this Agreement. The nature and frequency of these reports will be as mutually agreed.

3. Fees for Services. As consideration for the Services to be provided by Consultant and other obligations of Consultant hereunder, the Company shall grant the shares of Company common stock, par value $0.001 per share (the "Common Stock"). as described on Schedule B (the "Shares"). Shares will be registered on the books of the Company in Consultant's name as of the applicable payment date and the Company shall issue stock certificates or evidence Consultant's interest in the Shares by using a restricted book entry account as soon as practical thereafter.

4. Expenses. Consultant shall not be authorized to incur on behalf of the Company any expenses and will be responsible for all expenses incurred while performing the Services unless otherwise agreed to by the Company's Chief Executive Officer, which consent shall be evidenced in writing (email shall suffice). As a condition to receipt of reimbursement, Consultant shall be required to submit to the Company reasonable evidence that the amount involved was both reasonable and necessary to the Services provided under this Agreement.

5. Transfer Restrictions. Consultant acknowledges and agrees that the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be transferred or sold unless subsequently registered thereunder or unless such sale or transfer is pursuant to an exemption from such registration. Consultant acknowledges and agrees that, until such time as the Shares have been registered under the Securities Act and sold in accordance with an effective registration statement, certificates and other instruments representing any of the Shares shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Shares):

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

6. Confidentiality. During the Consulting Term, Consultant may develop or acquire knowledge in connection with Consultant's work or from the Board of Directors of the Company and officers, employees, agents or consultants of the Company, of Confidential Information (as hereinafter defined) relating to the Company, its business and/or its potential business.

"Confidential Information" includes all trade secrets, know-how, theories, technical, operating, financial, and other business information, whether or not reduced to writing or other medium and whether or not marked or labeled confidential, proprietary or the like, specifically including, but not limited to, information regarding customer lists, pricing, customer contracts, trade practices, source codes, software programs, computer systems, algorithms, formulae, apparatus, concepts, creations, costs, plans, materials, enhancements, research, specifications, works of authorship, techniques, documentation, models and systems, sales techniques, designs, inventions, discoveries, products, improvements, modifications, methodology, processes, concepts, records, files, memoranda, reports, plans, proposals, price lists, client, customer, supplier, collaborator/partner or distributor information, product development and project procedures. Confidential Information does not include general skills, experience or information that is: (i) known to Consultant prior to the time of disclosure to the Consultant by the Company; (ii) generally available to the public or generally known in the Company's industry, other than information that has become generally available as a result of Consultant's direct or indirect act or omission in violation of this Agreement; (iii) becomes known to the Consultant through disclosure by sources other than the Company which sources have the legal right to disclose such information; or (iv) is independently developed by the Consultant without reference to or reliance upon the Confidential Information. With respect to Confidential Information of the Company:

(a) Consultant will use Confidential Information only in the performance of Consultant's services to the Company. Consultant will not use Confidential Information at any time (during or up to three years after the Consulting Term) for Consultant's own benefit, for the benefit of any other individual or entity, or in any manner adverse to the interests of the Company.

(b) Consultant will not disclose Confidential Information during or up to three years after the Consulting Term) except (i) in the course of Consultant's engagement by, and for the benefit of, the Company, (ii) to enforce any rights or defend any claims hereunder or under any other agreement to which Consultant is a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed to the extent necessary in the formal proceedings related thereto, or (iii) when required to do so by a court of law, by any governmental agency or by any administrative or legislative body (including a committee thereof), provided that Consultant shall, unless legally prohibited from doing so, give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempt by the Company to obtain a protective order or similar treatment;

(c) Consultant is hereby notified that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. If an individual files a lawsuit for retaliation for reporting a suspected violation of law, then the individual may disclose the trade secret to Consultant's attorney and use the trade secret information in the court proceeding, if the individual: (x) files any document containing the trade secret under seal, and (y) does not disclose the trade secret, except pursuant to court order.

(d) Consultant will safeguard the Confidential Information by all reasonable steps; and

(e) Consultant will return all materials, substances, models, software, prototypes and the like containing and/or relating to Confidential Information, together with all other property of the Company to the Company upon expiration or termination of the Agreement, conclusion of the Consulting Term, or otherwise on demand. Consultant shall not retain any copies or reproductions of correspondence, memoranda, reports, notebooks, drawings, photographs, databases, diskettes, or other documents or electronically stored information of any kind containing and/or relating to Confidential Information.

7. No Conflict of Interest. Consultant represents and warrants to the Company that Consultant is legally able to enter into this consulting arrangement with the Company and that this Agreement will not and does not conflict with any agreement, arrangement or understanding, written or oral, to which Consultant is a party or by which Consultant is bound. Although Consultant is free to offer services similar to the Services to other customers and clients, Consultant agrees that during the term of this Agreement, Consultant shall not provide such services or engage in any other activity that could create a real or apparent conflict of interest with the Company. Such a conflict of interest may include, but not be limited to, directly or indirectly providing services to a competitor, customer or client of the Company or directly or indirectly soliciting or accepting work from a competitor, customer or client of the Company.

8. Non-Disparagement. During the Consulting Term and for a period of three years thereafter: other than in reports to the Company or as required by law, Consultant shall not make any negative, disparaging, detrimental or derogatory remarks or statements (written, oral, telephonic, electronic, or by any other method) about the Company or any of its directors or officers, including, without limitation, any remarks or statements that would adversely affect in any material manner (i) the conduct of the Company's business, or (ii) the business reputation or relationships of the Company and/or any of its past or present officers, directors, agents, or employees. During the Consulting Term and for a period of three years thereafter, Company and its officers, directors, agents and employees, other than as required by law, shall not make any negative, disparaging, detrimental or derogatory remarks or statements (written, oral, telephonic, electronic, or by any other method) about the Consultant in connection with his work for or relationship with the Company.

9. Assignment of Developments. Consultant represents that Consultant will disclose promptly and fully to the Company and to no one else: (a) all inventions, ideas, improvements, discoveries, works modifications, processes, software programs, works of authorship, documentation, formulae, techniques, designs, methods, trade secrets, technical specifications and technical data, know-how and show-how, concepts, expressions or other developments whatsoever or any interest therein (whether or not patentable or registrable under copyright, trademark or similar statutes or subject to analogous protection) made, authored, devised, developed, discovered, reduced to practice, conceived or otherwise obtained by Consultant ("Developments"), solely or jointly with others, during the course of the Consulting Term that (i) are related to any of the products or services being researched, developed, distributed, produced or sold by the Company or which may be used in relation therewith, or (ii) result from tasks assigned to Consultant by the Company; and (b) any Development made using the time, materials or facilities of the Company, even if such Development does not relate to any of the products or services being researched, developed, distributed, produced or sold by the Company and may not be used in relation therewith. Consultant agrees that all such Developments listed above, and the benefits thereof have been, are and shall immediately continue to become the sole and absolute property of the Company from conception, as "works made for hire" (as that term is used under the U.S. Copyright Act of 1976, as amended) or otherwise. Consultant has no interest in any Developments. To the extent that title to any Developments or any materials comprising or including any Developments does not, by operation of law, vest in the Company, Consultant hereby irrevocably assigns to the Company all of Consultant's right, title and interest, including, without limitation, tangible and intangible rights such as patent rights, trademarks and copyrights, that Consultant has, may have or may acquire in and to all such Developments, benefits and/or rights resulting therefrom, and agrees promptly to execute any further specific assignments related to such Developments, benefits and/or rights at the request of the Company. Consultant also hereby assigns to the Company, or waives if not assignable, all of Consultant's "moral rights" in and to all such Developments and agrees promptly to execute any further specific assignments or waivers related to moral rights at the request of the Company. Consultant agrees to assist the Company without charge for as long thereafter as may be necessary: (1) to apply, obtain, register and renew for, and vest in, the Company's benefit alone (unless the Company otherwise directs), patents, trademarks, copyrights, mask works, and other protection for such Developments in all countries, and (2) in any controversy or legal proceeding relating to Developments. In the event that the Company is unable to secure Consultant's signature after reasonable effort in connection with any patent, trademark, copyright, mask work or other similar protection relating to a Development, Consultant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Consultant's agent and attorney-in-fact, to act for and on Consultant's behalf and stead to execute and file any such application and to do all other lawfully permitted acts to further the prosecution and issuance of patents, trademarks, copyrights, mask works or other similar protection thereon with the same legal force and effect as if executed by Consultant.

10. Voting Agreement. Consultant agrees that during the period commencing as of the Effective Date and continuing until this Agreement is terminated pursuant to its terms, to vote, or cause to be voted, all shares of Common Stock, including any Shares, owned by Consultant, or over which Consultant has voting control, from time to time and at all times, in whatever manner as shall be recommended by the Board of Directors of the Company.

11. Adherence to Insider Trading Policy. Consultant acknowledges that the Company is publicly held and, as a result, has implemented an insider trading policy designed to preclude its directors, officers, employees and certain others from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company or any third party. Consultant represents and acknowledges that it has received a copy of the Company's insider trading policy and that it has read and understands such policy. Consultant agrees that it will comply in all respects with the Company's insider trading policy.

12. General Provisions.

(a) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties concerning the subject matter herein and supersedes any prior employment, consulting agreement or offer letter between Consultant and the Company. No representation, promise, inducement or statement of intention has been made by or on behalf of any party hereto, or any related party, that is not set forth in this Agreement or the documents referred to herein. This Agreement may be amended only by a written instrument specifically stating that it amends this Agreement executed by the parties hereto. Consultant hereby acknowledges and represents that Consultant has had the opportunity to consult with independent legal counsel or other advisor of Consultant's choice and has done so regarding Consultant's rights and obligations under this Agreement, that Consultant is entering into this Agreement knowingly, voluntarily, and of Consultant's own free will, that Consultant is relying on Consultant's own judgment in doing so, and that Consultant fully understands the terms and conditions contained herein.

(b) Successors and Assigns. The terms and provisions of this Agreement shall be binding on and inure to the benefit of the Company. The terms and provisions of this Agreement shall be binding on and inure to the benefit of Consultant. Neither Party's obligations hereunder shall be assignable (and any attempted assignment by a Party shall be null and void).

(c) Injunctive Relief and Survival. The Company may resort to a court of equity to enforce Sections 6, 7, 8 or 9 of this Agreement by temporary and/or permanent injunctive relief and/or restraining order or such other legal and equitable remedies as may be appropriate, in addition to any other remedy at law and shall not be required to post a bond in any such action or proceeding. This Section, along with Sections 6, 7, 8 and 9 shall survive the termination of this Agreement.

(d) Costs of Enforcement. In the event either party hereto brings an action or proceeding to enforce any provision or provisions of this Agreement or to obtain damages as a result of a breach of this Agreement or to enjoin any breach of this Agreement, the prevailing party in such action or proceeding shall be entitled to recover any and all reasonable costs and expenses (including without limitation attorneys' fees) incurred by such prevailing party in connection with such action or proceeding.

(e) Limitation of Liability. The liability of Consultant shall be limited to the cash value of the Common Stock received by it from the Company as compensation for services rendered pursuant to this Agreement during the 12-month period immediately preceding the events giving rise to such liability; provided, however, that this limitation of liability shall not apply to breaches by Consultant of Sections 10 or 11 of this Agreement. In no event shall either Party be liable for special, indirect, incidental or consequential damages to the full extent such may be disclaimed by law even if such Party has been advised of the possibility of such damages.

(f) Waiver. The failure of any party at any time or from time to time to require performance of any other party's obligations under this Agreement shall in no manner affect such party's right to enforce any provision of this Agreement at a subsequent time, and the waiver by any party of any right arising out of any breach shall not be construed as a waiver of any right arising out of any other or subsequent breach.

(g) Severability. If any provision of this Agreement shall be held invalid or unenforceable by competent authority, such provision shall be construed so as to be limited or reduced to be enforceable to the maximum extent compatible with the law as it shall then appear. The total invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

(h) Notices. Any notice or other communication required or permitted under this Agreement shall be in writing (including via e-mail) and shall be deemed to have been duly given: (i) upon hand delivery; (ii) on the first (1^st) day following delivery to a nationally recognized United States overnight courier service, fee prepaid; or (iii) upon the transmission of an e-mail to an e-mail address for the other party, which has been previously used to communicate among the parties. Any such notice or communication shall be directed to a party at its address set forth above or at such other address as may be designated by the party in a notice given to all other parties hereto in accordance with the provisions of this Section.

(i) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law. Such claim or action shall be brought and heard in the state and federal courts in New York County, New York, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of any such courts.

(j) Counterparts. This Agreement may be executed simultaneously in one or more counterparts (including by facsimile or .pdf copy), each one of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(k) Headings. The Section headings contained in this Agreement are for convenient reference only and shall not in any way affect the meaning or interpretation of this Agreement.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

	VerifyMe, Inc.

	By:	/s/ Adam Stedham
	Name:	Adam Stedham
	Title:	Chief Executive Officer and President

	Pentant LLC

	By:	/s/ Nick Spencer
	Name:	Nick Spencer
	Title:	Managing Partner

SCHEDULE A - DESCRIPTION OF CONSULTING SERVICES

Assist with strategic planning and advice; data analysis; business optimization; dashboard development; and investor relations.

SCHEDULE B - FEES

For Services rendered from the Effective Date through December 31, 2023, the Company shall grant Consultant 100,000 shares of Common Stock on December 31, 2023.

Commencing with the first quarter ending March 31, 2024, and for each quarter thereafter ending March 31, June 30, September 30, and December 31 during the term of this Agreement, the Company shall grant Consultant 30,000 shares of Common Stock on the last date of such quarterly period.

Exhibit 10.3

FIRST AMENDMENT TO

CONSULTING AGREEMENT

THIS FIRST AMENDMENT TO CONSULTING AGREEMENT (this “Amendment”) is entered into as of June 30, 2024, by and between VerifyMe, Inc., a Nevada corporation with its principal office at 801 International Parkway, Fifth Floor, Lake Mary, Florida 32746 (the “Company”) and Pentant LLC, a Connecticut limited liability corporation with its principal office at 680 E Main Street, Suite 626, Stamford, Connecticut 06901 (“Consultant”).

WHEREAS, the Company and Consultant entered into that certain Consulting Agreement effective as of November 15, 2023 (the “Agreement”) pursuant to which Consultant provides the Services to the Company set forth therein; and

WHEREAS, the Company and Consultant mutually desire to amend the Agreement in accordance with the terms set forth herein.

NOW, THEREFORE, in consideration of the mutual promises of the parties hereto and of the mutual benefits to be gained by the performance thereof, and for other good and valuable consideration, the respective receipt of which is hereby acknowledged by each of the parties hereto, the parties hereto agree as follows:

1. That Section 1(a) of the Agreement is hereby deleted and restated in its entirety as follows:

(a) Effective on the Effective Date, the Company hereby engages Consultant, and Consultant hereby agrees to provide the Services (defined below) to the Company pursuant to this Agreement. This Agreement shall continue for a period commencing on the Effective Date and continuing until June 30, 2025 (the “Initial Term”). If neither the Company nor Consultant provides a written note of non-renewal to the other party at least ninety (90) days prior to the end of the Initial Term, then this Agreement shall automatically renew on a quarterly, three (3) month basis until terminated as set forth below (each a “Renewal Term”). The entire period of Consultant’s engagement with the Company, including the Initial Term and each Renewal Term, is referred to herein as the “Consulting Term.”

2. Schedule B of the Agreement is hereby deleted in its entirety and replaced with Attachment 1 of this Amendment.

3. The parties agree that this Amendment and the Agreement shall be construed as a single document. In the event of a conflict between this Amendment and the Agreement, this Amendment shall control. In all other respects, the Agreement shall remain in full force and effect.

4. The parties agree that this Amendment may be executed by facsimile or electronic transmission and that the same shall constitute an original. The parties further agree that this Amendment may be executed in counterparts, each of which shall be deemed an original.

5. Except as set forth in this Amendment, the parties hereby ratify, confirm and approve all of the provisions of the Agreement and agree to be bound by the terms thereof as fully set forth therein.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

	VerifyMe, Inc.

	By:	/s/ Adam Stedham
	Name:	Adam Stedham
	Title:	Chief Executive Officer and President

	Pentant LLC

	By:	/s/ Nick Spencer
	Name:	Nick Spencer
	Title:	Managing Partner

ATTACHMENT 1

SCHEDULE B – FEES

For Services rendered from the Effective Date through December 31, 2023, the Company granted Consultant 100,000 shares of Common Stock on December 31, 2023.

For Services rendered from January 1, 2024 through June 30, 2024, the Company granted Consultant an aggregate of 60,000 shares of Common Stock: 30,000 shares of Common Stock were granted on March 31, 2024, and 30,000 shares of Common Stock were granted on June 30, 2024.

Commencing with the quarter ending September 30, 2024, and for each quarter thereafter ending March 31, June 30, September 30, and December 31 during the Initial Term of this Agreement, the Company shall grant Consultant 60,000 shares of Common Stock on the last date of such quarterly period.

During each Renewal Term, if any, the Company shall grant Consultant 30,000 shares of Common Stock on the last date of such Renewal Term.

If at any time prior to June 30, 2026, regardless of whether the Agreement has been terminated, the price of the Common Stock trades above $2.21 for twenty (20) consecutive trading days, the Company shall grant Consultant 60,000 shares of Common Stock as soon as reasonably practicable after the 20^th consecutive trading day.

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Adam Stedham, certify that:

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

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;

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;

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:

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;

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;

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

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

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):

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

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: August 13, 2024

/s/ Adam Stedham

Adam Stedham

Chief Executive Officer and President

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Nancy Meyers, certify that:

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

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: August 13, 2024

/s/ Nancy Meyers

Nancy Meyers

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

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 June 30, 2024, 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:

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

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

Chief Executive Officer and President

(Principal Executive Officer)

Date: August 13, 2024

In connection with the quarterly report of VerifyMe, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof, I, Nancy Meyers, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

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

/s/ Nancy Meyers

Nancy Meyers

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Date: August 13, 2024

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.

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2024	Aug. 06, 2024
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-39332
Entity Registrant Name	VERIFYME, INC.
Entity Central Index Key	0001104038
Entity Tax Identification Number	23-3023677
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	801 International Parkway
Entity Address, Address Line Two	Fifth Floor
Entity Address, City or Town	Lake Mary
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32746
City Area Code	(585)
Local Phone Number	736-9400
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,384,698
Common Stock, par value $0.001 per share
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	VRME
Security Exchange Name	NASDAQ
Warrants to Purchase Common Stock
Title of 12(b) Security	Warrants to Purchase Common Stock
Trading Symbol	VRMEW
Security Exchange Name	NASDAQ

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
CURRENT ASSETS
Cash and cash equivalents including restricted cash	$ 2,900	$ 3,095
Accounts receivable, net of allowance for credit loss reserve, $156 and $165 as of June 30, 2024 and December 31, 2023, respectively	1,214	3,017
Unbilled revenue	751	1,282
Prepaid expenses and other current assets	210	254
Inventory	23	38
TOTAL CURRENT ASSETS	5,098	7,686
PROPERTY AND EQUIPMENT, NET	184	240
RIGHT OF USE ASSET	378	468
INTANGIBLE ASSETS, NET	6,539	6,927
GOODWILL	5,334	5,384
TOTAL ASSETS	17,533	20,705
CURRENT LIABILITIES
Term note, current	500	500
Accounts payable	1,331	3,310
Other accrued expense	808	988
Lease liability- current	165	170
Contingent liability- current	123	173
TOTAL CURRENT LIABILITIES	2,927	5,141
LONG-TERM LIABILITIES
Contingent liability, non-current	401	751
Long-term lease liability	223	307
Term note	625	875
Convertible Note – related party	475	475
Convertible Note	625	625
TOTAL LIABILITIES	5,276	8,174
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 675,000,000 authorized; 10,655,065 and 10,453,315 issued, 10,384,698 and 10,123,964 shares outstanding as of June 30, 2024 and December 31, 2023, respectively	11	10
Additional paid in capital	95,504	95,031
Treasury stock at cost; 270,367 and 329,351 shares at June 30, 2024 and December 31, 2023, respectively	(464)	(659)
Accumulated deficit	(82,748)	(81,849)
Accumulated other comprehensive loss	(46)	(2)
STOCKHOLDERS' EQUITY	12,257	12,531
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	17,533	20,705
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible preferred stock
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible preferred stock

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Allowance for credit loss reserve	$ 156	$ 165
Common stock par value	$ 0.001	$ 0.001
Common stock, shares authorized	675,000,000	675,000,000
Common stock, shares issued	10,655,065	10,453,315
Common stock, shares outstanding	10,384,698	10,123,964
Treasury stock, shares	270,367	329,351
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	37,564,767	37,564,767
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	85	85
Preferred stock, shares issued	0.85	0.85
Preferred stock, shares outstanding	0.85	0.85

Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2024

Jun. 30, 2023

Jun. 30, 2024

Jun. 30, 2023

Income Statement [Abstract]

NET REVENUE

$ 5,352

$ 5,335

$ 11,111

$ 10,996

COST OF REVENUE

^[1]

3,262

3,749

6,761

7,889

GROSS PROFIT

2,090

1,586

4,350

3,107

OPERATING EXPENSES

Segment management and Technology

^[1]

1,517

1,251

2,860

2,356

General and administrative

^[1]

894

836

2,015

2,249

Research and development

Sales and marketing

^[1]

210

527

598

1,026

Total Operating expenses

2,626

2,624

5,533

5,649

LOSS BEFORE OTHER INCOME (EXPENSE)

(536)

(1,038)

(1,183)

(2,542)

OTHER (EXPENSE) INCOME

Interest expenses, net

(42)

(46)

(80)

(88)

Unrealized gain (loss) on equity investment

(2)

Change in fair value of contingent consideration

232

172

364

172

Other expense, net

(2)

TOTAL OTHER INCOME (EXPENSE), NET

190

156

284

NET LOSS

$ (346)

$ (882)

$ (899)

$ (2,462)

LOSS PER SHARE

BASIC

$ (0.03)

$ (0.09)

$ (0.26)

DILUTED

$ (0.03)

$ (0.09)

$ (0.26)

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING

BASIC

10,238,717

9,765,452

10,156,081

9,614,183

DILUTED

10,238,717

9,765,452

10,156,081

9,614,183

[1]	Includes share-based compensation of $239 thousand and $697 thousand for the three and six months ended June 30, 2024, respectively, and $315 thousand and $601 thousand for the three and six months ended June 30, 2023 respectively.

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
NET LOSS	$ (346)	$ (882)	$ (899)	$ (2,462)
Change in fair value of interest rate, Swap	2	2	5	1
Foreign currency translation adjustments	18	(46)	(49)	(48)
Total Comprehensive Loss	$ (326)	$ (926)	$ (943)	$ (2,509)

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (899)	$ (2,462)
Adjustments to reconcile net loss to net cash used in operating activities :
Allowance for bad debt	9	4
Stock based compensation	89	41
Unrealized loss on equity investment		2
Change in fair value of contingent consideration	(364)	(172)
Fair value of restricted stock awards and restricted stock units issued in exchange for services	608	560
Loss on disposal of equipment		2
Impairments	13	34
Amortization and depreciation	599	540
Unrealized loss on foreign currency transactions	30	10
Changes in operating assets and liabilities:
Accounts receivable	1,790	3,156
Unbilled revenue	530	451
Inventory	15	34
Prepaid expenses and other current assets	47	46
Accounts payable, other accrued expenses and net change in operating leases	(2,155)	(2,709)
Net cash provided by (used) in operating activities	312	(463)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of patents	(12)	(42)
Purchase of office equipment	(5)	(24)
Cash paid in business combination		(363)
Deferred implementation costs		(56)
Capitalized software costs	(174)	(373)
Net cash used in investing activities	(191)	(858)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit		800
Proceeds from SPP Plan	21	71
Contingent consideration payments	(36)
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered	(47)	(3)
Increase in treasury shares (share repurchase program)	(1)	(10)
Repayment of debt and line of credit	(250)	(250)
Net cash (used in) provided by financing activities	(313)	608
Effect of exchange rate changes on cash	(3)	(1)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(195)	(714)
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- BEGINNING OF PERIOD	3,095	3,411
CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH- END OF PERIOD	2,900	2,697
Cash paid during the period for:
Interest	94	68
Income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Change in fair value of interest rate, swap	$ 5	$ 1

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Series B Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stocks [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2022		$ 10	$ 92,987	$ (949)	$ (3)	$ (78,459)	$ 13,586
Beginning balance, shares at Dec. 31, 2022	0.85	8,951,035		389,967
Restricted stock awards, net of shares withheld for employee tax			147				147
Restricted stock awards, net of shares withheld for employee tax, shares		485,444
Restricted stock units, net of shares withheld for employee tax			410				410
Restricted Stock Units, net of shares withheld for employee tax, shares		1,750
Common stock issued in relation to Stock Purchase Plan			(58)	$ 167			109
Common stock issued in relation to Stock Purchase Plan, shares		57,245		(48,500)
Common stock issued in relation to Acquisition			625				625
Common stock issued in relation to Acquisition, shares		353,492
Repurchase of Common Stock				$ (10)			(10)
Repurchase of common stock, shares		(6,201)		6,201
Accumulated other comprehensive loss					(47)		(47)
Net loss						(2,462)	(2,462)
Ending balance, value at Jun. 30, 2023		$ 10	94,111	$ (792)	(50)	(80,921)	12,358
Ending balance, shares at Jun. 30, 2023	0.85	9,842,765		347,668
Beginning balance, value at Mar. 31, 2023		$ 10	93,790	$ (793)	(6)	(80,039)	12,962
Beginning balance, shares at Mar. 31, 2023	0.85	9,348,914		348,075
Restricted stock awards, net of shares withheld for employee tax			146				146
Restricted stock awards, net of shares withheld for employee tax, shares		485,444
Restricted stock units, net of shares withheld for employee tax			148				148
Restricted Stock Units, net of shares withheld for employee tax, shares
Common stock issued in relation to Stock Purchase Plan			27	$ 1			28
Common stock issued in relation to Stock Purchase Plan, shares		8,407		(407)
Accumulated other comprehensive loss					(44)		(44)
Net loss						(882)	(882)
Ending balance, value at Jun. 30, 2023		$ 10	94,111	$ (792)	(50)	(80,921)	12,358
Ending balance, shares at Jun. 30, 2023	0.85	9,842,765		347,668
Beginning balance, value at Dec. 31, 2023		$ 10	95,031	$ (659)	(2)	(81,849)	12,531
Beginning balance, shares at Dec. 31, 2023	0.85	10,123,964		329,351
Restricted stock awards		$ 1	275				276
Restricted stock awards, shares		140,000
Restricted stock units, net of shares withheld for employee tax			160	$ 125			285
Restricted Stock Units, net of shares withheld for employee tax, shares		39,845		(38,095)
Common stock issued for services			84				84
Common stock issued for services, shares		60,000
Common stock issued in relation to Stock Purchase Plan			(46)	$ 71			25
Common stock issued in relation to Stock Purchase Plan, shares		21,889		(21,889)
Repurchase of Common Stock				$ (1)			(1)
Repurchase of common stock, shares		(1,000)		1,000
Accumulated other comprehensive loss					(44)		(44)
Net loss						(899)	(899)
Ending balance, value at Jun. 30, 2024		$ 11	95,504	$ (464)	(46)	(82,748)	12,257
Ending balance, shares at Jun. 30, 2024	0.85	10,384,698		270,367
Beginning balance, value at Mar. 31, 2024		$ 10	95,438	$ (589)	(66)	(82,402)	12,391
Beginning balance, shares at Mar. 31, 2024	0.85	10,176,603		308,462
Restricted stock awards		$ 1	127				128
Restricted stock awards, shares		140,000
Restricted stock units, net of shares withheld for employee tax			(103)	$ 125			22
Restricted Stock Units, net of shares withheld for employee tax, shares		38,095		(38,095)
Common stock issued for services			42				42
Common stock issued for services, shares		30,000
Accumulated other comprehensive loss					20		20
Net loss						(346)	(346)
Ending balance, value at Jun. 30, 2024		$ 11	$ 95,504	$ (464)	$ (46)	$ (82,748)	$ 12,257
Ending balance, shares at Jun. 30, 2024	0.85	10,384,698		270,367

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

Reclassifications

Basis of Presentation

Restricted Cash


	As of
	June 30, 2024		December 31,2023

Cash and cash equivalents	$	2,900	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,900	$	3,095

Segment Reporting

Foreign Currency Translation

Use of Estimates

Recent Accounting Pronouncements

Fair Value of Financial Instruments

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.

Amounts in Thousands ('000)


	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)

Balance as of December 31, 2023	$	4	$	(924	)

Change in fair value of Contingent Consideration		-		364

Payments		-		36

Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		5		-

Balance at June 30, 2024	$	9	$	(524	)

Revenue Recognition

identify the contract with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

Precision Logistics

Authentication

Goodwill

Basic and Diluted Net Loss per Share of Common Stock

Stock-Based Compensation

REVENUE

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE

NOTE 2 – REVENUE

Revenue by Category

The following series of tables present our revenue disaggregated by various categories (dollars in thousands).

Schedule of disaggregation of revenue
	Authentication				Precision Logistics				Consolidated
Revenue	Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2024		2023		2024		2023		2024		2023

Proactive services	$	-	$	-	$	3,945	$	4,200	$	3,945	$	4,200
Premium services		-		-		1,299		1,014		1,299		1,014
Brand protection services		108		121		-		-		108		121
	$	108	$	121	$	5,244	$	5,214	$	5,352	$	5,335


	Authentication				Precision Logistics				Consolidated
Revenue	Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023		2024		2023

Proactive services	$	-	$	-	$	8,170	$	8,704	$	8,170	$	8,704
Premium services		-		-		2,688		1,924		2,688		1,924
Brand protection services		253		368		-		-		253		368
	$	253	$	368	$	10,858	$	10,628	$	11,111	$	10,996

Contract Balances

For all periods presented, contract liabilities were not significant.

The following table provides information about contract assets from contracts with customers:


	Contract Asset
	June 30,
In Thousands	2024			2023
Beginning balance, January 1	$	1,282		$	1,185
Contract asset additions		4,329			3,326
Reclassification to accounts receivable, billed to customers		(4,860	)		(3,777	)
Ending balance ⁽¹⁾	$	751		$	734

______________

(1)

Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

BUSINESS COMBINATIONS

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

BUSINESS COMBINATIONS

NOTE 3 – BUSINESS COMBINATIONS

Trust Codes Global Limited

The following table summarizes the purchase price allocation for the acquisition (dollars in thousands).

Schedule of business acquisitions
Cash	$	363
Fair value of contingent consideration		1,125
Stock (issuance of 353,492 shares of common stock) ^(a)		625
Total purchase price	$	2,113

				Amortization
				Period
Purchase price allocation:
Prepaid expenses	$	25
Property and Equipment, net		18
ROU Asset		171
Developed Technology		485		8 years
Trade Names/Trademarks		148		18 years
Customer Relationships		68		10 years
Goodwill		1,383
Accounts payable and other accrued expenses		(14	)
Current lease liability		(63	)
Long term lease liability		(108	)
	$	2,113

(a)

Stock issued was calculated based on the 15 day volume-weighted average price (“VWAP”) through February 28, 2023 calculated at $1.8388.

Contingent Consideration

INTANGIBLE ASSETS AND GOODWILL

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

NOTE 4 – INTANGIBLE ASSETS AND GOODWILL

Goodwill

Changes in the carrying amount of goodwill by reportable business segment for the six months ended June 30, 2024, were as follows (in thousands):


	Authentication			Precision Logistics		Total
Net book value at
January 1, 2024	$	1,396		$	3,988	$	5,384

2024 Activity
Foreign currency translation		(50	)		-		(50	)
Net book value at
June 30, 2024	$	1,346		$	3,988	$	5,334

Intangible Assets Subject to Amortization


June 30, 2024	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,766	$	(394	)	$	1,372		12
Capitalized Software		161		(125	)		36		2
Customer Relationships		1,905		(412	)		1,493		8
Developed Technology		3,614		(1,227	)		2,387		5
Internally Used Software		1,087		(108	)		979		6
Non-Compete Agreement		191		(84	)		107		3
Deferred Implementation		198		(33	)		165		9
Total Intangible Assets	$	8,922	$	(2,383	)	$	6,539
December 31, 2023
Patents and Trademarks	$	2,002	$	(564	)	$	1,438		13
Capitalized Software		161		(109	)		52		2
Customer Relationships		1,908		(317	)		1,591		9
Developed Technology		3,632		(938	)		2,694		5
Internally Used Software		914		(62	)		852		6
Non-Compete Agreement		191		(65	)		126		3
Deferred Implementation		198		(24	)		174		9
Total Intangible Assets	$	9,006	$	(2,079	)	$	6,927

Patents and Trademarks

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

Schedule of future amortization expense
Fiscal Year ending December 31,
2024 (six months remaining)	$	572
2025		1,109
2026		1,104
2027		1,070
2028		696
Thereafter		1,988
Total	$	6,539

STOCKHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 5 – STOCKHOLDERS’ EQUITY

Non-Qualified Stock Purchase Plan

Shares Held in Treasury

As of June 30, 2024, and December 31, 2023, the Company had 270,367 and 329,351 shares, respectively, held in treasury with a value of approximately $464 thousand and $659 thousand, respectively.

Shares Repurchase Program

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS

Stock Options

The following table summarizes the activities for the Company’s stock options as of June 30, 2024:

Schedule of stock options
	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in thousands)⁽¹⁾
Balance as of December 31, 2023		301,471		$	4.56

Granted		-			-

Forfeited/Cancelled/Expired		(471	)	$	212.50

Balance as of June 30, 2024		301,000		$	4.24

Exercisable as of June 30, 2024		301,000		$	4.24		0.7	$	-

(1)

As of June 30, 2024, the Company had no unvested stock options.

During the six months ended June 30, 2024, and 2023, the Company expensed $0 thousand, with respect to options.

As of June 30, 2024, there was $0 unrecognized compensation cost related to outstanding stock options.

Restricted Stock Awards and Restricted Stock Units

The following table summarizes the unvested restricted stock awards as of June 30, 2024:


				Weighted -
				Average
	Number of			Grant
	Award Shares			Date Fair Value

Unvested at December 31, 2023		416,669			1.44

Granted		140,000			1.60

Vested		(416,669	)		1.44

Balance at June 30, 2024		140,000		$	1.60

The following table summarizes the unvested time based restricted stock units as of June 30, 2024:


				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2023		371,253			1.32

Granted		35,000			1.60

Vested		(70,527	)		1.33

Forfeited		(25,334	)		1.23

Balance at June 30, 2024		310,392		$	1.34

The following table summarizes the unvested performance restricted stock units as of June 30, 2024:


				Weighted -
				Average
	Number of			Number of
	Unit Shares			Unit Shares
Unvested at December 31, 2023		1,438,760			1.51

Granted		480,000			1.12

Forfeited/Cancelled		(192,100	)		1.78

Balance at June 30, 2024		1,726,660		$	1.37

Warrants

The following table summarizes the activities for the Company’s warrants as of June 30, 2024:

Schedule of warrants outstanding
	Number of Warrant Shares		Weighted- Average Exercise Price		Weighted - Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)⁽¹⁾
Balance as of December 31, 2023		4,628,586	$	4.13

Granted		-		-

Expired		-		-

Balance as of June 30, 2024		4,628,586	$	4.13		1.8

Exercisable as of June 30, 2024		4,628,586	$	4.13		1.8	$	-

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.41 for our common stock on June 30, 2024.

DEBT

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

DEBT

NOTE 7—DEBT

As of June 30, 2024, $0 was outstanding on the RLOC.

Convertible Debt

INCOME TAXES

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8—INCOME TAXES

There are no taxes payable as of June 30, 2024, or December 31, 2023.

LEASES

6 Months Ended

Jun. 30, 2024

Leases

LEASES

NOTE 9– LEASES

We have operating leases for office facilities. We do not have any finance leases.

Lease expenses are included in General & administrative expenses on the accompanying Consolidated Statements of Operations. The components of lease expense were as follows (in thousands):

Schedule of components of lease expense
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	48	$	48	$	95	$	85
Short-term lease cost		4		9		9		18
Total lease costs	$	52	$	57	$	104	$	103

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


	June 30, 2024			December 31, 2023
Operating Lease right-of-use asset	$	378		$	468

Current portion of operating lease liabilities	$	165		$	170
Non-current portion of operating lease liabilities		223			307
Total operating lease liabilities	$	388		$	477

Cash paid for amounts included in the measurement of operating lease liabilities	$	94		$	177

Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-

Weighted-average remaining lease term for operating leases (years)		2.7

Weighted average discount rate for operating leases		6.4	%

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of June 30, 2024 (in thousands):


Year ending December 31,
2024 (six months remaining)	$	95
2025		193
2026		139
2027		45
Total future lease payments		472
Less: imputed interest		(84	)
Present value of future lease payments		388
Less: current portion of lease liabilities		(165	)
Long-term lease liabilities	$	223

CONCENTRATIONS

6 Months Ended

Jun. 30, 2024

Risks and Uncertainties [Abstract]

CONCENTRATIONS

NOTE 10– CONCENTRATIONS

As of June 30, 2024, one customer made up 18% of accounts receivable.

During the three and six months ended June 30, 2024, one vendor accounted for 99% of transportation cost, in our Precision Logistics segment.

SEGMENT REPORTING

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 11 – SEGMENT REPORTING

As of June 30, 2024, we operated through two reportable business segments: (i) Precision Logistics and (ii) Authentication.

Precision Logistics:

Authentication:

We do not allocate the following items to the segments: general & administrative expenses, research and development and other income (expense).


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Precision Logistics	$	5,244		$	5,214		$	10,858		$	10,628
Authentication		108			121			253			368
Total Revenue	$	5,352		$	5,335		$	11,111		$	10,996

Gross Profit:
Precision Logistics	$	1,997		$	1,485		$	4,126		$	2,839
Authentication		93			101			224			268
Total Gross Profit		2,090			1,586			4,350			3,107

Segment Management and Technology - Precision Logistics		1,171			962			2,246			1,866
Segment Management and Technology - Authentication		346			289			614			490
Sales and marketing - Precision Logistics		114			290			337			552
Sales and marketing - Authentication		96			237			261			474
General and administrative		894			836			2,015			2,249
Research and development		5			10			60			18
LOSS BEFORE OTHER INCOME (EXPENSE)		(536	)		(1,038	)		(1,183	)		(2,542	)
OTHER INCOME (EXPENSE)		190			156			284			80
NET LOSS	$	(346	)	$	(882	)	$	(899	)	$	(2,462	)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Nature of the Business

Nature of the Business

Reclassifications

Reclassifications

Basis of Presentation

Basis of Presentation

Restricted Cash

Restricted Cash


	As of
	June 30, 2024		December 31,2023

Cash and cash equivalents	$	2,900	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,900	$	3,095

Segment Reporting

Segment Reporting

Foreign Currency Translation

Foreign Currency Translation

Use of Estimates

Use of Estimates

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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.

Amounts in Thousands ('000)


	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)

Balance as of December 31, 2023	$	4	$	(924	)

Change in fair value of Contingent Consideration		-		364

Payments		-		36

Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		5		-

Balance at June 30, 2024	$	9	$	(524	)

Revenue Recognition

Revenue Recognition

identify the contract with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

Precision Logistics

Authentication

Goodwill

Goodwill

Basic and Diluted Net Loss per Share of Common Stock

Basic and Diluted Net Loss per Share of Common Stock

Stock-Based Compensation

Stock-Based Compensation

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Schedule of cash, cash equivalents and restricted cash


	As of
	June 30, 2024		December 31,2023

Cash and cash equivalents	$	2,900	$	3,032
Restricted cash		-		63
Total cash and cash equivalents including restricted cash	$	2,900	$	3,095

Schedule of fair value assets measured on recurring basis


	Derivative Asset		Contingent Consideration
	(Level 2)		(Level 3)

Balance as of December 31, 2023	$	4	$	(924	)

Change in fair value of Contingent Consideration		-		364

Payments		-		36

Change in fair value to interest rate, SWAP, recognized in other comprehensive loss		5		-

Balance at June 30, 2024	$	9	$	(524	)

REVENUE (Tables)

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

Schedule of disaggregation of revenue
	Authentication				Precision Logistics				Consolidated
Revenue	Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2024		2023		2024		2023		2024		2023

Proactive services	$	-	$	-	$	3,945	$	4,200	$	3,945	$	4,200
Premium services		-		-		1,299		1,014		1,299		1,014
Brand protection services		108		121		-		-		108		121
	$	108	$	121	$	5,244	$	5,214	$	5,352	$	5,335


	Authentication				Precision Logistics				Consolidated
Revenue	Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023		2024		2023

Proactive services	$	-	$	-	$	8,170	$	8,704	$	8,170	$	8,704
Premium services		-		-		2,688		1,924		2,688		1,924
Brand protection services		253		368		-		-		253		368
	$	253	$	368	$	10,858	$	10,628	$	11,111	$	10,996

Schedule of contract assets from contracts with customers


	Contract Asset
	June 30,
In Thousands	2024			2023
Beginning balance, January 1	$	1,282		$	1,185
Contract asset additions		4,329			3,326
Reclassification to accounts receivable, billed to customers		(4,860	)		(3,777	)
Ending balance ⁽¹⁾	$	751		$	734

______________

(1)

Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

BUSINESS COMBINATIONS (Tables)

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of business acquisitions

Schedule of business acquisitions
Cash	$	363
Fair value of contingent consideration		1,125
Stock (issuance of 353,492 shares of common stock) ^(a)		625
Total purchase price	$	2,113

				Amortization
				Period
Purchase price allocation:
Prepaid expenses	$	25
Property and Equipment, net		18
ROU Asset		171
Developed Technology		485		8 years
Trade Names/Trademarks		148		18 years
Customer Relationships		68		10 years
Goodwill		1,383
Accounts payable and other accrued expenses		(14	)
Current lease liability		(63	)
Long term lease liability		(108	)
	$	2,113

(a)

Stock issued was calculated based on the 15 day volume-weighted average price (“VWAP”) through February 28, 2023 calculated at $1.8388.

INTANGIBLE ASSETS AND GOODWILL (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill by reportable business segment


	Authentication			Precision Logistics		Total
Net book value at
January 1, 2024	$	1,396		$	3,988	$	5,384

2024 Activity
Foreign currency translation		(50	)		-		(50	)
Net book value at
June 30, 2024	$	1,346		$	3,988	$	5,334

Schedule of intangible assets subject to amortization


June 30, 2024	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life (Years)
Patents and Trademarks	$	1,766	$	(394	)	$	1,372		12
Capitalized Software		161		(125	)		36		2
Customer Relationships		1,905		(412	)		1,493		8
Developed Technology		3,614		(1,227	)		2,387		5
Internally Used Software		1,087		(108	)		979		6
Non-Compete Agreement		191		(84	)		107		3
Deferred Implementation		198		(33	)		165		9
Total Intangible Assets	$	8,922	$	(2,383	)	$	6,539
December 31, 2023
Patents and Trademarks	$	2,002	$	(564	)	$	1,438		13
Capitalized Software		161		(109	)		52		2
Customer Relationships		1,908		(317	)		1,591		9
Developed Technology		3,632		(938	)		2,694		5
Internally Used Software		914		(62	)		852		6
Non-Compete Agreement		191		(65	)		126		3
Deferred Implementation		198		(24	)		174		9
Total Intangible Assets	$	9,006	$	(2,079	)	$	6,927

Schedule of future amortization expense

Schedule of future amortization expense
Fiscal Year ending December 31,
2024 (six months remaining)	$	572
2025		1,109
2026		1,104
2027		1,070
2028		696
Thereafter		1,988
Total	$	6,539

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Tables)

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Schedule of stock options

Schedule of stock options
	Options Outstanding
						Weighted -
						Average
						Remaining		Aggregate
				Weighted-		Contractual		Intrinsic
	Number of			Average		Term		Value
	Shares			Exercise Price		(in years)		(in thousands)⁽¹⁾
Balance as of December 31, 2023		301,471		$	4.56

Granted		-			-

Forfeited/Cancelled/Expired		(471	)	$	212.50

Balance as of June 30, 2024		301,000		$	4.24

Exercisable as of June 30, 2024		301,000		$	4.24		0.7	$	-

(1)

Schedule of unvested restricted stock awards


				Weighted -
				Average
	Number of			Grant
	Award Shares			Date Fair Value

Unvested at December 31, 2023		416,669			1.44

Granted		140,000			1.60

Vested		(416,669	)		1.44

Balance at June 30, 2024		140,000		$	1.60

Schedule of unvested restricted stock units


				Weighted -
				Average
	Number of			Grant
	Unit Shares			Date Fair Value
Unvested at December 31, 2023		371,253			1.32

Granted		35,000			1.60

Vested		(70,527	)		1.33

Forfeited		(25,334	)		1.23

Balance at June 30, 2024		310,392		$	1.34

Schedule of unvested performance restricted stock units


				Weighted -
				Average
	Number of			Number of
	Unit Shares			Unit Shares
Unvested at December 31, 2023		1,438,760			1.51

Granted		480,000			1.12

Forfeited/Cancelled		(192,100	)		1.78

Balance at June 30, 2024		1,726,660		$	1.37

Schedule of warrants outstanding

Schedule of warrants outstanding
	Number of Warrant Shares		Weighted- Average Exercise Price		Weighted - Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)⁽¹⁾
Balance as of December 31, 2023		4,628,586	$	4.13

Granted		-		-

Expired		-		-

Balance as of June 30, 2024		4,628,586	$	4.13		1.8

Exercisable as of June 30, 2024		4,628,586	$	4.13		1.8	$	-

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.41 for our common stock on June 30, 2024.

LEASES (Tables)

6 Months Ended

Jun. 30, 2024

Leases

Schedule of components of lease expense

Schedule of components of lease expense
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	48	$	48	$	95	$	85
Short-term lease cost		4		9		9		18
Total lease costs	$	52	$	57	$	104	$	103

Schedule of supplemental information related to leases


	June 30, 2024			December 31, 2023
Operating Lease right-of-use asset	$	378		$	468

Current portion of operating lease liabilities	$	165		$	170
Non-current portion of operating lease liabilities		223			307
Total operating lease liabilities	$	388		$	477

Cash paid for amounts included in the measurement of operating lease liabilities	$	94		$	177

Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	-

Weighted-average remaining lease term for operating leases (years)		2.7

Weighted average discount rate for operating leases		6.4	%

Schedule of operating lease liabilities maturities


Year ending December 31,
2024 (six months remaining)	$	95
2025		193
2026		139
2027		45
Total future lease payments		472
Less: imputed interest		(84	)
Present value of future lease payments		388
Less: current portion of lease liabilities		(165	)
Long-term lease liabilities	$	223

SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Schedule of segment reporting information


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Precision Logistics	$	5,244		$	5,214		$	10,858		$	10,628
Authentication		108			121			253			368
Total Revenue	$	5,352		$	5,335		$	11,111		$	10,996

Gross Profit:
Precision Logistics	$	1,997		$	1,485		$	4,126		$	2,839
Authentication		93			101			224			268
Total Gross Profit		2,090			1,586			4,350			3,107

Segment Management and Technology - Precision Logistics		1,171			962			2,246			1,866
Segment Management and Technology - Authentication		346			289			614			490
Sales and marketing - Precision Logistics		114			290			337			552
Sales and marketing - Authentication		96			237			261			474
General and administrative		894			836			2,015			2,249
Research and development		5			10			60			18
LOSS BEFORE OTHER INCOME (EXPENSE)		(536	)		(1,038	)		(1,183	)		(2,542	)
OTHER INCOME (EXPENSE)		190			156			284			80
NET LOSS	$	(346	)	$	(882	)	$	(899	)	$	(2,462	)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cash and cash equivalents	$ 2,900	$ 3,032
Restricted cash	(0)	63
Total cash and cash equivalents including restricted cash	$ 2,900	$ 3,095	$ 2,697	$ 3,411

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Platform Operator, Crypto Asset [Line Items]
Change in fair value of contingent consideration	$ 364	$ 172
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Recurring [Member]
Platform Operator, Crypto Asset [Line Items]
Derivative Asset at beginning	4
Change in fair value of contingent consideration
Payments
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss	5
Derivative Asset at end	9
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Recurring [Member]
Platform Operator, Crypto Asset [Line Items]
Contingent Consideration at beginning	(924)
Change in fair value of contingent consideration	364
Payments	36
Change in fair value to interest rate, SWAP, recognized in other comprehensive loss
Contingent Consideration at end	$ (524)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001
Restricted cash	$ (0)		$ (0)		$ 63
Foreign currency transaction losses	$ 16		$ 46
Anti-dilutive shares	8,208,000	7,108,000	8,208,000	7,108,000
Restricted Stock [Member]
Anti-dilutive shares	2,177,000	1,998,000	2,177,000	1,998,000
Share-Based Payment Arrangement, Option [Member]
Anti-dilutive shares	301,000	337,000	301,000	337,000
Warrant [Member]
Anti-dilutive shares	4,629,000	4,629,000	4,629,000	4,629,000
Conversion Convertible Debt [Member]
Anti-dilutive shares	957,000		957,000
Preferred Stock [Member]
Anti-dilutive shares	144,000	144,000	144,000	144,000
Verify Me Inc [Member]
State of incorporation			Nevada
State of incorporation			Nov. 10, 1999

REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
REVENUE (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Disaggregation of Revenue [Line Items]
Revenues	$ 5,352	$ 5,335	$ 11,111	$ 10,996
Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	3,945	4,200	8,170	8,704
Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	1,299	1,014	2,688	1,924
Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	108	121	253	368
Authentication [Member]
Disaggregation of Revenue [Line Items]
Revenues	108	121	253	368
Authentication [Member] \| Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues
Authentication [Member] \| Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues
Authentication [Member] \| Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	108	121	253	368
Precision Logistics [Member]
Disaggregation of Revenue [Line Items]
Revenues	5,244	5,214	10,858	10,628
Precision Logistics [Member] \| Proactive Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	3,945	4,200	8,170	8,704
Precision Logistics [Member] \| Premium Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	1,299	1,014	2,688	1,924
Precision Logistics [Member] \| Brand Protection Services [Member]
Disaggregation of Revenue [Line Items]
Revenues

REVENUE (Details 1) - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2024

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Beginning balance

$ 1,282

$ 1,185

Contract asset additions

4,329

3,326

Reclassification to accounts receivable, billed to customers

(4,860)

(3,777)

Ending balance

^[1]

$ 751

$ 734

[1]	Included within "Unbilled revenue" on the accompanying Consolidated Balance sheets.

BUSINESS COMBINATIONS (Details) - USD ($)
$ in Thousands

Mar. 01, 2023

Jun. 30, 2024

Dec. 31, 2023

Business Acquisition [Line Items]

Goodwill

$ 5,334

$ 5,384

Trust Codes Global Limited [Member]

Business Acquisition [Line Items]

Cash

$ 363

Fair value of contingent consideration

1,125

Stock (issuance of 353,492 shares of restricted common stock)

^[1]

625

Total purchase price

2,113

Prepaid expenses

Property and Equipment, net

ROU Asset

171

Goodwill

1,383

Accounts payable and other accrued expenses

(14)

Current lease liability

(63)

Long term lease liability

(108)

Total purchase price allocation

2,113

Trust Codes Global Limited [Member] | Developed Technology Rights [Member]

Business Acquisition [Line Items]

Intangible Assets

$ 485

Amortization Period

8 years

Trust Codes Global Limited [Member] | Trademarks [Member]

Business Acquisition [Line Items]

Intangible Assets

$ 148

Amortization Period

18 years

Trust Codes Global Limited [Member] | Customer Relationships [Member]

Business Acquisition [Line Items]

Intangible Assets

$ 68

Amortization Period

10 years

[1]	Stock issued was calculated based on the 15 day volume-weighted average price (“VWAP”) through February 28, 2023 calculated at $1.8388.

BUSINESS COMBINATIONS (Details Narrative) - USD ($) $ in Thousands	Mar. 01, 2023	Jun. 30, 2024	May 15, 2024	Dec. 31, 2023
Business Acquisition [Line Items]
Consideration transferred	$ 360
Common stock shares, issued		10,655,065		10,453,315
Earn-out consideration	1,100
Current liability		$ 123
Long term contingent consideration		$ 401
Contingent consideration payment			$ 36
Business Combination [Member]
Business Acquisition [Line Items]
Purchase price	1,000
Stock consideration amount	650
Acquisition related costs	$ 278
Business Combination [Member] \| Restricted Stock [Member]
Business Acquisition [Line Items]
Common stock shares, issued	353,492

INTANGIBLE ASSETS AND GOODWILL (Details) $ in Thousands	6 Months Ended
INTANGIBLE ASSETS AND GOODWILL (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Beginning balance	$ 5,384
Foreign currency translation	(50)
Ending balance	5,334
Authentication [Member]
Beginning balance	1,396
Foreign currency translation	(50)
Ending balance	1,346
Precision Logistics [Member]
Beginning balance	3,988
Foreign currency translation
Ending balance	$ 3,988

INTANGIBLE ASSETS AND GOODWILL (Details 1) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 8,922	$ 9,006
Accumulated Amortization	(2,383)	(2,079)
Net Carrying Amount	6,539	6,927
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,766	2,002
Accumulated Amortization	(394)	(564)
Net Carrying Amount	$ 1,372	$ 1,438
Weighted average useful life (years)	12 years	13 years
Capitalized Software [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 161	$ 161
Accumulated Amortization	(125)	(109)
Net Carrying Amount	$ 36	$ 52
Weighted average useful life (years)	2 years	2 years
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,905	$ 1,908
Accumulated Amortization	(412)	(317)
Net Carrying Amount	$ 1,493	$ 1,591
Weighted average useful life (years)	8 years	9 years
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,614	$ 3,632
Accumulated Amortization	(1,227)	(938)
Net Carrying Amount	$ 2,387	$ 2,694
Weighted average useful life (years)	5 years	5 years
Internally Used Software [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,087	$ 914
Accumulated Amortization	(108)	(62)
Net Carrying Amount	$ 979	$ 852
Weighted average useful life (years)	6 years	6 years
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 191	$ 191
Accumulated Amortization	(84)	(65)
Net Carrying Amount	$ 107	$ 126
Weighted average useful life (years)	3 years	3 years
Deferred Implementation [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 198	$ 198
Accumulated Amortization	(33)	(24)
Net Carrying Amount	$ 165	$ 174
Weighted average useful life (years)	9 years	9 years

INTANGIBLE ASSETS AND GOODWILL (Details 2) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
2024 (six months remaining)	$ 572
2025	1,109
2026	1,104
2027	1,070
2028	696
Thereafter	1,988
Total	$ 6,539	$ 6,927

INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 540	$ 495
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Carrying value of asset	$ 13

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended			3 Months Ended		6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Dec. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Feb. 29, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock award, expense				$ 127	$ 147	$ 275	$ 148
Restricted stock units, expense				69	149	$ 333	412
Common stock issued upon vesting of restricted stock units, net of common stock withheld for taxes						1,750
Common stock withheld for taxes						38,095
Stock issued for services	30,000	30,000
Stock issued for services, value	$ 42	$ 42		$ 42		$ 84
Proceeds from SPP Plan						$ 21	$ 71
Treasury stock share	270,367		329,351	270,367		270,367
Treasury stock value	$ 464		$ 659	$ 464		$ 464
Share repurchase program			$ 500
Repurchased shares of common stock						1,000
Repurchased shares of common stock, amount	$ 1			1		$ 1
Plan 2021 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense				$ 0		$ 4
Proceeds from SPP Plan					$ 21
Non-qualified stock purchase plan								21,889
Non-qualified stock purchase exercise price								$ 0.97

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details) - Share-Based Payment Arrangement, Option [Member]

6 Months Ended

Jun. 30, 2024

USD ($)

$ / shares

Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]

Balance at beginning | shares

301,471

Weighted average exercise price, balance at beginning | $ / shares

$ 4.56

Granted | shares

Weighted average exercise price, granted | $ / shares

Forfeited/cancelled/expired | shares

(471)

Weighted average exercise price, forfeited/cancelled/expired | $ / shares

$ 212.50

Balance at ending | shares

301,000

Weighted average exercise price, Balance at ending | $ / shares

$ 4.24

Vested and exercisable at ending | shares

301,000

Weighted average exercise price, balance at ending | $ / shares

$ 4.24

Weighted average remaining contractual term, exercisable at ending

8 months 12 days

Vested and exercisable at ending | $

^[1]

[1]	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period.

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 1) - Restricted Stock [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning \| shares	416,669
Weighted - average grant date fair value, balance at beginning \| $ / shares	$ 1.44
Granted \| shares	140,000
Weighted - average grant date fair value, granted \| $ / shares	$ 1.60
Vested \| shares	(416,669)
Weighted - average grant date fair value, vested \| $ / shares	$ 1.44
Balance at ending \| shares	140,000
Weighted - average grant date fair value, balance at ending \| $ / shares	$ 1.60

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 2) - Restricted Stock Units [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning \| shares	371,253
Weighted - average grant date fair value, balance at beginning \| $ / shares	$ 1.32
Granted \| shares	35,000
Weighted - average grant date fair value, granted \| $ / shares	$ 1.60
Vested \| shares	(70,527)
Weighted - average grant date fair value, vested \| $ / shares	$ 1.33
Forfeited \| shares	(25,334)
Weighted - average grant date fair value, Forfeited \| $ / shares	$ 1.23
Balance at ending \| shares	310,392
Weighted - average grant date fair value, balance at ending \| $ / shares	$ 1.34

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 3) - Nonvested Stock Options [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Balance at beginning \| shares	1,438,760
Balance at beginning, weighted average grant date fair value \| $ / shares	$ 1.51
Granted \| shares	480,000
Granted, weighted average grant date fair value \| $ / shares	$ 1.12
Forfeited/Cancelled \| shares	(192,100)
Forfeited/Cancelled, weighted average grant date fair value \| $ / shares	$ 1.78
Balance at ending \| shares	1,726,660
Balance at ending, weighted average grant date fair value \| $ / shares	$ 1.37

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 4)

6 Months Ended

Jun. 30, 2024

USD ($)

$ / shares

Equity [Abstract]

Number of warrants outstanding, beginning balance | shares

4,628,586

Weighted average exercise price, beginning balance | $ / shares

$ 4.13

Number of warrants outstanding, granted | shares

Weighted average exercise price, granted | $ / shares

Number of warrants outstanding, expired | shares

Weighted average exercise price, expired | $ / shares

Number of warrants outstanding, ending Balance | shares

4,628,586

Weighted average exercise price, ending balance | $ / shares

$ 4.13

Weighted average remaining contractual terms

1 year 9 months 18 days

Number of warrants outstanding, exercisable | shares

4,628,586

Weighted average exercise price, exercisable | $ / shares

$ 4.13

Weighted average remaining contractual terms, exercisable

1 year 9 months 18 days

Aggregate intrinsic value, exercisable | $

^[1]

[1]	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $1.41 for our common stock on June 30, 2024.

STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details Narrative) - USD ($) $ in Thousands			1 Months Ended			6 Months Ended
	Aug. 10, 2020	Nov. 14, 2017	Mar. 18, 2024	Apr. 17, 2023	Mar. 28, 2022	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2013
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation cost						$ 0
Equity Incentive Plan2017 [Member] \| Board of Directors Chairman [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for potential issuance		260,000
Equity investments fair value \| Board of Directors Chairman [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for potential issuance	1,069,110		4,069,100	3,069,100	2,069,100
Issued Under The 2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Incentive stock options granted						1,000,000
Stock Options Restricted Stockand Unitsand Other Stockbased Awards [Member] \| Omnibus Equity Compensation Plan2013 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares authorized to grand awards								400,000
Incentive Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price, description						In connection with incentive stock options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company).
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock or Unit Option Plan Expense						$ 0	$ 0
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested restricted stock awards						209
Restricted Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested restricted stock awards						$ 206
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term						1 year 2 months 12 days
Nonvested Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Incentive stock options granted						480,000
Unvested restricted stock awards						$ 1,162
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term						1 year 4 months 24 days

DEBT (Details Narrative) - USD ($) $ in Thousands	1 Months Ended		6 Months Ended
DEBT (Details Narrative) - USD ($) $ in Thousands	Aug. 25, 2023	Oct. 17, 2022	Jun. 30, 2024
Debt Disclosure [Abstract]
Short term debt outstanding			$ 500
Long-term debt outstanding			600
Principal outstanding			250
Outstanding on RLOC			0
Notional amount		$ 1,958
Interest rate		7.602%
Principal amount	$ 1,100
Convertible promissory notes purchased by related party	$ 475
Interest expense			44
Convertible debt			$ 1,100

INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Income Tax Disclosure [Abstract]
Taxes payable	$ 0	$ 0
Effective income tax rate	21.00%

LEASES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
LEASES (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Leases
Operating lease cost	$ 48	$ 48	$ 95	$ 85
Short-term lease cost	4	9	9	18
Total lease costs	$ 52	$ 57	$ 104	$ 103

LEASES (Details 1) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Leases
Operating Lease right-of-use asset	$ 378	$ 468
Current portion of operating lease liabilities	165	170
Non-current portion of operating lease liabilities	223	307
Total operating lease liabilities	388	477
Cash paid for amounts included in the measurement of operating lease liabilities	94	177
Right-of-use assets obtained in exchange for operating lease liabilities
Weighted-average remaining lease term for operating leases (years)	2 years 8 months 12 days
Weighted average discount rate for operating leases	6.40%

LEASES (Details 2) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Leases
2024 (six months remaining)	$ 95
2025	193
2026	139
2027	45
Total future lease payments	472
Less: imputed interest	(84)
Present value of future lease payments	388	$ 477
Less: current portion of lease liabilities	(165)	(170)
Long-term lease liabilities	$ 223	$ 307

CONCENTRATIONS (Details Narrative)	3 Months Ended		6 Months Ended
CONCENTRATIONS (Details Narrative)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue Benchmark [Member] \| Customer Concentration Risk [Member] \| One Customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	22.00%	16.00%	22.00%	15.00%
Accounts Receivable [Member] \| Customer Concentration Risk [Member] \| One Customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			18.00%
Transportation Cost [Member] \| Product Concentration Risk [Member] \| One Vendor [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	99.00%		99.00%

SEGMENT REPORTING (Details) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2024

Jun. 30, 2023

Jun. 30, 2024

Jun. 30, 2023

Total Revenue

$ 5,352

$ 5,335

$ 11,111

$ 10,996

Gross Profit

2,090

1,586

4,350

3,107

Management and Technology

^[1]

1,517

1,251

2,860

2,356

Sales and marketing

^[1]

210

527

598

1,026

General and administrative

^[1]

894

836

2,015

2,249

Research and development

LOSS BEFORE OTHER INCOME (EXPENSE)

(536)

(1,038)

(1,183)

(2,542)

OTHER INCOME (EXPENSE)

190

156

284

NET LOSS

(346)

(882)

(899)

(2,462)

Precision Logistics [Member]

Total Revenue

5,244

5,214

10,858

10,628

Gross Profit

1,997

1,485

4,126

2,839

Management and Technology

1,171

962

2,246

1,866

Sales and marketing

114

290

337

552

Authentication [Member]

Total Revenue

108

121

253

368

Gross Profit

101

224

268

Management and Technology

346

289

614

490

Sales and marketing

$ 96

$ 237

$ 261

$ 474

[1]	Includes share-based compensation of $239 thousand and $697 thousand for the three and six months ended June 30, 2024, respectively, and $315 thousand and $601 thousand for the three and six months ended June 30, 2023 respectively.