EX-99.1 2 ex99_1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Unaudited Pro Forma Consolidated Financial Information

 

On December 8, 2024, VerifyMe, Inc. (the “Company”) and Paul Ryan (the "Buyer"), who previously served as Executive Vice President, Authentication Segment, and was employed by Trust Codes Global Limited, a wholly-owned subsidiary of the Company, entered into a Share Sale Agreement (the "Agreement") whereby the Company sold 100% of its equity interest in Trust Codes Global Limited in exchange for aggregate cash consideration of approximately NZD $1. Through his purchase, the Buyer assumed all continuing obligations and liabilities of Trust Codes Global Limited.

 

The accompanying unaudited pro forma financial information should be read in conjunction with our historical consolidated financial statements and the accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the "SEC") on March 29, 2024, and Quarterly Report on Form 10-Q for the period ended September 30, 2024, filed with the SEC on November 12, 2024.

 

The below unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023 have been prepared giving effect to the sale of Trust Codes Global Limited as if the transaction had occurred on January 1, 2023. In accordance with Rule 11-02(b) of Regulation S-X, the Company is omitting a pro forma balance sheet due to the limited number of pro forma adjustments required. A narrative description of the pro forma effects of the sale of Trust Codes Global Limited on the Company’s unaudited consolidated balance sheet as of September 30, 2024 is provided in Note 2 of the notes to the unaudited pro forma consolidated financial statements.

 

The unaudited pro forma consolidated financial statements are prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this report on Form 8-K.

 

The unaudited pro forma financial information is based on financial statements prepared in accordance with U.S. generally accepted accounting principles, which are subject to change and interpretation. The unaudited pro forma consolidated financial statements were based on and derived from our historical consolidated financial statements, adjusted for those amounts which were determined to be directly attributable to the sale of Trust Codes Global Limited, factually supportable, and with respect to the unaudited pro forma consolidated statements of operations, expected to have a continuing impact on our consolidated results. Actual adjustments, however, may differ materially from the information presented. Pro forma adjustments do not include allocations of corporate costs, as those are not directly attributable to the sale of Trust Codes Global Limited. In addition, the unaudited pro forma financial information is based upon available information and assumptions that management considers to be reasonable, and such assumptions have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the SEC. The unaudited pro forma financial information is not necessarily indicative of what the financial position or income statement results would have actually been had the sale of Trust Codes Global Limited occurred on the dates indicated. As a result of the factors above, these unaudited pro forma consolidated financial statements should not be considered to be indicative of our future consolidated financial performance or results.

 

  
 

 

VERIFYME, INC.

Unaudited Pro Forma Consolidated Statement of Operations

(in thousands except for per share amounts)

For the Year Ended December 31, 2023

 

   Historical (unaudited)         
           Pro Forma   Pro Forma 
   VerifyMe, Inc (Consolidated)(a)  Trust Codes Global   Adjustments   Consolidated 
                 
                 
REVENUE  $25,313   $314   $-   $24,999 
COST OF SALES   17,287    28    -    17,259 
GROSS PROFIT   8,026    286    -    7,740 
                     
OPERATING EXPENSES                    
Management and technology   4,997    824    -    4,173 
General and administrative (a)   4,516    3    278(b)   4,235 
Research and development   107    68    -    39 
Sales and marketing (a)   1,644    145    -    1,499 
Goodwill and Intangible asset impairment Authentication   90    -    -    90 
Total Operating expenses   11,354    1,040    278    10,036 
                     
LOSS BEFORE OTHER INCOME (EXPENSE)   (3,328)   (754)   (278)   (2,296)
                     
OTHER (EXPENSE) INCOME                    
Interest income (Expense)   (161)   -    -    (161)
Loss on equity investment   (100)   -    -    (100)
Change in fair value of contingent consideration   201    -    201(c)   (0)
Other (expense) income, net   (2)   -    -    (2)
                     
TOTAL OTHER INCOME (EXPENSE), NET   (62)   -    201    (263)
                     
NET INCOME   (3,390)   (754)   (77)   (2,559)
                     
EARNINGS/(LOSS) PER SHARE                    
BASIC  $(0.35)            $(0.26)
DILUTED  $(0.35)            $(0.26)
                     
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING                    
BASIC   9,766,469              9,766,469 
DILUTED   9,766,469              9,766,469 

 

  
 

 

VERIFYME, INC.

EBITDA and Adjusted EBITDA Reconciliation Table (Unaudited)

(in thousands)

For the Year Ended December 31, 2023

 

   Historical (unaudited)         
           Pro Forma   Pro Forma 
   VerifyMe, Inc (Consolidated)(a)  Trust Codes Global   Adjustments   Consolidated 
                 
Net Income (Loss) GAAP   (3,390)   (754)   (77)   (2,559)
Interest expense, net   161    -    -    161 
Amortization and depreciation   1,134    67    -    1,067 
                     
Total EBITDA (Non-GAAP)   (2,095)   (687)   (77)   (1,331)
                     
Change in fair value of contingent consideration   200    -    -    200 
Fair value of restricted stock and restricted stock units issued in exchange for services   1,354    -    -    1,354 
Severance expense   590    -    -    590 
Realized loss on equity investment   100    -    -    100 
Change in fair value of contingent consideration   (201)   -    (201)(c)   - 
Impairments   190    -    -    190 
One-time professional expenses for acquisitions   278    -                         278(b)   - 
                     
Total Adjusted EBITDA (Non-GAAP)   416    (687)   -   1,103 

 

  
 

 

VERIFYME, INC.

Unaudited Pro Forma Consolidated Statement of Operations

(in thousands except for per share amounts)

For the Nine Months Ended September 30, 2024

 

   Historical (unaudited)         
           Pro Forma   Pro Forma 
   VerifyMe, Inc (Consolidated)(a)  Trust Codes Global   Adjustments   Consolidated 
                 
                 
REVENUE  $16,546   $241   $-   $16,305 
COST OF SALES   10,301    5    -    10,296 
GROSS PROFIT   6,245    236    -    6,009 
                     
OPERATING EXPENSES                    
Management and technology   4,189    780    -    3,409 
General and administrative (a)   2,780    7    -    2,773 
Research and development   65    50    -    15 
Sales and marketing (a)   999    105    -    894 
Goodwill and Intangible asset impairment Authentication   2,265    -    1,919(d)   346 
Total Operating expenses   10,298    942    1,919    7,437 
                     
LOSS BEFORE OTHER INCOME (EXPENSE)   (4,053)   (706)   (1,919)   (1,428)
                     
OTHER (EXPENSE) INCOME                    
Interest income (Expense)   (109)   -    -    (109)
Loss on equity investment   -    -    -    - 
Change in fair value of contingent consideration   839    -    839(c)   - 
Other (expense) income, net   -    -    -    - 
                     
TOTAL OTHER INCOME (EXPENSE), NET   730    -    839    (109)
                     
NET INCOME   (3,323)   (706)   (1,079)   (1,537)
                     
EARNINGS/(LOSS) PER SHARE                    
BASIC  $(0.32)            $(0.15)
DILUTED  $(0.32)            $(0.15)
                     
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING                    
BASIC   10,306,392              10,306,392 
DILUTED   10,306,392              10,306,392 

 

  
 

 

VERIFYME, INC.

EBITDA and Adjusted EBITDA Reconciliation Table (Unaudited)

(in thousands)

For the Nine Months Ended September 30, 2024

 

   Historical (unaudited)         
           Pro Forma   Pro Forma 
   VerifyMe, Inc (Consolidated)(a)  Trust Codes Global   Adjustments   Consolidated 
                 
Net Income (Loss) GAAP   (3,323)   (706)   (1,079)   (1,537)
Interest expense, net   109    -    -    109 
Amortization and depreciation   905    61    -    844 
                     
Total EBITDA (Non-GAAP)   (2,309)   (645)   (1,079)   (584)
                     
Change in fair value of contingent consideration   174    -    -    174 
Fair value of restricted stock and restricted stock units issued in exchange for services   1,009    28    -    981 
Severance expense   141    -    -    141 
Change in fair value of contingent consideration   (839)   -    (839)(c)   0.47 
Impairments   2,265    -    1,919(d)   346 
                     
Total Adjusted EBITDA (Non-GAAP)   441    (617)   -    1,059 

 

  
 

 

VerifyMe, Inc.

Notes to Unaudited Pro Forma Combined Financial Statement

 

Note 1 - Basis of Presentation

 

The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023 give effect to the sale of Trust Codes Global Limited (“TCGL”) as if it were completed on January 1, 2023.

 

The pro forma financial statements have been derived from the historical consolidated financial statements of the Company. The historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are (i) directly attributable to the sale of TCGL, (ii) factually supportable and (iii) with respect to the unaudited pro forma consolidated statements of operations, expected to have a continuing impact on the Company's consolidated operating results.

 

Note 2 - Pro Forma Adjustments

 

A limited number of pro forma adjustments are required to illustrate the effects of the sale of TCGL on our balance sheet as of September 30, 2024. The following narrative description is furnished in lieu of a pro forma balance sheet. Assuming the Company has sold TCGL on January 1, 2023:

 

·As of September 30, 2024, current assets (cash and cash equivalent, accounts receivable net of allowance for credit losses, unbilled revenue and prepaid expenses) and total assets (property and equipment, net and right of use asset) for VerifyMe, Inc. would have been reduced by $0.1 million and $0.2 million respectively.
·As of September 30, 2024 total liabilities (accounts payable, other accrued expenses, lease liability current and long term and contingent liability current) would have been reduced by $0.2 million.

 

The following is a summary of the pro forma adjustments reflected in the unaudited pro forma consolidated financial statements based on preliminary estimates, which may change as additional information is obtained:

 

(a) Reflects the Company's consolidated statement of operations for the years end December 31, 2023, as contained in the financial statements presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the "SEC") on March 29, 2024, and the Company's consolidated statement of operations as of September 30, 2024, as contained in the financial statements presented in the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2024, filed with the SEC on November 12, 2024. The amounts presented in the pro forma statements reflect reclassifications to conform to our current presentation in our current reporting period.

 

(b) Represents one-time professional fees from acquisition separate from ongoing operating costs.

(c) Represents the change in fair value of contingent consideration from acquisition separate from ongoing operating costs.

(d) Represents goodwill and intangible asset impairments separate from ongoing operating costs.