8-K: VerifyMe Announces Sales Agreement for Up to $15.8 Million in Common Stock and Reports Q4 2024 Financial Results

VerifyMe, Inc. has entered into a sales agreement to potentially offer up to $15.8 million in common stock and reported its Q4 2024 financial results, highlighting increased gross profit and adjusted EBITDA for the year.

Summary

• VerifyMe, Inc. announced a sales agreement with Roth Capital Partners, LLC, allowing the company to offer and sell up to $15,803,511 of its common stock.
• The company will pay Roth a commission of 3.0% of gross proceeds from the sale of shares, plus reimbursement for legal counsel fees up to $50,000 and $5,000 per quarter for filing quarterly reports.
• VerifyMe also released its financial results for Q4 2024 and the year ended December 31, 2024.
• Annual revenue was $24.2 million, compared to $25.3 million in 2023, while Q4 revenue was $7.7 million, down from $8.7 million in Q4 2023.
• Annual gross profit increased to $8.7 million (36%) from $8.0 million (32%) in 2023, but Q4 gross profit decreased to $2.4 million (32%) from $2.9 million (33%) in Q4 2023.
• The annual net loss was $3.8 million (including $1.6 million of one-time adjustments), compared to a net loss of $3.4 million in 2023, while Q4 net loss was $0.5 million, compared to net income of less than $0.1 million in Q4 2023.
• Adjusted EBITDA for 2024 was $0.9 million, up from $0.4 million in 2023, but Q4 adjusted EBITDA decreased to $0.5 million from $1.1 million in Q4 2023.
• As of February 28, 2025, the company had $5.7 million in cash, and senior long-term debt of $0.9 million was repaid in 2025.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While there are positives like increased gross profit and adjusted EBITDA, there are also negatives like decreased revenue and a net loss. The company is taking steps to improve its financial position, but there are still risks involved.

Positives

• Annual gross profit increased by 8% year-over-year.
• Annual adjusted EBITDA more than doubled compared to 2023.
• The company divested of an unprofitable operation to focus on areas more likely to provide shareholder returns, which should benefit cashflow from operations in 2025.
• VerifyMe retired all company debt, besides $0.8 million of convertible notes held by company affiliates and Board members.
• The company has $5.7 million of cash as of February 28, 2025, plus the availability of the recently announced ATM.
• The company entered into an Inducement Letter Agreement with an institutional investor that exercised 1,461,896 warrants at a price of $3.215 per share for $4.7 million.

Negatives

• Annual revenue decreased to $24.2 million from $25.3 million in the previous year.
• Q4 revenue decreased to $7.7 million from $8.7 million in the same quarter of the previous year.
• Net loss for Q4 2024 was ($0.5) million, compared to net income of less than $0.1 million in Q4 2023.
• Adjusted EBITDA in Q4 2024 was $0.5 million, compared to $1.1 million in Q4 2023.
• The decrease in revenue in the Precision Logistics segment primarily relates to a discontinued contract with one customer in our Premium services.

Risks

• The company's reliance on one key strategic partner for shipping services in its Precision Logistics segment.
• Competition, including by the key strategic partner.
• Seasonal trends in the business and severe climate conditions.
• The highly competitive nature of the industry.
• Potential impairments related to goodwill and other intangible assets.
• Economic factors such as recessions, downturns in the economy, inflation, global uncertainty and instability, and the effects of pandemics.
• Global supply-chain delays or shortages and fluctuations in labor costs and raw materials.
• The company's history of losses and ability to use net operating losses to offset future taxable income.
• Intellectual property litigation.

Future Outlook

VerifyMe is finalizing its strategy to maximize shareholder returns and looks forward to announcing it, with improved liquidity and a strengthened financial condition.

Management Comments

• Adam Stedham, VerifyMe's CEO and President, stated that 2024 and the start of 2025 was key.
• The company increased gross profit by 8% year over year and more than doubled annual adjusted EBITDA compared to 2023.
• The company made the critical business decision to divest of an unprofitable operation and focus capital in areas that are more likely to provide shareholder returns.
• The company has retired all company debt, besides $0.8 million of convertible notes held by company affiliates and Board members.
• The company is still working with bankers and advisors to evaluate various alternatives and continues to be encouraged by the options.
• The strength of the balance sheet, with $5.7 million cash as of February 28, 2025, and access to additional low-cost capital adds to optimism for VerifyMe going forward.

Industry Context

The decrease in overall parcel shipment activity during Q4 2024 mirrored industry trends.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or comparable companies.
• The document mentions that overall parcel shipment activity was below that of the fourth quarter of 2023, mirroring industry trends.

Stakeholder Impact

• Shareholders may be impacted by the potential dilution from the offering of common stock.
• Employees may be impacted by the company's decision to divest of an unprofitable operation.
• Customers may be impacted by the company's focus on specific areas of its business.

Next Steps

• The company will continue to evaluate various alternatives with bankers and advisors.
• The company is finalizing its strategy to maximize shareholder returns and will announce it in the future.
• The company will continue to identify avenues for potential expansion.

Key Dates