VerifyMe Reports Continued Revenue Growth for the Fourth Quarter 2021

• Quarterly revenue of $255 Thousand, an increase of 240% compared to Q4 2020

• Revenue of $867 Thousand for the year ended December 31, 2021, an increase of 153% compared to December 31, 2020

• Diluted earnings per share of $0.49 for the year ended December 31, 2021, compared to a loss per share of $1.48 for December 31, 2020

• Cash of $9.4 Million and Equity Investment of $11.0 Million as of December 31, 2021

• Repurchased 79,593 shares at an average price of $3.28 per share in the fourth quarter of 2021

VerifyMe, Inc. providing brand owners with authentication, supply chain monitoring and data rich consumer engagement features using unique smartphone readable codes on their products, announced the Company’s financial results for the fourth quarter ended December 31, 2021 (“Q4 2021”).

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Key Financial Highlights for Q4 2021:

• Revenues of $255 thousand for the three months ended December 31, 2021, increased by 240% compared to $75 thousand for the three months ended December 31, 2020
• Net loss of $1.0 million or ($0.13) fully diluted loss per share for the three months ended December 31, 2021, compared to a loss of $1.2 million or ($0.29) fully diluted loss per share for the three months ended December 31, 2020
• Adjusted EBITDA, a non-GAAP financial measure, loss of $792 thousand for the three months ended December 31, 2021, compared to an adjusted EBITDA loss of $802 thousand for the three months ended December 31, 2020¹
• ·Share repurchase of 79,593 at an average price of $3.28 per share and 216,945 at an average price of $3.34 per share in the fourth quarter of 2021 and year ended 2021, respectively and approximately $775 thousand remaining under the share repurchase plan as of December 31, 2021
• Cash balance of $9.4 million on December 31, 2021

¹ See “Use of Non-GAAP Information” below for information about this non-GAAP measure. A reconciliation to the most directly comparable GAAP measure, net income (loss), is included as a schedule to this release.

Patrick White, VerifyMe’s CEO stated, “For the year, VerifyMe achieved a record level of revenue which we expect to continue to grow during 2022. Until we reach a much larger base of recurring revenue, we can expect quarterly revenue to be volatile based on timing and the size of various projects.  We continue to see growth in quality prospect inquiries and projects, including in the apparel, pharma and food and beverage industries.  We are also continuing to pursue synergistic acquisition opportunities.”

Recent Business Highlights

We are preparing to launch a new Non-Fungible Token (“NFT”) linking product called VerifyNFT^TM.

• This technology will use VerifyMe patented dual-code technology to verify both physical products and their associated NFT certificates of ownership.  This dual-code technology will prevent the creation of counterfeit physical products linked to NFTs, a growing challenge for many NFT providers. VerifyNFT^TM will integrate with the major blockchains, including Ethereum, Cardano, Solana, Polka Dot, Avalanche etc.

To increase our global presence, we have recently signed two new agreements to promote, market, adapt and sell our products.  These consultants are well established in their respective countries and have been granted a non-exclusive license to sell VerifyMe’s products and solutions.

• On December 5, 2021, we signed a reseller agreement with Kimoha Entrepreneurs in the United Arab Emirates.  Kimoha provides premium and specialty labelling and packaging solutions, for market segments like Cosmetics, Perfume, Lubricants, Food and Beverages, Pharmaceuticals, Aviation, Retail and Logistics, Garments, etc., in the Middle East and is a long-standing HP Indigo Partner.
• On December 21, 2021, we signed a Sales Consultant agreement with The AAB in South Africa. The AAB is a virtual back office that specializes in financial management and supply chain risk management. They are focused on counterfeit and product diversion and are promoting both our overt and covert security printing solutions in major growth industries.

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Financial Results for the Three Months Ended December 31, 2021:

Revenue for the three months ended December 31, 2021, was $255 thousand, a 240% increase as compared to $75 thousand for the three months ended December 31, 2020. The increase in revenue is primarily related to increased use of our security printing and authentication serialization technology with new cannabis companies using our unique smart phone readable codes which allow them to connect directly with their customer base.

Gross profit for the three months ended December 31, 2021, was $170 thousand, compared to $62 thousand for the three months ended December 31, 2020. The resulting gross margin was 67% for the three months ended December 31, 2021, compared to 83% for the three months ended December 31, 2020. The decrease in our gross profit margin relates to a shift in product mix, with an increase in the use of our secure track and trace serialization technology and customer engagement products. We believe our high gross profit margins demonstrate our business model’s ability to generate profitable growth.

Operating loss for the three months ended December 31, 2021, was $1,163 thousand, a decrease of $11 thousand compared to $1,174 thousand for the three months ended December 31, 2020. The decrease is primarily related to the increase in gross profit of $108 thousand, and a decrease in legal expenses; partially offset by the increase of $200 thousand in salaries and number of employees.

Our net loss for the three months ended December 31, 2021, decreased by $170 thousand to $1,004 thousand compared to a net loss of $1,174 thousand for the three months ended December 31, 2020. The decrease was primarily due to the fair value gain on our equity investment in the SPAC -G3 VRM Acquisition Corp contributing a fair value gain of $157 thousand.  The resulting loss per share for the three months ended December 31, 2021, was ($0.13) per diluted share, compared to a loss per share of ($0.29) per diluted share for the three months ended December 31, 2020.

Adjusted EBITDA loss for the three months ended December 31, 2021, was $792 thousand, a decrease of $10 thousand, compared to a loss of $802 thousand for the three months ended December 31, 2020. Adjusted EBITDA is a non-GAAP financial measure. Please see “Use of Non-GAAP Financial Measures” for a discussion of this non-GAAP measure. A reconciliation to the most directly comparable GAAP measure, net income (loss), is included as a schedule to this release.

At December 31, 2021, VerifyMe has a strong balance sheet with $9.4 million cash balance, $11.0 million equity investment and no debt.