Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 10, 2022 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2022 | |
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 | Clinton Square, 75 S. Clinton Ave | |
Entity Address, Address Line Two | Suite 510 | |
Entity Address, City or Town | Rochester | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 14604 | |
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 | 8,467,046 | |
Common Stock, par value $0.001 per share | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | VRME | |
Security Exchange Name | NASDAQ | |
Warrants to Purchase Common Stock | ||
Title of 12(b) Security | Warrants to Purchase Common Stock | |
Trading Symbol | VRMEW | |
Security Exchange Name | NASDAQ |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 3,751 | $ 9,422 |
Accounts Receivable, net of allowance for credit loss reserve, $13 and $0 as of June 30, 2022 and December 31, 2021, respectively | 1,738 | 297 |
Unbilled revenue | 622 | |
Prepaid expenses and other current assets | 234 | 152 |
Short term Investments | 94 | 88 |
Inventory | 59 | 52 |
TOTAL CURRENT ASSETS | 6,498 | 10,011 |
INVESTMENTS | ||
Equity investment | 10,964 | |
PROPERTY AND EQUIPMENT, NET | 351 | 204 |
RIGHT OF USE ASSET | 531 | |
INTANGIBLE ASSETS, NET | 6,517 | 509 |
GOODWILL | 4,092 | |
OTHER ASSETS | 106 | |
TOTAL ASSETS | 18,095 | 21,688 |
CURRENT LIABILITIES | ||
Current portion of debt | 500 | |
Accounts payable | 1,406 | 341 |
Other accrued expenses | 567 | 109 |
Lease liability- current | 116 | |
TOTAL CURRENT LIABILITIES | 2,589 | 450 |
LONG-TERM LIABILITIES | ||
Long-term portion of debt | 1,500 | |
Long-term lease liability | 416 | |
Long term derivative liability | 71 | |
TOTAL LIABILITIES | 4,505 | 521 |
STOCKHOLDERS' EQUITY | ||
Common stock, $.001 par value; 675,000,000 authorized; 8,666,002 and 7,420,633 issued, 8,467,046 and 7,196,677 shares outstanding as of June 30, 2022 and December 31, 2021, respectively | 9 | 7 |
Additional paid in capital | 92,347 | 86,059 |
Treasury stock as cost; 198,956 and 223,956 shares at June 30, 2022 and December 31, 2021, respectively | (756) | (838) |
Accumulated deficit | (78,010) | (64,061) |
STOCKHOLDERS' EQUITY | 13,590 | 21,167 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 18,095 | 21,688 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Convertible preferred stock | ||
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Convertible preferred stock |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Accounts and Financing Receivable, Allowance for Credit Loss | $ 13 | $ 0 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 675,000,000 | 675,000,000 |
Common stock, issued | 8,666,002 | 7,420,633 |
Common stock, outstanding | 8,467,046 | 7,196,677 |
Treasury stock, shares | 198,956 | 223,956 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 37,564,767 | 37,564,767 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 85 | 85 |
Preferred stock, issued | 0.85 | 0.85 |
Preferred stock, outstanding | 0.85 | 0.85 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | ||
Income Statement [Abstract] | |||||
NET REVENUE | $ 4,497 | $ 124 | $ 4,658 | $ 312 | |
COST OF REVENUE | 2,812 | 26 | 2,850 | 69 | |
GROSS PROFIT | 1,685 | 98 | 1,808 | 243 | |
OPERATING EXPENSES | |||||
General and administrative | [1] | 2,535 | 1,217 | 4,000 | 2,325 |
Research and development | 25 | 12 | 34 | 17 | |
Sales and marketing | [1] | 447 | 297 | 746 | 544 |
Total Operating expenses | 3,007 | 1,526 | 4,780 | 2,886 | |
LOSS BEFORE OTHER EXPENSE | (1,322) | (1,428) | (2,972) | (2,643) | |
OTHER (EXPENSE) INCOME | |||||
Interest income (expenses), net | (23) | (22) | |||
Loss on equity investments | (11,210) | (10,958) | |||
Other income | 3 | ||||
Payroll Protection Program Debt Forgiveness | 70 | 70 | |||
TOTAL OTHER (EXPENSE) INCOME, NET | (11,233) | 70 | (10,977) | 70 | |
NET LOSS | $ (12,555) | $ (1,358) | $ (13,949) | $ (2,573) | |
LOSS PER SHARE | |||||
BASIC | $ (1.53) | $ (0.18) | $ (1.81) | $ (0.37) | |
DILUTED | $ (1.53) | $ (0.18) | $ (1.81) | $ (0.37) | |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | |||||
BASIC | 8,218,964 | 7,391,864 | 7,699,324 | 6,991,690 | |
DILUTED | 8,218,964 | 7,391,864 | 7,699,324 | 6,991,690 | |
[1]Includes share-based compensation of $ 312 741 569 1,007 |
Statements of Operations (Una_2
Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Stock-based compensation | $ 312 | $ 569 | $ 741 | $ 1,007 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (13,949) | $ (2,573) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Allowance for bad debt | 13 | |
Stock based compensation | 92 | 23 |
Fair value of options in exchange for services | 85 | |
Fair value of restricted stock awards issued in exchange for services | 173 | 565 |
Fair value of restricted stock units issued in exchange for services | 477 | 277 |
Payroll Protection Program debt forgiveness | (70) | |
Fair value loss on equity investments | 10,958 | |
Amortization and depreciation | 243 | 55 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (619) | (112) |
Unbilled revenue | (622) | |
Due from related parties | (15) | |
Inventory | (7) | 1 |
Prepaid expenses and other current assets | (77) | 57 |
Accounts payable, other accrued expenses and leases | 693 | 39 |
Net cash used in operating activities | (2,625) | (1,668) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Due from related parties deposit and reimbursable expenses on investment | (2,937) | |
Purchase of patents | (25) | (55) |
Purchase of equipment for lease | (45) | |
Purchase of equity investment | (11) | |
Acquisition of PeriShip | (7,500) | |
Deferred implementation costs | (106) | |
Capitalized software costs | (77) | |
Net cash used in investing activities | (7,631) | (3,125) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from public offering of securities | 4,552 | 8,447 |
Repayment of note payable | (3) | |
Proceeds from Stock Purchase Plan | 67 | |
Increase in treasury shares (share repurchase program) | (228) | |
Tax withholding payments for employee stock-based compensation in exchange for shares surrendered | (34) | |
Net cash provided by financing activities | 4,585 | 8,216 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (5,671) | 3,423 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 9,422 | 7,939 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 3,751 | 11,362 |
Cash paid during the period for: | ||
Interest | ||
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Initial recognition of right-of-use asset and lease liability during the period | $ 552 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 6 | $ 76,099 | $ (113) | $ (67,673) | $ 8,319 | ||
Balance at beginning (in shares) at Dec. 31, 2020 | 0.85 | 5,596,877 | 7,011 | ||||
Restricted stock awards, net of shares withheld for employee tax | 565 | 565 | |||||
Restricted stock awards, net of shares withheld for employee tax (in shares) | 75,691 | ||||||
Restricted stock units | 277 | 277 | |||||
Common stock issued for services (in shares) | |||||||
Common stock issued for services | 23 | 23 | |||||
Repurchase of Common Stock | $ (228) | (228) | |||||
Repurchase of Common Stock (in shares) | (67,516) | 67,516 | |||||
Common stock issued for services (in shares) | 5,426 | ||||||
Net loss | (2,573) | (2,573) | |||||
Fair value of stock options | 85 | 85 | |||||
Common stock issued in relation to public offering of securities | $ 1 | 8,446 | 8,447 | ||||
Stock Issued During Period Shares Common Stock Issued in Relation to Public Offering of Securities | 1,750,000 | ||||||
Ending balance, value at Jun. 30, 2021 | $ 7 | 85,495 | $ (341) | (70,246) | 14,915 | ||
Balance at ending (in shares) at Jun. 30, 2021 | 0.85 | 7,360,478 | 74,527 | ||||
Beginning balance, value at Mar. 31, 2021 | $ 7 | 84,983 | $ (113) | (68,888) | 15,989 | ||
Balance at beginning (in shares) at Mar. 31, 2021 | 0.85 | 7,359,042 | 7,011 | ||||
Restricted stock awards, net of shares withheld for employee tax | 350 | 350 | |||||
Restricted stock awards, net of shares withheld for employee tax (in shares) | 65,691 | ||||||
Restricted stock units | 149 | 149 | |||||
Common stock issued for services (in shares) | |||||||
Common stock issued for services | 13 | 13 | |||||
Repurchase of Common Stock | $ (228) | (228) | |||||
Repurchase of Common Stock (in shares) | (67,516) | 67,516 | |||||
Common stock issued for services (in shares) | 3,261 | ||||||
Net loss | (1,358) | (1,358) | |||||
Ending balance, value at Jun. 30, 2021 | $ 7 | 85,495 | $ (341) | (70,246) | 14,915 | ||
Balance at ending (in shares) at Jun. 30, 2021 | 0.85 | 7,360,478 | 74,527 | ||||
Beginning balance, value at Dec. 31, 2021 | $ 7 | 86,059 | $ (838) | (64,061) | 21,167 | ||
Balance at beginning (in shares) at Dec. 31, 2021 | 0.85 | 7,196,677 | 223,956 | ||||
Restricted stock awards, net of shares withheld for employee tax | 139 | 139 | |||||
Restricted stock awards, net of shares withheld for employee tax (in shares) | 29,688 | ||||||
Restricted stock units | 477 | 477 | |||||
Common stock issued for services | 96 | 96 | |||||
Common stock issued in relation to stock purchase plan | (15) | $ 82 | 67 | ||||
[custom:StockPurchasePlanShares] | (25,000) | ||||||
Common stock issued for services (in shares) | 30,000 | ||||||
Net loss | (13,949) | (13,949) | |||||
Stock purchase plan | 67 | 67 | |||||
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 25,000 | ||||||
Common stock issued in relation to private placement | $ 2 | 4,550 | 4,552 | ||||
Common stock issued in relation to private placement ( in shares) | 880,208 | ||||||
Common stock issued in relation to Acquisition | 974 | 974 | |||||
Common stock issued in relation to Acquisition (in shares) | 305,473 | ||||||
Ending balance, value at Jun. 30, 2022 | $ 9 | 92,347 | $ (756) | (78,010) | 13,590 | ||
Balance at ending (in shares) at Jun. 30, 2022 | 0.85 | 8,467,046 | 198,956 | ||||
Beginning balance, value at Mar. 31, 2022 | $ 7 | 86,387 | $ (756) | (65,455) | 20,183 | ||
Balance at beginning (in shares) at Mar. 31, 2022 | 0.85 | 7,252,115 | 198,956 | ||||
Restricted stock awards, net of shares withheld for employee tax | 31 | 31 | |||||
Restricted stock awards, net of shares withheld for employee tax (in shares) | (750) | ||||||
Restricted stock units | 274 | 274 | |||||
Common stock issued for services (in shares) | |||||||
Common stock issued for services | 96 | 96 | |||||
Common stock issued for services (in shares) | 30,000 | ||||||
Net loss | (12,555) | (12,555) | |||||
Stock purchase plan | 35 | 35 | |||||
Stock Issued During Period, Shares, Employee Stock Purchase Plans | |||||||
Common stock issued in relation to private placement | $ 2 | 4,550 | 4,552 | ||||
Common stock issued in relation to private placement ( in shares) | 880,208 | ||||||
Common stock issued in relation to Acquisition | 974 | 974 | |||||
Common stock issued in relation to Acquisition (in shares) | 305,473 | ||||||
Ending balance, value at Jun. 30, 2022 | $ 9 | $ 92,347 | $ (756) | $ (78,010) | $ 13,590 | ||
Balance at ending (in shares) at Jun. 30, 2022 | 0.85 | 8,467,046 | 198,956 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Business VerifyMe, Inc. (“VerifyMe”) was incorporated in the State of Nevada $0.001 VerifyMe is a technology solutions provider specializing in products to connect brands with consumers and, through our wholly owned subsidiary, PeriShip Global, LLC (”PeriShip Global”) provides brands with high-touch, end-to-end logistics management for their products. Our operations are split into two segments: VerifyMe Solutions and PeriShip Global Solutions. Through our VerifyMe Solutions segment our technologies give consumers the ability to authenticate products prior to use and brand owners the ability to connect to their consumers and gather business intelligence. VerifyMe technologies provide brand owners the ability to gather business intelligence while engaging directly with their consumers. VerifyMe technologies also provide brand protection and supply chain functions such as counterfeit prevention, authentication, serialization, and track and trace features for labels, packaging and products. Through our PeriShip Global Solutions segment we provide logistics management from a sophisticated IT platform with proprietary databases, package and flight-tracking software, weather, traffic, and flight status monitoring systems, as well as dynamic dashboards with real-time visibility into shipment transit and last-mile events which are managed by a call center. The Company’s activities are subject to significant risks and uncertainties. See the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and our other filings with the Securities and Exchange Commission (the “SEC”). Reclassifications Certain amounts presented for the three and six months ended June 30, 2021, reflect reclassifications made to conform to the presentation in our current reporting period. Basis of Presentation The accompanying unaudited interim consolidated financial statements (the “Interim Statements”) include the accounts of VerifyMe and its wholly owned subsidiary. 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, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2022. 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, 2022, are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or for any future interim periods. 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 to allocate resources and assess performance. The Company has two reportable segments, namely, (i) VerifyMe Solutions and (ii) PeriShip Global Solutions. . See Note 13 Segment Reporting, for further discussion of the Company’s segment reporting structure. 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 June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments The Company’s accounts receivable is currently the only financial instrument subject to the new CECL model. The Company has considered re levant internal and/or external information about past events, e.g., historical loss experience with similar assets, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the reported amount of financial assets in determining the credit loss. Fair Value of Financial Instruments The Company’s financial instruments consist of accounts receivable, accounts payable, notes payable and accrued expenses, equity investments, and long-term derivative 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 approximate 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. 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 December 31, 2021 and June 30, 2022. Amounts in Thousands ('000) Short Term Investment Equity Investment Derivative Liability (Level 1) (Level 3) (Level 3) Balance as of December 31, 2021 $ 88 10,964 (71 ) Realized loss on fair value recognized in other (expense)/income - (10,964 ) - Unrealized gain on fair value recognized in other (expense)/income 6 - - Realized gain on fair value recognized in share based compensation - - 71 Balance at June 30, 2022 $ 94 $ - $ - Variable Interest Entity The Company has determined that G3 VRM Acquisition Corp. (NASDAQ: GGGVU) (the “SPAC”, see Note 2 – Equity Investments), a Delaware corporation and special purpose acquisition company, was a variable interest entity (“VIE”) in which the Company had a variable interest but is not the primary beneficiary. Making the determination as to whether a VIE should be consolidated requires judgement in assessing if the Company is the primary beneficiary. To make this determination, the Company evaluated its power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the SPAC. The Company concluded that it was not the primary beneficiary of the VIE and as such, did not consolidate the SPAC. The Company reassess its evaluation of whether an entity is a VIE and if it continues to be a VIE, whether the Company is the primary beneficiary of the VIE, on an ongoing basis based on the current facts and circumstances surrounding the entity. The SPAC was unable to complete its initial business combination within 12 months from the closing of the IPO, and the Company has made the decision not to fund the extension and did not deposit additional funds into the trust account. As a result, the SPAC has dissolved, and liquidated according to its charter. The SPAC redeemed 100% of the public shares for cash, the rights have expired worthless, and after provisions are made for dissolution of the SPAC it is anticipated that the founder shares and the private placement securities will be worthless. Equity Investments When the Company does not have a controlling financial interest in an entity but can exert influence over the entity’s operations and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under applicable generally accepted accounting policies. The Company has elected the fair value option for its equity investment in the SPAC (see Note 2 – Equity Investments) and its equity security under short term investment on the balance sheets, as it has determined the fair value best reflects the economic performance of the equity investment. Changes in unrecognized gains or losses of the fair value of the equity investments are included in Loss on equity investments on the accompanying Consolidated Statements of Operations. Revenue Recognition The Company accounts for revenues according to Accounting Standards Codification (“ASC”) Topic 606, “ Revenue from Contracts with Customers” The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: o identify the contract with a customer; o identify the performance obligations in the contract; o determine the transaction price; o allocate the transaction price to performance obligations in the contract; and o recognize revenue as the performance obligation is satisfied. During the three and six months ended June 30, 2022, the Company’s revenues primarily consisted of revenue related to our shipping logistics services generated by our subsidiary PeriShip Global. 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, 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. 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. Business Combinations The Company applies the provisions of Accounting Standard Codification (“ASC”) Topic 805, Business Combinations, in the accounting for business acquisitions. ASC 805 requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately apply preliminary value to assets acquired and liabilities assumed at the acquisition date, where applicable, these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments in the current period, rather than a revision to a prior period. Upon the conclusion of the measurement period or final determination of the values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the Consolidated Statements of Operations. Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets where applicable. Although the Company believes the assumptions and estimates made have been reasonable and appropriate, they are based in part on information obtained from management of the acquired companies and are inherently uncertain. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results. Basic and Diluted Net Loss per Share of Common Stock The Company follows Financial Accounting Standards Board (“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 each of the three and six months ended June 30, 2022, and 2021, 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. months ended June 30, 2022, 5,596,000 727,000 337,000 3,713,000 675,000 144,000 six months ended June 30 4,338,000 465,000 3,779,000 144,000 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-based awards on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model include risk-free interest rates, expected volatility and expected life of the stock options. Changes in these assumptions can materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. For performance restricted stock units with stock price appreciation targets (see Note 7 – Stock Options, Restricted Stock and Warrants), we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the RSU’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal based on actual achievement during the period. 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 (“ASU 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. 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. |
EQUITY INVESTMENTS
EQUITY INVESTMENTS | 6 Months Ended |
Jun. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
EQUITY INVESTMENTS | NOTE 2 – EQUITY INVESTMENTS On February 26, 2021, the Company formed VMEA Holdings Inc. (the “Sponsor Entity”), a Delaware corporation that was the founder of the “SPAC” that was being co-sponsored by the Company. The SPAC was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On April 12, 2021, the Sponsor Entity converted to a Delaware limited liability company, changed its name to “G3 VRM Holdings LLC” and a co-sponsor was added as a member of the Sponsor Entity resulting in an equity interest of 44.40 10,626,000 626,000 569,410 516,280 53,130 5,694 229,228 2,581 9.42 As a result of ceasing to have a controlling financial interest in the Sponsor Entity on April 12, 2021, the Company accounted for the Sponsor Entity as an equity investment and has elected the fair value option. The SPAC was unable to complete its initial business combination within 12 months from the closing of the IPO and the Company decided not to fund the extension and did not deposit additional funds into the trust account. As a result, the SPAC has dissolved and liquidated in accordance with its charter. The SPAC redeemed 100% of the public shares for cash on July 19, 2022, the rights have expired worthless, and after provisions are made for dissolution of the SPAC it is anticipated that the founder shares and private placement securities will be worthless. The documentation to liquidate the SPAC was filed on July 29, 2022, no distributions are currently anticipated to be made to the Sponsors, and final distributions to the Sponsors, if any, are expected to take place in the third quarter of 2022. The fair value of the equity investment was $ 0 11.0 10,964 The following table presents summary financial information of the Sponsor Entity. Such summary information has been provided herein based upon the individual significance of the equity investment to the financial information of the Company. Amounts in Thousands ('000) June 30, 2022 December 31, Total Assets $ 108,403 $ 109,043 Total Liabilities 23 3,730 Mezzanine Equity and Stockholders' Deficit 108,380 105,313 Amounts in Thousands ('000) Six Months Ended 2022 2021 Operating Loss 805 2 Net Loss 652 2 In December 2021, the Company acquired 8,841 10 10.00 88,410 48 6 94 88 |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 3 – REVENUE Revenue by Category The following series of tables present our revenue disaggregated by various categories (dollars in thousands). VerifyMe PeriShip Global Consolidated Revenue Three Months Ended Three Months Ended Three Months Ended 2022 2021 2022 2021 2022 2021 Proactive services $ - - $ 3,315 - $ 3,315 $ - Premium services - - 916 - 916 - Brand protection services 266 124 - - 266 124 $ 266 $ 124 $ 4,231 $ - $ 4,497 $ 124 VerifyMe PeriShip Global Consolidated Revenue Six Months Ended Six Months Ended Six Months Ended 2022 2021 2022 2021 2022 2021 Proactive services $ - - $ 3,315 - $ 3,315 $ - Premium services - - 916 - 916 - Brand protection services 427 312 - - 427 312 $ 427 $ 312 $ 4,231 $ - $ 4,658 $ 312 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 the 30 days. These assets and liabilities are reported on the consolidated balance sheet 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, 2022 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, 2022, we did not have any capitalized sales commissions. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 6 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATION | NOTE 4 – BUSINESS COMBINATION PeriShip LLC On April 22, 2022, we acquired, through our wholly owned subsidiary PeriShip Global, the business and certain assets of PeriShip, LLC (“PeriShip”), a service provider of value-added time and temperature sensitive package management. PeriShip Global provides shipping logistics services utilizing its proprietary predictive analytics software and supporting call center services. Using its proprietary IT platform, the Company provides 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. The purchase price was $ 10.5 million 7.5 million 2.0 million 6 305,473 1.0 million The following table summarizes the purchase price allocation for the acquisition (dollars in thousands). Cash 7,500 Promissory note 2,000 Stock (issuance of 305,473 shares of common stock) (a) 974 Total purchase price 10,474 Amortization Period Purchase price allocation: Accounts receivable, net 836 Prepaid expenses 5 Developed Technology 3,120 6 Trade Names/Trademarks 1,096 13 Customer Relationships 1,923 10 Non-Compete Agreement 41 1 Property and Equipment, net 193 Goodwill 4,092 Accounts payable and other accrued expenses (832 ) 10,474 (a) Stock issued was calculated based on the 15 days prior to April 22, 2022, volume-weighted average price (“VWAP”) calculated at $3.2736 Unaudited Pro forma Financial Information The following unaudited proforma financial information presents the combined results of operations of the Company and gives effect to the acquisition discussed above for the three and six months ended June 30, 2022, as if the acquisition had occurred as of the beginning of the first period presented instead of on April 22, 2022, The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the acquisition had been completed on January 1, 2021, nor does it purport to project the results of operations of the combined company in future periods. The pro forma financial information does not give effect to any anticipated integration costs related to the acquired company during the periods presented. The below table summarizes proforma financial information for the Company, and the acquired PeriShip business, assuming the acquisition date of Periship occurred on January 1, 2021 (dollars in thousands): Three Months Ended Six Months Ended Description 2022 2021 2022 2021 Revenues $ 5,343 $ 4,806 $ 10,479 $ 12,178 Net loss $ (12,499 ) $ (456 ) $ (13,847 ) $ (1,457 ) |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | NOTE 5 – 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 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 that 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 Intangibles - Goodwill and Other Changes in the carrying amount of goodwill by reportable business segment for the six months ended June 30, 2022, were as follows (in thousands): VerifyMe PeriShip Global Total Net book value at January 1, 2022 $ - $ - $ - 2022 Activity Acquisition - 4,092 4,092 Net book value at June 30, 2022 $ - $ 4,092 $ 4,092 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, 2022 Gross Carrying Accumulated Net Carrying Patents and Trademarks $ 1,828 $ (389 ) $ 1,439 Capitalized Software 206 (70 ) 136 Customer Relationships 1,923 (36 ) 1,887 Developed Technology 3,120 (98 ) 3,022 Non-Compete Agreement 41 (8 ) 33 $ 7,118 $ (601 ) $ 6,517 December 31, 2021 Patents and Trademarks $ 707 $ (354 ) $ 353 Capitalized Software 206 (50 ) 156 Customer Relationships - - - Developed Technology - - - Non-Compete Agreement - - - $ 913 $ (404 ) $ 509 Amortization expense for intangible assets was $ 197 29 Patents and Trademarks As of June 30, 2022, the current patent and trademark portfolios consist of twelve granted U.S. patents and one granted European patent validated in four countries (France, Germany, United Kingdom, and Italy), six pending U.S. and foreign patent applications, fifteen registered U.S. trademarks (of which eight trademarks were acquired through our wholly owned subsidiary, PeriShip Global), 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, and twenty-two pending US and foreign trademark applications. The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands): Year June 30, 2022 2022 (six months remaining) $ 458 2023 881 2024 869 2025 843 2026 833 Thereafter 2,633 Total $ 6,517 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 6 – STOCKHOLDERS’ EQUITY The Company expensed $ 34 173 407 622 The Company expensed $ 274 477 149 277 During the six months ended June 30, 2022, and 2021, the Company issued 30,000 and 5,426 shares of common stock in relation to services with a stock-based compensation expense of $96 thousand and $23 thousand, respectively. On April 22, 2022, 305,473 On April 22, 2022, the Company, as part of the acquisition of the business of PeriShip, LLC, entered into employment agreements with three executives effective as of April 22, 2022. In accordance with the employment agreements, the Compensation Committee of the Board approved grants of performance restricted stock units (“Performance RSUs”) to each of the executives with a grant date value as of April 22, 2022, equal to their respective base salary for a total of 194,044 571 The Performance RSUs vest as follows: 50% of the RSUs (“Tranche 1”) will vest on the two-year anniversary of the Date of Grant if the Participant has remained in continuous employment with the Company through such date and the closing price of the Common Stock during such two-year period was at or above $5.00 for 20 consecutive trading days. If Tranche 1 does not vest on the two-year anniversary of the Date of Grant because closing price of the Common Stock was not at or above $5.00 during such two year period, then Tranche 1 will vest on the three-year anniversary of the Date of Grant if the Participant has remained in continuous employment with the Company through such date and the closing price of the Common Stock during such three-year period was at or above $5.00 for 20 consecutive trading days. In the event of termination of the Participant’s employment due to the death or Disability of the Participant at any time on or before the two-year anniversary of the Date of Grant, if Tranche 1 has not vested prior to the date of termination, then Tranche 1 will vest on the date of the Participant’s termination if the closing price of the Common Stock was at or above $5.00 for 20 consecutive trading days during the period from Date of Grant through the date of the Participant’s employment. 50% of the RSUs (“Tranche 2”) will vest on the two-year anniversary of the Date of Grant if the Participant has remained in continuous employment with the Company through such date and the closing price of the Common Stock during such two-year period was at or above $7.00 for 20 consecutive trading days. If Tranche 2 does not vest on the two-year anniversary of the Date of Grant because closing price of the Common Stock was not at or above $7.00 during such two year period, then Tranche 2 will vest on the three-year anniversary of the Date of Grant if the Participant has remained in continuous employment with the Company through such date and the closing price of the Common Stock during such three-year period was at or above $7.00 for 20 consecutive trading days. In the event of termination of the Participant’s employment due to the death or Disability of the Participant at any time on or before the two -year anniversary of the Date of Grant, if Tranche 2 has not vested prior to the date of termination, then Tranche 2 will vest on the date of the Participant’s termination if the closing price of the Common Stock was at or above $7.00 for 20 consecutive trading days during the period from Date of Grant through the date of the Participant’s employment. Effective April 15, 2021, Norman Gardner, our former Chairman of the board of directors retired from the board of directors. Mr. Gardner was awarded 69,284 300 34,642 On April 15, 2022, On April 12, 2022, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with the selling stockholder and certain directors, providing for the issuance and sale to purchasers therein of an aggregate of 880,208 shares of our common stock, pre-funded warrants to purchase up to 675,000 shares of our common stock, and warrants to purchase up to 1,555,208 shares of our common stock, for gross proceeds to us of approximately $5.0 million and net proceeds of $4.6 million. The pre-funded warrant is exercisable immediately and shall terminate when fully exercised and has an exercise price of $0.001 per share. The warrants will be exercisable for a period of five years commencing six months from the date of issuance and have an exercise price of $3.215 per share. Both the pre-funded warrants and warrants contain price adjustment provisions which may, under certain circumstances, reduce the applicable exercise price. The transaction closed on April 14, 2022. Four of our directors, participated in the offering as purchasers and acquired an aggregate of 93,312 shares of our common stock and warrants to purchase an aggregate of 93,312 shares of our common stock. Effective April 7, 2022, the Company approved restricted stock units or restricted stock awards, for a non-employee director, with a grant date fair value equal to $ 92 28,592 On April 7, 2022, the Compensation Committee of the Board approved grants of 30,000 178 On March 29, 2022, On February 16, 2022, the Company, as part of the development and implementation of the Company’s strategic initiatives, entered into employment agreements with its Chief Executive Officer, President & Chief Operating Officer, Executive Vice President & Chief Financial Officer, Chief Technology Officer and Senior VP of Finance and Investor Relations, each with effect as of February 15, 2022. In accordance with the employment agreements, the Compensation Committee of the Board approved grants of Performance RSUs to each of the executives, for a total of 178,282 525 Effective January 1, 2022, the Company approved restricted stock units or restricted stock awards, for each non-employee director, with a grant date fair value equal to $ 100 25 a total of 157,232 restricted stock units were issued to four non-employee directors for a fair value of $500 thousand, and 39,308 restricted stock awards were issued to one non-employee director for a fair value of $125 thousand, vesting one year from the date of issuance. On April 15, 2021, the board of directors granted the Company’s Chief Financial Officer, an award of 5,000 21 In April 2021, the Company granted an employee, an award of 5,000 21 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 numbers 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 plan is considered compensatory. During the three and six months ended June 30, 2022, $35 thousand and $67 thousand, respectively, have been expensed in relation to the non-qualified stock purchase plan. Shares Held in Treasury As of June 30, 2022, and December 31, 2021, the Company had 198,956 223,956 756 838 On February 28, 2022, five participants exercised their option under the Company’s non-qualified stock purchase plan, and as a result, 25,000 2.69 Shares Repurchase Program In November 2020, the Company’s Board of Directors approved a share repurchase program for up to $ 1.5 million |
STOCK OPTIONS, RESTRICTED STOCK
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS | NOTE 7 – 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 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 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 The 2020 Plan 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). 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. Details for all stock issuances are discussed in Note 6 – Stockholders’ Equity. 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, 2021 465,471 $ 4.38 Granted - - Forfeited/Cancelled/Expired (128,000 ) 3.74 Balance as of June 30, 2022 337,471 $ 4.63 Exercisable as of June 30, 2022 337,471 $ 4.63 2.3 $ - (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. As of June 30, 2022, the Company had no unvested stock options. During the three months ended June 30, 2022, and 2021, the Company expensed $ 0 0 0 85 As of June 30, 2022, there was $ 0 Restricted Stock Awards and Restricted Stock Units The following table summarizes the unvested restricted stock awards as of June 30, 2022: Unvested Restricted Stock Awards Weighted - Average Number of Grant Shares Date Fair Value Unvested at December 31, 2021 44,642 4.31 Granted 39,308 3.18 Vested (42,142 ) 4.32 Balance June 30, 2022 41,808 $ 3.24 As of June 30, 2022, total unrecognized share-based compensation cost related to unvested restricted stock awards was $ 67 0.5 The following table summarizes the unvested restricted stock units as of June 30, 2022: Unvested Restricted Stock Units Weighted - Average Number of Grant Shares Date Fair Value Unvested at December 31, 2021 187,010 4.11 Granted 185,824 3.18 Vested (145,010 ) 4.31 Balance June 30, 2022 $ 227,824 $ 3.23 As of June 30, 2022, total unrecognized share-based compensation cost related to unvested restricted stock units was $ 375 0.5 For RSUs 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 RSU’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 The following table summarizes the unvested performance restricted stock units as of June 30, 2022: Unvested Performance Restricted Stock Units Weighted - Average Number of Grant Shares Date Fair Value Unvested at December 31, 2021 - - Granted 432,326 2.95 Vested - - Balance June 31, 2022 $ 432,326 $ 2.95 As of June 30, 2022, total unrecognized share-based compensation cost related to unvested restricted stock units was $ 1,160 2.73 Warrants The following table summarizes the activities for the Company’s warrants for the six months ended Schedule of warrants Warrants Outstanding (Excluding Pre-Funded Warrants) Number of Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in thousands) (1) Balance as of December 31, 2021 3,779,243 $ 5.89 Granted 1,590,150 3.14 Expired (101,679 ) 7.20 Balance as of June 30, 2022 5,267,714 $ 5.03 3.4 Exercisable as of June 30, 2022 3,712,506 $ 5.79 2.6 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $ 1.96 For the six months ended June 30, 2022, the Company granted 39,942 warrants to warrant holders pursuant to anti-dilution provisions, 1,555,208 warrants in conjunction with the Securities Purchase Agreement (see Note 6 – Stockholders’ Equity). As the fair value of the warrants granted would have had a net zero impact to equity (increasing additional paid in capital and offering costs for the same amount), the Company did not break out or complete a separate valuation of the warrants granted in association with either capital raise. Pre-funded Warrants On April 14, 2022, in connection with our Securities Purchase Agreement (see Note 6 – Stockholders’ Equity), the Company issued 675,000 0.001 The pre-funded warrants do not expire and are immediately exercisable at any time. A holder will not be entitled to exercise any portion of any pre-funded warrant if the holder’s ownership of the Company’s common stock would exceed 4.99% to 9.99% following such exercise. In the event of certain fundamental transactions, the holders of the pre-funded warrants will be entitled to receive upon exercise of the pre-funded warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the pre-funded warrants immediately prior to such fundamental transaction without regard to any limitations on exercise contained in the pre-funded warrants. Per ASC 480, Distinguishing Liabilities from Equity, states that when there is a conditional redemption future, and such event becomes certain to occur, the fair value of the pre-funded warrants would become a liability. As no such trigger event has occurred or is certain to occur, the pre-funded warrants were determined to be equity classified; accordingly, proceeds received from their issuance were recorded as a component of stockholders’ equity within additional paid-in capital. The determination for classifying the warrants in equity is evaluated at each reporting. The evaluation was made at this reporting period ended June 30, 2022, and the Company concluded that the warrants are appropriately classified as equity. None of the pre-funded warrants were exercised for the six months ended June 30, 2022, and therefore remain outstanding as of June 30, 2022. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 8— DEBT On April 22, 2022, the Company issued a $ 2.0 million 6 Pursuant to the Guaranty, the Company unconditionally guaranteed to PeriShip the prompt and unconditional payment of the promissory note and any interest thereon, whether at stated maturity, by acceleration or otherwise, any and all sums of money that, at the time, may have become due and payable under the provisions of the promissory note, and all expenses that may be paid or incurred by the Seller in the collection of any portion of the promissory note or enforcement thereof, including reasonable attorney’s fees. As of June 30, 2022, our short term debt outstanding under the term of the promissory note 0.5 million 1.5 million |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9— INCOME TAXES There are no taxes payable as of June 30, 2022, or December 31, 2021. 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 Utilization of the net operating loss (NOL) carryforwards may be subject to a substantial annual limitation due to ownership changes that could occur in the future, as required by Section 382 of the IRC, as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income. In general, an “ownership change” as defined by Section 382 of the IRC 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. 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 three months ended June 30, 2022. The Company acquired certain assets and the business of PeriShip LLC on April 22, 2022. Intangible assets have been established in the amount of $ 6,180 15 1 13 4,092 |
LONG TERM DERIVATIVE LIABILITY
LONG TERM DERIVATIVE LIABILITY | 6 Months Ended |
Jun. 30, 2022 | |
LONG TERM DERIVATIVE LIABILITY | NOTE 10— LONG TERM DERIVATIVE LIABILITY On April 7, 2022, the Company granted two directors 11,250 restricted stock units each (“SPAC RSUs”) with respect to the common stock, $ 0.0001 On September 17, 2021, the Company granted two directors SPAC RSUs with respect to the common stock, $0.0001 par value per share, of G3 VRM Acquisition Corp. The SPAC RSUs vest upon the initial business combination of the SPAC (see Note 2 – Equity Investments) subject to continuous service to the Company through the vesting date. Each vested SPAC RSU represents the right to receive the value of one share of stock in G3 VRM Acquisition Corp., which will be paid to the director as soon as practicable after the fifteen-month anniversary of the vesting date. The grant date fair value of the SPAC RSUs for each director was $ 98 In June 2022, the Company decided not to fund the extension for the time that the SPAC had to complete its initial business combination. As a result, the SPAC has dissolved and liquidated in accordance with its charter and under ASC 815, the derivative instrument is terminated. As a result, the SPAC RSUs were forfeited. For the six months ended June 30, 2022, the Company has recorded the effect of termination to reduce the fair value and recorded a credit to share-based compensation expense of $(126) thousand in relation to these awards. The fair value of the derivative liability was $ 0 71 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 11– 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 lease includes 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. 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 expense is included in General & Administrative Expenses on the Consolidated Statements of Operations. The components of lease expense were as follows (in thousands): Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Operating lease cost $ 21 $ - $ 21 $ - Short-term lease cost 3 2 7 6 Total lease costs $ 24 2 $ 28 6 Supplemental information related to leases was as follows (dollars in thousands): June 30, 2022 December 31, 2021 Operating Lease right-of-use asset $ 531 $ - Current portion of operating lease liabilities $ 116 $ - Non-current portion of operating lease liabilities 416 - Total operating lease liabilities $ 532 $ - Cash paid for amounts included in the measurement of operating lease liabilities $ 20 $ - Right-of-use assets obtained in exchange for operating lease liabilities $ 552 $ - Weighted-average remaining lease term for operating leases (years) 4.8 Weighted average discount rate for operating leases 6.0 % The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of June 30, 2022 (in thousands): Year ended December 31, 2022 (Excluding six months ended June 2022) $ 60 2023 122 2024 126 2025 130 2026 134 Thereafter 45 Total future lease payments 617 Less: imputed interest (85 ) Present value of future lease payments 532 Less: current portion of lease liabilities (116 ) Long-term lease liabilities $ 416 |
CONCENTRATIONS
CONCENTRATIONS | 6 Months Ended |
Jun. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 12– CONCENTRATIONS For the three months ended June 30, 2022, one customer represented 17 97 17 84 As of June 30, 2022, one customer made up 38 94 During the three and six months ended June 30, 2022, one vendor accounted for 99 99 |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 13 – SEGMENT REPORTING As of June 30, 2022, we operated through two reportable business segments: (i) VerifyMe Solutions and (ii) PeriShip Global Solutions. VerifyMe Solutions PeriShip Global Solutions: offers a value-added service provider for time and temperature sensitive parcel management. We provide shipping logistics services utilizing proprietary predictive analytics software and supporting call center services. 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. We do not allocate the following items to the segments: general & administrative expenses, sales & marketing expenses, restructuring charges, other expense, interest expense, gain on equity investments and income tax 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 Six Months Ended 2022 2021 2022 2021 Revenue VerifyMe Solutions $ 266 124 $ 427 312 PeriShip Global Solutions 4,231 - 4,231 - $ 4,497 $ 124 $ 4,658 $ 312 Gross Profit VerifyMe Solutions $ 176 $ 98 $ 299 $ 243 PeriShip Global Solutions 1,509 - 1,509 - 1,685 98 1,808 243 General and administrative (a) 2,535 1,217 4,000 2,325 Research and development 25 12 34 17 Sales and marketing (a) 447 297 746 544 LOSS BEFORE OTHER (EXPENSE) INCOME (1,322 ) (1,428 ) (2,972 ) (2,643 ) OTHER (EXPENSE) INCOME (11,233 ) 70 (10,977 ) 70 NET LOSS $ (12,555 ) $ (1,358 ) $ (13,949 ) $ (2,573 ) |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS Effective July 1, 2022, the Company’s Board of Directors approved a new share repurchase program to allow the Company to spend up to $ 1.5 million to repurchase shares of its common stock, so long as the price does not exceed $ 5.00 until July 1, 2023 which replaced the Company’s existing share repurchase program that was due to expire on August 16, 2022. The SPAC was unable to complete its initial business combination within 12 months from the closing of the IPO and the Company decided not to fund the extension and did not deposit additional funds into the trust account. As a result, the SPAC has dissolved and liquidated in accordance with its charter. The SPAC redeemed 100% of the public shares for cash on July 19, 2022, On August 11, 2022, we received an exercise notice to exercise 675,000 0.001 Upon receipt of $675 the Company will issue 675,000 shares of its common stock. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Nature of the Business | Nature of the Business VerifyMe, Inc. (“VerifyMe”) was incorporated in the State of Nevada $0.001 VerifyMe is a technology solutions provider specializing in products to connect brands with consumers and, through our wholly owned subsidiary, PeriShip Global, LLC (”PeriShip Global”) provides brands with high-touch, end-to-end logistics management for their products. Our operations are split into two segments: VerifyMe Solutions and PeriShip Global Solutions. Through our VerifyMe Solutions segment our technologies give consumers the ability to authenticate products prior to use and brand owners the ability to connect to their consumers and gather business intelligence. VerifyMe technologies provide brand owners the ability to gather business intelligence while engaging directly with their consumers. VerifyMe technologies also provide brand protection and supply chain functions such as counterfeit prevention, authentication, serialization, and track and trace features for labels, packaging and products. Through our PeriShip Global Solutions segment we provide logistics management from a sophisticated IT platform with proprietary databases, package and flight-tracking software, weather, traffic, and flight status monitoring systems, as well as dynamic dashboards with real-time visibility into shipment transit and last-mile events which are managed by a call center. The Company’s activities are subject to significant risks and uncertainties. See the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and our other filings with the Securities and Exchange Commission (the “SEC”). |
Reclassifications | Reclassifications Certain amounts presented for the three and six months ended June 30, 2021, reflect reclassifications made to conform to the presentation in our current reporting period. |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements (the “Interim Statements”) include the accounts of VerifyMe and its wholly owned subsidiary. 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, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2022. 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, 2022, are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or for any future interim periods. |
Segment Reporting | 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 to allocate resources and assess performance. The Company has two reportable segments, namely, (i) VerifyMe Solutions and (ii) PeriShip Global Solutions. . See Note 13 Segment Reporting, for further discussion of the Company’s segment reporting structure. |
Use of Estimates | 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 | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments The Company’s accounts receivable is currently the only financial instrument subject to the new CECL model. The Company has considered re levant internal and/or external information about past events, e.g., historical loss experience with similar assets, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the reported amount of financial assets in determining the credit loss. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of accounts receivable, accounts payable, notes payable and accrued expenses, equity investments, and long-term derivative 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 approximate 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. 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 December 31, 2021 and June 30, 2022. Amounts in Thousands ('000) Short Term Investment Equity Investment Derivative Liability (Level 1) (Level 3) (Level 3) Balance as of December 31, 2021 $ 88 10,964 (71 ) Realized loss on fair value recognized in other (expense)/income - (10,964 ) - Unrealized gain on fair value recognized in other (expense)/income 6 - - Realized gain on fair value recognized in share based compensation - - 71 Balance at June 30, 2022 $ 94 $ - $ - |
Variable Interest Entity | Variable Interest Entity The Company has determined that G3 VRM Acquisition Corp. (NASDAQ: GGGVU) (the “SPAC”, see Note 2 – Equity Investments), a Delaware corporation and special purpose acquisition company, was a variable interest entity (“VIE”) in which the Company had a variable interest but is not the primary beneficiary. Making the determination as to whether a VIE should be consolidated requires judgement in assessing if the Company is the primary beneficiary. To make this determination, the Company evaluated its power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the SPAC. The Company concluded that it was not the primary beneficiary of the VIE and as such, did not consolidate the SPAC. The Company reassess its evaluation of whether an entity is a VIE and if it continues to be a VIE, whether the Company is the primary beneficiary of the VIE, on an ongoing basis based on the current facts and circumstances surrounding the entity. The SPAC was unable to complete its initial business combination within 12 months from the closing of the IPO, and the Company has made the decision not to fund the extension and did not deposit additional funds into the trust account. As a result, the SPAC has dissolved, and liquidated according to its charter. The SPAC redeemed 100% of the public shares for cash, the rights have expired worthless, and after provisions are made for dissolution of the SPAC it is anticipated that the founder shares and the private placement securities will be worthless. |
Equity Investments | Equity Investments When the Company does not have a controlling financial interest in an entity but can exert influence over the entity’s operations and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under applicable generally accepted accounting policies. The Company has elected the fair value option for its equity investment in the SPAC (see Note 2 – Equity Investments) and its equity security under short term investment on the balance sheets, as it has determined the fair value best reflects the economic performance of the equity investment. Changes in unrecognized gains or losses of the fair value of the equity investments are included in Loss on equity investments on the accompanying Consolidated Statements of Operations. |
Revenue Recognition | Revenue Recognition The Company accounts for revenues according to Accounting Standards Codification (“ASC”) Topic 606, “ Revenue from Contracts with Customers” The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: o identify the contract with a customer; o identify the performance obligations in the contract; o determine the transaction price; o allocate the transaction price to performance obligations in the contract; and o recognize revenue as the performance obligation is satisfied. During the three and six months ended June 30, 2022, the Company’s revenues primarily consisted of revenue related to our shipping logistics services generated by our subsidiary PeriShip Global. |
Goodwill | 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, 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. 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. |
Business Combinations | Business Combinations The Company applies the provisions of Accounting Standard Codification (“ASC”) Topic 805, Business Combinations, in the accounting for business acquisitions. ASC 805 requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately apply preliminary value to assets acquired and liabilities assumed at the acquisition date, where applicable, these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments in the current period, rather than a revision to a prior period. Upon the conclusion of the measurement period or final determination of the values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the Consolidated Statements of Operations. Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets where applicable. Although the Company believes the assumptions and estimates made have been reasonable and appropriate, they are based in part on information obtained from management of the acquired companies and are inherently uncertain. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results. |
Basic and Diluted Net Loss per Share of Common Stock | Basic and Diluted Net Loss per Share of Common Stock The Company follows Financial Accounting Standards Board (“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 each of the three and six months ended June 30, 2022, and 2021, 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. months ended June 30, 2022, 5,596,000 727,000 337,000 3,713,000 675,000 144,000 six months ended June 30 4,338,000 465,000 3,779,000 144,000 |
Stock-Based Compensation | 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-based awards on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model include risk-free interest rates, expected volatility and expected life of the stock options. Changes in these assumptions can materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. For performance restricted stock units with stock price appreciation targets (see Note 7 – Stock Options, Restricted Stock and Warrants), we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the RSU’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation trial. We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal based on actual achievement during the period. 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 (“ASU 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. 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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
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 December 31, 2021 and June 30, 2022. | 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 December 31, 2021 and June 30, 2022. Amounts in Thousands ('000) Short Term Investment Equity Investment Derivative Liability (Level 1) (Level 3) (Level 3) Balance as of December 31, 2021 $ 88 10,964 (71 ) Realized loss on fair value recognized in other (expense)/income - (10,964 ) - Unrealized gain on fair value recognized in other (expense)/income 6 - - Realized gain on fair value recognized in share based compensation - - 71 Balance at June 30, 2022 $ 94 $ - $ - |
EQUITY INVESTMENTS (Tables)
EQUITY INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
The following table presents summary financial information of the Sponsor Entity. Such summary information has been provided herein based upon the individual significance of the equity investment to the financial information of the Company. | The following table presents summary financial information of the Sponsor Entity. Such summary information has been provided herein based upon the individual significance of the equity investment to the financial information of the Company. Amounts in Thousands ('000) June 30, 2022 December 31, Total Assets $ 108,403 $ 109,043 Total Liabilities 23 3,730 Mezzanine Equity and Stockholders' Deficit 108,380 105,313 Amounts in Thousands ('000) Six Months Ended 2022 2021 Operating Loss 805 2 Net Loss 652 2 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
The following series of tables present our revenue disaggregated by various categories (dollars in thousands). | The following series of tables present our revenue disaggregated by various categories (dollars in thousands). VerifyMe PeriShip Global Consolidated Revenue Three Months Ended Three Months Ended Three Months Ended 2022 2021 2022 2021 2022 2021 Proactive services $ - - $ 3,315 - $ 3,315 $ - Premium services - - 916 - 916 - Brand protection services 266 124 - - 266 124 $ 266 $ 124 $ 4,231 $ - $ 4,497 $ 124 VerifyMe PeriShip Global Consolidated Revenue Six Months Ended Six Months Ended Six Months Ended 2022 2021 2022 2021 2022 2021 Proactive services $ - - $ 3,315 - $ 3,315 $ - Premium services - - 916 - 916 - Brand protection services 427 312 - - 427 312 $ 427 $ 312 $ 4,231 $ - $ 4,658 $ 312 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
The following table summarizes the purchase price allocation for the acquisition (dollars in thousands). | The following table summarizes the purchase price allocation for the acquisition (dollars in thousands). Cash 7,500 Promissory note 2,000 Stock (issuance of 305,473 shares of common stock) (a) 974 Total purchase price 10,474 Amortization Period Purchase price allocation: Accounts receivable, net 836 Prepaid expenses 5 Developed Technology 3,120 6 Trade Names/Trademarks 1,096 13 Customer Relationships 1,923 10 Non-Compete Agreement 41 1 Property and Equipment, net 193 Goodwill 4,092 Accounts payable and other accrued expenses (832 ) 10,474 (a) Stock issued was calculated based on the 15 days prior to April 22, 2022, volume-weighted average price (“VWAP”) calculated at $3.2736 |
The below table summarizes proforma financial information for the Company, and the acquired PeriShip business, assuming the acquisition date of Periship occurred on January 1, 2021 (dollars in thousands): | The below table summarizes proforma financial information for the Company, and the acquired PeriShip business, assuming the acquisition date of Periship occurred on January 1, 2021 (dollars in thousands): Three Months Ended Six Months Ended Description 2022 2021 2022 2021 Revenues $ 5,343 $ 4,806 $ 10,479 $ 12,178 Net loss $ (12,499 ) $ (456 ) $ (13,847 ) $ (1,457 ) |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of goodwill by reportable business segment for the six months ended June 30, 2022, were as follows (in thousands): | Changes in the carrying amount of goodwill by reportable business segment for the six months ended June 30, 2022, were as follows (in thousands): VerifyMe PeriShip Global Total Net book value at January 1, 2022 $ - $ - $ - 2022 Activity Acquisition - 4,092 4,092 Net book value at June 30, 2022 $ - $ 4,092 $ 4,092 |
The primary assets included in this category and their respective balances were as follows (in thousands): | 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, 2022 Gross Carrying Accumulated Net Carrying Patents and Trademarks $ 1,828 $ (389 ) $ 1,439 Capitalized Software 206 (70 ) 136 Customer Relationships 1,923 (36 ) 1,887 Developed Technology 3,120 (98 ) 3,022 Non-Compete Agreement 41 (8 ) 33 $ 7,118 $ (601 ) $ 6,517 December 31, 2021 Patents and Trademarks $ 707 $ (354 ) $ 353 Capitalized Software 206 (50 ) 156 Customer Relationships - - - Developed Technology - - - Non-Compete Agreement - - - $ 913 $ (404 ) $ 509 |
The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands): | The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands): Year June 30, 2022 2022 (six months remaining) $ 458 2023 881 2024 869 2025 843 2026 833 Thereafter 2,633 Total $ 6,517 |
STOCK OPTIONS, RESTRICTED STO_2
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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, 2021 465,471 $ 4.38 Granted - - Forfeited/Cancelled/Expired (128,000 ) 3.74 Balance as of June 30, 2022 337,471 $ 4.63 Exercisable as of June 30, 2022 337,471 $ 4.63 2.3 $ - (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. |
The following table summarizes the unvested restricted stock awards as of June 30, 2022: | The following table summarizes the unvested restricted stock awards as of June 30, 2022: Unvested Restricted Stock Awards Weighted - Average Number of Grant Shares Date Fair Value Unvested at December 31, 2021 44,642 4.31 Granted 39,308 3.18 Vested (42,142 ) 4.32 Balance June 30, 2022 41,808 $ 3.24 |
The following table summarizes the unvested restricted stock units as of June 30, 2022: | The following table summarizes the unvested restricted stock units as of June 30, 2022: Unvested Restricted Stock Units Weighted - Average Number of Grant Shares Date Fair Value Unvested at December 31, 2021 187,010 4.11 Granted 185,824 3.18 Vested (145,010 ) 4.31 Balance June 30, 2022 $ 227,824 $ 3.23 |
The following table summarizes the unvested performance restricted stock units as of June 30, 2022: | The following table summarizes the unvested performance restricted stock units as of June 30, 2022: Unvested Performance Restricted Stock Units Weighted - Average Number of Grant Shares Date Fair Value Unvested at December 31, 2021 - - Granted 432,326 2.95 Vested - - Balance June 31, 2022 $ 432,326 $ 2.95 |
Schedule of warrants | The following table summarizes the activities for the Company’s warrants for the six months ended Schedule of warrants Warrants Outstanding (Excluding Pre-Funded Warrants) Number of Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in thousands) (1) Balance as of December 31, 2021 3,779,243 $ 5.89 Granted 1,590,150 3.14 Expired (101,679 ) 7.20 Balance as of June 30, 2022 5,267,714 $ 5.03 3.4 Exercisable as of June 30, 2022 3,712,506 $ 5.79 2.6 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $ 1.96 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Lease expense is included in General & Administrative Expenses on the Consolidated Statements of Operations. The components of lease expense were as follows (in thousands): | Lease expense is included in General & Administrative Expenses on the Consolidated Statements of Operations. The components of lease expense were as follows (in thousands): Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Operating lease cost $ 21 $ - $ 21 $ - Short-term lease cost 3 2 7 6 Total lease costs $ 24 2 $ 28 6 |
Supplemental information related to leases was as follows (dollars in thousands): | Supplemental information related to leases was as follows (dollars in thousands): June 30, 2022 December 31, 2021 Operating Lease right-of-use asset $ 531 $ - Current portion of operating lease liabilities $ 116 $ - Non-current portion of operating lease liabilities 416 - Total operating lease liabilities $ 532 $ - Cash paid for amounts included in the measurement of operating lease liabilities $ 20 $ - Right-of-use assets obtained in exchange for operating lease liabilities $ 552 $ - Weighted-average remaining lease term for operating leases (years) 4.8 Weighted average discount rate for operating leases 6.0 % |
The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of June 30, 2022 (in thousands): | The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of June 30, 2022 (in thousands): Year ended December 31, 2022 (Excluding six months ended June 2022) $ 60 2023 122 2024 126 2025 130 2026 134 Thereafter 45 Total future lease payments 617 Less: imputed interest (85 ) Present value of future lease payments 532 Less: current portion of lease liabilities (116 ) Long-term lease liabilities $ 416 |
The following table presents th
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 December 31, 2021 and June 30, 2022. (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Short Term Investment | $ 88 |
Equity Investment | 10,964 |
Derivative Liability | 71 |
Short-Term Investments | 94 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Short Term Investment | 88 |
Unrealized gain on fair value recognized in other (expense)/income | 6 |
Short-Term Investments | 94 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Equity Investment | 10,964 |
Derivative Liability | (71) |
Realized loss on fair value recognized in other (expense)/income | 71 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Realized loss on fair value recognized in other (expense)/income | $ (10,964) |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - $ / shares | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||
Anti-dilutive shares | 5,596,000 | 4,338,000 | 5,596,000 | 4,338,000 | |
Restricted Stock [Member] | |||||
Anti-dilutive shares | 727,000 | ||||
Share-Based Payment Arrangement, Option [Member] | |||||
Anti-dilutive shares | 337,000 | 465,000 | |||
Warrant [Member] | |||||
Anti-dilutive shares | 3,713,000 | 3,779,000 | |||
Pre Funded Warrant [Member] | |||||
Anti-dilutive shares | 675,000 | ||||
Equity Unit Purchase Agreements [Member] | |||||
Anti-dilutive shares | 144,000 | 144,000 | |||
Verify Me Inc [Member] | |||||
State of incorporation | Nevada |
The following table presents su
The following table presents summary financial information of the Sponsor Entity. Such summary information has been provided herein based upon the individual significance of the equity investment to the financial information of the Company. (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 30, 2021 | |
Subsidiary, Sale of Stock [Line Items] | |||||
Total Assets | $ 108,403 | $ 108,403 | $ 109,043 | ||
Total Liabilities | 23 | 23 | 3,730 | ||
Mezzanine Equity and Stockholders' Deficit | 108,380 | 108,380 | $ 105,313 | ||
Operating Loss | (1,322) | $ (1,428) | (2,972) | $ (2,643) | |
Net loss | $ (12,555) | $ (1,358) | (13,949) | (2,573) | |
Sponsor Entity [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Operating Loss | 805 | 2 | |||
Net loss | $ 652 | $ 2 |
EQUITY INVESTMENTS (Details Nar
EQUITY INVESTMENTS (Details Narrative) | 3 Months Ended | 6 Months Ended | |||
Jul. 06, 2021 USD ($) shares | Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) $ / shares | Apr. 12, 2021 | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Equity Securities, FV-NI, Cost | $ 0 | $ 0 | $ 11,000,000 | ||
Equity Securities, FV-NI, Unrealized Loss | 10,964,000 | ||||
Equity investments fair value | 48,000 | 6,000 | |||
Fair value of equity investment | $ 94,000 | $ 94,000 | $ 88,000 | ||
Series D Preferred Stock [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Cumulative convertible preferred stock ratio | 0.10 | ||||
Cumulative convertible preferred stock price | $ / shares | $ 10 | ||||
Cumulative convertible preferred stock value | $ 88,410 | ||||
IPO [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Number of units issued in transaction | shares | 10,626,000 | ||||
Over-Allotment Option [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Number of units issued in transaction | shares | 626,000 | ||||
Private Placement [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Sale of Stock, Consideration Received on Transaction | $ 569,410,000 | ||||
Private Placement [Member] | G V R M Holdings L L Cand Maxim Partners L L C [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Sale of Stock, Consideration Received on Transaction | $ 5,694,000 | ||||
Private Placement [Member] | Beneficial Owner [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Number of units issued in transaction | shares | 229,228 | ||||
Sale of Stock, Consideration Received on Transaction | $ 2,581,000 | ||||
Sponsor Entity [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Sale of Stock, Consideration Received on Transaction | 516,280,000 | ||||
Maxim Partners L L C [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Sale of Stock, Consideration Received on Transaction | $ 53,130,000 | ||||
Co Sponsor [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Equity Method Investment, Ownership Percentage | 44.40% | ||||
G V R M Holdings L L C [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Equity Method Investment, Ownership Percentage | 9.42% |
The following series of tables
The following series of tables present our revenue disaggregated by various categories (dollars in thousands). (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | $ 4,497 | $ 124 | $ 4,658 | $ 312 |
Proactive Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 3,315 | 3,315 | ||
Premium Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 916 | 916 | ||
Brand Protection Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 266 | 124 | 427 | 312 |
Parent Company [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 266 | 124 | 427 | 312 |
Parent Company [Member] | Proactive Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | ||||
Parent Company [Member] | Premium Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | ||||
Parent Company [Member] | Brand Protection Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 266 | $ 124 | 427 | $ 312 |
Subsidiaries [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 4,231 | 4,231 | ||
Subsidiaries [Member] | Proactive Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 3,315 | 3,315 | ||
Subsidiaries [Member] | Premium Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services | 916 | 916 | ||
Subsidiaries [Member] | Brand Protection Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brand protection services |
The following table summarizes
The following table summarizes the purchase price allocation for the acquisition (dollars in thousands). (Details) | Apr. 22, 2022 USD ($) |
Business Acquisition [Line Items] | |
Total purchase price | $ 7,500,000 |
Goodwill | 7,500,000 |
Accounts payable and other accrued expenses | (7,500,000) |
Total purchase price | 10,474,000 |
Accounts Receivable Net [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 836,000 |
Goodwill | 836,000 |
Accounts payable and other accrued expenses | (836,000) |
Prepaid Expenses [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 5,000 |
Goodwill | 5,000 |
Accounts payable and other accrued expenses | (5,000) |
Developed Technology Rights [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 3,120,000 |
Goodwill | $ 3,120,000 |
Amortization Period | 6 years |
Accounts payable and other accrued expenses | $ (3,120,000) |
Trademarks [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 1,096,000 |
Goodwill | $ 1,096,000 |
Amortization Period | 13 years |
Accounts payable and other accrued expenses | $ (1,096,000) |
Customer Relationships [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 1,923,000 |
Goodwill | $ 1,923,000 |
Amortization Period | 10 years |
Accounts payable and other accrued expenses | $ (1,923,000) |
Noncompete Agreements [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 41,000 |
Goodwill | $ 41,000 |
Amortization Period | 1 year |
Accounts payable and other accrued expenses | $ (41,000) |
Property And Equipment Net [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 193,000 |
Goodwill | 193,000 |
Accounts payable and other accrued expenses | (193,000) |
Goodwill [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 4,092,000 |
Goodwill | 4,092,000 |
Accounts payable and other accrued expenses | (4,092,000) |
Accounts Payable And Other Accrued Expenses [Member] | |
Business Acquisition [Line Items] | |
Total purchase price | 832,000 |
Goodwill | 832,000 |
Accounts payable and other accrued expenses | (832,000) |
Business Combination [Member] | |
Business Acquisition [Line Items] | |
Cash | 7,500,000 |
Promissory note | 2,000,000 |
Stock (issuance of 305,473 shares of restricted common stock) | 974,000 |
Total purchase price | 10,474,000 |
Goodwill | 10,474,000 |
Accounts payable and other accrued expenses | (10,474,000) |
Total purchase price | $ 10,500,000 |
The below table summarizes prof
The below table summarizes proforma financial information for the Company, and the acquired PeriShip business, assuming the acquisition date of Periship occurred on January 1, 2021 (dollars in thousands): (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | ||||
Revenues | $ 5,343 | $ 4,806 | $ 10,479 | $ 12,178 |
Net loss | $ (12,499) | $ (456) | $ (13,847) | $ (1,457) |
BUSINESS COMBINATION (Details N
BUSINESS COMBINATION (Details Narrative) - USD ($) | Apr. 22, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | |||
[custom:BusinessCombinationConsiderationTransferred2] | $ 10,474,000 | ||
Business Combination, Consideration Transferred | $ 7,500,000 | ||
Common Stock, Shares, Issued | 305,473 | 8,666,002 | 7,420,633 |
Business Combination [Member] | |||
Business Acquisition [Line Items] | |||
[custom:BusinessCombinationConsiderationTransferred2] | $ 10,500,000 | ||
Business Combination, Consideration Transferred | 10,474,000 | ||
[custom:PromissoryNote] | $ 2,000,000 | ||
Investment Interest Rate | 6% | ||
[custom:StockConsiderationAmount] | $ 1,000,000 | ||
Business Combination [Member] | Restricted Stock [Member] | |||
Business Acquisition [Line Items] | |||
Common Stock, Shares, Issued | 305,473 |
Changes in the carrying amount
Changes in the carrying amount of goodwill by reportable business segment for the six months ended June 30, 2022, were as follows (in thousands): (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Beginning balance | |
Acquisition | 4,092 |
Ending balance | 4,092 |
Parent Company [Member] | |
Beginning balance | |
Acquisition | |
Ending balance | |
Subsidiaries [Member] | |
Beginning balance | |
Acquisition | 4,092 |
Ending balance | $ 4,092 |
The primary assets included in
The primary assets included in this category and their respective balances were as follows (in thousands): (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 7,118 | $ 913 |
Accumulated Amortization | (601) | (404) |
Net Carrying Amount | 6,517 | 509 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,828 | 707 |
Accumulated Amortization | (389) | (354) |
Net Carrying Amount | 1,439 | 353 |
Capitalized Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 206 | 206 |
Accumulated Amortization | (70) | (50) |
Net Carrying Amount | 136 | $ 156 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,923 | |
Accumulated Amortization | (36) | |
Net Carrying Amount | 1,887 | |
Developed Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,120 | |
Accumulated Amortization | (98) | |
Net Carrying Amount | 3,022 | |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 41 | |
Accumulated Amortization | (8) | |
Net Carrying Amount | $ 33 |
The Company expects to record a
The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands): (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (six months remaining) | $ 458 | |
2023 | 881 | |
2024 | 869 | |
2025 | 843 | |
2026 | 833 | |
Thereafter | 2,633 | |
Total | $ 6,517 | $ 509 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 197 | $ 29 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||
Apr. 22, 2022 | Apr. 07, 2022 | Feb. 11, 2022 | Jan. 02, 2022 | Apr. 15, 2021 | Feb. 16, 2021 | Apr. 30, 2021 | Nov. 30, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Feb. 28, 2022 | Dec. 31, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
Restricted stock/restricted stock units, expense | $ 21 | $ 34,000 | $ 407,000 | $ 173,000 | $ 622,000 | |||||||||
Restricted stock/restricted stock units, expense | $ 274,000 | 149,000 | $ 477,000 | 277,000 | ||||||||||
common stock issued | 305,473 | 8,666,002 | 8,666,002 | 7,420,633 | ||||||||||
[custom:RestrictedCommonStock] | 194,044 | |||||||||||||
Common stock issued for services | $ 571,000 | $ 92,000 | $ 100,000 | $ 96,000 | $ 13,000 | $ 96,000 | $ 23,000 | |||||||
Restricted stock awards granted | 5,000 | |||||||||||||
Treasury stock share | 198,956 | 198,956 | 223,956 | |||||||||||
Treasury stock value | $ 756,000 | $ 756,000 | $ 838,000 | |||||||||||
Non-qualified stock purchase plan | 25,000 | |||||||||||||
Non-qualified stock purchase exercise price | $ 2.69 | |||||||||||||
Share repurchase program | $ 1,500,000 | |||||||||||||
Non Employee Director [Member] | ||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
[custom:RestrictedCommonStock] | 28,592 | |||||||||||||
Chief Financial Officer [Member] | ||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
Restricted stock/restricted stock units, expense | $ 21 | |||||||||||||
Restricted stock awards granted | 5,000 | |||||||||||||
Restricted Stock Units (RSUs) [Member] | Board of Directors Chairman [Member] | ||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
Restricted stock/restricted stock units, expense | $ 178,000 | |||||||||||||
Restricted stock awards granted | 30,000 | |||||||||||||
Restricted Stock Units (RSUs) [Member] | Board of Directors Chairman [Member] | Norman Gardner [Member] | ||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
Restricted stock/restricted stock units, expense | $ 300,000 | |||||||||||||
Restricted stock awards granted | 69,284 | |||||||||||||
Additionally accelerated vesting shares | 34,642 | |||||||||||||
Restricted Stock Units (RSUs) [Member] | Chief Executive Officer [Member] | ||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
Restricted stock/restricted stock units, expense | $ 525,000 | |||||||||||||
Restricted stock awards granted | 178,282 | |||||||||||||
Restricted Stock [Member] | ||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||
Common stock issued for services | $ 25,000 | |||||||||||||
Description of units transaction | a total of 157,232 restricted stock units were issued to four non-employee directors for a fair value of $500 thousand, and 39,308 restricted stock awards were issued to one non-employee director for a fair value of $125 thousand, vesting one year from the date of issuance. |
Schedule of stock options (Deta
Schedule of stock options (Details) - Share-Based Payment Arrangement, Option [Member] | 6 Months Ended | |
Jun. 30, 2022 USD ($) $ / shares shares | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Balance at beginning | shares | 465,471 | |
Balance at beginning | $ / shares | $ 4.38 | |
Granted | shares | ||
Granted | $ / shares | ||
Forfeited/Cancelled/Expired | shares | (128,000) | |
Forfeited/Cancelled/Expired | $ / shares | $ 3.74 | |
Balance at ending | shares | 337,471 | |
Balance at ending | $ / shares | $ 4.63 | |
Vested and Exercisable at ending | shares | 337,471 | |
Vested and Exercisable at ending | $ / shares | $ 4.63 | |
Vested and Exercisable at ending | 2 years 3 months 18 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. |
The following table summarize_2
The following table summarizes the unvested restricted stock awards as of June 30, 2022: (Details) - Restricted Stock [Member] | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Balance at beginning | shares | 44,642 |
Balance at beginning | $ / shares | $ 4.31 |
Granted | shares | 39,308 |
Granted | $ / shares | $ 3.18 |
Vested | shares | (42,142) |
Vested | $ / shares | $ 4.32 |
Balance at ending | shares | 41,808 |
Balance at ending | $ / shares | $ 3.24 |
The following table summarize_3
The following table summarizes the unvested restricted stock units as of June 30, 2022: (Details) - Restricted Stock Units [Member] | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Balance at beginning | shares | 187,010 |
Balance at beginning | $ / shares | $ 4.11 |
Granted | shares | 185,824 |
Granted | $ / shares | $ 3.18 |
Vested | shares | (145,010) |
Vested | $ / shares | $ 4.31 |
Balance at ending | shares | 227,824 |
Balance at ending | $ / shares | $ 3.23 |
The following table summarize_4
The following table summarizes the unvested performance restricted stock units as of June 30, 2022: (Details) - Nonvested Stock Options [Member] | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Balance at beginning | shares | |
Balance at beginning | $ / shares | |
Granted | shares | 432,326 |
Granted | $ / shares | $ 2.95 |
Vested | shares | |
Vested | $ / shares | |
Balance at ending | shares | 432,326 |
Balance at ending | $ / shares | $ 2.95 |
Schedule of warrants (Details)
Schedule of warrants (Details) | 6 Months Ended | |
Jun. 30, 2022 USD ($) $ / shares shares | ||
Net Investment Income [Line Items] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Beginning Balance | shares | 3,779,243 | |
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Outstanding Weighted Average Exercise Price | $ 5.89 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares | 1,590,150 | |
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Grants In Period Weighted Average Exercise Price | $ 3.14 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Forfeitures and Expirations | shares | (101,679) | |
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Forfeited In Period Weighted Average Exercise Price | $ 7.20 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance | shares | 5,267,714 | |
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Outstanding Weighted Average Exercise Price | $ 5.03 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 3 years 4 months 24 days | |
Share Based Compensation Arrangement By Share Based Payment Award Non Option Equity Instruments Exercisable Number | shares | 3,712,506 | |
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Exercisable Weighted Average Exercise Price | $ 5.79 | |
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Outstanding Exercisable Weighted Average Remaining Contractual Terms | 2 years 7 months 6 days | |
Sharebased Compensation Arrangement By Sharebased Payment Award Other Than Options Exercisable Intrinsic Value1 | $ | [1] | |
Warrant [Member] | ||
Net Investment Income [Line Items] | ||
Exercise price (in dollars per share) | $ 1.96 | |
[1]The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $ 1.96 |
STOCK OPTIONS, RESTRICTED STO_3
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Aug. 10, 2020 | Nov. 14, 2017 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2020 | Apr. 14, 2022 | Dec. 31, 2013 | |
Class of Warrant or Right [Line Items] | |||||||||
Unrecognized compensation cost | $ 0 | $ 0 | |||||||
Unvested restricted stock awards | 67 | $ 67 | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term | 6 months | ||||||||
[custom:UnrecognizedCompensationCost1-0] | 375 | $ 375 | |||||||
Director And Officer [Member] | Debentures2020 [Member] | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Stock Issued During Period, Shares, Issued for Services | 675,000 | ||||||||
Director And Officer [Member] | Debentures 2022 [Member] | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Per share public offering price(in dollars per share) | $ 0.001 | ||||||||
Incentive Stock Options [Member] | |||||||||
Class of Warrant or Right [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). | ||||||||
Restricted Stock [Member] | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
[custom:UnrecognizedCompensationCost1-0] | 1,160 | $ 1,160 | |||||||
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm2] | 2 years 8 months 23 days | ||||||||
Omnibus Equity Compensation Plan2013 [Member] | Stock Options Restricted Stockand Unitsand Other Stockbased Awards [Member] | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Number of shares authorized to grand awards | 400,000 | ||||||||
Equity Incentive Plan2017 [Member] | Board of Directors Chairman [Member] | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Stock issued during period shares new issues | 1,069,110 | 260,000 | |||||||
Issued Under The2020 Plan [Member] | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Incentive stock options granted | 1,000,000 | ||||||||
Plan2019 [Member] | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Stock or Unit Option Plan Expense | $ 0 | $ 0 | $ 0 | $ 85 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | Apr. 22, 2022 | Jun. 30, 2022 |
Line of Credit Facility [Line Items] | ||
Short term debt outstanding | $ 500,000 | |
Long-term debt outstanding | $ 1,500,000 | |
Promissory Note [Member] | ||
Line of Credit Facility [Line Items] | ||
Unsecured promissory note | $ 2,000,000 | |
Intrest rate | 6% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | Apr. 22, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||
Effective income tax rate | 21% | ||
Intangible assets | $ 6,180 | ||
Amortization | 15 years | ||
Goodwill | $ 4,092 | $ 4,092 | |
Minimum [Member] | |||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||
Amortization | 1 year | ||
Maximum [Member] | |||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||
Amortization | 13 years |
LONG TERM DERIVATIVE LIABILITY
LONG TERM DERIVATIVE LIABILITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Sep. 17, 2021 | Jun. 30, 2022 | Apr. 07, 2022 | Dec. 31, 2021 |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Fair value of the derivative liability | $ 0 | $ 71 | ||
G 3 V R M [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | |||
Director [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||
[custom:GrantFairValue] | $ 98 |
Lease expense is included in Ge
Lease expense is included in General & Administrative Expenses on the Consolidated Statements of Operations. The components of lease expense were as follows (in thousands): (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 21 | $ 21 | ||
Short-term lease cost | 3 | 2 | 7 | 6 |
Total lease costs | $ 24 | $ 2 | $ 28 | $ 6 |
Supplemental information relate
Supplemental information related to leases was as follows (dollars in thousands): (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating Lease right-of-use asset | $ 531 | |
Current portion of operating lease liabilities | 116 | |
Non-current portion of operating lease liabilities | 416 | |
Total operating lease liabilities | 532 | |
Cash paid for amounts included in the measurement of operating lease liabilities | 20 | |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 552 | |
Weighted-average remaining lease term for operating leases (years) | 4 years 9 months 18 days | |
Weighted average discount rate for operating leases | 6% |
The following is a reconciliati
The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of June 30, 2022 (in thousands): (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Leases [Abstract] | |
2022 (Excluding six months ended June 2022) | $ 60 |
2023 | 122 |
2024 | 126 |
2025 | 130 |
2026 | 134 |
Thereafter | 45 |
Total future lease payments | 617 |
Less: imputed interest | (85) |
Present value of future lease payments | 532 |
Less: current portion of lease liabilities | (116) |
Long-term lease liabilities | $ 416 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Two Customer Concentration Risk [Member] | Revenue Two [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 17% | 97% | 17% | 84% |
Two Customer Concentration Risk 2 [Member] | Accounts Receivable Two [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 38% | 94% | ||
One Vendorr Concentration Risk 2 [Member] | Transportation Cost [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 99% | 99% |
The following table sets forth
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 thou (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues | $ 4,497 | $ 124 | $ 4,658 | $ 312 |
Gross Profit | 1,685 | 98 | 1,808 | 243 |
General and administrative (a) | 2,535 | 1,217 | 4,000 | 2,325 |
Research and development | 25 | 12 | 34 | 17 |
Sales and marketing (a) | 447 | 297 | 746 | 544 |
LOSS BEFORE OTHER (EXPENSE) INCOME | (1,322) | (1,428) | (2,972) | (2,643) |
OTHER (EXPENSE) INCOME | (11,233) | 70 | (10,977) | 70 |
NET LOSS | (12,555) | (1,358) | (13,949) | (2,573) |
Parent Company [Member] | ||||
Revenues | 266 | 124 | 427 | 312 |
Gross Profit | 176 | 98 | 299 | 243 |
Subsidiaries [Member] | ||||
Revenues | 4,231 | 4,231 | ||
Gross Profit | $ 1,509 | $ 1,509 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Aug. 11, 2022 | Jul. 02, 2022 | Jul. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | |
Subsequent Event [Line Items] | |||||
Stock repurchase | $ 228 | $ 228 | |||
Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock repurchase | |||||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Description of business combination | its initial business combination within 12 months from the closing of the IPO and the Company decided not to fund the extension and did not deposit additional funds into the trust account. As a result, the SPAC has dissolved and liquidated in accordance with its charter. The SPAC redeemed 100% of the public shares for cash on July 19, 2022, | ||||
Exercise price, shares | 675,000 | ||||
Exercise price, per share | $ 0.001 | ||||
Subsequent Event [Member] | Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock repurchase | $ 1,500 | ||||
Stock repurchased per shares | $ 5 | ||||
Description of upon receipt | Upon receipt of $675 the Company will issue 675,000 shares of its common stock. |