VerifyMe, Inc. (VRME) 10-K Summary: Fiscal Year Ended December 31, 2025
Business Context and Reporting Period
This Annual Report covers the fiscal year ended December 31, 2025. VerifyMe, Inc. operates primarily through its Precision Logistics segment (subsidiary PeriShip Global), providing predictive analytics and management for time- and temperature-sensitive shipments. The company also maintains a smaller Authentication segment for brand protection. The reporting period was defined by a significant strategic shift: the loss of its primary carrier partner (FedEx) in September 2025 and the subsequent transition to a new Strategic Partner. Additionally, on February 11, 2026, the company entered into a definitive Merger Agreement with Open World Ltd., a digital asset infrastructure company.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenue | $16.4 million | $24.2 million | -32% |
| Gross Profit | $6.3 million | $8.7 million | -27% |
| Gross Margin | 38.5% | 35.8% | +270 bps |
| Net Loss | $(4.9) million | $(3.8) million | -28% |
| Loss Per Share (Diluted) | $(0.39) | $(0.37) | -5% |
| Cash from Operations | $0.6 million | $0.9 million | -31% |
| Cash and Equivalents (End of Period) | $4.4 million | $2.8 million | +57% |
| Total Debt Outstanding | $0.75 million | $1.53 million | -51% |
Note: Debt figures exclude the $2.0 million note receivable issued to ZenCredit Ventures.
Material Changes vs. Prior Period
- Revenue Decline: Total revenue dropped 32% primarily due to the termination of the ProActive service agreement with the prior carrier partner (FedEx) effective September 2025. Precision Logistics revenue fell from $23.8 million to $16.2 million.
- Impairment Charges: The company recorded a total impairment charge of $3.85 million ($1.06 million goodwill and $2.79 million intangible assets) related to the Precision Logistics segment, triggered by the loss of the carrier partnership and revised forecasts.
- Expense Reduction: Operating expenses decreased by approximately $1.66 million year-over-year, driven by a reduction in stock-based compensation ($1.39 million to $0.55 million) and lower management/technology costs following the divestiture of the Trust Codes Global business in late 2024.
- Capital Deployment: The company issued a $2.0 million promissory note to ZenCredit Ventures at 16% interest in August 2025. Conversely, it repaid its $2.0 million Term Note to PNC Bank in full during Q1 2025.
Guidance, Outlook, and Risks
Merger with Open World Ltd.: The company is pursuing a merger where current VerifyMe stockholders are expected to retain approximately 10% of the post-closing entity, while Open World securityholders will own approximately 90%. The transaction is subject to stockholder approval, regulatory clearance, and a reverse stock split (1-for-2 to 1-for-10) to meet Nasdaq listing requirements.
Operational Outlook: Management anticipates a material decline in ProActive service revenues for Q1 and Q2 2026 as the company transitions customers to the new Strategic Partner. Broad offering of Premium services to the new partner is expected to begin in Q2 2026. The company expects to recover revenue levels in 2026 but provides no assurance of returning to historical levels.
Risks and Contingencies:
- Carrier Dependency: The business relies heavily on a single Strategic Partner for shipping services. Disruptions or termination of this relationship could materially harm operations.
- Merger Uncertainty: The merger is subject to numerous closing conditions, including a minimum closing net cash requirement of $1 million. Failure to close could result in significant stock price decline and loss of anticipated synergies.
- Liquidity: While cash balances improved to $4.4 million, the company has a history of losses and relies on the merger or future financing to fund long-term growth.
- Debt Covenants: The company was not in compliance with certain covenants under its PNC Facility as of December 31, 2025, though a waiver was obtained in March 2026.
Investor Verification Checklist
- Merger Terms: Verify the final Exchange Ratio and the specific reverse stock split ratio to be implemented, as these will determine the final ownership percentage of current shareholders.
- Carrier Transition: Monitor Q1 and Q2 2026 earnings to assess the actual revenue impact of the transition from the prior carrier to the new Strategic Partner.
- Cash Position: Confirm the company maintains the required $1 million closing net cash threshold for the merger, considering the $2 million loan receivable from ZenCredit is not immediately liquid.
- Debt Compliance: Review the terms of the PNC Facility waiver and ensure no further defaults occur that could trigger acceleration of debt obligations.
- Stockholder Support: Note that approximately 14% of voting power has agreed to support the merger, but full stockholder approval is still required.