VerifyMe — Second Quarter 2026 Earnings Summary

Financial Performance

• Quarterly revenue was $1.9 million, a 58% decrease from $4.5 million in Q2 2025, primarily due to the loss of ProActive services revenue following the September 2025 termination of the prior carrier agreement.
• Gross profit was $1.0 million (54% margin) in Q2 2026, compared to $1.6 million (35% margin) in Q2 2025; the margin increase resulted from a shift in service mix toward Premium services.
• Net loss was $0.5 million ($0.04 per diluted share) in Q2 2026, widening from a $0.3 million loss ($0.02 per diluted share) in Q2 2025.
• Operating loss was $0.6 million in Q2 2026, compared to $0.3 million in Q2 2025, driven by increased legal expenses related to the proposed merger and lower gross profit.
• Adjusted EBITDA was $0.0 million in Q2 2026, down from $0.3 million in Q2 2025.
• Cash balance was $5.1 million and working capital was $4.7 million as of June 30, 2026.
• Total assets were $11.4 million as of June 30, 2026, down from $13.0 million as of December 31, 2025.
• Total liabilities were $1.4 million as of June 30, 2026, down from $2.0 million as of December 31, 2025.
• The company holds $400,000 in convertible notes related to a party and $350,000 in current convertible notes as of June 30, 2026.
• Accumulated deficit increased to $91.8 million as of June 30, 2026, from $90.6 million as of December 31, 2025.

Business Segments and Product Lines

• The company is transitioning legacy ProActive customers to a new strategic shipping partner.
• In June 2026, VerifyMe launched Premium services with its new shipping partner.
• The company is finalizing technology integration with the new shipping partner and evaluating emerging technologies to enhance margins and operational efficiency.
• The Precision Logistics business segment continues to make progress.

Risks and Challenges

• The company faces risks related to the proposed merger, including the potential failure to obtain securityholder approval, regulatory approvals, or satisfaction of other closing conditions.
• Significant risks include reliance on a single key strategic partner for shipping services and competition from that same partner.
• The company cites risks regarding the erosion of its customer base following the termination of the prior carrier agreement.
• Other risks include severe climate conditions, global supply-chain delays, fluctuations in labor and raw material costs, and the highly competitive nature of the industry.
• The company notes risks associated with its history of losses and the ability to use net operating losses to offset future taxable income.

Management Commentary and Tone

• CEO Adam Stedham stated the company continued transitioning legacy customers and onboarding new ones during the quarter.
• Management indicated they are finalizing technology integration with the new partner and evaluating emerging technologies to improve efficiency.
• Management expressed that the Precision Logistics business is making progress while working toward the previously announced merger.
• No earnings call is scheduled at this time.

Other Key Points

• The company is actively working toward a previously announced business combination (merger).
• Legal expenses related to the proposed merger were recorded in general and administrative expenses, contributing to the increased operating loss.
• Share-based compensation for the three months ended June 30, 2026, was $111,000, compared to $259,000 in the same period in 2025.
• One-time professional expenses for acquisitions and divestiture were $274,000 in Q2 2026, compared to $30,000 in Q2 2025.
• The company had 13,626,076 shares issued and 13,165,196 shares outstanding as of June 30, 2026.