VerifyMe (VRME) FY2025 10-K Risk Factors: 24 New, 5 Dropped

What the changes say

The business faces severe disruption following the September 2025 termination of its preferred shipper relationship with its prior carrier partner.
Recorded massive impairment charges totaling $2.788 million in intangibles and $1.062 million in goodwill for the Precision Logistics segment in 2025.
The company entered into a pending Merger Agreement with Open World, adding extensive risks related to closing conditions and shareholder dilution.

What changed since the prior 10-K

New

NewRisks Relating to Our Business
Our future growth will depend upon the success of our Strategic Partner to integrate our solutions into their service offerings and our ability to continue to provide Direct Premium services to legacy customers of our prior carrier
Our Precision Logistics growth depends entirely on our Strategic Partner integrating our services and our ability to retain legacy customers from our prior carrier.
NewRisks Relating to our Common Stock
Because we have not historically paid cash dividends on our shares of common stock, any returns will be limited to the value of our shares
We have never paid cash dividends and any future payout depends on remaining compliant with net cash requirements in the Merger Agreement.
NewRisks Relating to our Common Stock
Provisions of our warrants could discourage an acquisition of us by a third party
Certain provisions in our outstanding warrants prohibit fundamental transactions unless the surviving entity assumes our obligations, deterring third-party acquisitions.
NewRisks Relating to Loan Agreement and our Debt
We are subject to credit risk related to the Loan Agreement and related promissory note with ZenCredit which could lead to unexpected losses
We loaned $2 million to ZenCredit at a 16% interest rate maturing May 11, 2026, and hold a $12 thousand credit loss allowance against the note.
NewRisks Relating to the Merger
The Merger is subject to closing conditions and may not be completed, the Merger Agreement may be terminated in accordance with its terms, and we may be required to pay a termination fee upon termination
The Merger with Open World is subject to closing conditions including Nasdaq listing approval, HSR Act clearance, and Cayman Islands licensing.
NewRisks Relating to the Merger
The pendency of the Merger could adversely affect our business and operations and the business operations of Open World
During the pendency of the Merger, we are restricted from making acquisitions, incurring debt, or issuing equity without Open World's consent.
NewRisks Relating to the Merger
The announcement and pendency of the Merger may create uncertainty that could adversely affect our business relationships and the business relationships of Open World
Merger uncertainty may cause customers, suppliers, and distributors to delay contracts or key employees to depart.
NewRisks Relating to the Merger
Securities class action and derivative lawsuits may be filed challenging the Merger, and an adverse ruling in any such lawsuit may delay or prevent the Closing
Securities class action or derivative lawsuits challenging the Merger could result in adverse rulings, delaying or preventing the closing.
NewRisks Relating to the Merger
The Merger may be completed even though a material adverse effect may result from the announcement of the Merger, industry-wide changes, or other causes
The Merger may still be required to close despite general economic downturns, regulatory changes, or cryptocurrency market volatility.
NewRisks Relating to the Merger
If the Merger is not completed, our stock price may decline significantly, and our business may be adversely affected
If the Merger fails, our stock price may decline significantly and we will absorb all incurred financial advisory, legal, and accounting fees.
NewRisks Relating to the Merger
The Exchange Ratio in the Merger is fixed and will not be adjusted to reflect changes in the market price of our common stock or changes in the relative performance of the parties
The Exchange Ratio for the Merger is fixed and will not adjust based on changes in our common stock market price.
NewRisks Relating to the Merger
Some of our and Open World officers and directors have interests in the Merger that are different from yours and that may influence them to support or approve the Merger without regard to your interests
Officers and directors have competing financial interests in the Merger, including continued service, severance, and accelerated equity vesting.
NewRisks Relating to the Merger
The Merger will involve substantial costs, whether or not the Merger is consummated
NewRisks Relating to the Merger
The Merger Agreement limits our and Open World’s ability to pursue alternatives to the Merger and includes the potential obligation to pay a Termination Fee
NewRisks Relating to the Merger
We and Open World must obtain certain regulatory approvals and clearances to consummate the Merger, which, if delayed, not granted, or granted with unacceptable conditions, could prevent, substantially delay, or impair consummation of the Merger
NewRisks Relating to the Combined Company should the Merger be effected
The combined company may not be able to retain customers, suppliers, or business partners, or such third parties may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operations
NewRisks Relating to the Combined Company should the Merger be effected
If the combined company fails to attract and retain management and other key personnel, it may be unable to successfully integrate the businesses or execute its business plan
NewRisks Relating to the Combined Company should the Merger be effected
Following the Merger, our current stockholders will have a significantly reduced ownership and voting interest in the combined company compared to their ownership of VerifyMe prior to the Merger
NewRisks Relating to the Combined Company should the Merger be effected
The market price of the combined company’s common stock after the Merger may be affected by factors different from those currently affecting the shares of our common stock prior to completion of the Merger
NewRisks Relating to the Combined Company should the Merger be effected
The combined company may be unable to obtain the additional capital, equity or debt financing required to fund its operations and growth, which could adversely affect its business, prospects and ability to continue as a going concern
NewRisks Relating to the Combined Company should the Merger be effected
Open World’s management has limited experience in operating a public company and may not successfully or effectively manage the transition to a public company
NewRisks Relating to the Combined Company should the Merger be effected
The combined company is expected to be a controlled company as defined under Nasdaq exchange listing rules and should it choose to rely on controlled company exemptions, you would not have the same protections afforded to stockholders of companies that are subject to these corporate governance requirements
NewRisks Relating to the Combined Company should the Merger be effected
Upon and after completion of the Merger, the combined company may be unable to meet the continued listing standards of Nasdaq, which could result in delisting, reduced liquidity, increased volatility, and harm to its ability to raise capital
NewRisks Relating to a Reverse Stock Split
Subject to the Merger Agreement, our Board of Directors currently has discretion to effect a reverse stock split of our common stock at a ratio ranging from 1-for-2 to 1-for 10 without further stockholder approval, which could adversely effect our stockholders and the value of our common stock

Dropped

DroppedRisks Relating to Our Business
Our future growth will depend upon the success of our strategic partners who integrate our solutions into their product offerings
DroppedRisks Relating to Our Business
We may not continue to invest in our Authentication segment operations and as a result, we may not be able to complete the development and commercialization of our Authentication segment products
DroppedRisks Relating to Our Business
Our Authentication segment has historically targeted large companies and, their internal policies and resistance to change may impair our ability to successfully commercialize our Authentication segment.
DroppedRisks Relating to Our Business
The terms of our patents may not be sufficient to effectively protect our business
DroppedRisks Relating to Our Business
The expenses or losses associated with lack of widespread market acceptance of our solutions may harm our business, operating results and financial condition

Reworded

77% rewrittenRisks Relating to Our Business
Fluctuations in labor costs, changes in the availability of transportation service, or catastrophic events may increase the cost of our products and services
Updated to reflect that PeriShip Global ceased being a preferred shipper with the prior carrier partner in September 2025, increasing delivery constraints.
Was: Fluctuations in labor costs, changes in the availability of key suppliers, or catastrophic events may increase the cost of our products and services
68% rewrittenRisks Relating to Our Business
Our Precision Logistics segment relies on our Strategic Partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues
Added that PeriShip Global ceased providing ProActive services to the prior carrier's customers in September 2025 and Premium services in February 2026.
Was: Our Precision Logistics segment relies on one key strategic partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues
62% rewrittenRisks Relating to Our Business
The Company has significant goodwill and other intangible assets, and future impairment of these assets could have a material adverse impact on the Company's financial results
Disclosed specific 2025 impairment charges: $2.788 million in intangibles and $1.062 million in goodwill for Precision Logistics, plus 2024 Authentication segment figures.
62% rewrittenRisks Relating to Our Business
Our ability to become profitable is largely dependent upon our ability to continually improve our platforms and acquiring new customers in increasingly competitive markets
Shifted focus to logistics industry trends, adding a factor regarding leveraging strategic partnerships to commercialize existing technologies.
52% rewrittenRisks Relating to our Common Stock
Upon exercise of our outstanding warrants, conversion of our Series B Convertible Preferred Stock, conversion of our Convertible debt, and vesting of our restricted stock units, we will be obligated to issue a substantial number of additional shares of common stock which will dilute our present stockholders
Updated anti-dilutive share counts for 2025, noting 3,976,000 total anti-dilutive shares compared to 7,971,000 in 2024.
Was: Upon exercise of our outstanding options or warrants, conversion of our Series B Convertible Preferred Stock, conversion of our Convertible debt, and vesting of our restricted stock units, we will be obligated to issue a substantial number of additional shares of common stock which will dilute our present shareholders
47% rewrittenRisks Relating to Our Business
Global supply-chain delays and shortages may adversely impact our customers or potential customers
Changed phrasing from stating global supply chain delays are currently affecting specific customers to noting they can affect customers generally.
43% rewrittenRisks Relating to our Common Stock
There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure of which could result in a de-listing of our common stock and certain warrants
Removed references to the specific 'Nasdaq Capital Market' branding, broadening potential delisting warnings to Nasdaq generally.
Was: There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq Capital Market, a failure of which could result in a de-listing of our common stock and certain warrants
42% rewrittenRisks Relating to our Common Stock
Because we may issue preferred stock without the approval of our stockholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire us and could depress our stock price
Corrected terminology from referring to 'shareholders' to 'stockholders' throughout the preferred stock anti-takeover defense risk.
Was: Because we may issue preferred stock without the approval of our shareholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire us and could depress our stock price
36% rewrittenRisks Relating to Our Business
We are not currently expanding our sales, marketing and support organizations and our distribution arrangements, which will limit our ability to increase market acceptance of our products and services
Was: We will need to expand our sales, marketing and support organizations and our distribution arrangements to increase market acceptance of our products and services
27% rewrittenRisks Relating to Our Business
We have a history of losses and we may never achieve or maintain profitability
26% rewrittenRisks Relating to Our Business
Our business is subject to seasonal trends
24% rewrittenRisks Relating to Our Business
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations

All 62 risk factors

Headings as the filing states them, in filing order.

Risks Relating to Our Business

01We have engaged, and may engage in future acquisitions or strategic partnerships that increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks
02Failure to attract and retain management, and develop successors for management, may damage our operations and financial results and cause our stock price to decline
03Our future growth will depend upon the success of our Precision Logistics segment. If we fail to effectively execute our strategy, our competitive position and financial performance could be materially harmed
04Our Precision Logistics segment relies on our Strategic Partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues68% rewritten
05Our business is subject to seasonal trends26% rewritten
06Severe climate conditions and other catastrophic events can have an adverse impact on our business
07We operate in a highly competitive industry and our business may suffer if we are unable to adequately address potential downward pricing pressures and other competitive factors
08The shipping and logistics industry is rapidly evolving. We expect to continue to face significant competition, which could materially adversely affect us
09Our future growth will depend upon the success of our Strategic Partner to integrate our solutions into their service offerings and our ability to continue to provide Direct Premium services to legacy customers of our prior carrierNew
10Damage to our brand image and corporate reputation could materially adversely affect us
11The Company has significant goodwill and other intangible assets, and future impairment of these assets could have a material adverse impact on the Company's financial results62% rewritten
12Impairment charges could adversely affect the Company's financial condition or results of operations in the periods recognized
13Overall economic conditions that reduce freight volumes could have a material adverse impact on our operating results and ability to achieve growth
14Reductions in discretionary consumer spending could have an adverse effect on our business, financial condition, and results of operations
15Global supply-chain delays and shortages may adversely impact our customers or potential customers47% rewritten
16We have a history of losses and we may never achieve or maintain profitability27% rewritten
17Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations24% rewritten
18Because our name and brand could be confused with brands that have similar names, we may be adversely affected by any confusion or negative publicity related to others that use a name similar to VerifyMe in their brand names
19If our technologies do not work as anticipated once we achieve meaningful sales, we will not be successful
20If our technology cannot be used successfully to proactively provide analytics logistics management, we may not be able to generate material revenue
21We are not currently expanding our sales, marketing and support organizations and our distribution arrangements, which will limit our ability to increase market acceptance of our products and services36% rewritten
22If we fail to protect or enforce our intellectual property rights, or if the costs involved in protecting and defending these rights are prohibitively high, our business and operating results may suffer
23If we are required to sue third parties who we allege are violating our intellectual property rights, or if we are sued for violating a third party’s patents or other intellectual property rights, we may incur substantial expenses, and we could incur substantial damages, including amounts we cannot afford to pay
24If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
25Because we do business outside of the United States, we may be exposed to liabilities under the Foreign Corrupt Practices Act, violations of which could have a material adverse effect on our business
26Our business depends on our ability to successfully develop, implement, maintain, upgrade, enhance, protect, and integrate information technology systems
27Our information technology systems are subject to cyber and other risks some of which are beyond our control. A security breach, failure or disruption of these services could have a material adverse effect on our business, results of operations and financial position
28Evolving regulations concerning data privacy may result in increased regulation and different industry standards, which could prevent us from providing our current products to our users, or require us to modify our products, thereby harming our business
29We rely on the services of third-party data center hosting facilities. Interruptions or delays in those services could impair the delivery of our service and harm our business
30Fluctuations in labor costs, changes in the availability of transportation service, or catastrophic events may increase the cost of our products and services77% rewritten
31Our ability to become profitable is largely dependent upon our ability to continually improve our platforms and acquiring new customers in increasingly competitive markets62% rewritten

Risks Relating to our Common Stock

32Upon exercise of our outstanding warrants, conversion of our Series B Convertible Preferred Stock, conversion of our Convertible debt, and vesting of our restricted stock units, we will be obligated to issue a substantial number of additional shares of common stock which will dilute our present stockholders52% rewritten
33Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline
34Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock
35Because we may issue preferred stock without the approval of our stockholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire us and could depress our stock price42% rewritten
36Because we have not historically paid cash dividends on our shares of common stock, any returns will be limited to the value of our sharesNew
37There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure of which could result in a de-listing of our common stock and certain warrants43% rewritten
38Provisions of our warrants could discourage an acquisition of us by a third partyNew

Risks Relating to Loan Agreement and our Debt

39We are subject to credit risk related to the Loan Agreement and related promissory note with ZenCredit which could lead to unexpected lossesNew
40If we do not timely pay amounts due and comply with the covenants under our debt facilities, our business, financial condition, and results of operations may be adversely impacted
41Our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing
42Covenants in our debt agreements may restrict our operating activities and adversely affect our financial condition

Risks Relating to the Merger

43The Merger is subject to closing conditions and may not be completed, the Merger Agreement may be terminated in accordance with its terms, and we may be required to pay a termination fee upon terminationNew
44The pendency of the Merger could adversely affect our business and operations and the business operations of Open WorldNew
45The announcement and pendency of the Merger may create uncertainty that could adversely affect our business relationships and the business relationships of Open WorldNew
46Securities class action and derivative lawsuits may be filed challenging the Merger, and an adverse ruling in any such lawsuit may delay or prevent the ClosingNew
47The Merger may be completed even though a material adverse effect may result from the announcement of the Merger, industry-wide changes, or other causesNew
48If the Merger is not completed, our stock price may decline significantly, and our business may be adversely affectedNew
49The Exchange Ratio in the Merger is fixed and will not be adjusted to reflect changes in the market price of our common stock or changes in the relative performance of the partiesNew
50Some of our and Open World officers and directors have interests in the Merger that are different from yours and that may influence them to support or approve the Merger without regard to your interestsNew
51The Merger will involve substantial costs, whether or not the Merger is consummatedNew
52The Merger Agreement limits our and Open World’s ability to pursue alternatives to the Merger and includes the potential obligation to pay a Termination FeeNew
53We and Open World must obtain certain regulatory approvals and clearances to consummate the Merger, which, if delayed, not granted, or granted with unacceptable conditions, could prevent, substantially delay, or impair consummation of the MergerNew

Risks Relating to the Combined Company should the Merger be effected

54The combined company may not be able to retain customers, suppliers, or business partners, or such third parties may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operationsNew
55If the combined company fails to attract and retain management and other key personnel, it may be unable to successfully integrate the businesses or execute its business planNew
56Following the Merger, our current stockholders will have a significantly reduced ownership and voting interest in the combined company compared to their ownership of VerifyMe prior to the MergerNew
57The market price of the combined company’s common stock after the Merger may be affected by factors different from those currently affecting the shares of our common stock prior to completion of the MergerNew
58The combined company may be unable to obtain the additional capital, equity or debt financing required to fund its operations and growth, which could adversely affect its business, prospects and ability to continue as a going concernNew
59Open World’s management has limited experience in operating a public company and may not successfully or effectively manage the transition to a public companyNew
60The combined company is expected to be a controlled company as defined under Nasdaq exchange listing rules and should it choose to rely on controlled company exemptions, you would not have the same protections afforded to stockholders of companies that are subject to these corporate governance requirementsNew
61Upon and after completion of the Merger, the combined company may be unable to meet the continued listing standards of Nasdaq, which could result in delisting, reduced liquidity, increased volatility, and harm to its ability to raise capitalNew

Risks Relating to a Reverse Stock Split

62Subject to the Merger Agreement, our Board of Directors currently has discretion to effect a reverse stock split of our common stock at a ratio ranging from 1-for-2 to 1-for 10 without further stockholder approval, which could adversely effect our stockholders and the value of our common stockNew

Other VerifyMe 10-Ks

FY2024 10-K risk factors
43 risks
The company relies heavily on a single strategic shipping partner for its PeriShip Global logistics segment. Profitability is threatened by a history of operating losses and potential goodwill impairment. Future growth depends on commercializing technologies and executing acquisitions within competitive markets.
Filed Mar 12, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.