What changed in this filing

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Item 1. Business

2021-03-25 compared with 2020-03-09 · 770 added, 1188 removed, 85 unchanged (96% of the section changed)

1 unchanged sentence

(“VerifyMe,”

the “Company,”

or the “Company,”

“we,”

or “us”) is a technology solutions provider

specializing in brand protection functions such as counterfeit prevention, authentication, serialization, track and trace

features for labels, packaging and products.

The Company was formed in Nevada on November 10, 1999.

Leveraging our covert

luminescent pigment, RainbowSecure®, which we began commercializing in 2018, we also developed the patented

VeriPAS™

software system in 2018 which covertly and overtly serializes products to remotely track a product’s

“life cycle”

“us,”

or “our”) is a technology solutions provider specializing

in brand protection and supply chain functions such as counterfeit prevention, authentication, serialization, consumer engagement,

track and trace features for labels, packaging and products.

The Company was formed as LaserLock Technologies, Inc., in Nevada

on November 10, 1999.

Until 2018, we were primarily engaged in the research and development of our technologies.

We began to commercialize

our covert luminescent pigment, RainbowSecure®, in 2018, and we also developed the patented VeriPAS™

software system

in 2018 which covertly and overtly serializes products to track a product’s “life cycle”

for brand owners.

We believe VeriPAS™

is the only invisible covert serialization and

authentication solution deployed through variable digital printing on HP Indigo printing systems with a smartphone tracking

and authentication system.

believe VeriPAS™

is the only invisible covert serialization and authentication solution deployed through variable digital

printing on HP Indigo printing systems with a smartphone tracking and authentication system.

VeriPAS™

is capable of fluorescing, decoding, and verifying invisible RainbowSecure®

codes in the field –

designed to allow investigators to quickly and efficiently authenticate product throughout the

distribution chain, including warehouses, ports of entry, retail locations, and product purchased over the Internet for

inspection and investigative actions.

This technology is coupled with a secure cloud based track and trace software engine

which allows brands and investigators to see where products originate and where they are deployed with geo location mapping

and intelligent programable alerts.

is capable of fluorescing,

decoding, and verifying invisible RainbowSecure®

codes in the field designed to allow investigators to quickly and efficiently

authenticate product throughout the distribution chain, including warehouses, ports of entry, retail locations, and product purchased

over the Internet for inspection and investigative actions.

This technology is coupled with a secure cloud-based track and trace

software engine which allows brands and investigators to monitor the complete supply chain from product origination to the end

user utilizing geolocation mapping and intelligent programable alerts.

Brand owners access the VeriPAS™

software over the Internet.

Brand owners can then

set rules of engagement, establish marketing programs for customer engagement and control, and monitor and protect their

products’

software through

a web portal over the Internet.

Brand owners can then set rules of engagement, gather rich business intelligence, establish marketing

programs for customer engagement and control, monitor and protect their products’

“life cycle.”

We have derived minimal revenue from our VeriPAS™

software system and have

derived limited revenue from the sale of our RainbowSecure®

We believe the brand protection technologies

we own, once fully developed, can be used to enable businesses to reconstruct their overall approaches to security—from

brand protection, product diversion and counterfeit identification to employee or customer monitoring.

The Company is currently

testing a pre-printed labeling system containing VeriPAS™

for third party on-line retailers to affix to their products that

allows the third party retailer to engage with their customer through marketing and data gathering.

In addition these pre-printed

labels containing VeriPAS™

labels will allow the receiving customer to authenticate the product with their personal smartphone.

The Company is also developing a thread made of fabric containing covert RainbowSecure®

Ink that will be sewn into clothing

and apparel for authentication.

A VeriPAS™

readable code for apparel labels is also being developed with a third party apparel

manufacturer.

Potential applications of our technologies are available in different types of products and industries—e.g.,

banking, gaming, apparel, tobacco, cosmetics, food, beverages, plastics, metal, event and transportation tickets, manufactured

goods, tax stamps, fabrics, parts, driver’s licenses, insurance cards, passports, computer software, on-line retail and

credit cards.

We have had revenue generating sales through re-seller agreements of our technology and through direct sales of

our technology to global brand owners, and label and packaging printers.

Our brand protection

technologies involve the utilization of invisible and/or color changing inks, which are compatible and printed with modern digital

and standard printing presses.

The inks may be used with certain printing systems such as digital, offset, flexographic, silkscreen,

gravure, inkjet and toner based laser printers.

The inks can be used to print both static and variable images utilizing digital

printing presses and third party digital inkjet systems which are attached to traditional printing presses.

Our invisible ink can

be used in fixed images, variable images or serialized codes, bar codes or QR codes.

We have developed a product which attaches

to a smart-phone that reads our invisible ink codes into sophisticated cloud based track and trace software.

We also have a product

that informs users that our invisible ink is present for authentication.

Based upon our experience, we believe that the ink technologies

may be incorporated into most existing manufacturing processes.

Until 2018, we were primarily engaged

in the research and development of our technologies.

In order to penetrate the security printing market, we modernized our invisible

ink technology, called RainbowSecure®.

We created the ability to utilize RainbowSecure®

as an invisible code that contained

data that could be read into sophisticated software that resides in the cloud.

To accomplish this task, we created our VeriPAS™

Smartphone Authenticator, a device that attaches to a smartphone.

After several prototypes, this device was successfully tested

in 2018 and is now being manufactured.

The first units have been leased to one customer in Taiwan starting in June 2019 and one

customer in the United States starting in September 2019 and are ready for leasing to brand owners, inspectors and print service

providers around the world.

See “Business Update:

at page 2 for

additional information.

In conjunction with our smartphone reading

device, we finalized our VeriPAS TM cloud-based software which gives brand owners the ability to monitor, control, track,

engage with the customer, gather data from the end user and protect their products complete life cycle.

This software resides in

the cloud and can be accessed over the Internet.

The software generates serialization codes available for purchase by brand owners.

These codes are then printed on labels and packaging in both visible codes for consumers to engage and invisible codes known as

RainbowSecure®

which trained brand inspectors review with our reading device.

We have derived

minimal revenue from our VeriPAS™

software system and have derived limited revenue from the sale of our RainbowSecure®

Our brand protection technologies involve

the utilization of invisible and/or color changing inks, which are compatible and printed with modern digital and standard printing

The inks may be used with certain printing systems such as digital, offset, flexographic, silkscreen, gravure, inkjet

and toner-based laser printers.

The inks can be used to print both static and variable images utilizing digital printing presses

and third-party digital inkjet systems which are attached to traditional printing presses.

Our invisible ink can be used in fixed

images, variable images or serialized codes, bar codes or QR codes.

We have developed a product which attaches to a smartphone

that reads our invisible ink codes into sophisticated cloud-based track and trace software.

We also have a product that informs

users that our invisible ink is present for authentication.

Based upon our experience, we believe that the ink technologies may

be incorporated into most existing manufacturing processes.

Business Update

In 2019, we focused our efforts primarily

on the completion of our products and began the introduction of our products into the market and forging relationships that could

help generate revenue in future periods.

Beginning on October 15, 2019, we entered

into a consulting agreement with G Prime LLC for services involving the development of relationships with brand owners and others

in the food, pharmaceutical, medical device, household good and industrial products packaging industry.

This agreement continues

until either party terminates at any time upon 30 days prior written notice to the other or as otherwise mutually agreed.

On October 1, 2019, we entered into a representative

agreement with J.A.G.

Associates, Ltd.

to represent us in the sale of our products in the U.S.

and globally.

This two-year agreement

can be terminated by either party upon 60 days prior written notice.

Effective as of May 30, 2019, we entered

into a leasing agreement and purchase agreement with a Forbes Top 50 Private Company that sells nutrition, personal care, beauty

and home care products around the globe.

This is our first direct contract with a brand owner who prints some of its own packaging

and labels using HP Indigo printing presses.

They lease our equipment and software including VeriPAS™

technology products

in conjunction with HP Indigo printing presses, our strategic partner.

This one year leasing agreement can be terminated by either

party upon 90 days’

prior notice.

This client began printing labels that include our technology in the fourth quarter of

In addition, the client leased six units of the Company’s VeriPAS™

Smartphone Authenticator to outfit their global

brand inspectors’

On May 28, 2019, pursuant to a memorandum

of understanding, we began a strategic partnership with INX International Ink Company, the third largest producer of inks in North

America, to co-develop inkjet inks to be used for inkjet printing in combination with high speed, high volume label and packaging

printing presses.

The specially formulated inks will enable these printing presses to print our RainbowSecure®

invisible ink

technology, which includes our variable VeriPAS™

Recent Developments

In March 2021, we signed a sales agency agreement with Syntax

Ltd., HP Indigo’s authorized channel partner for China.

Syntax is the only distributor authorized to sell and support HP

Indigo products in China, and now has an exclusive agreement to sell our technology solutions for HP Indigo products in China.

We also granted Syntax a non-exclusive right to sell our other products in China.

In February 2021, David Sandello joined VerifyMe as Director

of Sales and Business Development of North America to focus on expanding our revenue operations and to accelerate growth.

brings 15 years of experience building, scaling and leading revenue organizations including new sales and growth through existing

account management teams.

In February 2021, we

received an initial purchase order for 2 million pre-printed anti-counterfeiting labels.

The labels will be utilized for track and trace

and brand protection for 2 million boxes of surgical gloves, a personal protective equipment (“PPE”) necessity in fighting

the ongoing Covid-19 pandemic.

This initial purchase order for complete pre-printed tamper-evident labels with VeriPAS™

brand protection

and consumer engagement is the first order under our strategic partnership with Renavotio (OTC:

This is a custom-designed tamper

proof label containing multiple layered technologies embedded and printed by VerifyMe.

In February 2021, we

entered into a strategic partnership with INX International Ink Company (“INX”).

INX will supply us with conventional and

ink jet inks that incorporate our RainbowSecure®

marking technology for resale to our customers.

The inks are developed and ready

for market for metal container decorating, dry offset printing, gravure shrink sleeves, and flexographic fabric printing.

The inks developed,

and expected to be developed, under the supply agreement are applicable to a broad range of uses, including aluminum beverage cans and

bottles, labels and packaging for the cannabis industry, personal protective equipment, aerospace parts, motor vehicle parts, weapons

and ammunition, silicon chips and medical equipment.

In February, 2021, as part of our public offering of an aggregate 1,750,000

shares of common stock, we generated aggregate gross proceeds of $9.2 million and net proceeds of $8.5 million, less underwriting discounts

and commissions and other offering expenses, including the partial exercise of the over-allotment option resulting in gross proceeds of

$530 thousand.

In January 2021,

we signed Authentik, a company registered in Pakistan, as an independent sales contractor.

Our relationship with Authentik will

expand our global reach across critical industries, including pharmaceutical and food.

December 31, 2020

In 2020, we focused our

efforts primarily on the completion of our products, and began the introduction of our products into the market and forging relationships

that could help generate revenue in future periods.

We continue to expand our business and grow organically.

We also plan to pursue acquisition

opportunities that will allow us to accelerate our growth plans.

In November 2020, we

announced a share repurchase program to spend up to $1.5 million to repurchase shares of our common stock over the next nine months.

date, no shares have been purchased, but the Company reserves the right to make purchases at any time under the terms set out in this

In June 2020,

we completed the closing of our underwritten public offering of an aggregate of 2,173,913 units at a price to the public of $4.60

Each unit issued in the offering consisted of one share of common stock and one warrant to purchase one share of common

stock at an exercise price of $4.60.

The common stock and warrants began trading on the Nasdaq Capital Market (“Nasdaq”)

on June 18, 2020, under the symbols “VRME”

and “VRMEW,”

respectively.

We received gross proceeds of $10.0

million, before deducting underwriting discounts and commissions and other estimated offering expenses.

Concurrent with the offering,

we also effectuated a reverse split of our issued and outstanding common stock and treasury stock at a ratio of 50-to-1.

In March 2020, we completed the private placement of $1,992,000

senior secured convertible debentures (the “2020 Debentures”).

We used $750,000 of the net proceeds to redeem prior

outstanding convertible debentures issued in 2019.

In connection with the issuance of the 2020 Debentures, we also issued warrants

(“2020 Warrants”) to purchase 498,000 shares of common stock.

Each of the 2020 Warrants had a three-year term and were

immediately exercisable at an exercise price of $7.50 per share.

On June 22, 2020, we cancelled the 2020 Warrants for twenty-three

of the twenty-five warrant holders and issued to the holders of the cancelled 2020 Warrants an aggregate of 179,200 shares of common

Also on such date, the 2020 Debentures were automatically converted into an aggregate of 637,513 shares of common stock

and warrants to purchase 573,479 shares of common stock upon closing of our listing on Nasdaq.

In January 2020, we received a Notice of

Allowance for the U.S.

Patent Application from the U.S.

Patent & Trademark Office for the dual code authentication process

relating to our invisible QR code and smartphone reading system “Dual Code Authentication Process.”

COVID-19 Pandemic

The COVID-19 pandemic disrupted businesses

and affect production and sales across a range of industries, as well as caused volatility in the financial markets, which negatively

impacted our results of operations for 2020, and could further negatively impact our sales and results of operations.

has also caused a major spike in demand for safety products such as masks and gloves, COVID-19 test kits, medications, and vaccines

to treat the virus, which we believe has further caused an increase in counterfeit products.

Our suite of technology solutions

for global manufacturers, distributors and sellers are designed to allow consumers to prove authenticity and we have proactively

reached out to global manufacturers who are seeking to provide their customers authenticity in their products.

Please see Item

1A, “Risk Factors—Risks Relating to the COVID-19 Pandemic”

“Management’s Discussion and

Analysis of Financial Condition and Results of Operations—COVID-19 Pandemic”

in this Report for additional information

regarding certain risks associated with the pandemic and the pandemic’s effect on our results of operations.

Commercialization

of our Technologies

In 2020, we entered

into a number of strategic partnerships and agreements to accelerate the commercialization of our technology and announced a number

of commercial milestones achieved by the Company, including:

In October 2020, we entered into an agreement with OWS Capital to market, promote and sell our

security authentication technology solutions, including the VerifyMe®

as Authentic®

labels, in the United Arab Emirates

and Middle East.

In October 2020, we extended our agreement with Micro Focus

International PLC (“Micro Focus”) for three years.

The original agreement was entered into in December 2017.

Focus cross-sells our technology and supports our VeriPAS™

software platform.

To date, no sales have been made on our behalf

by Micro Focus, and limited revenue has been derived from our VeriPAS™

supply chain serialization, track and trace technology.

In September 2020, we were notified that a Forbes Top 50 Private Company that sells nutrition,

personal care, beauty and home care products, expects to add additional distribution in three additional countries;

Japan, Vietnam

The client also ordered RainbowSecure®

ink technology to meet required production volumes for products, in the

first quarter of 2021.

In June 2020, we entered into a new partnership with Corsearch, Inc.

(“Corsearch”),

a brand clearance and protection leader, pursuant to which we have the right to use and offer Corsearch’s technical search

platform ZERO®

to our customers and Corsearch will have the right to offer its brand clients the full suite of our technologies

to protect their e-commerce products.

is an online monitoring and enforcement platform that monitors and processes all

information relating to a brand’s products, trademarks, copyrights, designs and patents.

The initial term of the agreement

is two years and becomes auto renewable after the initial period.

To date, we have not derived revenue from this technology.

are beginning to demonstrate this technology to our customers as part of a broader strategy for a comprehensive provider of brand

protection solutions, for e-commerce as well as our proprietary physical and digital supply chain product offerings .

In June 2020, we executed a Technology Integration and Sales Referral Agreement with SmartGlyph

Limited (“SmartGlyph”), a U.K-based digital solutions provider, for a two-year term, to integrate technologies and

establish a sales referral relationship.

Under the agreement, the combined offering will include the VeriPAS™

Authenticator and its mobile app, VeriPAS™

serialization, track and trace technology and RainbowSecure®

ink and SmartGlyph’s

barcodes and multi-faceted, “software only”

coding platform.

In addition, the agreement includes a cross-selling agreement,

pursuant to which the receiving party will pay the referring party a referral fee equal to 10% of the purchase price of the products

purchased by a customer of the receiving party who was introduced by the referring party.

In June 2020, we received our first order for VeriPAS™

serialization, track and trace technology

Pursuant to the memorandum of

understanding, either party may terminate the strategic partnership at any time after September 1, 2019.

Testing of the inkjet

inks commenced in the third quarter of 2019and is still on-going.

On May 3, 2019, we entered into a one

year leasing contract with Identity Management Systems Co., Ltd., for the lease of one of our new VeriPAS™

Authenticators which includes the VeriPAS™

This lease is expected to allow us to introduce and sell our

products and services to the East Asia markets.

The contract can be terminated by either party with 90 days’

On April 24, 2019, we entered into a

license agreement with Niagara, a western New York label manufacturer with 33 years’

allows Niagara to offer our brand protection technology solutions to brand owners throughout the United States through the

leasing of our VeriPAS™

Smartphone Authenticators.

These VeriPAS™

Smartphone Authenticator read the invisible

in the cannabis industry, combined with our VerifyMe®

as Authentic®

The VeriPAS™

serialization, track

and trace technology is being utilized on pre-printed tamper-proof labels in order for the client to protect itself from counterfeit

products containing contaminants.

The solution also allows the end-consumer to download the compulsory certificate of origin, directly

from their smartphone, by scanning the overt barcode on the tamper-proof label.

We derived approximately $16 thousand in revenue

related to this order, and we received a similar reorder in the first quarter of 2021.

In June 2020, we entered into a strategic partnership with Techind Engineers & Consultants-Impex

(“Techind”), part of the Gohar Group, of India, with a two-year term, pursuant to which Techind provides our VeriPAS™

serialization, track and trace technology to a broad range of industries and clients of Techind, with a specific focus on the pharmaceutical

and food and beverage industries.

We have demonstrated our solution to a number of global companies with a presence in India through

our partnership with Techind.

Our Anti-Counterfeit Technologies and

In the areas of authentication and serialization of physical

goods, we offer clients the following brand protection security and anti-counterfeit technologies:

RainbowSecure®

codes into the cloud and are recorded in our serialization, track and trace software platform,

VeriPAS™

This license has a one year term that automatically renews for successive one year terms unless 90

prior notice of non-renewal is given by either party.

The agreement can also be terminated by either party with

90 days’

prior notice.

On April 11, 2019, we entered into a one-year

reseller agreement with Arca, a leading label and packaging company based in Milan, Italy.

Pursuant to the agreement, we offer

our brand protection technology solutions to brand owners throughout Europe through the leasing of our patented VeriPAS™

Smartphone Authenticators which read the invisible codes into the cloud and are recorded in the Company’s VeriPAS™

Our devices are expected to be leased to brand owners by Arca in exchange for recurring revenue.

The agreement can be

terminated by either party with 90 days’

prior notice.

Anti-Counterfeit Technologies and Products

Recent developments

in copying and printing technologies have made it easier to counterfeit a wide variety of documents and products.

Counterfeiting

can be divided into the following two types:

“Traditional Counterfeiting”

which includes mainly paper type documents and instruments

such as bank checks, birth certificates, credentials, identification documents, stock certificates, currency, lottery tickets,

credit cards, driver’s licenses, event and transportation tickets, coupons, and travelers’

Traditional Counterfeiting targets are mainly paper type instruments which can be traditionally copied, scanned, color copied,

hand drawn, etc., by both professionals and consumers alike;

“Modern Counterfeiting”

which consists of the actual counterfeiting of major brand

owners’

products such as expensive luxury items like jewelry, purses, military items (sabotage), drug manufacturing, golf

clubs, consumables like tobacco, alcohol, food and beverages.

Not only is the packaging and labeling counterfeited, the actual

products are counterfeited as well.

There are even reports of whole companies being counterfeited.

Although Traditional

Counterfeiting targets are extremely important and cause mainly financial harm, Modern Counterfeiting targets on the other hand

are much more sophisticated.

Organized crime, consumers, small and large businesses, and even governments may partake in

Modern Counterfeiting.

consumers at risk, but brand owners are also at risk.

Normally brand owners are financially impacted when someone is

selling or diverting their products.

The financial impact seems to be the lesser of the risk factors.

the additional, more impactful risk, facing brand owners and drug manufacturers is the liability issue.

A brand owner

may be called to a court room to prove that a product is authentic or counterfeit to avoid major liability exposure in the

form of judgements and fines, as well as the extremely severe negative marketing exposure for such issues.

Brand owners do not want their products

published under the name of a product that injured or harmed a consumer.

Our covert RainbowSecure®

technology can be

utilized by brand owners to authenticate products, labels and packaging in those circumstances.

We believe that losses and

liability from such counterfeiting is increasing substantially with improvements in counterfeiting technology as well as the proliferation

of highly skilled and well-funded counterfeiters.

It is therefore imperative that all brand owners, beverages, food and drug

manufacturers utilize the best counterfeit prevention technologies available for their products.

supply chain serialization, track and trace technology

VeriPAS™

Smartphone Authenticator

VerifyMe Beeper

VerifyMe®

RainbowSecure®

technology was

our first technology to be patented.

It combines an invisible ink with a proprietary tuned laser to enable counterfeit products to be

In 2017, we signed a five-year contract with Indigo Division of HP Inc.

(“HP Indigo”) to print this technology on

packages and labels on their 6000 series presses.

Our technology has been tested and approved by HP Indigo 6000 series presses and

more recently was qualified on HP Indigo’s 6900 series presses.

In addition, we successfully trialed production on their 7900 press

series used for sheet-fed products like folded cartons and plastic cards.

HP Indigo informed us that other press models will be qualified

once clients formally request in writing the need for qualification for current unqualified models.

In addition, HP Indigo is producing

sample secure government products such as tax stamp samples for governments with our RainbowSecure®

invisible ink technology.

has showcased these samples at various global government and print service providers trade shows.

Customers can use a handheld beeping

device, our VerifyMe Beepers, tuned to authenticate the unique frequency of our RainbowSecure®

invisible ink, to broadcast a beeping

sound to confirm the authenticity when placed on products, labels and packaging containing our RainbowSecure®

VerifyMe Beepers

are being commercialized and leased to customers, typically for one year.

In December 2017, we signed a contract with Micro Focus to use

RainbowSecure®

in their Global Product Authentication Service (GPAS).

The technology also features a unique double layer of security

which remains entirely covert at all times and provides licensees with additional protection.

Under the contract with Micro Focus, we

have a re-seller agreement where we sell the combined Micro Focus GPAS with our RainbowSecure®

identifier under our own trademarked

name, VeriPAS™.

In May 2019, we entered into a strategic partnership with INX, the third largest producer of inks in North America,

to co-develop inkjet inks to be used for inkjet printing in combination with high speed, high volume label and packaging printing presses.

In 2020 INX, in conjunction with Print Craft Inc., successfully-tested an appeal garment containing our RainbowSecure®

garment survived the 50 wash and dry cycle test.

Sales and marketing efforts for this new VerifyMe secure apparel technology are commencing

in 2021 in conjunction with INX and Print Craft Inc.

In February 2021, INX completed the development of a version of our RainbowSecure®

security ink for metal objects and INX is now co-marketing the new security ink to its global clients.

The specially formulated inks will

enable these printing presses to print our RainbowSecure®

invisible ink technology, which includes our variable VeriPAS™

serialization,

track and trace technology.

We believe RainbowSecure®

is particularly well-suited to closed and controlled environments that want

to verify transactions within a specific area, as well as labels, packaging, textiles, plastics and metal products which need authentication.

We have derived limited revenue from the sale of our RainbowSecure®

VeriPAS™

serialization, track and trace technology combines the covert identifier of RainbowSecure®

with the Micro Focus GPAS

which provides brand owners geographical business intelligence on counterfeiting as well as the ability to authenticate

labels, packaging and products.

Using information from a smartphone screen, our VeriPAS TM technology, can

provide authentication and data submission information.

A customer or end-user can scan information from a product label or

QR code and send it to the cloud where our VeriPAS TM software can verify authenticity of the product, as well

as track and trace the product from production through delivery.

Certain clients are in the testing stage with this product.

Revenue was received for the first time in 2020 and a new order was received in the first quarter of 2021.

To date, we have

recognized minimal revenue from this technology.

VeriPAS ™

Authenticator technology is a piece of hardware with a built-in lighting system and software that scans invisible RainbowSecure®

Product investigators attach their smartphone to this device which then reveals the hidden RainbowSecure®

the smartphone screen which are then sent to the VeriPAS TM software in the cloud for authentication and data submission.

These devices have been commercialized and are being leased to customers.

Leases are typically one year in length and are auto-renewable.

A Forbes Top 50 Private Company added additional leases in 2020 for its international brand inspector team.

Revenue from this product

is at an initial stage and minimal at this time.

VerifyMe Beeper technology

is an authentication tool which we are marketing to customers in conjunction with our RainbowSecure®

Beeper is a handheld beeping device is tuned to authenticate the unique frequency of our RainbowSecure®

invisible ink and will

broadcast a beeping sound to confirm the authenticity when placed on products, labels and packaging containing our RainbowSecure®

The VerifyMe Beeper is designed for use by customers who desire instant authentication on items, such as event tickets at

an entry gate.

Our customized beeper will only positively identify a product bearing our unique anti-counterfeit solution.

technology is being commercialized and leased to customers, typically for one year auto-renewable terms.

We are in the process

of upgrading the functionality of this device so that it connects to a mobile phone via Bluetooth allowing authentication attempts

to be recorded in the cloud by geo-location with time and date stamp.

VerifyMe®

as Authentic®

are dual-purpose pre-printed labels with a visible serialized QR code for consumer scanning purposes, and an invisible serialized

IR code for inspector scanning, authentication and tracking purposes.

This label can be either a standard label or designed

with tamper evident features.

It was developed to provide covert brand protection for e-commerce retailers, to enable consumer

product authentication, promotion, engagement and education through the visible serialized QR code.

This technology has been successfully

launched with tamper evident features and is being used in the cannabis sector by one customer, without the covert IR component.

VerifyMe®

Web TM includes,

through our collaboration with Corsearch, a brand clearance and protection leader, technologies and services that better enable

customers to effectively tackle counterfeit websites, domains and e-commerce platforms offering counterfeit products.

we have not derived revenue from this technology.

We believe that our brand protection security

anti-counterfeit technologies may be useful to businesses desiring to authenticate a wide variety of materials and products.

best solution for brand owners and manufacturers is to layer as many technologies as they can to protect their products.

Brand Protection Printing Technology

technologies, coupled with our contract with HP Indigo, can be used to enable brand owners to securely prevent counterfeiting,

prevent product diversion and authenticate labels, packaging and products and alleviate the brand owner’s liability from

counterfeit products which physically harm consumers.

Our covert technologies give brand owners the ability to control, monitor

and protect their products life cycle.

Also, our technologies allow brand owners to prove whether the product causing an issue

is authentic or counterfeit.

Brand Protection Technology

Our brand protection technologies include

(i) a technology utilizing invisible ink taggant that can be revealed by use of a special calibrated laser light for authentication

purposes, (ii) an ink technology, which allows invisible codes to be printed, and (iii) a color changing technology that is

activated by certain types of lights.

Based on our knowledge and test results, we believe none of these technologies can be copied

or scanned by counterfeiters.

purposes, (ii) an ink technology, which allows invisible codes to be printed, and (iii) a color changing technology that is activated

by certain types of lights.

Based on our knowledge and test results, we believe none of these technologies can be copied or scanned

by counterfeiters.

We believe the useful life of our technologies on a label or package is at least 20 years.

Our technologies can be printed on labels and packaging and can also be applied to metals, plastics and textiles.

Other possible

variations of our laser-based technology involve multiple color responses from a common laser, visible marks of one color that

turn another color with a second laser, or visible and invisible marks that turn into a multicolored image.

These technologies

provide users with the ability to authenticate products and detect counterfeit documents.

Applications include the authentication

of documents having intrinsic value, such as currency, checks, travelers’

checks, gift certificates and event tickets, and

the authentication of product labeling and packaging.

When applied to product labeling and packaging, our technologies can be used

to detect counterfeit products with labels and/or in packaging that do not contain the authenticating marks invisibly printed on

the packaging or labels of legitimate products, as well as to combat product diversion (i.e., the sale of legitimate products through

unauthorized distribution channels or in unauthorized markets).

We believe that our technologies also could be used in a manner

that permits manufacturers and distributors to track the movement or pinpoint geographically where counterfeiting of products is

We can track and trace from production to ultimate consumption when coupled with our VeriPAS ™

2017, we signed a five-year contract with the Indigo Division of HP Inc.

(“HP Indigo”) to print this technology on

packages and labels on their 6000 series digital presses.

The 6000 series digital qualified presses are mainly used to print both

static and variable high-quality images such as personalized labels and packaging for brand owners.

We have also successfully run

pilot production on the HP Indigo 7800 series press used for sheet-fed products like folded cartons and plastic cards.

informed the Company that other press models will be qualified once clients formally request in writing the need for qualification

for current unqualified models.

In addition, HP Indigo is producing sample secure government products such as tax stamp samples

for governments with our RainbowSecure®

In 2017, we signed a five-year contract

with the HP Indigo to print this technology on packages and labels on their 6000 series digital presses.

The 6000 series digital

qualified presses are mainly used to print both static and variable high-quality images such as personalized labels and packaging

for brand owners.

In 2020, our technology was qualified on HP Indigo’s 6900 series presses, and we also successfully trialed

production on their 7900 press series used for sheet-fed products like folded cartons and plastic cards.

HP Indigo informed us

that other press models will be qualified once clients formally request in writing the need for qualification for current unqualified

In addition, HP Indigo is producing sample secure government products such as tax stamp samples for governments with our

RainbowSecure®

invisible ink technology.

HP Indigo is showcasing these samples at various global government

and print service providers trade shows.

HP Indigo has showcased these samples at various global government and print service

providers trade shows.

This solution is marketed as RainbowSecure®

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technology prints covert serialization numbers, codes or images

either fixed or variable mainly on labels and packaging which are revealed when using our hand-held authentication devices.

In addition, in 2019, HP Indigo significantly

increased their own marketing of our RainbowSecure®

either fixed or variable mainly on labels and packaging which are revealed when using our hand-held authentication devices, we

call our VeriPAS™

Smartphone Authenticators.

In combination with a smartphone, these authenticators utilize special calibrated

laser light for authentication purposes.

VeriPAS™

Smartphone Authenticators are being commercialized and leased to customers,

typically for one year.

In addition, in 2020, HP Indigo increased

their own marketing of our RainbowSecure®

invisible ink technology.

HP Indigo had VerifyMe, Inc.

join them in their

trade show booth in the Global LabelExpo trade show held in Brussels, Belgium in September 2019.

HP Indigo has trained their world-wide

sales force on VerifyMe’s technology to show to both print service providers and brand owners.

HP Indigo has also installed

the Company’s technology offerings in their HP Experience Centers located in Tel Aviv, Israel, Singapore, Barcelona, Spain

and Alpharetta, Georgia where customers can perform tests and get hands on experience with the Company’s technologies.

also believe business will be generated from both internal sales efforts as well as from our strategic partner S-One Labels and

Packaging LLC, a division of S-One LP (“S-One”) which has agreed to provide us with global sales, distribution, and

promotion support for our products and employs representatives on an as needs basis to promote our products.

Under the terms of

our agreement with S-One, S-One will act as a sales and marketing contractor for our printed products and services on a global

basis and will assist us in fulfilling our obligations under our signed current and future reseller agreements with global and

domestic print providers and brand owners.

As an add-on track

and trace feature of our RainbowSecure®

covert imaging, we have contracted with Micro Focus International PLC (“Micro

Focus”), a global software developer to utilize their visible QR code system, GPAS, which is printed on labels and packaging

along with our covert RainbowSecure®

to store our hidden covert serial number in the cloud for product diversion investigators

to authenticate with a proprietary app on a mobile device.

The Micro Focus GPAS allows customers to use their smartphone

to scan a product’s QR code or send the code via a text message.

Immediate results help verify whether the product is real

or counterfeit.

This helps save customers from potential physical harm and businesses from facing lawsuits, loss of revenue and

brand erosion.

In addition to the anti-counterfeiting image, the Micro Focus Track and Trace software has a “big data”

gathering system with real-time analytics which geographically locate and identify counterfeiting activity by using an easily configured

rules engine.

We collaborated with HP Indigo at the Asia Security Group

Virtual High Security Printing & Brand Protection Conference & Exhibition in December 2020 to showcase our RainbowSecure®

solution on HP Indigo’s digital printing presses.

HP Indigo also highlighted our RainbowSecure®

invisible ink and VeriPAS™

Smartphone Authenticator in a webinar in July 2020.

HP Indigo has trained their world-wide sales force on our technology to show

to both print service providers and brand owners.

HP Indigo has also installed our technology offerings in their HP Experience

Centers located in Tel Aviv, Israel, Singapore, Barcelona, Spain and Alpharetta, Georgia where customers can perform tests and

get hands on experience with our technologies.

We also believe business will be generated

from both internal sales efforts as well as from our strategic partners.

S-One Labels and Packaging LLC, a division of S-One LP

(“S-One”), has agreed to provide us with global sales, distribution, shipping, warehousing and promotion support for

our products and employs representatives on an as needs basis to promote our products.

Under the terms of our agreement with S-One,

S-One will act as a sales and marketing contractor for our printed products and services on a global basis and will assist us in

fulfilling our obligations under our signed current and future reseller agreements with global and domestic print providers and

brand owners.

In addition, in 2020 we entered into a consulting arrangement to develop relationships with brand owners, converters

and other stakeholders in the food, pharmaceutical, medical device, fashion, apparel, household good and industrial products packaging

industry, focusing on markets in the United Kingdom, European Union, Middle East and Asia.

As an add-on track and trace feature of

our RainbowSecure®

covert imaging, we have contracted with Micro Focus, a global software developer to utilize their visible

QR code system, GPAS, which is printed on labels and packaging along with our covert RainbowSecure®

to store our hidden covert

serial number in the cloud for product diversion investigators to authenticate with a proprietary application on a mobile device.

The Micro Focus GPAS allows customers to use their smartphone to scan a product’s QR code or send the code via a text message.

Immediate results help verify whether the product is real or counterfeit.

This helps save customers from potential physical harm

and businesses from facing lawsuits, loss of revenue and brand erosion.

In addition to the anti-counterfeiting image, the Micro

Focus GPAS has a “big data”

gathering system with real-time analytics which geographically locate and identify counterfeiting

activity by using an easily configured rules engine.

Our covert or invisible RainbowSecure®

system works as an extra layer of protection for the GPAS system.

When a professional product investigator scans the Micro Focus visible QR code with a special app on a smartphone it brings him

or her to our secure cloud application to see what the hidden serialization number printed by the HP Indigo is for that particular

label or package.

The product investigator then uses the RainbowSecure®

reading device to compare the hidden serialization

number against the cloud number to prove authenticity.

Under the contract

with Micro Focus, VerifyMe has a re-seller agreement where we sell the combined Micro Focus GPAS system with our RainbowSecure®

identifier under our own trademarked name, VeriPAS TM .

The first pre-printed “VerifyMe As Authentic”

were printed containing VeriPAS™

in the fourth quarter of 2019.

These labels were tested with a third party Amazon retailer.

No revenue has been received yet.

We also have a strategic partnership with

INX International Ink Company, the third largest producer of inks in North America, to co-develop inkjet inks to be used for inkjet

printing in combination with high speed, high volume label and packaging printing presses.

The specially formulated inks will enable

these printing presses to print our RainbowSecure®

system works as an extra layer

of protection for the GPAS.

When a professional product investigator scans the Micro Focus visible QR code with a special application

on a smartphone it brings him or her to our secure cloud application to see what the hidden serialization number printed by the

HP Indigo is for that particular label or package.

The product investigator uses the RainbowSecure®

reading device, the smartphone

authenticator, to compare the hidden serialization number against the cloud number to prove authenticity.

Under the contract with Micro Focus, VerifyMe

has a re-seller agreement where we sell the combined Micro Focus GPAS with our RainbowSecure®

identifier under our own trademarked

name, VeriPAS™.

Minimal revenue has been recognized from VeriPAS™.

We also have a strategic partnership with INX,

the third largest producer of inks in North America, to co-develop inkjet inks to be used for inkjet printing in combination with high

speed, high volume label and packaging printing presses.

The specially formulated inks enable these printing presses to print our RainbowSecure®

invisible ink technology, which includes our variable VeriPAS™

serialization,

track and trace technology.

Testing of the inkjet inks commenced in the third quarter of 2019 and is on-going.

In addition, effective as of May 30, 2019,

we entered into an equipment and software leasing contract with a Forbes Top 40 Private Company that sells nutrition, personal

care, beauty and home care products around the globe.

See “Business Update”

above for further information about this

serialization, track and trace technology.

The inks are developed

and ready for market for metal container decorating, dry offset printing, gravure shrink sleeves, and flexographic fabric printing.

inks developed, and expected to be developed, under our partnership agreement are applicable to a broad range of uses, including aluminum

beverage cans and bottles, labels and packaging for the cannabis industry, personal protective equipment, aerospace parts, motor vehicle

parts, weapons and ammunition, silicon chips, and medical equipment.

This development has significantly expanded the market and availability

of our technology to the broader and more voluminous label and packaging manufacturing industry.

In addition, in May 2019, we entered into

an equipment and software leasing contract with a Forbes Top 50 Private Company that sells nutrition, personal care, beauty and

home care products around the globe.

In September 2020, we received notice that this client plans to expand to cover additional

products and three additional countries;

Japan, Vietnam and Taiwan.

We believe that our brand protection security

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is authentic or counterfeit.

In addition to

packaging and labels, our brand protection security printing technologies can be applied to authenticate important credentials

such as driver’s licenses, plastics, metal, apparel, birth certificates, immigration documents, gaming, apparel, currency,

event and transportation tickets, passports, computer software, and credit cards.

Brand Protection and Physical Goods Anti-Counterfeit Industry

We believe one

of the most important areas for our technology is authentication, which is the act of confirming that objects such as currency,

passports, casino chips, credit cards, stock certificates, pharmaceuticals, stamps, identification cards, lottery tickets, and

so forth, are real and not forgeries.

With the advent of new technologies, including the color copier and other printing technologies

and templates and the availability of the Internet, counterfeiters have had access to technologies which make it easier to produce

counterfeit items.

Counterfeiters are often located in foreign nations where counterfeiting is subject to little or no viable threat

of prosecution.

While some currency

and credit cards have introduced holograms, seals, and embedded strips in order to add a level of protection, most such methodologies

are expensive and, in some cases involve a time-consuming production process.

In other instances, such as when printing cigarette

tax stamps or hundreds of millions of pieces used in a popular restaurant chain’s contest game pieces, the authentication

process must be extremely inexpensive and easy to use or it will not be cost effective.

Currently many national currencies lack

a sufficient layer of protection to deter counterfeiting and can easily be counterfeited.

We believe major shifts are occurring in

how counterfeit products get in the hands of consumers.

Many consumers are purchasing counterfeit products online.

biometric technology is becoming increasingly popular which can tie individuals to their documents and transactions.

We have multi-factor

technology using biometrics in our digital verification technology.

Our entry into the biometrics technology business is further

described below under “Digital Authentication Technologies and Products.”

Counterfeiting is a continuously evolving

economic crime.

It presents companies, governments and individuals with a unique set of problems and has become a sophisticated

network of counterfeiting.

Counterfeiting devalues corporate reputations, hinders investment, and imposes costs upon many people

We believe counterfeiting is a serious threat to the global and U.S.

economies and a threat to national security.

significance of this problem was recently recognized by the U.S.

Department of Homeland Security which issued a Report to the U.S.

President on January 24, 2020 entitled “Combating Trafficking in Counterfeit and Pirated Goods.”

https://www.dhs.gov/sites/default/files/publications/20_0124_plcy_counterfeit-pirated-goods-report_01.pdf.

Additionally, on February 7, 2020, Peter Navarro, director of the U.S.

Office of Trade and Manufacturing, recently referred to

the counterfeiting problem as it pertains to Chinese exports as an “epidemic”

which the U.S.

government is committed

to stopping in 2020.

The anti-counterfeiting

industry is segmented into four general categories:

(i) Optical technologies –

use of light, i.e.

(ii) Electronic

magnetic strips and smart cards;

(iii) Biotechnologies –

uses characteristics of biological proteins such as antibodies,

enzymes and DNA;

and (iv) Chemical technologies - includes photochromic (or light-reactive) and thermochromic (or heat-reactive)

We operate in the chemical technologies

and security ink sectors of the industry.

Products in this industry change color when exposed to either heat or light and revert

to their original color when exposed again.

Generally, the effect is reversible as often as required.

Inks have also been developed

that are invisible to the human eye, but which can be read by bar-code scanners.

Other reactive inks change color when brought

into contact with specific substances, such as ink from a felt-tipped pen.

Based on technology,

the label and packaging market, including the anti-counterfeit packaging industry, has been segmented as follows:

Coding & printing technology (Track and Trace)

Radio Frequency Identification (“RFID”)

Security labels

Packaging design

Others (digital mass sterilization, digital mass encryption, and surveillance technologies)

We operate in

the coding and printing technology, security labels segments in the anti-counterfeit packaging industry.

Our technologies can be printed on labels

and packaging and can also be applied to metals, plastics and textiles.

In addition to packaging and labels, our brand protection

security printing technologies can be applied to authenticate important credentials such as tax stamps, driver’s licenses,

plastics, metal, apparel, birth certificates, immigration documents, gaming, apparel, currency, event and transportation tickets,

passports, computer software, and credit cards.

We can track and trace from production to ultimate consumption when coupled with

our VeriPAS™

proprietary software.

The Opportunity

Recent developments

in printing technologies have made it easier to counterfeit a wide variety of documents.

Lottery tickets, gift certificates, event

and transportation tickets and travelers’

checks are all susceptible to counterfeiting, and we believe that losses from such

counterfeiting have increased substantially due to improvements in technology.

Counterfeiting has long caused losses to manufacturers

of brand name products, and we believe that these losses have increased as the counterfeiting of labeling and packaging has become

Counterfeiters

have become so good at their unlawful activity that spotting the difference between legitimate and counterfeit products can be

Counterfeiters have many ways to subvert legitimate brands.

These may include taking an out-of-date product and selling

it in packaging and labels that have been forged;

sometimes, the packaging, labels and product itself are all counterfeited.

Counterfeiters

might also use legitimate packaging coupled with fake products.

We believe our pigment security systems are a cost-effective solution

for printer and packagers and are easily integrated into their existing manufacturing process.

As counterfeiting

continues to increase and losses to manufacturers and others continue to escalate, we believe that those entities will seek better

technologies to minimize their exposure.

These technologies, however, must also be cost-effective, easy to integrate, and highly

resistant to counterfeiting themselves.

The Organization for Economic Cooperation and Development, or OECD, in its March 2019 press

release, estimated that global trade related counterfeiting accounts for 3.3% of world trade or approximately $509 billion.

We offer products

in two related market segments.

We offer security ink taggants in the anti-counterfeiting/authentication industry and a software

product called VeriPAS TM in the identifier/track and trace industry.

We believe our brand protection products

have applications in the following areas:

Printing and Packaging –

Counterfeiting in packaging has greatly intensified in recent

years, causing concerns for consumers and financial concern for businesses worldwide.

Billions of dollars per year are at stake

for companies as they seek to ensure that the products sold with their logos and brands are authorized and authentic.

The proliferation

of counterfeiting requires brand owners and their converter/printer partners to work together to create a multi-layered protection

plan so that their packaging and labels protect their brands and deter those trying to profit at their (and their reputation’s)

Identification Cards and Secure Documents –

Governments are increasingly vulnerable

to counterfeiting, terrorism and other security threats at least in part because currencies, identity and security cards and other

official documents can be counterfeited with relative ease.

Governments must also enforce the various anti-counterfeiting and anti-piracy

regimes of their respective jurisdictions which becomes increasingly difficult with the continued expansion of global trade.

overt and covert ink pigment platform can provide secure, forensic, and cost-effective anti-counterfeiting, anti-piracy and identification

solutions to local, state, and federal governments as well as the defense contractors and the other companies that do business

Our pigment solution can be used for many types of identification and official documents, such as:

o Permanent resident, or “green”

cards and visas;

o Driver’s licenses;

o Social Security cards;

o Military identification cards;

o National transportation cards;

o Security cards for access to sensitive physical locations;

o other important identity cards, official documents and security-related cards.

In connection with the development of our VeriPAS™

Smartphone Authenticator, we are currently seeking to expand our business in this market but have not yet generated sales in this

Pharmaceuticals –

The pharmaceutical industry faces major problems relative to counterfeit,

diluted, or falsely labeled drugs that make their way through healthcare systems worldwide, posing a health threat to patients

and a financial threat to producers and distributors.

We believe counterfeit prescription pharmaceuticals are a growing trend,

widely recognized as a public health risk and a serious concern to public health officials, private companies, and consumers.

Counterfeiting

can apply to both branded and generic products and counterfeit pharmaceuticals may include products with the correct ingredients

but fake packaging, with the wrong ingredients, without active ingredients or with insufficient active ingredients.

on this threat, many countries have started to address vulnerabilities in the supply chain by enacting legislation which, among

other things, requires the implementation of a comprehensive system designed to combat counterfeit, diluted or falsely labelled

pharmaceuticals.

These systems are often referred to as serialization, or in the United States as e-Pedigree (electronic pedigree).

and the Federal Drug Administration (“FDA”) mandated serialization requirements were implemented in November 2018 and

are now required in all aspects of the pharmaceutical supply chain, from the manufacturer to the packager, wholesaler, distributor

and final dispensing entity.

The e-Pedigree provides an “audit trail,”

or documented evidence, to help identify and

catch counterfeiting and diversion.

Serialization requires manufacturers, or third-party packagers in some virtual supply chains,

to establish and apply to the smallest saleable unit package or immediate container a “unique identification number.”

Our unique pigments embedded in the ink of a unique serialized barcode can provide a layered security foundation for a customer

solution in this market.

all pharmaceutical companies will eventually comply with the legislation at some point in the future.

Our RainbowSecure®

as well as our VeriPAS™

track and trace system can address the need for product identifiers.

We plan on selling directly

to the pharmaceutical industry and their printers.

We also expect to engage third party marketing and sales companies to present

our solutions to the drug and pharmaceutical industry.

entered into a strategic partnership to assist us with marketing our products to the pharmaceutical industry.

have applications in many areas.

Currently, we are aggressively marketing opportunities in the following:

Consumer Products –

Counterfeit items are a significant and growing problem with all

kinds of consumer-packaged goods, especially in the luxury retail and apparel industries.

Our unique ink pigments can be incorporated

in dyes and used by manufacturers in these industries to combat counterfeiting and piracy of actual physical goods.

expressed as inks can also be used on packaging, as well as to track products that have been lost in transit, whether misplaced

We currently have a contract to assist with securing certain cosmetic products.

Counterfeit items are a significant and growing

problem with all kinds of consumer-packaged goods, especially in the luxury retail and apparel industries.

We believe our technologies

are particularly suited for the cosmetics, health and beauty and apparel industries.

We give the consumer the ability to test a

products authenticity instantly with a smartphone.

We can protect brand owners from liability litigation, product diversion and

lost financial sales with our unique ink pigments which can be incorporated in dyes and used by manufacturers in these industries

to combat counterfeiting and piracy of actual physical goods.

Our pigments expressed as inks can also be used on packaging, as

well as to track products that have been lost in transit, whether misplaced or stolen.

We currently have a contract to assist with

securing certain cosmetic products.

Pharmaceuticals/nutraceuticals –

We believe counterfeit prescription

pharmaceuticals are a growing trend, widely recognized as a public health risk and a serious concern to public health officials,

private companies, and consumers.

Counterfeiting can apply to both branded and generic products and counterfeit pharmaceuticals

may include products with the correct ingredients but fake packaging, with the wrong ingredients, without active ingredients or

with insufficient active ingredients.

The United States enacted legislation requiring the implementation of a comprehensive system

designed to combat counterfeit, diluted or falsely labelled pharmaceuticals, referred to as serialization or electronic pedigree

(e-Pedigree).

Our unique pigments embedded in the ink of a unique serialized barcode can provide a layered security foundation

for a customer solution in this market.

We are seeking to expand our business in this market and believe that as additional pharmaceutical

companies seek to comply with the legislation we believe our products will provide attractive alternatives to address the need

for product identifiers.

We expect to engage third-party marketing and sales companies to present our solutions to the drug and

pharmaceutical industry.

Food and Beverage –

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as supply chains become more global and as imaging and manufacturing technology become more accessible.

There have been numerous

reports of counterfeit foods, including long-grain rice labelled and sold as basmati rice, Spanish olive oil bottled and sold as

Italian olive oil, and mixtures of industrial solvents and alcohol sold as vodka.

Although many of these stories have emerged from

and Europe, the fake-food problem is also relevant in the United States.

the fake-food problem is often due to product laundering, dilution and intentionally false labeling.

We believe our pigments and

authentication tools can help in the battle against counterfeit foods and beverages.

We are currently marketing our products in

Our Solutions

In the areas of

authentication and serialization of physical goods, we offer clients the following products as anti-counterfeit systems:

RainbowSecure®

VeriPAS TM Global Product Identifier, Track and Trace System

SecureLight®

SecureLight+®

VeriPAS™

Smartphone Authenticator

VerifyMe Beeper

VerifyMe As Authentic Labels

RainbowSecure ®

was our first technology to be patented.

It combines an invisible ink with a proprietary tuned laser to enable counterfeit products

to be exposed.

In 2017, we signed a five-year contract with HP Indigo to print this technology on packages and labels on their

6000 series presses.

Our technology has been tested and approved by HP Indigo 6000 series presses and more recently we have

successfully run pilot production on the 7800 press which runs on HP Indigo’s newer series 4 platform, and will open up

sheet-feed products like folded cartons and plastic cards.

In December 2017, we signed a contract with Micro Focus to use RainbowSecure®

in their Global Product Authentication, Track and Trace system (software).

The technology also features a unique double layer

of security which remains entirely covert at all times and provides licensees with additional protection.

RainbowSecure®

particularly well-suited to closed and controlled environments, such as casinos that want to verify transactions within a specific

area, as well as labels, packaging, textiles, plastics and metal products which need authentication.

In May 2019, we entered into

a strategic partnership with INX International Ink Company, the third largest producer of inks in North America, to co-develop

inkjet inks to be used for inkjet printing in combination with high speed, high volume label and packaging printing presses.

specially formulated inks will enable these printing presses to print our RainbowSecure®

invisible ink technology, which includes

our variable VeriPAS™

serialization, track and trace technology.

We have derived minimal revenue from our VeriPAS™

software system and have derived limited revenue from the sale of our RainbowSecure®

VeriPAS ™

technology combines

the covert identifier of RainbowSecure®

with the Micro Focus Track and Trace software which provides brand owners geographical

business intelligence on counterfeiting as well as the ability to authenticate labels, packaging and products.

Based on our discussions

with other serialization, track and trace software providers we expect to add alternatives to clients beyond the Micro Focus GPAS

This technology is currently being co-marketed with RainbowSecure®

and our VeriPAS™

Smartphone Authenticator

Several clients are in the testing stage with this product.

To date, we have not derived revenue from this technology.

SecureLight ®

technology was developed as a result of our investment in new proprietary color changing inks that could penetrate broader markets.

During the past decade, we have refined our technology and its applications, and now have what we believe to be the easiest, most

cost effective and efficient authentication technology available in the world today.

Our technology, known as SecureLight®,

takes advantage of the new ubiquitous energy efficient fluorescent lighting to change the color of ink, resulting in hundreds

of new applications ranging from credit cards to driver’s licenses, passports, stock certificates, clothing labels, currency,

ID cards, and tax stamps.

The technology can also be used to protect apparel, pharmaceuticals, and virtually any other physical

product, such as fabrics, plastics, ceramics and metal.

In 2018, we received notice that patents involving this technology were

approved in various European nations.

We are attempting to commercialize this product.

SecureLight +®

technology combines the covert characteristics of RainbowSecure®

and the overt characteristics of SecureLight®.

This provides

a solution which can be authenticated in two different ways - by proprietary tuned laser devices, and also by anyone with fluorescent

lighting, including end consumers.

In 2018, we received notice that patents involving this technology were approved in various

European nations.

SecureLight+®

has been successfully deployed in one country’s drivers’

licenses and another country’s

voter registration card program.

We have begun to commercialize this product.

VeriPAS ™

Smartphone Authenticator technology is a piece of hardware with a built-in lighting system and software that scans invisible

RainbowSecure®

Product investigators attach their smartphone to this device which then reveals the hidden RainbowSecure®

images on the smartphone screen which are then sent to the VeriPAS TM software in the cloud for authentication and data

These devices have been commercialized and are being leased to customers.

Leases are typically one year in length.

VerifyMe Beeper

technology is an authentication tool which we are marketing to customers in conjunction with our RainbowSecure®

Authentication is provided in the form of an LED indicator, a camera device which reveals the hidden serialization numbers and

codes on a viewing screen and an audible beeping device when placed on a label, product or package containing the RainbowSecure®

The handheld beeping device is tuned to authenticate the unique frequency of our RainbowSecure®

invisible ink

and will broadcast a beeping sound to confirm the authenticity when placed on products, labels and packaging containing our RainbowSecure®

ink technology.

The VerifyMe Beeper is designed for use by customers who desire instant authentication on items, such as event

tickets at an entry gate.

Our customized beeper will only positively identify a product bearing our unique anti-counterfeit solution.

This technology is being commercialized and leased to customers.

VerifyMe®

as Authentic™

technology is a dual-purpose pre-printed label with a visible serialized QR code for consumer scanning

purposes, and an invisible serialized IR code for inspector scanning, authentication, and tracking purposes.

This label was

developed to provide covert brand protection for on-line retailers, while enabling consumer product authentication, promotion,

engagement and education through the visible serialized QR code.

This technology is being commercialized to prospective customers.

We believe our pigments

and authentication tools can help in the battle against counterfeit foods and beverages.

We are currently marketing our products

in this market.

Our Raw Material Suppliers

Our security pigments

are manufactured from naturally occurring inorganic rare earth materials.

The manufacturing process includes both chemical and

mechanical elements.

Our security pigments are manufactured

from naturally occurring inorganic rare earth materials.

The manufacturing process includes both chemical and mechanical elements.

In many cases, we produce pigments that are unique to a customer or product line.

This uniqueness can be achieved

through a variety of techniques, including custom formulation or combination of our proprietary pigments and/or incorporation of

other specialized taggants.

There are many

manufacturers of these types of specialized pigments and we intend to maintain multiple simultaneous relationships to ensure ample

sources of supply.

We provide pigment

mixing instructions for the specific uses of each client based on their existing equipment and processes.

We maintain policies

and procedures to monitor, track and log access to and disposition of all pigment.

Our customers are also required to agree to

and implement these policies and procedures.

Digital Authentication Technologies and Products

We believe accurate

identification of human beings in electronic transactions, also known as Digital Identity Management, will continue to be a large

and rapidly growing market.

In today’s world the need for verification of the unique identity of human beings participating

in those transactions has become more important.

In general, every electronic transaction has a least two actors –

and a relying party.

The relying party has a business need to eliminate or reduce risk associated with the identification of the

Electronic financial

theft and electronic theft of private information often make headlines.

We believe the majority of this harm can be traced to weak

authentication systems, such as username/password, yet these weak systems continue to be used in most of the world’s transactional

Cybersecurity is a growing threat requiring continuously evolving forms of electronic security.

Historically,

stronger authentication solutions, such as biometric, two-factor and multi-factor solutions have been difficult to use and expensive

to deploy and operate.

The proliferation of smartphones and tablets provide an infrastructure for disruptive solutions that leverage

the mobile nature of these devices and the multi-sensor computing capabilities.

VeriPAS™

Smartphone Authenticator is

a digital identity management software platform that provides extensible authentication mechanisms that can be dynamically invoked

to achieve a specified degree of identity assurance.

The VeriPAS™

Smartphone Authenticator platform incorporates a risk engine

that associates individual risk parameters and scores with every unique authentication mechanism.

The risk engine then generates

aggregate risk scores based on the specific combination of individual authentication mechanisms used to confirm the identity of

the human being.

We are now enhancing this product and

getting it ready for deployment into the financial services industry.

We cannot assure you we will generate any revenues

from these efforts.

Digital Authentication Technology

We believe that the digital technologies

we own will enable businesses and consumers to reconstruct their overall approaches to security—from identity and authentication

to the management of legacy passwords and PINs.

We empower our customers to take advantage of the full capabilities of smart mobile

devices and provide solutions that are both simple to use and deliver the highest level of security.

These solutions can be applied

to corporate networks, financial services, e-gov services, digital wallets, mobile payments, entertainment, subscription services,

and social media.

The challenges associated with digital

access control and identity theft are problems that are highly relevant in the world today.

Consumers, citizens, employees, governments

and employers demand comprehensive solutions that are timely, reliable but not intrusive.

The current widespread use of passwords

and personal identification numbers, or PINs for authentication has proven to be unsecure and inadequate.

Individuals increasingly

expect anywhere-anytime experiences—whether they are making purchases, crossing borders, accessing services or logging into

online accounts or corporate resources.

They expect those experiences to ensure the protection of their privacy and to provide

uncompromising confidentiality.

Verification is the front door of all access

and transactions.

The most fundamental action is to identify “who the person is and how you identify yourself.”

believe our VerifyMe digital authentication is the building block that answers that question.

Our verification technology ensures

that users are who they say they are.

Our technology becomes their virtual credentials which are protected from fraud and

There are hundreds of millions of identities stolen annually.

It is absolutely crucial to know which users have the

right to access particular information or transactions, and whether or not unauthorized users have been prevented from accessing

those same critically important items.

In today’s world we have global workforces,

customers, systems and data.

Unfortunately, we have the same global sophisticated cybercrime.

Therefore, vetting users and

access also means asking important questions about authentication, such as which authentication method is most appropriate given

a resource, channel or specific risk factor.

We believe that our digital verification

technology meets user expectations for ease of use, privacy and overall experiences especially in financial and healthcare enterprises.

For connected organizations, the authentication process is like the front door.

To users, it is important not only to smoothly

reach the systems or data they need, but to know that their own account access and data is secured.

Authentication is crucial,

but it needs to be frictionless to avoid frustrating users whether they are customers, partners, or employees.

Passwords are no longer enough.

been proven time and time again that even strong credentials can be stolen, cracked or coaxed from end users.

Given today’s

threat landscape, good security requires strong authentication practices, one of which is multi-factor authentication (“MFA”).

Our MFA system requires no passwords at all.

By using multiple independent factors VerifyMe’s

verification system significantly increases the effort that cybercriminals must exert to break in and access the protected transaction

Also attempts that fail for lack of additional factors raise immediate red flags to end users and their financial

or data system administrators.

Additionally, our MFA does not use tokens

or complicated, tiered passwords.

Passwords are replaced by our MFA technology.

Passwords are lost, stolen, forgotten, constantly

changed, etc.

Our MFA removes the need for passwords.

The person’s biometrics combined with other non-password factors become

their password.

Our digital technologies involve the utilization

of multiple authentication mechanisms, some of which we own.

These mechanisms include biometric factors, knowledge factors, possession

factors and location factors.

Biometric factors include facial recognition with liveness detection, finger print and voice recognition.

Knowledge factors include a personal gesture swipe and a safe and panic color choice.

Possession factor includes devices that the

user has in their possession such as a smartphone, smart watch, and other wearable computing devices.

The location factor geo-locates

the user during a secure login.

We surround these authentication mechanisms with proprietary systems that improve the usability

and the security of the solutions.

Our solutions allow the assessment and quantification of risk using a sophisticated patented

heuristic scoring mechanism.

We have specialized systems that perform ‘liveness’

detection to insure the subject of

authentication is in fact a live human being.

We have software systems that introduce learning capabilities into our solutions

to improve the ease of use and flexibility.

We believe that by using a host of factors,

our proprietary scoring system gives a 99% assurance that the person behind the transaction is the person they say they are.

The digital technologies we own will enable

businesses and consumers to reconstruct their overall approaches to security—from identity and authentication to the management

of legacy passwords and PINs.

We empower our customers to take advantage of the full capabilities of smart mobile devices and provide

solutions that are both simple to use and deliver the highest level of security of five or more factors and a patented scoring

Our digital multi-factor

verification software solutions can be applied to:

Cryptocurrencies

Blockchain Authentication

Corporate Networks

Digital Drop Box Access

Physical Access

Financial Transaction Services

Medical Insurance

Digital Wallets

Government (e-gov services)

Pharmaceutical

Entertainment

Mobile Payments

Purchaser Authentication

Notary Authentication

Electronic Forms

Voting Systems

Subscription services

Employee Time Systems

Digital Authentication Industry

The growth in

Internet banking and Internet commerce and the increasing use and reliance upon proprietary or confidential information that is

remotely accessible by many users by businesses, government and educational institutions, has made information security a paramount

We believe that enterprises are seeking solutions that will continue to allow them to expand access to data and financial

assets while maintaining network security.

vendor in the user authentication market delivers on-premises software/hardware or a cloud-based service that makes real-time authentication

decisions for users who utilize an arbitrary endpoint device (that is, not just Windows PCs or Macs) to access one or more applications,

systems or services in a variety of use cases.

Where appropriate to the authentication methods supported, a vendor in this market

also delivers client-side software or hardware that end users utilize to make those real-time authentication decisions.

market is mature, with several vendors offering products that have been continuously offered during the past three decades (although

ownership has changed over that time).

However, new methods and vendors continue to emerge, with the most rapid growth occurring

within the past decade in response to the changing market needs for different trade-offs among trust, user experience and total

cost of ownership.

The greater adoption of user authentication over a wider variety of use cases, the impact of mobile, cloud and

big data analytics, and the emergence of innovative methods continue to be disruptive.

While over 100

authentication vendors currently operate in the market, the vast majority deliver two-factor authentication solutions.

few vendors that market biometric solutions simply combine them with a password for two-factor security.

Internet and Enterprise Security .

the advent of personal computers and distributed information systems in the form of wide area networks, intranets, local area networks

and the Internet, as well as other direct electronic links, many organizations have implemented applications to enable their workforce

and third parties, including vendors, suppliers and customers, to access and exchange data and perform electronic transactions.

As a result of the increased number of users having direct and remote access to such enterprise applications, data and financial

assets have become increasingly vulnerable to unauthorized access and misuse.

Individual User Security .

addition to the need for enterprise-wide security, the proliferation of personal computers, personal digital assistants and mobile

telephones in both the home and office settings, combined with widespread access to the Internet, have created significant opportunities

for electronic commerce by individual users such as electronic bill payment, home banking and home shopping.

The continued

reliance by most enterprises on passwords and PINs has resulted in daily identity theft and data breaches, with massive attacks

being announced almost every week.

The companies that have been attacked and compromised private data include top brands in finance,

retail, entertainment, technology and governments.

Strong Digital Authentication Market

A strong authentication

market has emerged, initially led by two-factor authentication solutions.

Two-factor authentication solutions combine a password

with a second factor, which typically involves proving possession of some object through a one-time password token that generates

rotating secret codes, a telephone call via a callback or a SMS message, or an email address via emailing a secret code.

three-, four- and five-step methods are expensive and typically used by banks and high-level government operations.

biometric technology will play a larger role.

Password Manager/Digital Wallet Market

Until companies

figure out a better way to protect their data in the cloud, we believe that the best solution is to enforce higher security with

password managers.

Password managers provide tools to encrypt text files that can store passwords that are not web based,

such as Windows and Outlook passwords, Lotus Notes passwords, administration passwords including local and domain accounts, BIOS

passwords, encrypted hard drive passwords, cell phone and voicemail passwords and iPad and iPhone passwords.

managers promise greater security while improving the user experience.

The best password

managers sync to the cloud across all dominant platforms and require MFA.

There are currently no password managers that utilize

more than two-factor authentication and none that incorporate additional biometric mechanisms.

The Opportunity

Biometric Systems Market

According to researchandmarkets.com the biometric systems market

is expected to reach $65.3 billion by 2024 from $33 billion in 2019 growing at a CAGR of 14.6%.

We believe the biometric system

market is expected to grow at a modest rate due to cohesive support by governments worldwide and regulations favorable to growth

of the biometrics market.

The main reason for the adoption of this technology is security.

In today’s era, theft and breach

of security is easily possible, which we believe supports the growth of demand in this market.

Simultaneously, we believe, a growth

in cyber-attacks and crimes are pushing the demand for biometric security.

By verticals, the biometric system market

is segmented as Banking, Financial Services, Insurance (“BFSI”), consumer electronics, automotive, government and others.

Due to economic growth across the globe, we believe demands for automotive vehicles is increasing, along with increasing vehicle

thefts, thus the growing automotive production is anticipated to push the demand for biometric systems for vehicle security.

the BSFI sector we believe the biometric market is trending toward growth due to increased thefts and cybercrimes.

We expect the

consumer electronics market will dominate this market as manufacturers are investing heavily to make their devices more secure.

By geography, the market is segmented

as the Americas, Europe, Middle East and Africa and Asia Pacific.

In the Americas, this market is expected to grow due to security

and scrutiny of employees.

The Asia Pacific region is adopting the new technologies of biometrics for more security and efficiency.

In North America, the implementation of various governmental initiatives has supported growth in the biometric system market.

Major industry players according to researchandmarkets.com are NEC Corporation (Japan), Aware (US), Cross Match Technologies (US);

Thales Group (France), Safran (France), ASSA ABLOY AB (Sweden), and Fujitsu Ltd.

As identity theft and data breaches continue to increase and losses to service providers and individuals continue to escalate,

we believe both enterprises and consumers will seek better solutions to protect their interests.

These solutions must be cost

effective, easy to integrate, and simple to use.

Any transaction or action which requires

authentication of an individual is a potential opportunity for a strong multi-factor solution such as VeriPAS™

Authenticator.

We believe this is a large market opportunity, within which we are focused on five specific segments:

Subscription services market, where revenue is commonly lost due to multiple individuals sharing

user credentials to access information and services;

Online gaming market, where financial transactions are performed and geo-location is very important

to maintaining compliance with state/country regulations;

Financial services market, where there is a large financial risk to identity theft and fraud, including

banking, purchases, mobile payments, and digital wallets;

Access control market, where the identity of individuals is key to allow access to buildings as

well as digital access to data;

Social Media Market to identify people versus robots or imposters.

VerifyMe MFA delivers

an electronic authentication solution for identifying individual human beings.

When subject attempts to access an Internet resource

and asserts an identity, VeriPAS™

Smartphone Authenticator attempts to authenticate the asserted identity.

It does this utilizing

multiple strong authentication mechanisms, involving at least three independent factors.

around mobile apps that incorporate a password manager and single sign on capability.

In addition to facilitating strong authentication

during the logon process to the enterprise resource or service, VeriPAS™

Smartphone Authenticator also lets the user conveniently

integrate and protect all of their legacy username and passwords.

VeriPAS™

Smartphone Authenticator has several advantages,

including, among other things:

Fast and Easy to Use –

VeriPAS™

Smartphone Authenticator replaces passwords and PINs

with a quick, intuitive and user-friendly interface.

Our customers can authenticate end users in multiple ways (multi-factor) in

the same timeframe as a conventional password login.

The service is platform agnostic (available for IOS, Android, Mac and PC),

and scalable for use on wearable personal devices.

Support for Any Authentication Method –

VeriPAS™

Smartphone Authenticator has

the ability to authenticate individuals using facial recognition, fingerprint, voice scanning, retina scanning, swipe pattern recognition,

location detection and approved IP detection.

We believe that the VeriPAS™

Smartphone Authenticator can provide the highest

levels of confidence, security and account protection to a businesses’

customers, all within seconds.

VeriPAS™

Authenticator is not limited to specific authentication factors.

Our platform can support any available authentication mechanism,

including those that require policy-driven mechanisms.

We are continuing to add new authentication mechanisms, including

mechanisms suitable for wearable devices and new biometrics.

Multi-Factor Confidence Scores –

Depending on the desired level of confidence, different

online and mobile application accounts can require varying quality scores.

As the desired level of security increases, so does

the required quality score to complete a sign-in transaction.

As the quality score increases, additional authentication factors

are added to the sign-in process.

Secure Platform, Easy to Integrate –

VeriPAS™

Smartphone Authenticator can be delivered

either as managed service from our secure cloud or as licensed software which can be operated with existing infrastructure.

VeriPAS™

Smartphone Authenticator also features the following benefits:

o Available to be white-labeled and integrated into existing digital platforms;

o Non-Stop, audited, monitored, private cloud service;

o Three independent, fault tolerant, redundant data centers;

o Global load balancing and traffic management;

o High level commercial API’s can be integrated in hours;

o Complete audit information, including fresh biometrics.

o MFA utilizes a number of factors including, without limitation, the following:

Factor 1 –

Something you have

a possession device –

typically this is a registered mobile device, which we can authenticate either via SMS or

email round robin protocol.

Something you know –

a knowledge factor –

we currently utilize a color gesture swipe.

This requires

the subject to confirm their secret color and appropriately connect dots on a matrix consistent with their registered gesture pattern.

Something you are –

we utilize facial recognition to authenticate images captured in real-time using the

registered devices built in camera, with images that were stored in the subject’s profile during registration.

Our platform can

be distinguished from competitors in that it is not limited to any of the above authentication mechanisms.

MFA currently supports

many more authentication mechanisms and we intend to continue expanding this list.

For example, our platform is not

limited to facial recognition as a biometric mechanism.

It currently supports voice, fingerprint and other mechanisms.

In addition, MFA

includes a risk-scoring engine that is able to enforce complex, customer specific authentication policies and shield them from

the underlying complexity of evaluating multiple, independent authentication mechanisms.

This risk engine allows us to constantly

add new authentication mechanisms as they emerge.

We see the emerging market of wearable devices as providing new authentication

mechanisms that will be very simple and reliable for the end-user.

Because our risk engine insulates the enterprise from the complexity

of having to interface with all these different platforms, they are available to benefit from and insure their customers can utilize

these devices to their full potential.

MFA is platform

agnostic (available for IOS, Android, Mac, Linux and Windows) and scalable for use on wearable personal devices.

The digital platform

is an enterprise solution, which combines multiple independent authentication factors and can also determine geo-location utilizing

a number of mechanisms including GPS, cell tower triangulation and IP/WIFI address.

Because the service utilizes biometrics

and liveness detection, it eliminates the possibility that users might share their authentication credentials, or that user accounts

can be accessed by other individuals.

The combination of biometrics and geo-location provides extremely strong transactional evidence,

making it nearly impossible for an end-user to refute having been part of a transaction.

During 2019, we spent approximately $36,000 on hosting of our

MFA software and have spent approximately $300,000 on software and hardware development since the beginning of 2018.

sales in 2019 in relation to our MFA technologies due to further refinement to address new smartphone capabilities.

now work on both Apple IOS and Android phone systems.

In 2018 and 2019, we developed applications (“APPs”) which are

used in conjunction with the MFA technology.

These APPs are now fully functional however, we expect to enhance and upgrade the

visual appearance and functionality of the APPs to enhance a customer’s experience.

Although this product is fully developed

and ready for deployment, we have only passively marketed it with just a website presence.

We have had no sales to date.

is concentrating most of its financial resources on security printing brand protection technology sales.

The Company hired an independent

consulting group, who reviewed the current MFA market and our MFA software system and concluded that the product is viable, marketable,

and has the ability to increase the Company’s revenue.

The Company intends to implement the product once adequate funding

becomes available.

This uniqueness can be achieved through a variety

of techniques, including custom formulation or combination of our proprietary pigments and/or incorporation of other specialized

There are many manufacturers of these types of specialized pigments and we intend to maintain multiple simultaneous relationships

to ensure ample sources of supply.

Accordingly, we are not dependent on any principal suppliers.

Manufacturing and Distribution

We rely on third-party strategic partners

to manufacture and distribute our RainbowSecure®

We provide these strategic partners with pigment mixing instructions

for the specific uses of each client based on their existing equipment and processes.

We maintain policies and procedures to monitor,

track and log access to and disposition of all pigment.

Our customers are also required to agree to and implement these policies

and procedures.

In relation to our other products, such our hand held VerifyMe Beeper and VeriPAS™

Smartphone Authenticator devices,

as well as our VerifyMe®

as Authentic®

tamper-proof labels, we provide instructions for the design of these products

and rely on our strategic partners for manufacturing and distribution.

Our Intellectual Property

Intellectual property is important to our

The current patent and trademark portfolios consist of 9 granted US patents and one granted European patent validated

in four countries, four pending US and foreign patent applications, four registered US trademarks, one EU foreign registration

and one Colombian foreign registration, and seven pending US and foreign trademark applications.

The current patent and trademark portfolios consist of eleven granted US patents and one granted European patent

validated in four countries, nine pending US and foreign patent applications, six registered US trademarks, two EU trademark registrations,

one Colombian trademark registration, one Australian trademark registration, one Japanese trademark registration, one Mexican trademark

registration, one Singaporean trademark registration, and four pending US and foreign trademark applications.

In addition, seven patent applications

were abandoned.

We plan on considering the filing for reinstatement on some of the abandoned patent applications.

We have attempted

to achieve sufficient flexibility in our products and technologies so as to provide cost-effective solutions to a wide variety

of counterfeiting problems.

We intend to generate revenues primarily by selling pigment to manufacturers who incorporate our technologies

into their manufacturing processes and their products as well as through licensing fees where we are providing unique or custom

While some of

our granted patents are commercially ready, we believe that others may have commercial application in the future but will require

additional capital and/or a strategic partner in order to reach the potential markets.

All of our patents are related to the inventions

described above.

Our patents expire between the years 2019 and 2033.

The expiration date of a pending application that matures

into a registration depends upon the issuance date and any adjustment under 35 U.S.C.

It is cost prohibitive

to register patents in every country.

We continue to develop new anti-counterfeiting technologies and we apply for patent

protection for these technologies in countries with the most market potential and strong patent enforcement tools.

new product or process is developed, we may seek to preserve the economic benefit of the product or process by applying for a patent

in each jurisdiction in which the product or process is likely to be exploited.

are abandoned.

We plan on considering filing for revival of some of the abandoned patent applications.

We have attempted to achieve sufficient

flexibility in our products and technologies so as to provide cost-effective solutions to a wide variety of counterfeiting problems.

We intend to generate revenues primarily by selling pigment to manufacturers who incorporate our technologies into their manufacturing

processes and their products as well as through licensing fees where we are providing unique or custom solutions.

While some of our granted patents are commercially

ready, we believe that others may have commercial application in the future but will require additional capital and/or a strategic

partner in order to reach the potential markets.

All of our patents are related to the inventions described above.

Our registered

patents expire between the years 2021 and 2038.

The expiration date of a pending application that matures into a registration depends

upon the issuance date and any adjustment under 35 U.S.C.

It is cost prohibitive to register patents

in every country.

We continue to develop new anti-counterfeiting technologies and we apply for patent protection for these technologies

in countries with the most market potential and strong patent enforcement tools.

When a new product or process is developed, we

may seek to preserve the economic benefit of the product or process by applying for a patent in each jurisdiction in which the

product or process is likely to be exploited.

The issuance of

5 unchanged sentences

a challenge will not be successful.

We have trademarked

the VerifyMe TM brand in the United States and have pending applications with respect to our brand internationally.

However, our name and brand could be confused with brands that have similar names, including but not limited to Verified.Me, a

service offered to Canadians by SecureKey Technologies Inc.

We have a pending application for the VerifyMe name in Canada but

can make no assurances regarding its approval.

We are aware of names and marks similar to our service marks being used from time

to time by other persons that could result in confusion and may diminish the value of our brands and adversely affect our business.

“Risk Factors.”

We have been involved

in research and development since our inception and intend to continue our research and development activities, funds permitting.

Through 2012, our research and development focused on pigment technologies.

Since 2012, we have allocated research and development

efforts between digital and pigment technologies.

We hope to expand our technology into new areas of implementation and to develop

unique customer applications.

We spent approximately $5,000 and $188,000 during the years ended December 31, 2019 and 2018, respectively,

on research and development.

We have trademarked the VerifyMe TM

brand in the United States and have registered and pending applications with respect to our brand internationally.

our name and brand could be confused with brands that have similar names, including but not limited to Verified.Me, a service offered

to Canadians by SecureKey Technologies Inc.

We have a pending application for the VerifyMe name in Canada but can make no assurances

regarding its approval.

We are aware of names and marks similar to our service marks being used from time to time by other persons

that could result in confusion and may diminish the value of our brands and adversely affect our business.

See Item 1A “Risk

Factors”

for additional information regarding the risk of confusion of our name with other brands and other intellectual

property risks.

Prior to 2019,

we had been involved primarily in research and development since our inception.

Through 2012, our research and development focused

on pigment technologies.

From 2012 through 2018, we allocated research and development efforts between digital and pigment technologies.

Since 2019 our primary focus has shifted from research and development to commercialization of our products.

Current research and

development efforts are focused on expanding our technology into new areas of implementation and to develop unique customer applications.

We spent approximately $19 thousand and $5 thousand during the years ended December 31, 2020 and 2019, respectively, on research

and development.

We are now researching the conversion of our VeriPAS™

cloud-based platform into an Ethereum de-centralized blockchain network to increase its security.

We are looking at an existing

Ethereum Blockchain-as-a-Service ("BaaS") platform system that we would upgrade with our patented digital features.

goal for the new platform will be to provide a comprehensive blockchain platform offering product lifecycle management, supply

chain process control, data mining, consumer engagement, product certification, and process certification.

We envision that this

new blockchain network could be utilized by any sized business, to further enhance brand protection and value as well as to possibly

enable us to expand into new business models.

Sales and Marketing

Brand Protection

We plan on marketing

directly with HP Indigo 6000 series and HP Indigo 7800 series press owners as well as the label and packaging printing industry,

including both traditional and digital printers and users to address their clients’

The rise of e-commerce is a major opportunity

for our products and technologies.

Both brand owners and counterfeiters conduct a rapidly growing proportion of their trade online.

sites such as Amazon, Alibaba and, eBay and social media networks, including Facebook, Twitter and Instagram, have become major hubs for

counterfeits.

These e-commerce sites continue to outperform brick-and-mortar retail growth, and such performance has been accelerated

by the significant travel restrictions, mandated closures and other effects of the COVID-19 pandemic.

A virtual global marketplace provides

multiple benefits for counterfeiters.

We have identified the following factors that make it easier for counterfeiters to deceive customers

about the authenticity of the products they are buying:

Product inspection occurs after payment and delivery;

Counterfeiters base themselves in jurisdictions where the laws on counterfeiting are less stringent;

Product images on a website are often all the consumer has, to view and inspect prior to the sale.

We view this is a major opportunity to

address this growing problem.

VerifyMe has developed two strategies to address the growing e-commerce counterfeiting issue.

VerifyMe®

as Authentic®

tamper proof labels.

This new pre-printed product is sold to large

and small brand owners who want to provide their customers with the ability to instantly authenticate their product upon receipt using

their customers own smartphone camera.

The brand owner works with us to design the label and its security features and we manufacture

the labels, through our strategic partnerships, and sell them to the brand owner to affix to their products for their customer to authenticate.

As a side benefit the brand owner has the ability to engage with its customer and gather business intelligence about them.

VerifyMe®

Web TM is another new e-commerce product line that VerifyMe markets

to brand owners.

This product is a search tool that brand owners subscribe to which reports back to the brand owner any counterfeit

websites and or counterfeit products that are found on the internet.

VerifyMe provides reports to the brand owner and shuts down

the counterfeiting sites and products by legal means.

In our opinion, standard historical optical security features

such as holograms and Yellow UV Ink are still used but their effectiveness and usage are declining.

Our product line has a standard optical feature

known as RainbowSecure®

Security Ink Taggant.

The differentiator between our standard ink taggant feature and existing products is

that our RainbowSecure®

feature can be printed on digital presses making each label, package, or product completely unique with its

own digital signature.

In addition, our invisible code can be read into the cloud with a smartphone.

This solution is invisible to the

human eye, and each code is unique and stored in the cloud for each product, thereby preventing a counterfeiter from matching the codes

to products that contain our RainbowSecure®

Our software also provides intelligent monitoring capabilities.

if a counterfeit is suspected or a product is not in the correct location (i.e.

product diversion) the brand owner is alerted by our software.

In conjunction with HP Indigo, we have modernized RainbowSecure®

by creating unique signatures in the form of invisible codes that can be imbedded onto labels, packages and products that can be

read with a smartphone into a supply chain management cloud-based software known as VeriPAS™.

We market directly with HP Indigo to owners

of the 6000 series and HP Indigo 7900 series digital presses as well as the label and packaging printing industry, including both

traditional and digital printers and users to address their clients’

needs for our covert serialization.

We expect those printers to market and resell our technologies to both current and future brand owner clients.

HP Indigo has trained

their international digital press salesforce in various security printing technologies including our RainbowSecure®

We expect those

printers to market and resell our technologies to both current and future brand owner clients.

HP Indigo has trained their international

digital press salesforce in various security printing technologies including our RainbowSecure®

and VeriPAS™

1 unchanged sentence

HP Indigo sales people have generated multiple leads on our behalf.

In September 2017, we entered into a five-year

contract with HP to supply HP Indigo Digital press ink canisters containing our technology pigment for use by HP Indigo digital

press owners who print our security feature on labels and packages for their brand owners.

Additionally, we enter into reseller

agreements with print service providers (“PSP”).

Pursuant to one of these agreements, a global label manufacturer

began printing our technology in July 2018 and has major brand owners as clients which can utilize our technologies to protect

their product labels and packaging from counterfeiting and product diversion.

This label printer owns and operates printers and

manufacturing equipment which can implement our technology.

In 2017, we entered into a five-year contract with HP to supply

HP Indigo digital press ink canisters containing our RainbowSecure®

pigment for use by HP Indigo digital press owners who print

our security feature on labels and packages for their brand owners.

Additionally, we enter into reseller agreements with print

service providers.

Pursuant to one of these agreements, a global label manufacturer began printing our technology in July 2018

and has major brand owners as clients which can utilize our technologies to protect their product labels and packaging from counterfeiting

and product diversion.

This label printer owns and operates printers and manufacturing equipment which can implement our technology.

This reseller also has manufacturing facilities around the globe.

In addition to

the printing industry, we expect to market directly to all brand owners who utilize labels and packaging for their products.

owners can be licensed directly by VerifyMe and direct their personal printer to print their labels and packaging with the VerifyMe

printing technologies.

The brand owner will therefore pay their royalties directly to VerifyMe based on the number of labels

and packages units that their printer applied the technology to.

In 2019, the Company entered into a leasing agreement and purchase

agreement with a major brand owner.

This particular brand owner is on the “Forbes Top 50 Private Companies list”.

brand owner began printing labels that include our product in the fourth quarter 2019.

Additionally, we intend to engage third

parties to market, sell and support our brand protection security technologies on a global basis for a contracted fee based on

Our targeted third parties will already have a successful track record in supporting HP Indigo owners as well

as traditional printing clients.

We have a strategic partnership with S-One.

S-One provides VerifyMe with global sales, distribution, and promotion support for the Company’s products and employ multiple

representatives on an as needs basis to promote the Company’s products.

Under the terms of the Company’s agreement

with S-One, S-One acts as a sales and marketing contractor for the Company’s printed products and services on a global basis

and assists the Company in fulfilling the Company’s obligations under the Company’s signed current and future reseller

agreements with various global and domestic print providers and brand owners.

The FDA implemented the identifier track

and trace portion of the Title II of the Drug Quality and Security Act in November 2018, entitled the “Drug Supply Chain

Security Act.”

This regulation requires drug manufactures and re-packagers to add product identifiers, such as our RainbowSecure®

technology as well as our VeriPAS TM track and trace system, to certain prescription drug packages beginning in 2018.

We expect to engage third party marketing and sales companies to present our solutions to the drug and pharmaceutical industry.

The FDA intends to continue implementing the Drug Supply Chain Security Act to ensure that a full electronic identification system

for prescription drugs is implemented by 2023.

We believe that the pharmaceutical industry has been slow to adopt the mandates

due to the low fines associated with the mandate versus the cost of the implementation.

In addition, our track and trace partner,

Micro Focus has agreed to cross sell our technologies as part of their Global Product Authentication System called “GPAS”.

In addition to the printing industry,

we expect to market directly to all brand owners who utilize labels and packaging for their products.

Brand owners can be licensed

directly with us and direct their personal printer to print their labels and packaging with our printing technologies.

owner will therefore pay their royalties directly to us based on the number of labels and packages units to which their printer

applied the technology.

In 2019, we entered into a leasing agreement and purchase agreement with a major brand owner who is on

the Forbes Top 50 Private Companies list.

The brand owner began printing labels that include our product in the fourth quarter

of 2019 and, in 2020, we received notice that this client plans to add additional products and three additional countries Japan,

Vietnam and Taiwan.

To date, we have derived limited revenue from this contract.

In lieu of building, training, and supporting

a world-wide internal sales force, we have engaged with multiple strategic partners who have existing government and brand owner relationships

in their particular geographical locations.

These strategic partnerships include both paid and commissioned sales only contract arrangements.

These strategic partners are located in the Middle East, Europe, United Kingdom, India, China and Pakistan.

We plan to continue to build

new strategic partnerships throughout the globe.

We have also established a network of commission only paid consultants within the United

These consultants mainly focus on brand owners and they are not constricted geographically.

We have also entered into commissioned

sales contract arrangements with the global sales staff of our vendors, HP Indigo and S-One.

We have a strategic partnership with S-One pursuant

to which S-One provides us with global sales, distribution, shipping, help desk, warehousing and promotion support for our products and

employs representatives on an as needs basis to promote our products.

Under the terms of our agreement with S-One, S-One acts as a sales

and marketing contractor for our printed products and services on a global basis to mainly print service providers (“PSP”)

and assists us in fulfilling our obligations under our current and future reseller agreements with various global and domestic PSPs and

brand owners.

In addition, we have cross-selling agreements

with some of our strategic partners.

Micro Focus, our track and trace partner, has agreed to cross sell our technologies as part

of their GPAS.

We are also contracted with Micro Focus to re-sell their GPAS product with our RainbowSecure®

and our VeriPAS™

Authenticator technology under our own trademarked name, VeriPAS TM which stands for VerifyMe Global Product Authentication

An additional marketing strategy is to

incorporate our technology into the high-speed inkjet hardware that traditional Flexo and Commercial Printers use to add a variable

data feature for their clients.

Some of the major brand segments that need

our type of label, packaging and serialization identifier products are:

(a) Consumer Product Security:

Pharmaceuticals

Aviation parts

Any other label/ packaging requirements

(b) Documents of Value:

Stock certificates and bonds

Event tickets

Lottery tickets

Driver’s licenses

Container seals

Pallet security

(d) Military:

(e) Product Diversion Tracking:

Pharmaceuticals

Apparel/licensed merchandise

Cosmetics and fragrances

Watches and jewelry

(f) Financial Services and Products

Consumer login credentials

Online transaction approval

Financial documents/promissory notes

We plan for our

sales and marketing strategy to include an outreach program and sales programs that tailor the product to the governmental body

or merchant, as well as key partnerships with authorities and merchants whose products or audiences can be complementary to our

In particular, we intend to focus on building relationships with key partners who can deliver our products to their existing

and prospective customers in target markets, i.e., commercial printers/packagers, plastic card manufacturers and financial services

intermediaries.

HP Indigo’s Experience Centers located in Tel Aviv, Israel, Singapore, Barcelona, Spain and Alpharetta, Georgia

have all been trained and outfitted with samples, including our VerifyMe Beepers, and VeriPAS™

Smartphone Authenticators

to demonstrate the technology to customers who visit the centers.

Customers can perform tests and receive hands on experience with

our technologies.

HP Indigo also

invited VerifyMe to man a station in the security printing sections of their trade show booths such as the global LabelExpo show

held in Brussels, Belgium in September 2019 and in Singapore in March 2019.

HP Indigo also has VerifyMe display their solutions

at their annual VIP print service provider event held in Tel Aviv every year.

HP Indigo has invited VerifyMe to attend additional

trade shows in 2020 including one in Singapore, Dusseldorf, Germany and Orlando, Florida.

Multi-Factor Biometric Authentication

We expect to market

our MFA digital software technology by our website only.

We are taking a very passive marketing approach at this time and concentrating

our resources on security printing products.

When funding allows, we may expand marketing plan at that time.

targeted market segment is the financial services industry.

This includes both the traditional banking and crypto financial

transaction industries.

Our second targeted market segment is expected to be the healthcare industry.

The third targeted

market is expected to the gaming industry.

The fourth target market segment we expect to market to will be governments.

Governments can be both foreign and domestic as well as federal, state and local levels.

We anticipate

that all of these market outreaches will be made directly by us and we also plan to use third party marketing vendors who specialize

in software sales.

We are also seeking business partners with revenue and proven business models.

In 2019 we invested in developing

sales channels and pursuing opportunities in the digital authentication area.

Smartphone Authenticator technology under our own trademarked name, VeriPAS™.

Additionally, entered into a cross-selling

agreement with SmartGlyph in 2020, pursuant to which we have agreed to integrate our technologies with their barcodes and multi-faceted,

“software only”

coding platform and sell to our respective customers.

We plan for our sales and marketing strategy

to include an outreach program and sales programs that tailor the product to the governmental body or merchant, as well as key

partnerships with authorities and merchants whose products or audiences can be complementary to our own.

In particular, we intend

to focus on building relationships with key partners who can deliver our products to their existing and prospective customers in

target markets, i.e., commercial printers/packagers, plastic card manufacturers and financial services intermediaries.

into an agreement with OWS Capital to market, promote and sell our security authentication technology solutions to the UAE government

and companies located in the Middle East.

HP Indigo’s Experience Centers located in Tel Aviv, Israel, Singapore, Barcelona,

Spain and Alpharetta, Georgia have all been trained and outfitted with samples, including our VerifyMe Beepers, and VeriPAS™

Smartphone Authenticators, to demonstrate the technology to customers who visit the centers.

Customers can perform tests and receive

hands on experience with our technologies.

In addition, we collaborated with HP Indigo

at the Asia Security Group Virtual High Security Printing & Brand Protection Conference & Exhibition in December 2020 to

showcase our RainbowSecure®

solution on HP Indigo’s digital printing presses.

HP Indigo also invited us to man a station

in the security printing sections of their trade show booths such as the global LabelExpo show held in Brussels, Belgium in September

2019 and in Singapore in March 2019.

HP Indigo has us display solutions at their annual VIP print service provider event held in

Tel Aviv every year as well as invited VerifyMe to attend other trade shows in 2020, however, due to the COVID-19 pandemic, these

shows were postponed or cancelled.

Due to the strong security background of our management

team, we have undertaken a major overhaul of our website to position us as a “one stop shop”

for brand protection technologies,

and as an expert advisor to brand owners to consult with them on their brand protection issues.

Our new website is expected to launch

in mid-April 2021.

In addition to the website, a new social media advertising program will be launched to targeted customers.

In addition to the website and social media expansion, we have

recently signed on new salespeople from a large competitor to enhance our sales team.

We anticipate that additional hiring of experienced

salespeople will continue for the foreseeable future.

The market for protection from counterfeiting,

diversion, theft and forgery is a mature more than 25-year old industry dominated by a number of large, well-established companies,

particularly in the area of traditional overt security technologies where repeating static produced images are commonly used.

is due to the fact that security printing for currency production began in Europe over a century ago and has resulted in the establishment

of old-line security printers which have branched out into brand and product protection as well.

In North America, brand protection

products, such as tamper-resistant packaging, security labels, and anti-theft devices are readily available and utilized on a widespread

In recent years, however, demand has increased for more sophisticated overt and covert security technologies with a strong

desire for technologies that can provide variable images and data.

diversion, theft and forgery is a mature industry dominated by a number of large, well-established companies, particularly in the

area of traditional overt security technologies where repeating static produced images are commonly used.

Security printing for

currency production began in Europe over a century ago and has resulted in the establishment of old-line security printers which

have branched out into brand and product protection as well.

In North America, brand protection products, such as tamper-resistant

packaging, security labels, and anti-theft devices are readily available and utilized on a widespread basis.

In recent years, however,

demand has increased for more sophisticated overt and covert security technologies with a strong desire for technologies that can

provide variable images and data.

Competitors can be segregated into the following groups:

Security Ink Manufacturers:

These are generally well-established companies such as SICPA and Sun Chemical, whose core business

is manufacturing and selling printing inks;

(ii) System Integrators:

These companies have often evolved from other sectors in the

printing industry, mainly security printing manufacturers, technology providers, or packaging and label manufacturers.

These companies

offer a range of security solutions, enabling them to provide a complete suite of solutions tailored to the customer’s specific

needs and requirements.

The companies in this space include 3M, DuPont, Opsec, Honeywell, and Avery Dennison;

(iii) System Consultancy

These companies offer a range of technologies from several different providers and tailor specific solutions to end-users;

(iv) Traditional Authentication Technology Providers:

These purveyors include companies like American Banknote Holographics, Crown

Roll Leaf and Digimarc, which provide holograms and digital watermarking, respectively;

(v) Product Diversion Tracking Providers.

Applied DNA Sciences Next-Generation Technology Providers LLC falls into this group, along with several companies such as Applied

DNA Sciences, Authentix, DNA Technologies, and Identif, Kodak Traceless, which provide on-product and in-product tagging technologies;

(vi) Traditional Security Printers:

This group includes traditional security printers such as Thomas de la Rue, Canadian Banknote,

and Banknote Corporation of America, and Portals, whose core products are printing the world’s currencies;

and (vii) Biometric

Solution Providers:

These companies offer biometric authentication capabilities to be integrated with existing mobile device authentication,

such as OT-Morpho and ImageWare Systems.

Amazon has recently become a competitor

with their new “Project Zero”

(i) security ink manufacturers who are

generally well-established companies whose core business is manufacturing and selling printing inks;

(ii) system integrators who

have often evolved from other sectors in the printing industry, mainly security printing manufacturers, technology providers, or

packaging and label manufacturers, and who typically offer a range of security solutions that enable them to provide a complete

suite of solutions tailored to the customer’s specific needs and requirements;

(iii) system consultancy groups who offer

a range of technologies from several different providers and tailor specific solutions to end-users;

(iv) traditional authentication

technology providers which provide holograms and digital watermarking;

(v) product diversion tracking providers which provide on-product

and in-product tagging technologies;

and (vi) traditional security printers whose core products are printing the world’s

In general, we believe competition in our principal markets is primarily driven by product performance, features and

ease of implementation, technology effectiveness, digital instant verification;

new laws and regulations;

innovation and timing of new product introductions;

ability to develop, maintain and protect proprietary products and technologies;

sales and distribution capabilities;

technical support and service;

brand loyalty;

applications support;

and breadth of product

In 2020, new blockchain as a service (“BAAS”)

technology companies have surfaced.

These are mainly early-stage development companies that have begun to enter the marketplace using

de-centralized blockchain networks to authenticate and validate products as well as traditional supply chain management including serialization,

track and trace and internet of things (“IoT”) connectivity using codes, near field communication and RFID chips.

that converting our VeriPAS™

cloud-based platform into a de-centralized blockchain network will allow us to compete in this space

with the advantage of blending our physical technologies for an enhanced product offering.

Amazon has become a competitor with their

new “Project Zero”

brand protection system utilizing their “Transparency”

serialization product.

Amazon’s product serialization service provides a unique code for every unit that is manufactured, and the brand puts these

codes on its products as part of its manufacturing process, which Amazon scans and verifies.

This differs from our covert luminescent

pigment which is incorporated in the labeling process and our invisible covert serialization and authentication solution.

Also HP Indigo, is selling a yellow ultra

violet ink as a security product for an inexpensive price that directly competes with our products.

There are a number of providers

of inexpensive ultra violet inks in the marketplace, however, we believe these inexpensive ultra violet inks do not provide the

level of security and safety that our products provide.

New types of security competition is also

increasing, such as retail website monitoring, brand investigations, RFID and near field communications (“NFC”) products

using low powered radio signals.

Amazon’s

product serialization service provides a unique code for every unit that is manufactured, and the brand puts these codes on its

products as part of its manufacturing process, which Amazon scans and verifies.

This differs from our covert luminescent pigment

which is incorporated in the labeling process and our invisible covert serialization and authentication solution.

Also, HP Indigo is selling a yellow ultraviolet

ink and a color changing ink as a security product at inexpensive prices that directly competes with our products.

number of providers of inexpensive ultraviolet inks in the marketplace, however, we believe these inexpensive ultraviolet inks

do not provide the level of security and safety that our products provide.

New types of security competition are also

increasing, such as retail website monitoring, brand investigations, RFID and near field communications products using low powered

radio signals to connect to products.

To compete effectively, we are seeking

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sufficient resources to develop and market our services to the market effectively.

We expect competition with our products

and services to continue and intensify in the future.

We believe competition in our principal markets is primarily driven by:

product performance, features and liability;

new laws and regulations;

product innovation and timing of new product introductions;

ability to develop, maintain and protect proprietary products and technologies;

sales and distribution capabilities;

technical support and service;

brand loyalty;

applications support;

breadth of product line.

If a competitor

develops superior technology or cost-effective alternatives to our products, our business, financial condition and results of operations

could be significantly harmed.

We expect competition with our products and

services to continue and intensify in the future.

Major Customers/Vendors

During the year

ended December 31, 2019, two customers accounted for 97% of total sales.

During the year ended December 31, 2018, four

customers accounted for 100.0% of total sales.

Generally, a substantial percentage of our sales have been made to a small number

of customers and is typically on an open account basis.

During the years

ended December 31, 2019 and 2018, we purchased 100% of our pigment from one vendor.

VerifyMe utilizes

multiple vendors including the pigment vendor for engineered RainbowSecure®

authentication devices.

As of March 6, 2020, we had one full-time employee, our Chief Executive Officer, three part-time employees, our Chief Financial Officer,

our Chief Technology Officer, our Vice President of Sales and two outside contractors, including our Chief Operating Officer and

our Chairman.

During the year ended December 31, 2020,

two customers accounted for 92% of total sales.

During the year ended December 31, 2019, two customers accounted for

97% of total sales.

Generally, a substantial percentage of the Company's sales has been made to a small number of customers and

is typically on an open account basis.

During the years ended December 31, 2020 and 2019, the Company

purchased 100% of pigment from one vendor.

Additionally, during the years ended December 31, 2020 and 2019, the Company purchased

100% of canisters from one vendor.

As of December 31, 2020, two customers

accounted for 96% of total accounts receivable.

As of December 31, 2019, two customers accounted for 97% of total accounts receivable.

Employees and

External Sales Force

As of March 19, 2021, we had three full-time employees, our

Chief Executive Officer, our Chief Financial Officer, our Director of Sales and Business Development, North America, one part-time

employee, our Chief Technology Officer, and four paid consultants, including our Chief Operating Officer and our Chairman.

of the nature of our business, our employees and consultants can, and do, conduct their work for us remotely.

In lieu of building,

training and supporting a world-wide internal sales force, we have engaged with multiple strategic partners who have existing government

and brand owner relationships in their particular geographical locations.

These strategic partnerships include both paid and commissioned

sales only contract arrangements.

These strategic partners are located in the Middle East, Europe, United Kingdom, India, China

and Pakistan.

We plan to continue to build new strategic partnerships throughout the globe.

We have also established a network of over a dozen commission-paid

sales consultants within the United States.

These consultants mainly focus on brand owners and they are not constricted geographically.

We have also entered into commissioned sales contract arrangements

with the global sales staff of our vendors, HP Indigo and S-One.

Available Information

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them to, the SEC.

We have not incorporated by reference into this Report the information included, or that can be accessed through,

our website and you should not consider it to be part of this Report.

The SEC maintains

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business