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Item 1. Business

2024-03-29 compared with 2023-03-28 · 307 added, 400 removed, 115 unchanged (86% of the section changed)

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(“VerifyMe”) together

with its subsidiaries PeriShip Global, LLC (“PeriShip Global”) and Trust Codes Global Limited (“Trust Codes Global”),

(together the “Company,” “we,” “us,” or “our”), is a software driven predictive analytics

logistics provider of high-touch end-to-end logistics management, which represents most of our current revenue stream.

In addition, VerifyMe

technologies provide product traceability, brand protections services, and consumer engagement solutions.

Our operations are split into

two segments:

PeriShip Global Solutions and VerifyMe Solutions.

Through our PeriShip Global Solutions segment we provide a value-added

service for time and temperature sensitive parcel management driven by a proprietary software platform that provides predictive analytics

from key metrics such as flight-tracking, weather, and traffic, all delivered to customers via a secure portal.

The portal provides real-time

visibility into shipment transit and last-mile events, with dynamic dashboards.

All aspects of the of the shipping journey is managed

by a dedicated call center.

Using our proprietary logistics solution, we provide real-time information and analysis to mitigate supply

chain flow interruption, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

our VerifyMe Solutions segment, our technologies provide unit level traceability, brand protection, unit level traceability and consumer

engagement solutions allowing brand owners to gather business intelligence, cross-sell products, monitor product diversion through the

supply chain and build brand loyalty through interaction utilizing our unique dynamic codes which are read by consumers with their smart

with its subsidiaries, including PeriShip Global, LLC (“PeriShip Global”) and Trust Codes Global Limited (“Trust Codes

Global”), (together the “Company,” “we,” “us,” or “our”), is a traceability and

customer support services provider using specialized software and process technology.

The company operates a Precision Logistics Segment

and an Authentication Segment to provide specialized logistics for time-and-temperature sensitive products, as well as item level

traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions.

Through our Precision

Logistics segment, we provide a value-added service for sensitive parcel management driven by a proprietary software platform that provides

predictive analytics from key metrics such as pre-shipment weather analysis, flight-tracking, sort volumes, and traffic, delivered to

customers via a secure portal.

The portal provides real-time visibility into shipment transit and last-mile events which is supported

by a service center.

Through our Authentication segment our technologies enable brand owners to gather business intelligence through the

supply chain, cross-sell products, detect counterfeit activities, monitor product diversion, and build brand loyalty utilizing our unique

dynamic codes which are read by consumers with their smart phones.

Further information regarding our business segments is discussed below:

Business Update

On March 1, 2023, the

Company entered into an Asset Purchase Agreement (the “APA”) effective as of February

28, 2023 by and among the Company, Trust Codes Global, Trust Codes Limited, a New Zealand limited liability company (“Trust Codes”)

and Signum Holdings Limited.

Pursuant to the terms of the APA Trust Codes Global agreed to purchase from Trust Codes and Trust Codes agreed

to sell to Trust Codes Global substantially all of the assets of Trust Codes and certain specified liabilities (the “Transaction”).

The Transaction closed simultaneously with the execution of the APA on March 1 , 2023.

Trust Codes Global is based in New Zealand and provides brand protection based on a digital identity assigned at the unique item level

delivered to customers through a software as a service model.

The use of unique QR codes or IoT, coupled with GS1 standards, connects

brands to consumers.

Trust Codes Global leverages advanced algorithms to protect authenticity and brand value and provides data-driven

storytelling which allows visibility of the journey for each item through the supply chain to the consumer’s hands.

We believe combining

the solutions of Trust Codes Global and PeriShip Global will allow the Company to provide a competitive advantage in the software logistics

space, securing supply chains from products manufacture all way to the point of delivery, elevating a consumer’s trust and their brand

Please refer to Note 17 – Subsequent Events – to the Audited Consolidated Financial Statements appended

to this Report and incorporated by reference into Item 8 in this Annual Report on Form 10-K.

In January 2023 we signed

a mutual sales referral agreement with The Agrarian Group.

The agreement is structured to help advance food safety and customer loyalty,

as well as increase revenue for both companies.

The food industry is a focus area for our VerifyMe Solutions segment and perishable food

has been a long-standing focus of our PeriShip Global segment.

In November 2022 we entered

into an amended five-year renewal agreement with HP Indigo to provide VerifyInk TM security ink taggants for HP Indigo digital

This amended agreement also increases the scope of cooperation, in which HP Indigo will refer opportunities for additional VerifyMe

technologies.

In September 2022 we

entered into a $2 million term loan agreement and a $1 million line of credit with PNC Bank and repaid the $2 million promissory note

from the acquisition of PeriShip LLC.

In August 2022, we entered

into a multi-year contract extension with our strategic partner and largest customer of PeriShip Global to continue to provide proactive

customer service to their customers.

The term of the agreement has been extended to March 1, 2026.

Our Solutions

PeriShip Global Solutions:

Global Solutions segment specializes in predictive analytics through its proprietary software platform for optimizing delivery of time

and temperature sensitive perishable products.

We manage complex industry-specific shipping logistic processes that require critical time,

temperature control and handling to prevent spoilage and extended delivery times.

Precision Logistics:

The Precision Logistics

(formerly PeriShip Global Solutions) segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive

perishable products.

We manage complex industry-specific shipping logistic processes that require critical time, temperature control and

handling to prevent spoilage and extreme delivery times and brand impairment.

Utilizing predictive analytics from multiple data sources

including weather, traffic, flight data, major carrier feeds, and time of day data, we provide our clients an end-to-end vertical approach

for their most critical service delivery needs.

Using the IT platform, we provide real-time information and analysis to mitigate supply

chain flow interruption, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

including flight-tracking, weather, traffic, major carrier feeds, and time of day data, we provide our clients an end-to-end vertical

approach for their most critical service delivery needs.

Using our proprietary IT platform, we provide real-time information and analysis

to mitigate supply chain flow interruption, as well as delivering last-mile resolution for key markets, including the perishable healthcare

and food industries.

Through our proprietary PeriTrack ® customer

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to critical information in support of the specific needs of the supply chain stakeholders.

In addition, we provide proactive alerts to

address on-coming weather issues to make changes in scheduling to meet critical deadlines for shipments.

We offer post-delivery services

such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.

PeriShip Global generates revenue from three business

service models.

Proactive Service – PeriShip Global clients pay us directly for carrier service coupled with

our proactive logistics assistance.

Direct Premium Service –PeriShip Global clients pay us directly for carrier service coupled with

our complete white-glove shipping monitoring and predictive analytics service.

This service includes the customer web portal access, weather

monitoring, temperature control, full call center support and last mile resolution.

Indirect Premium Service – Our carrier partner also offers a “white label” version

of our Premium Service to its customers and pays us a fixed contractual fee.

PeriShip Service Products:

Global Solutions segment includes the following bundled services as part of our service offerings to our customers:

We offer post-delivery services such as customized

reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.

Precision Logistics generates revenue from two

business service models.

· ProActive Service – clients pay us directly for carrier service coupled with our proactive

logistics assistance.

· Premium Service – clients pay us directly or through our carrier partner for our complete

white-glove shipping monitoring and predictive analytics service.

This service includes customer web portal access, weather monitoring,

temperature control, full service center support and last mile resolution.

The Precision Logistics segment

includes the following bundled services as part of our service offerings to our customers:

· PeriTrack ® :

Our proprietary

PeriTrack® customer dashboard was developed utilizing our extensive logistics operational knowledge.

This integrated web portal tool

gives our customers an in-depth look at their shipping activities and alerts based on real-time data.

The PeriTrack® dashboard was

designed to provide critical information in support of the specific needs of supply chain stakeholders and gives our customer resolution

specialists a 360° view of shipping activity.

PeriTrack® features tools tailored for shippers of perishable goods, which includes

the In-Transit Shipment Tracker.

This tool provides details on the unique shipper’s in-transit shipments, with the ability to select

and analyze data on individual shipments.

Call Center Service :

Global has assembled a team of customer resolution specialists based in the U.S.

This human intervention service team resolves shipping

problems on behalf of our customers.

The call center acts as a help desk and monitors shipping to delivery for our customers.

Our proprietary PeriTrack® customer dashboard was developed utilizing our

extensive logistics operational knowledge.

This integrated web portal tool gives our customers an in-depth look at their shipping activities

based on real-time data.

The PeriTrack® dashboard was designed to provide critical information in support of the specific needs of

supply chain stakeholders and gives our customer resolution specialists a 360° view of shipping activity.

PeriTrack® features

tools tailored for shippers of perishable goods, which includes the In-Transit Shipment Tracker.

This tool provides details on the unique

shipper’s in-transit shipments, with the ability to select and analyze data on individual shipments.

· Service Center :

We have assembled a team of customer resolution specialists based in the U.S.

service team resolves shipping problems on behalf of our customers.

The service center acts as a help desk and monitors shipping to delivery

for our customers.

· Pre-Transit Service :

Global helps clients prepare their products for shipments by advising clients on packaging requirements for various types of perishable

Each product type requires its own particular packaging to protect it during the shipment, and we utilize our extensive knowledge

and research to provide our customers with packaging recommendations to meet their unique needs.

We help clients prepare their products for shipments by advising clients on

packaging requirements for various types of perishable products.

Each product type requires its own particular packaging to protect it

during shipment, and we utilize our extensive knowledge and research to provide our customers with packaging recommendations to meet their

unique needs.

· Post-Delivery :

PeriShip Global

provides customized reporting for trend analysis, system performance reports, power outage maps, and many other reports to help our customers

improve their processes and customer service outcomes.

We provide customized reporting for trend analysis, system performance reports,

power outage maps, and many other reports to help our customers improve their processes and customer service outcomes.

· Weather/Traffic Service :

Global has full-time meteorologists on staff to monitor weather.

A package may experience a variety of weather conditions between the

origin and destination, and our team actively monitors these conditions to minimize the changes of timely and safe transit of shipments.

Similarly, traffic and construction also create unpredictable delays which our team works diligently to mitigate.

If delays or other issues

occur the PeriShip team informs clients and works with them to proactively resolve such shipment issues.

VerifyMe Solutions:

The VerifyMe Solutions

segment in traceability to connect brands with consumers through their product.

Brands can gain unit level traceability through the supply

Through VerifyMe technologies brand inspectors can authenticate product with visible and invisible unique serialized codes.

owners have the ability to gather business intelligence while engaging directly with their consumers and can receive programmable alerts

related to counterfeit products or if their products are in unexpected geographical markets.

Consumers can authenticate products with

their smart phone prior to usage and engage with the brand in unique and innovative ways.

Engagement can come in many forms such as free

giveaways, product specifications, seed to table tracking, cross-selling of products, contests, videos, and recipes.

VerifyMe Products:

VerifyMe has a custom

suite of products that offer clients traceability and consumer engagement.

These products are combined with “software as a service”

or “SAAS” which is stored in the cloud and accessed through the internet.

VerifyMe Engage™ for consumer engagement allowing the brand owner to gather business intelligence and engage with their customers

VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packages and products

We have full-time meteorologists on staff to monitor weather.

may experience a variety of weather conditions between the origin and destination, and our team actively monitors these conditions to

maximize the number of timely and safely transmitted shipments.

Similarly, traffic and construction also create unpredictable delays which

our team works diligently to mitigate.

If delays or other issues occur, we inform clients and work with them to proactively resolve such

shipment issues.

Authentication :

The Authentication (formerly

VerifyMe Solutions) segment specializes in traceability to connect brands with consumers through their product.

This is critical in the

current landscape of increased regulations, as well as increased counterfeit activity and product diversion.

The ability to detect fraud

or abnormal behavior while tracing an item’s journey from production through to the consumer’s hands provides consumers and

brands the assurance they require.

VerifyMe has custom software, patented technologies, and a cloud environment that combines machine

learning and data science to meet the needs of consumers and brands.

In addition, the personalized consumer experience with the brand

creates a connection that increases brand perception and loyalty.

We have a custom suite of products

that offer clients traceability and brand solutions.

These products are combined with “software as a service” or “SaaS”

which is stored in the cloud and accessed through the internet.

· VerifyMe Engage™ for brand enhancement allowing the brand owner to gather business intelligence and engage with customers

· VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication of labels, packaging and products

· VerifyMe Track & Trace™ for unit level traceability and supply chain control

PeriShip Global and VerifyMe Synergies:

We believe that PeriShip Global and our VerifyMe

solutions have synergistic product centric technology platforms and combined have a compelling technology offering for brand owners.

example, currently PeriShip Global ships vaccines for major pharmaceutical companies.

With the addition of VerifyMe technology, PeriShip

Global can add unit level traceability and authentication to protect clients’ vaccines from product diversion and sub-standard counterfeits.

In addition, VerifyMe’s consumer engagement solutions could give PeriShip Global food and beverage clients the ability to gather

rich business intelligence, turn “unknown consumers” into “known consumers” and build customer loyalty with engagement

functions like videos, discounts, contests, etc.

Strategic Partnerships

PeriShip Global has a direct partnership with

a major global carrier company.

This partnership includes the ability for both companies to white label each partner’s services.

In addition, PeriShip Global has data feeds directly from the carrier into our proprietary logistics optimization software which provides

shippers much more detailed information and predictive analytics on their shipment versus a standard shipping code look up which is provided

by the carrier.

VerifyMe has a contract with HP Indigo, and a

strategic partnership with INX International, the third largest producer of inks in North America.

We believe these partnerships can be

used to enable brand owners to securely prevent product diversion, engage with their consumers and authenticate labels, packaging and

products, alleviating liability from counterfeit products that harm consumers.

INX International manufactures VerifyInk™ for printing

static images for labels, packaging and products such as aluminum twist caps for the spirits industry.

INX International also successfully

created ink jet variable images containing the VerifyInk™ which can be used with flexo, silkscreen and offset printing presses.

Our security pigments are manufactured from naturally occurring inorganic rare earth materials.

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 are not dependent on any principal suppliers.

We rely on third-party strategic partners to manufacture and distribute our VerifyInk TM

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 as our hand held VerifyChecker™

and VerifyAuthenticator TM Smartphone Authenticator devices, as

well as our VerifyLabel™ tamper-proof labels, we provide instructions for the design of these products and rely on our strategic

partners for manufacturing and distribution.

Global Opportunities

According to a 2023 report entitled, “Perishable

Goods Transportation Market in the US 2023-2027”, written by Infiniti research Limited, the Perishable Goods logistics market size

was $4.0 billion in 2022 and is estimated to be $4.3 billion in 2023 and is expected to grow to $5.9 billion by 2027.

That represents

a compound average market acceleration with a growth rate of approximately 8% per year.

This report is based on perishable product segments

including meat, poultry, seafood, dairy, fruits and vegetables, and bakery and confectionary.

PeriShip Global services all of these product

Currently most shipping businesses utilize the

carriers’ data platform for tracking which generally informs the shipping enterprise, and their customers, when a package is in

transit, when a package has been delivered, and some level of detail of the path which a package traveled.

We believe taking the data

feeds from a carrier and adding real-time visibility with predictive analytics and the human intervention factor of PeriShip Global’s

call center gives us a major competitive advantage against other third-party platforms that solely rely on the carrier’s data feeds.

PeriShip Global utilizes a variety of input sources beyond just the carrier’s data feed.

PeriShip Global’s proprietary “Predictive

Analytics” technology is fed real-time meteorology data, traffic and road construction data, and power grid information to help

predict issues before they happen.

If an alert is created the shipper and our call center will work to address the issue and save the

perishable product from spoiling, saving the shipper significant costs and reducing the need to replace products that are no longer viable.

PeriShip Global has two meteorologists on staff that track world-wide weather patterns to address predicted issues before they happen.

We believe the pharmaceutical and healthcare industries represent the biggest areas of opportunity and we are focusing our PeriShip Global

sales emphasis on those industries.

In addition, we believe that combining VerifyMe’s solutions into the product offering for PeriShip

Global clientele, including food and beverage and healthcare industries, gives PeriShip Global a competitive advantage to generate revenue

by enhancing PeriShip Global’s clients’ ability to grow revenue, gain business intelligence and build brand loyalty.

The current global logistics industry worldwide

is facing an economic slowdown.

We believe this represents an opportunity for PeriShip Global since major global carriers are cutting

internal staff and are reducing research and development investments.

To maintain their credibility in the market, these carriers will

need to ensure they meet their customers’ demands for time and temperature sensitive shipments, while maintaining their overheads.

We believe outsourcing this function to PeriShip Global provides the ideal solution for all parties involved.

Opportunities

Precision Logistics:

Traditionally,

most shipping businesses utilize the carrier’s data platform for tracking which generally informs the shipping enterprise, and their

customers, when a package is in transit, when a package has been delivered, and some level of detail of the path which a package traveled.

We believe taking the data feeds from a carrier and adding real-time visibility with predictive analytics and the human intervention factor

of our service center gives us a competitive advantage against other third-party platforms that solely rely on the carrier’s data

We utilize a variety of input sources beyond the carrier’s data feed.

Our proprietary “Predictive Analytics”

technology is fed real-time meteorology data, traffic and road construction data, and power grid information to help predict issues before

If an alert is created the shipper and our service center will work to address the issue and save the perishable product

from spoiling, saving the shipper significant costs and reducing the need to replace products that are no longer viable.

We have meteorologists

on staff that track world-wide weather patterns to address predicted issues before they happen.

We believe the company has two significant

areas of opportunity.

First, our services are specifically designed to address the needs of small and medium size agriculture, food and

beverage companies.

Second, the pharmaceutical and healthcare industries represent significant opportunities due to the enhanced tracking

and customer service associated with distribution of these products.

We are focusing our sales emphasis on those industries.

we believe that combining our authentication solutions into the product offering for Precision Logistics clientele, gives our Precision

Logistics segment a competitive advantage to generate revenue by enhancing clients’ ability to grow revenue, gain business intelligence

and build brand loyalty.

logistics industry is facing an economic

We believe this represents an opportunity since major global carriers are cutting internal staff.

These carriers are looking

for lower cost alternatives to service their customers as well as partners that can help the carrier increase revenues.

To maintain their

credibility in the market, these carriers will need to ensure they meet their customers’ demands for time and temperature sensitive

shipments, while maintaining their overheads.

We believe outsourcing this function to our Precision Logistics segment provides the ideal

solution for all parties involved.

Building logistics infrastructure is a capital-intensive

process as the investment is locked in for a considerably long period.

Due to the current economic downturn, we believe several companies

will opt to outsource their logistics services to reduce their operational costs and maintain cash flows.

The outsourcing of supply chain

logistics operations to service providers such as PeriShip Global allows companies to improve the efficiency of their businesses by focusing

their resources on core competencies.

Opportunities

We believe VerifyMe’s products have applications

in many areas.

Currently, we are aggressively marketing opportunities in the following areas:

Food and Beverage – Food safety is becoming more common as supply chains become more global and as imaging

and manufacturing technology become more accessible.

Food traceability, sustainability and carbon neutral production is becoming a significant

consideration for brand and governments.

We believe our unit level traceability and authentication solutions can help brands tell their

story about sustainability and battle against tainted or substandard foods and beverages.

Due to the current economic environment, and our cost competitive

offering, we believe companies will opt to outsource their precision logistics services to reduce their operational costs.

The outsourcing

of supply chain related and other logistics operations to service providers such as ours allows companies to improve the efficiency of

their businesses by focusing their resources on core competencies.

Authentication:

We believe the products

in our Authentication segment have applications in many areas.

Currently, we are aggressively marketing opportunities in the following

· Agriculture, Food and Beverage – Food safety is becoming more common as supply chains become more

global and as imaging and manufacturing technology become more accessible.

Food traceability, sustainability and carbon neutral production

is becoming a significant consideration for brand and governments.

We believe our unit level traceability and authentication solutions

can help brands tell their story about sustainability and battle against tainted or substandard foods and beverages.

· Pharmaceuticals/nutraceuticals – We believe counterfeit prescription pharmaceuticals and nutraceuticals

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with the legislation, our products will provide attractive alternatives to address the need for product identifiers.

Consumer Products –We believe our technology solutions 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.

protect brand owners from liability litigation, product diversion and lost financial sales with our consumer facing visible codes and

unique ink pigments which can be incorporated in dyes and used by manufacturers in these industries to combat counterfeiting and piracy

· Consumer Products – We believe our technology solutions are particularly suited for the cosmetics,

health and beauty and apparel industries.

We give the consumer the ability to test a product’s authenticity instantly with a smartphone.

We can protect brand owners from liability litigation, product diversion and lost financial sales with our consumer facing visible codes

and 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.

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in transit, whether misplaced or stolen.

In addition, in each of these markets, our SaaS

software allows brand owners and consumers to track the products and will alert the consumer or brand owner of product diversion with

24/7 monitoring.

As each product has a unique code, this allows consumers and brand owners to authenticate the product in real time and

link directly to the brand owner’s website for additional product information, discounts, and more.

in each of these markets, our SaaS software allows brand owners and consumers to track the products and will alert the consumer or brand

owner of product diversion with 24/7 monitoring.

As each product has a unique code, this allows consumers and brand owners to authenticate

the product in real time and link directly to the brand owner’s website for additional product information, discounts, and more.

We believe that Precision Logistics

and Authentication segments have synergistic product centric technology platforms and combined have a compelling technology offering for

brand owners.

For example, currently our Precision Logistics segment ships vaccines for major pharmaceutical companies.

With the addition

of our Authentication technology, we can add unit level traceability and authentication to protect clients’ vaccines from product

diversion and sub-standard counterfeits.

In addition, our Authentication segment brand enhancement solutions could give the Precision

Logistics food and beverage clients the ability to gather rich business intelligence and build customer loyalty with engagement functions

like videos, discounts, contests, recipes, etc.

Partnerships:

Precision Logistics has a direct partnership with

a major global carrier company.

This partnership includes the ability for both companies to white label each partner’s services.

In addition, Precision Logistics has data feeds directly from the carrier into our proprietary logistics optimization software which provides

shippers much more detailed information and predictive analytics on their shipment versus a standard shipping code look up which is provided

by the carrier.

Our Authentication segment has a contract with

HP Indigo, and a strategic partnership with INX, the third largest producer of inks in North America.

We believe these partnerships can

be used to enable brand owners to securely prevent counterfeiting, prevent product diversion and authenticate labels, packaging and products

alleviating liability from counterfeit products that harm consumers.

Current Economic Environment

In early September 2022, the major global carrier

company that PeriShip partners with, disclosed that a global recession could be coming based on various indicators in its business, including

the demand for packages weakening considerably in the final weeks of August 2022, a negative impact on its express delivery business due

to the weakening global economy, particularly in Asia and Europe, and a decline in the volume of freight it handles in every region around

The major global carrier stated that it expects business conditions to further weaken during its current quarter and is responding

by reducing flights, temporarily parking aircraft, trimming hours for its staff, delaying some hiring plans, laying off more than 10%

of its officers and directors, and closing ninety office locations as well as five corporate offices.

It also stated it is cutting $500

million from its capital expenditure budget for its fiscal year, which runs through May of 2023.

In response to market conditions and lower demand

some carriers have implemented strategies to address a potential global recession.

In April 2023, the major carrier that PeriShip Global

partners with laid out steps it was taking to slash $4 billion in permanent costs by the end of its 2025 fiscal year in response to these

market conditions and lower demand.

In June 2023, the major carrier stated that due to ongoing demand its plans to ground 29 more aircraft

in its fiscal year that started in June 2024.

In mid-December 2023, the carrier forecasted a low single digit percentage decline in revenue

year over year for 2024.

We have seen a softening in demand for some services

related to high-end perishable items which seem to be impacted by reduced discretionary spending by U.S.

While a recession,

whether global or more localized to the U.S., may decrease the demand for our services that are more discretionary in nature, we believe

that the internal cost cutting measures, if implemented by the major global carrier, may benefit out-sourced service providers, including

PeriShip Global.

Additionally, PeriShip Global is working with this major global carrier to address their small and medium sized

business clients, which we believe is an underserved segment and presents considerable growth opportunities for PeriShip Global.

we can provide no assurances that a decline in discretionary consumer spending will not have a negative impact on our revenues and results

of operations.

Business Combination

related to high-end perishable items and cannabis products which seem to be impacted by reduced discretionary spending by U.S.

While a recession, whether global or more localized to the U.S., may decrease the demand for our services that are more discretionary

in nature, we believe that the internal cost cutting measures, if implemented by the major global carrier may benefit out-sourced service

We are working with this major global carrier to address their small and medium-sized business clients, which we believe is

an underserved market and presents considerable growth opportunities for our Precision Logistics segment.

However, we can provide no assurances

that a decline in discretionary consumer spending will not have a negative impact on our revenues and results of operations.

Business Combinations

On March 1, 2023, we acquired, through Trust Codes

Global, the business and certain assets of Trust Codes Limited, which provides unique item level

codes for brand protection, data intelligence and consumer engagement technology with an expertise in the food and agriculture industry.

Using unique QR codes or IoT, coupled with GS1 standards, we provide brand protection based on a digital identity assigned at the unique

item level delivered to customers through a software as a service model.

Leverages advanced algorithms to protect authenticity and brand

value we provide data-driven storytelling which allows visibility of the journey for each item through the supply chain to the consumer’s

The purchase price was approximately $1,000,000, which consisted of approximately $350,000 in cash paid at closing, and 353,492

shares of restricted common stock of the Company, representing $650,000 in Stock Consideration.

The acquired Trust Codes business is included

in the VerifyMe Solutions segment and we expect the results of its operations will be included in the consolidated financial statement

beginning March 1, 2023.

Please refer to Note 17 – Subsequent Events – to the Audited Consolidated Financial Statements

appended to this Report and incorporated by reference into Item 8 in this Annual Report on Form 10-K.

Global, the business and certain assets of Trust Codes, a company specializing in brand protection,

anti-counterfeiting and consumer engagement technology with an expertise in the food and agriculture industry.

Trust Codes Global uses

unique QR codes or IoT, coupled with GS1 standards to deliver cloud-based brand protection based on a unique per-item digital identity

to protect brand and product authenticity, increase data visualization of a product through the end-to-end supply chain and creates a

data driven engine to inform and educate consumers of the product.

The purchase price was approximately $1.0 million which consisted of

approximately $0.36 million in cash paid at closing, and 353,492 shares of restricted common stock of the Company, representing $0.65

million in stock consideration.

In addition, the purchase agreement requires consideration contingent upon the achievement of earnings

targets during a five-year period subsequent to the closing of the acquisition.

The earn-out consideration estimated at $1.1 million at

the acquisition date, however the maximum amount of the payment is unlimited.

Trust Codes Global is included in the Authentication segment

and the results of its operations are included in the consolidated financial statement beginning March 1, 2023.

On April 22, 2022, we acquired, through PeriShip

Global, the business and certain assets of PeriShip, LLC, a value-added service provider for time and temperature sensitive parcel management.

PeriShip Global provides shipping logistics services utilizing proprietary predictive analytics software and supporting call center services.

Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, delivering

last-mile resolution for key markets, including the perishable healthcare and food industries.

The purchase price was $10.5 million which

consisted of $7.5 million in cash paid at closing, a promissory note of $2.0 million with a fixed interest rate of 6% per annum on the

unpaid principal balance, to be paid in three installments on the sixth, fifteenth, and eighteenth month anniversaries of the closing,

and 305,473 shares of restricted common stock of the Company, representing $1.0 million in stock consideration.

We expect that all of

the goodwill recorded for financial statement purposes is deductible for tax purposes.

The acquired PeriShip business is included in the

PeriShip Global Solutions segment and the results of its operations have been included in the consolidated financial statements beginning

April 22, 2022.

SPAC Investment

On July 6, 2021, we co-sponsored the initial public

offering of G3 VRM Acquisition Corp, a special purpose acquisition company, or “SPAC,” through a contribution into G3 VRM

Holdings LLC, or the “Sponsor Entity.” The closing of the IPO of 10,626,000 Units, including 626,000 Units pursuant to the

partial exercise of the underwriter’s over-allotment, generated gross proceeds of $106,260 thousand.

G3 VRM commenced trading on

NASDAQ under the symbol “GGGVU” and was targeting businesses with enterprise values of approximately $250 million to $500

million within the technology and business services industry.

VerifyMe, indirectly through the Sponsor Entity beneficially owned approximately

9.42% of the common stock of the SPAC.

The SPAC was unable to complete its initial business

combination within 12 months from the closing of the IPO and the Sponsor Entity decided not to fund the extension and did not deposit

additional funds into the trust account.

As a result, the SPAC was dissolved and liquidated in accordance with its charter.

The SPAC redeemed

100% of the public shares for cash, the rights expired worthless, and the founder shares and the private placement securities have become

In December 2022, it was determined that the costs to dissolve the SPAC were ultimately less than the remaining assets of the

SPAC and the SPAC made a distribution to the Company of $32 thousand.

The fair value of the equity investment was $0

million as of December 31, 2022, and $11.0 million as of December 31, 2021.

As of December 31, 2022, we have recognized the

impairment loss of $10,932 thousand included in Loss on equity investments in the accompanying Consolidated Statements of Operations.

PeriShip Global provides shipping logistics services utilizing proprietary predictive analytics software and supporting service center

Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption,

delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

The purchase price was $10.5

million which consisted of $7.5 million in cash paid at closing, a promissory note of $2.0 million with a fixed interest rate of

6% per annum on the unpaid principal balance, to be paid in three installments on the sixth, fifteenth, and eighteenth month anniversaries

of the closing, and 305,473 shares of restricted common stock of the Company, representing $1.0 million in stock consideration.

that all of the goodwill recorded for financial statement purposes is deductible for tax purposes.

The acquired PeriShip Global business

is included in the Precision Logistics segment and the results of its operations have been included in the consolidated financial statements

beginning April 22, 2022.

We experience seasonal fluctuations

in our net revenues from sales in our Precision Logistics segment.

Revenues from sales are generally higher in the fourth quarter than

in other quarters due to increased holiday shipments.

The seasonality of our business may cause fluctuations in our quarterly operating

Our Intellectual Property

Intellectual property is important to our business.

current patent and trademark portfolios consist of eleven granted U.S.

patents and one granted European patent validated in four

countries (France, Germany, United Kingdom, and Italy), six pending U.S.

and foreign patent applications, fifteen registered U.S.

(of which seven trademarks were acquired through our wholly owned subsidiary, PeriShip Global), two EU trademark registrations, one Colombian

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

one Singaporean trademark registration, two UK trademark registrations, and twenty-one pending US and foreign trademark applications.

of December 31, 2023, our current patent and trademark portfolios consist of nine granted U.S.

patents and two granted European patents,

one validated in four countries (France, Germany, United Kingdom, and Italy), and the second patent validated in three countries (France,

Germany, and United Kingdom), three pending U.S.

and foreign patent applications, twenty-six registered U.S.

trademarks (of which nineteen

are in the name of VerifyMe, Inc., and seven trademarks were acquired through our wholly owned subsidiary, PeriShip Global), two EU trademark

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

trademark registration, one Singaporean trademark registration, two UK trademark registrations, seven NZ trademark registration (of which

six are in the name of Trust Codes Limited and/or Trust Codes Global Limited), one OAPI (African Intellectual Property Organization) trademark

registration (in the name of Trust Codes Global Limited), and two pending US and foreign trademark applications.

The Company abandoned

two patents during the year ended December 31, 2023.

While some of our granted patents are commercially

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Technologies Inc.

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

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.

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.

Research and Development

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We spent approximately $107 thousand and $89 thousand during the years ended December 31, 2023, and 2022, respectively, on research and

Research in our PeriShip

Global Solutions segment is currently focused on developing:

multi-carrier software support so our services can be provided to clients no matter which carrier they choose

to ship their packages;

Research in our Precision

Logistics segment is currently focused on developing:

· the ability to print labels utilizing our own label printing software rather than relying on a carrier’s

print engine;

an mobile app for smart phones so our clients can access our portal from their phones rather than a personal

the imbedding of artificial intelligence into our proprietary IT portal to expand and improve our predictive

· the imbedding of machine learning into our proprietary IT portal to expand and improve our predictive

analytics capabilities;

imbedding a new temperature sensitive ink solution that will give an indication if a temperature exceeded

a certain level on packaging for vaccines, food and beverages, and other temperature sensitive packaging, that need constant cold storage

temperatures during transit;

· creating revenue from our weather analytics.

Our legacy ink technology

in our VerifyMe Solution Segment is effectively complete, and we are concentrating on the marketing of our technologies.

VerifyMe continues

to monitor the market for state-of-the-art innovation and may add new products and services in the future, if we believe it would provide

a competitive market advantage and could be successfully monetized.

Research in our Authentication

segment is currently focused on developing new innovative solutions, and enhancement of our existing solutions to counterfeiting and

traceability so that we continue to expand what we believe is our long-term competitive advantage:

· Novel new algorithms to combat counterfeit methods more effectively, including expanding the use of machine

learning techniques to better identify counterfeit behaviors;

· Improvement and enhancement of our smart production systems integration suite and its connection with

critical expert partners;

· New methods to verify and validate customers who onboard, including using deep learning models to validate

both identity and claims;

· Further development of our web app augmented reality/mixed reality capability, leveraging our unique technology

in this area which we acquired with Trust Codes;

· New methods to detect and validate VerifyInk™ on customer packing to help expand the market for

the VerifyInk™ product, and in line with our dual factor related patents.

VerifyMe continues to

monitor the market for state-of-the-art innovation and may either develop, partner to deploy or seek to acquire new technologies, products

and services in the future, if we believe it would provide a competitive market advantage and could be successfully monetized.

Sales and Marketing

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for opportunities to expand the services we are providing.

We are currently revising the PeriShip Global website, with an on-line chat

system as well as aligning with the VerifyMe website to advertise our synergistic offerings.

We believe many of the clients of PeriShip

Global will benefit from the legacy VerifyMe business consumer engagement and food safety technologies.

We will also continue to re-establish

trade show attendance which had declined during the height of the COVID pandemic.

We are currently revising and optimizing our websites to improve customer engagement

We believe many of the clients of PeriShip Global will benefit from the legacy VerifyMe business consumer engagement and food

safety technologies.

We will also continue to participate in trade show attendance which had declined during the height of the COVID pandemic.

In lieu of building, training, and supporting

a world-wide internal sales force, we have engaged with multiple strategic partners who have existing relationships in their particular

geographical locations.

For our VerifyMe Solutions segment, these strategic partners have relationships with government and brands and

include both paid and commissioned sales only contract arrangements.

They are located in the Middle East, Europe, United Kingdom, India,

South Africa, United Arab Emirates, 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 States.

These consultants mainly focus on brand

owners, and they are not constricted geographically.

a world-wide internal sales force, we continue to have strategic partners who have existing relationships in their particular geographical

For our Authentication segment, these strategic partners have relationships with government and brands and include both paid

and commissioned sales only contract arrangements.

PeriShip Global has developed its own software

portal with predictive analytics for weather, traffic, power grids, and data feeds it receives from one of the world’s largest logistics

There are approximately 10 U.S.

companies that operate a similar business model, however most of these companies specialize

in a particular field such as healthcare or non-perishable building materials.

There are other companies that operate a similar business model, however most of these companies specialize in a particular

field such as healthcare or non-perishable building materials.

PeriShip Global is operating in all of the perishable segments.

In addition, the major carriers such as FedEx, UPS and DHL all have internal operations servicing the critical time, temperature, and

cold storage shipping segment, however we believe with the economic downturn, major carriers are seeking to outsource perishable shipping

services rather than invest additional funds to provide internal support.

the major carriers such as FedEx, UPS and DHL all have internal operations servicing the critical time, temperature, and cold storage

shipping segment, however we believe with the economic downturn, major carriers are seeking to outsource perishable shipping services

rather than invest additional funds to provide internal support.

The market for protection from 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:

(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;

consultancy groups who offer a range of technologies from several different providers and tailor specific solutions to end-users;

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 currencies.

In general, we believe competition in our principal markets is primarily driven by product performance,

features and liability;

and forgery is a highly fragmented industry that includes smaller companies as well as a number of large, well-established companies.

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:

(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 currencies.

In general, we believe competition in our principal markets is primarily

driven by product performance, features and liability;

ease of implementation, technology effectiveness, digital instant verification;

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product innovation and timing of new product introductions;

ability to develop, maintain and protect proprietary products and technologies;

ability to develop, maintain and protect proprietary

products and technologies;

sales and distribution capabilities;

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applications support;

and breadth of product line.

Amazon has become a competitor with their new

breadth of product line.

Amazon has an anti-counterfeit service with their

“Project Zero” brand protection system utilizing their “Transparency” serialization product.

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of its manufacturing process, which Amazon scans and verifies.

Amazon’s solution must be used within the Amazon ecosystem.

differs from our visible unit level traceability codes and our covert luminescent pigment which may be incorporated in the labeling and

packaging process as static or variable covert codes.

Competition is building in the consumer engagement market as more companies enter

the space but are using mainly NFC technology imbedded into apparel.

In addition to this technology, we have the ability to print labels

on more applications including fabrics and metals.

Our traceability and authentication solutions are interoperable with Amazon’s

Transparency solutions.

While Amazon’s customers could use our solution when using Amazon, they would not be required to in order

to use Amazon’s Transparency solutions.

However, Amazon’s solution must be used within the Amazon ecosystem.

Competition is

building in the consumer engagement market as more companies enter the space but are using mainly NFC technology imbedded into apparel.

In addition to this technology, we have the ability to print labels on more applications including fabrics and metals.

Some of our competitors have substantially greater

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During the year ended December 31, 2023, one customer

accounted for 13% of total revenue.

During the year ended December 31, 2021, five customers accounted for 95% of total revenue.

During the years ended December 31, 2022, one vendor accounted for

99% of transportation cost in our PeriShip Global Solutions segment.

As of December 31, 2022, two customers accounted

for 23% of total accounts receivable.

As of December 31, 2021, three customers accounted for 91% of total accounts receivable.

represented 17% of revenues and one customer represented 13% of revenues for the year ended December 31, 2022.

As of December 31, 2023, three customers made

up 47% of accounts receivable.

As of December 31, 2022, two customers accounted for 23% of total accounts receivable.

During the year ended December 31, 2023, and December

31, 2022, one vendor accounted for 99% of transportation costs, in our Precision Logistics segment.

Employees and External

As of December 31,

2022, we employed approximately 50 persons and several consultants.

Of these employees, approximately 40 were employed in our PeriShip

Global operations and 8 were employed by our legacy business, VerifyMe.

Because of the nature of our business, many of 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 for our VerifyMe legacy business, 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, South Africa, United Arab Emirates, Australia, New Zealand, 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.

As of December 31, 2023, we employed approximately

fifty persons and eight consultants.

Of these employees, approximately forty were employed in our Precision Logistics operations and 10

were employed by our Authentication operations.

Because of the nature of our business, many of our employees and consultants can, and

do, conduct their work for us remotely.

We have also entered

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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