What changed in this filing

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Item 9A. Controls and Procedures

2026-03-31 compared with 2025-03-12 · 963 added, 1179 removed, 1453 unchanged (60% of the section changed)

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relationship management.

He holds a Master of Business Administration from Anderson University, Master’s of Education from University

of Pennsylvania, and Master’s in Adult & Community Education from Ball State University.

Stedham’s prior experience

as the chief executive officer and president of a public company gives him the qualifications, skills to serve on our Board.

He holds a Master of Business Administration from Anderson University, Master of Education from University of

Pennsylvania, and Master’s in Adult & Community Education from Ball State University.

Stedham’s prior experience as

the chief executive officer and president of a public company gives him the qualifications, skills to serve on our Board of Directors.

Geller, age 87, has served as one of our directors since July 2017.

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well as his experience with serving on the boards of directors of other public and private corporations give him the qualifications, skills,

and financial expertise to serve on our Board.

and financial expertise to serve on our Board of Directors.

Goldberg , age 80, has served as one of our directors since July 2017.

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the managing partner of a New Jersey law firm where he specialized in gaming regulatory law and real estate from 1970 through 1994.

Goldberg’s experience as a director of other public companies and his legal expertise gives him the qualifications, skills and financial

expertise to serve on our Board.

Goldberg’s experience as a director of other public companies and his legal expertise gives him the qualifications, skills, and

financial expertise to serve on our Board of Directors.

Greenberg , age 69, has served as one of our directors since November 2019.

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Greenberg’s significant experience and expertise in management, acquisitions, and strategic planning, as well as many years of finance

and related transactional experience give him the qualifications, skills and financial expertise to serve on our Board.

Laffer , age 84, has served as one of our directors since March 2019.

Laffer is the founder and chairman of Laffer Associates,

an institutional economic research and consulting firm.

Laffer has served as a director of NexPoint Residential Trust Inc.

since May 2015, NexPoint Real Estate Finance Inc.

(NYSE:NREF) since February 2020, Melt Pharmaceuticals, Inc., a private company, since

February 2022, and NexPoint Diversified Real Estate Trust (NYSE:NXDT) since July 2022.

He was a director of EVO Transportation & Energy

Services, Inc.

(OTCPINK:EVOA) from August 2018 to December 2019 and the GEE Group Inc.

(NYSE American:JOB) from January 2015 to March

Laffer’s economic acumen and influence in triggering a world-wide tax-cutting movement in the 1980s have earned him the

distinction in many publications as “The Father of Supply-Side Economics.” Dr.

Laffer was a member of President Reagan’s

Economic Policy Advisory Board for both of his two terms (1981-1989).

Laffer also advised Prime Minister Margaret Thatcher on fiscal

policy in the UK during the 1980s.

In the early 1970s, Dr.

Laffer was the first to hold the title of Chief Economist at the Office of

Management and Budget under George Shultz.

Additionally, Dr.

Laffer served as Charles B.

Thornton Professor of Business Economics at the

University of Southern California and as Associate Professor of Business Economics at the University of Chicago.

In June 2019, Dr.

received the Presidential Medal of Freedom.

Laffer’s expertise in economics and his experience as a director of multiple companies

give him the qualifications, skills and financial expertise to serve on our Board.

and related transactional experience give him the qualifications, skills, and financial expertise to serve on our Board of Directors.

Edmonds , age 68, has served as one of our directors since June 2023.

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and logistics field and network of relationships which we believe are valuable assets to the Company and its growth give him the qualifications,

skills and financial expertise to serve on our Board.

skills, and financial expertise to serve on our Board of Directors.

Management and Executive Officers

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Stedham can be found under “Directors,”

Nancy Meyers , age 55, has served as the

Company’s Chief Financial Officer and Executive Vice President since August 2023 and was the Company’s Senior Vice President

of Finance and Investor Relations from February 2022 until July 2023.

Prior to joining the Company in September 2021, Ms.

Meyers had several

accounting and financial reporting roles at GP Strategies Corporation, ultimately serving as Manager of Financial Reporting from October

2017 until May 2021.

Meyers is a Chartered Professional Accountant (CPA) and brings over 25 years of experience in finance, accounting,

and operations.

Jennifer Cola , age 56, has served as the

Company’s Chief Financial Officer since July 8, 2025 and was the Company’s Vice President of Finance from May 2025.

to joining the Company in May 2025, Ms.

Cola served as Chief Financial Officer of GP Government Solutions Inc., a subsidiary of GP Strategies

Corporation from January 2024 until April 2025, and previously as Vice President of Internal Audit of LTG, plc, the parent company of

GP Strategies Corporation from 2018 through 2023.

Cola is a Certified Public Accountant with more than 25 years of experience in financial

accounting, auditing, and operations.

Volk, III , age 58, has been the

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Director Independence

The listing standards of The Nasdaq Stock Market

LLC (“Nasdaq”) require that a majority of our Board be independent.

No director will qualify as independent unless the board

affirmatively determines that the director has no relationship with us that would interfere with the exercise of independent judgment

in carrying out the responsibilities of a director.

Based upon the Nasdaq listing standards and applicable SEC rules and regulations,

our board has determined that each of Scott Greenberg, Marshall Geller, Howard Goldberg, Dr.

Arthur Laffer, and David Edmonds are independent.

Adam Stedham our Chief Executive Officer is not an independent director.

Board Leadership Structure

Although the board has not adopted a formal policy

regarding the separation of the roles of the Chairman and the Chief Executive Officer, we believe that our corporate governance is most

effective when these positions are not held by the same person.

The board recognizes the differences between the two roles and believes

The listing standards of Nasdaq require that a majority of our Board

of Directors be independent.

No director will qualify as independent unless the Board of Directors affirmatively determines that the director

has no relationship with us that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Based upon the Nasdaq listing standards and applicable SEC rules and regulations, our Board of Directors has determined that each of Scott

Greenberg, Marshall Geller, Howard Goldberg, and David Edmonds are independent.

Adam Stedham our Chief Executive Officer is not an independent

Board of Directors Leadership Structure

Although the Board of Directors has not adopted a formal policy regarding

the separation of the roles of the Chairman and the Chief Executive Officer, we believe that our corporate governance is most effective

when these positions are not held by the same person.

The Board of Directors recognizes the differences between the two roles and believes

that separating them allows each person to focus on his individual responsibilities.

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our Chairman can focus his attention on board responsibilities.

Depending on the circumstances, other leadership

models, such as combining the role of Chairman with the role of Chief Executive Officer, might be appropriate.

For example, Patrick White

served as our Chief Executive Officer and as a director of the Company until March 14, 2023 at which time the board appointed Scott Greenberg

to serve as the Interim Chief Executive Officer in addition to his position as Executive Chairman.

Accordingly, the positions of Chief

Executive Officer and Executive Chairman were combined on an interim basis.

Greenberg served as both our Executive Chairman from April

7, 2022 to June 19, 2023 and Interim CEO from March 2023 to June 19, 2023 when Adam Stedham was appointed as our Chief Executive Officer,

at which time Mr.

Greenberg continued as our non-executive Chairman.

Our Board intends to periodically review our leadership structure.

Non-Executive Vice Chairman and Lead Independent

In addition to a non-executive Chairman, we have

appointed Marshall Geller to serve as our non-executive Vice Chairman of our board.

The Board has also appointed a lead independent director,

currently Howard Goldberg, in order to promote independent leadership of the board.

Our non-executive vice chairman or lead independent

director preside over the executive sessions of the independent directors.

Our lead independent director chairs board meetings in the

non-executive Vice Chairman’s absence and is available to engage directly with major stockholders where appropriate.

and direction provided by the lead independent director reinforce the board’s independent oversight of management and contribute

to communication among members of the Board.

Board Committees

The Board has established an Audit Committee,

Compensation Committee, and Nominating and Corporate Governance Committee Executive Committee, and Mergers & Acquisitions Committee.

committee acts pursuant to a written charter adopted by our Board.

The current charters for each board committee are available on our

website, www.verifyme.com under the heading, “Investor Hub” and the subheading, “Corporate Governance.”

Depending on the circumstances, other leadership models, such as combining

the role of Chairman with the role of Chief Executive Officer, might be appropriate.

Our Board of Directors intends to periodically review

our leadership structure.

Non-Executive Vice Chairman and Lead Independent Director

In addition to a non-executive Chairman, we have appointed Marshall

Geller to serve as our non-executive Vice Chairman of our Board of Directors.

The Board of Directors has also appointed a lead independent

director, currently Howard Goldberg, in order to promote independent leadership of the board.

Our non-executive vice chairman or lead

independent director preside over the executive sessions of the independent directors.

Our lead independent director chairs board meetings

in the non-executive Vice Chairman’s absence and is available to engage directly with major stockholders where appropriate.

guidance and direction provided by the lead independent director reinforce the Board of Director’s independent oversight of management

and contribute to communication among members of the board.

Board of Directors Committees

The Board of Directors has established an Audit Committee, Compensation

Committee, and Nominating and Corporate Governance Committee Executive Committee, and Mergers & Acquisitions Committee.

committee acts pursuant to a written charter adopted by our Board of Directors.

The current charters for each board committee are available

on our website, www.verifyme.com under the heading, “Investor Hub” and the subheading, “Corporate Governance.”

Audit Committee

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standing committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

The Board has determined that each member of

the Audit Committee meets the independence and financial literacy requirements applicable to audit committee members under the Nasdaq

listing standards and SEC rules.

The Board has further determined that Mr.

Geller qualifies as an “Audit Committee Financial Expert”

in accordance with the applicable rules and regulations of the SEC.

The Board of Directors has determined that

each member of the Audit Committee meets the independence and financial literacy requirements applicable to audit committee members under

the Nasdaq listing standards and SEC rules.

The Board of Directors has further determined that Mr.

Geller qualifies as an “Audit

Committee Financial Expert” in accordance with the applicable rules and regulations of the SEC.

Compensation Committee

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In determining the amount, form, and terms of such

compensation, the committee considers the annual performance evaluation of the Chief Executive Officer conducted by the board in light

of our goals and objectives relevant to Chief Executive Officer compensation, competitive market data pertaining to Chief Executive Officer

compensation at comparable companies, and such other factors as it deems relevant, and is guided by, and seeks to promote, the best interests

of the Company and its stockholders.

compensation, the committee considers the annual performance evaluation of the Chief Executive Officer conducted by the Board of Directors

in light of our goals and objectives relevant to Chief Executive Officer compensation, competitive market data pertaining to Chief Executive

Officer compensation at comparable companies, and such other factors as it deems relevant, and is guided by, and seeks to promote, the

best interests of the Company and its stockholders.

In addition, subject to existing agreements, the

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It also reviews

and makes recommendations to the board regarding executive and employee compensation and benefit plans and programs generally, including

employee bonus and retirement plans and programs (except to the extent specifically delegated to a board appointed committee with authority

to administer a particular plan).

In addition, the Compensation Committee approves the compensation of non-employee directors and reports

it to the full board.

and makes recommendations to the Board of Directors regarding executive and employee compensation and benefit plans and programs generally,

including employee bonus and retirement plans and programs (except to the extent specifically delegated to a Board of Directors appointed

committee with authority to administer a particular plan).

In addition, the Compensation Committee approves the compensation of non-employee

directors and reports it to the full Board of Directors.

The Compensation Committee also reviews and makes

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other adviser retained by the committee.

The Board has determined that each member of the

Compensation Committee meets the independence requirements applicable to compensation committee members under the Nasdaq listing standards.

The Board of Directors has determined that each

member of the Compensation Committee meets the independence requirements applicable to compensation committee members under the Nasdaq

listing standards

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee

identifies individuals qualified to become members of the board, consistent with criteria approved by the board;

recommends to the board

the director nominees for the next annual meeting of stockholders or special meeting of stockholders at which directors are to be elected;

recommends to the board candidates to fill any vacancies on the board;

develops, recommends to the board, and reviews the corporate governance

guidelines applicable to the Company;

The Nominating and Corporate Governance Committee identifies individuals

qualified to become members of the Board of Directors, consistent with criteria approved by the board;

recommends to the board the director

nominees for the next annual meeting of stockholders or special meeting of stockholders at which directors are to be elected;

to the board candidates to fill any vacancies on the board;

develops, recommends to the board, and reviews the corporate governance guidelines

applicable to the Company;

and oversees the evaluation of the board and management.

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if any, governing the nomination of directors.

It considers and recruits candidates to fill positions on the board, including as a result

of the removal, resignation or retirement of any director, an increase in the size of the board or otherwise.

The committee conducts,

subject to applicable law, any and all inquiries into the background and qualifications of any candidate for the board and such candidate’s

compliance with the independence and other qualification requirements established by the committee.

The committee also recommends candidates

to fill positions on committees of the board.

It considers and recruits candidates to fill positions on the Board of Directors, including

as a result of the removal, resignation or retirement of any director, an increase in the size of the board or otherwise.

The committee

conducts, subject to applicable law, any and all inquiries into the background and qualifications of any candidate for the Board of Directors

and such candidate’s compliance with the independence and other qualification requirements established by the committee.

The committee

also recommends candidates to fill positions on committees of the Board of Directors.

In selecting and recommending candidates for election

to the board or appointment to any committee of the board, the Nominating and Corporate Governance Committee does not believe that it

is appropriate to select nominees through mechanical application of specified criteria.

Rather, the committee shall consider such factors

at it deems appropriate, including, without limitation, the following:

to the Board of Directors or appointment to any committee of the board, the Nominating and Corporate Governance Committee does not believe

that it is appropriate to select nominees through mechanical application of specified criteria.

Rather, the committee shall consider such

factors at it deems appropriate, including, without limitation, the following:

personal and professional integrity, ethics and values;

in corporate management, such as serving as an officer or former officer of a publicly-held company;

experience in corporate management, such as serving as an officer or former officer of a publicly-held company;

experience in the Company’s

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and composition

of the board (including its size and structure).

of the Board of Directors (including its size and structure).

The Nominating and Corporate Governance Committee

develops and recommends to the board a policy regarding the consideration of director candidates recommended by the Company’s stockholders

and procedures for submission by stockholders of director nominee recommendations.

develops and recommends to the Board of Directors a policy regarding the consideration of director candidates recommended by the Company’s

stockholders and procedures for submission by stockholders of director nominee recommendations.

In appropriate circumstances, the Nominating and

Corporate Governance Committee, in its discretion, will consider and may recommend the removal of a director, in accordance with the applicable

provisions of our Amended and Restated Articles of Incorporation and Bylaws.

If we are subject to a binding obligation that requires director

removal structure inconsistent with the foregoing, then the removal of a director shall be governed by such instrument.

provisions of our Articles of Incorporation and Bylaws.

If we are subject to a binding obligation that requires director removal structure

inconsistent with the foregoing, then the removal of a director shall be governed by such instrument.

The Nominating and Corporate Governance Committee

oversees the evaluation of the board and management.

It also develops and recommends to the board a set of corporate governance guidelines

applicable to us, which the committee shall periodically review and revise as appropriate.

In discharging its oversight role, the committee

is empowered to investigate any matter brought to its attention.

The Board has determined that each member of the

Nominating and Corporate Governance Committee meets the director independence requirements of the Nasdaq listing standards.

oversees the evaluation of the Board of Directors and management.

It also develops and recommends to the Board of Directors a set of corporate

governance guidelines applicable to us, which the committee shall periodically review and revise as appropriate.

In discharging its oversight

role, the committee is empowered to investigate any matter brought to its attention.

The Board of Directors has determined that each

member of the Nominating and Corporate Governance Committee meets the director independence requirements of the Nasdaq listing standards.

Executive Committee

The Executive Committee acts on behalf of the

board between regularly scheduled board meetings, and subject to certain limitations imposed by applicable legal or regulatory requirements,

may exercise during such intervals, all of the powers of the board in the management of the business, affairs and property of our Company

Board of Directors between regularly scheduled board meetings, and subject to certain limitations imposed by applicable legal or regulatory

requirements, may exercise during such intervals, all of the powers of the board in the management of the business, affairs and property

of our Company other than:

(i) the filling of vacancies on the board;

(ii) approving or adopting, or recommending to the shareholders, any action or

(iii) adopting, amending or repealing the Amended and Restated Bylaws;

and (iv) those matters that are specifically delegated

to other committees of the board or that are under active review by the board or a board committee, unless the board specifically determines

(ii) approving or adopting, or recommending to the stockholders,

any action or matter;

(iii) adopting, amending or repealing our Bylaws;

and (iv) those matters that are specifically delegated to other

committees of the board or that are under active review by the board or a board committee, unless the board specifically determines otherwise.

Mergers & Acquisitions Committee

The Mergers & Acquisitions Committee is empowered

to review and assess, and assist the board in reviewing and assessing, potential mergers, acquisitions, joint ventures and strategic investments.

In addition, the committee is empowered to assist management in identifying and reviewing merger and acquisition opportunities and is

charged with assessing the associated risk to the Company and making recommendations with respect to the terms thereof to the board.

committee is also charged with planning of, and evaluating the execution of, integrations of merger and acquisition transactions.

Role of the Board in Risk Oversight

to review and assess and assist the Board of Directors in reviewing and assessing, potential mergers, acquisitions, joint ventures, and

strategic investments.

In addition, the committee is empowered to assist management in identifying and reviewing merger and acquisition

opportunities and is charged with assessing the associated risk to the Company and making recommendations with respect to the terms thereof

to the Board of Directors.

The committee is also charged with planning of, and evaluating the execution of, integrations of merger and

acquisition transactions.

Role of the Board of Directors in Risk Oversight

The Company’s risk management function is

overseen by the board.

This oversight is conducted in part through the board’s committees.

Our Audit Committee focuses on risks

associated with financial matters, particularly financial reporting and disclosures, accounting, internal control over financial reporting,

financial policies, and compliance with legal and regulatory matters related to accounting and financial reporting.

Our Nominating and

Corporate Governance Committee focuses on the oversight of risks associated with our corporate governance, including board membership

and structure.

Our Compensation Committee focuses on the oversight of risks arising from our compensation policies and programs.

While our board committees have certain oversight

responsibilities, the full board retains responsibility for monitoring and assessing strategic

risk exposure related to cybersecurity risks and general oversight of risk.

Our Chairman works closely together with other

members of the board when material risks are identified on how to best address such risks.

If the identified risk poses an actual or potential

conflict with management, our independent directors may conduct the assessment.

In addition, our management keeps the board apprised of

overseen by the Board of Directors.

This oversight is conducted in part through the Board of Directors’ committees.

Our Audit Committee

focuses on risks associated with financial matters, particularly financial reporting and disclosures, accounting, internal control over

financial reporting, financial policies, and compliance with legal and regulatory matters related to accounting and financial reporting.

Our Nominating and Corporate Governance Committee focuses on the oversight of risks associated with our corporate governance, including

board membership and structure.

Our Compensation Committee focuses on the oversight of risks arising from our compensation policies and

While our Board of Director’s committees

have certain oversight responsibilities, the full board retains responsibility for monitoring and assessing strategic risk exposure related

to cybersecurity risks and general oversight of risk.

Our Chairman works closely together with other members of the Board of Directors

when material risks are identified on how to best address such risks.

If the identified risk poses an actual or potential conflict with

management, our independent directors may conduct the assessment.

In addition, our management keeps the Board of Directors apprised of

material risks and provides its directors access to all information necessary for them to understand and evaluate how these risks interrelate,

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Code of Business Conduct and Ethics

The board has adopted a Code of Business Conduct and Ethics (the

“Code of Ethics”) that applies to all of our employees, including our Chief Executive Officer and Chief Financial Officer.

The Board of Directors has adopted a Code of Business

Conduct and Ethics (the “Code of Ethics”) that applies to all of our employees, including our Chief Executive Officer and

Chief Financial Officer.

Although not required, the Code of Ethics also applies to our directors.

The Code of Ethics provides written standards that we believe

are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent

conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure and

compliance with laws, rules and regulations and the prompt reporting of illegal or unethical behavior, and accountability for adherence

to the Code of Ethics.

The Code of Ethics provides written

standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling

of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable

disclosure and compliance with laws, rules and regulations and the prompt reporting of illegal or unethical behavior, and accountability

for adherence to the Code of Ethics.

The Code of Ethics is available on our website at https://www.vrmeinvestor.com/investors/.

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as compensation.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act, requires directors,

officers and greater than 10% stockholders to file with the SEC reports of ownership and changes in ownership regarding their holdings

in company securities.

During VerifyMe’s fiscal year ended December 31, 2025, all of its directors and officers timely complied

with the filing requirements of Section 16(a) of the Exchange Act, except for Ms.

Cola who filed a late Form 3, and Mr.

Geller and Ms.

Cola who each filed one late Form 4 each reporting one transaction.

In making this statement, VerifyMe has relied upon the written representations

of its directors and officers, and copies of the reports that they have filed with the SEC.

EXECUTIVE COMPENSATION.

This section contains information about the compensation

earned and paid to our named executive officers during fiscal year 2024 and fiscal year ended December 31, 2023 (“fiscal year 2023”),

or only fiscal year 2024 if the individual was not a named executive officer for fiscal year 2023.

For fiscal year 2024, in accordance

with the executive compensation disclosure rules and regulations of the SEC, we determined that the following officers were our named

executive officers:

earned and paid to our named executive officers during fiscal year ended December 31, 2025 and fiscal year ended December 31, 2024, or

only fiscal year ended December 31, 2025 if the individual was not a named executive officer for fiscal year ended December 31, 2024.

For fiscal year ended December 31, 2025, in accordance with the executive compensation disclosure rules and regulations of the SEC, we

determined that the following officers were our named executive officers:

Adam Stedham, Chief Executive Officer and President

Volk, III, VP of Operations, PeriShip Global

· Nancy Meyers, Chief Financial Officer;

· Paul Ryan, former Executive Vice President, Authentication Segment;

· Curt Kole, former Executive Vice President, Precision Logistics and Executive

Vice President, Global Sales and Strategy, PeriShip Global ;

Jennifer Cola, Chief Financial Officer

Summary Compensation Table

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Summary Compensation Table

Adam Stedham (3)

CEO and President

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VP of Operations, PeriShip Global

Paul Ryan (4)

Former EVP, Authentication Segment

Curt Kole (5)

Former EVP, Precision Logistics;

EVP Global Sales and Strategy, PeriShip Global

(1) The amounts shown in this column reflect time-based restricted stock units (“RSUs”) and performance-based

restricted stock units (“PSUs”) granted to our named executive officers which are subject to certain vesting terms.

in this column do not reflect the actual value realized by the recipient.

Amounts in this column represent the grant date fair value of

the awards, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 718,

“Compensation – Stock Compensation,” or ASC 718.

The assumptions used in calculating the grant date fair value of the

awards are set forth Note 1 – Summary of Significant Accounting Policies in the notes accompanying the financial statements.

value of the PSUs are based on the target level of the performance as of the date of grant.

For fiscal year 2024, we only granted PSUs

Jennifer Cola

The amounts shown in this column reflect time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) granted to our named executive officers which are subject to certain vesting terms.

The amounts in this column do not reflect the actual value realized by the recipient.

Amounts in this column represent the grant date fair value of the awards, calculated in accordance with Financial Accounting Standards Board ASC Topic 718, “Compensation – Stock Compensation,” or ASC 718.

The assumptions used in calculating the grant date fair value of the awards are set forth Note 1 – Summary of Significant Accounting Policies in the notes accompanying the financial statements.

The value of the PSUs are based on the target level of the performance as of the date of grant.

We granted no PSUs to our named executive officer in the year ended December 31, 2025.

For fiscal year ended December 31, 2024, we only granted PSUs to Mr.

If the highest level of performance is achieved, the value of the PSUs for Mr.

Volk would be $105,750.

(2) The amounts shown in this column reflect amounts paid by us to or on behalf of each named executive officer

for company matching contributions to 401(k) or to New Zealand’s retirement savings scheme, Kiwis aver,

as applicable .

(3) Adam Stedham served as a non- employee director

in fiscal year 2023 until June 19, 2023 when he was appointed Chief Executive Officer.

Stedham’s stock awards for fiscal year

2023 include a grant of 34,014 shares of restricted stock for his service as a

non-employee director during fiscal year 2023.

(4) Paul Ryan served as our Executive Vice President, Authentication

Segment until October 4, 2024 .

(5) Curt Kole served as our Executive Vice President

of Precision Logistics and as Executive Vice President, Global Sales and Strategy of PeriShip Global until June 4, 2024.

Employment and Consulting Agreements with Named

Executive Officers

The amounts shown in this column reflect amounts paid by us to or on behalf of each named executive officer for company matching contributions to 401(k) and short term incentive plan.

Employment Agreements with Named Executive

Adam Stedham - Chief Executive Officer and

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In connection

with the employment agreement, the board granted Mr.

Stedham an annual bonus potential of up to 50% of base salary to be earned based

on adjusted EBITDA performance goals to be set annually by the Compensation Committee.

with the employment agreement, the Board of Directors granted Mr.

Stedham an annual bonus potential of up to 50% of base salary to be

earned based on adjusted EBITDA performance goals to be set annually by the Compensation Committee.

March 12, 2024, the Compensation Committee approved a change to the cash bonus for Mr.

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approved by the Compensation Committee of the Company’s Board of Directors.

Stedham will have his annual base salary reduced

by ten percent (10%) during the term of the Salary Reduction Agreement.

Stedham had his annual base salary reduced by ten

percent (10%) during the term of the Salary Reduction Agreement.

In return for the reduction in his annual base salary, Mr.

will be entitled to receive a grant of restricted stock unit awards (“RSUs”) on July 1, 2024 and each 1st of January thereafter

during the term of the Salary Reduction Agreement, each such RSU representing the contingent right to receive one share of the Company’s

entitled to receive a grant of restricted stock unit awards (“RSUs”) on July 1, 2024 and each 1st of January thereafter during

the term of the Salary Reduction Agreement, each such RSU representing the contingent right to receive one share of the Company’s

common stock, par value $0.001 per share, subject to the terms of the Company’s 2020 Equity Incentive Plan and form RSU award agreement,

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Each RSU granted pursuant

to the Salary Reduction Agreement vests in full on the 1st of January following its grant date and is payable as soon as reasonably practicable

after vesting.

The term of the Salary Reduction Agreement is until December 31, 2025.

Pursuant to the Salary Reduction Agreement, a pro-rata

portion of RSUs granted will vest upon the early termination of the Salary Reduction Agreement, or any termination of the employment of

Stedham except for a termination for cause.

Any unvested RSUs will be forfeited in whole by Mr.

Stedham in the event he is terminated

by the Company for cause.

to the Salary Reduction Agreement was to vest in full on the 1st of January following its grant date and is payable as soon as reasonably

practicable after vesting.

The Salary Reduction Agreement terminated on December 31, 2025 and as of the date hereof all RSUs granted pursuant

to the Salary Reduction Agreement have fully vested.

In connection with the Merger Agreement, on February 11, 2026, the Company entered

into an Amended and Restated Employment Agreement with Adam Stedham, effective as of the Effective Time of the Merger.

As of the Effective

Time, and subject to the Closing of the Merger, Mr.

Stedham is expected to resign as a director, Chief Executive Officer and President

to become the President of Precision Logistics (the “Stedham Employment Agreement”).

Stedham’s expected resignation

as a director, Chief Executive Officer and President is not the result of any disagreement with the Company on any matter relating to

the Company’s operations, policies or practices.

Pursuant to the Stedham Employment Agreement,

should it become effective, Mr.

Stedham will receive an annual base salary of $300,000 and be eligible for an annual bonus for each calendar

year, with a potential up to 50% of his base salary based on performance goals set by the Board of Directors each year.

Stedham shall

be eligible to receive equity-based compensation award(s), as determined by the Board of Directors (or a subcommittee thereof), from time

The Stedham Employment Agreement is for an initial term of one year and will thereafter be “at-will”, and may be

terminated by either party during the initial term.

If terminated by Mr.

Stedham for good reason, or by the Company without cause prior

to the 6-month anniversary of the Effective Time, then Mr.

Stedham shall be entitled to an amount equal to his Base Salary that would

have otherwise been paid until the conclusion of the initial term.

If the qualifying termination occurs after the 6-month anniversary

of the Effective Time, then Mr.

Stedham shall be entitled to an amount equal to six (6) months of his Base Salary.

Fred G Volk, III – VP of Operations,

28 unchanged sentences

Volk will be entitled to any accrued and unpaid salary and expenses prior to the effective date of his termination.

Nancy Meyers – Chief Financial Officer

On February 16, 2022, the Company entered into

an Employment Agreement with Ms.

Under the employment agreement, Ms.

Meyers is entitled to an annual base salary of $180 ,000.

Additionally, pursuant to the employment agreement, on February 16, 2022, Ms.

Meyers was awarded PSUs with a grant date value equal to

50% of her annual base salary, each such unit representing the contingent right to receive one share of the Company’s common stock,

par value $0.001 per share, subject to the terms of the 2020 Plan.

These PSUs, except as otherwise provided in the award agreement, will

vest, subject to continuous employment and other conditions, as follows:

50% if the Company’s common stock price exceeds $5.00

per share for a period of 20 consecutive days, and the remaining 50% if the Company’s common stock price exceeds $7.00 per share

for a period of 20 consecutive days, in each case prior to the three-year anniversary of the grant date.

The employment agreement may

be terminated by us for cause, or by Ms.

Meyers without good reason.

If terminated by us without cause or by Ms.

Meyers with good reason

Meyers will be entitled to accrued but unpaid base salary and expenses, a payment equal to 6 months of her base salary and six months

On July 2, 2024, the Company entered into Salary

Reduction Agreement with Nancy Meyers, the Company’s Chief Financial Officer, as part of a salary reduction program for certain

employees of the Company and its subsidiaries approved by the Compensation Committee of the Company’s Board of Directors.

will have her annual base salary reduced by ten percent (10%) during the term of the Salary Reduction Agreement.

In return for the reduction

in her annual base salary, Ms.

Meyers will be entitled to receive a grant of restricted stock unit awards (“RSUs”) on July

1, 2024 and each 1st of January thereafter during the term of the Salary Reduction Agreement, each such RSU representing the contingent

right to receive one share of the Company’s common stock, par value $0.001 per share, subject to the terms of the Company’s

2020 Equity Incentive Plan and form RSU award agreement, with the number of shares underlying the RSU awards to be determined by dividing

the projected amount of Ms.

Meyers base salary reduction for the calendar year, respectively, by $1.60, rounded down to the nearest number

of whole shares.

Each RSU granted pursuant to the Salary Reduction Agreement vests in full on the 1st of January following its grant date

and is payable as soon as reasonably practicable after vesting.

The term of the Salary Reduction Agreement is until December 31, 2025.

Pursuant to the Salary Reduction Agreement, a pro-rata portion of RSUs granted will vest upon the early termination of the Salary Reduction

Agreement, or any termination of the employment of Ms.

Meyers except for a termination for cause.

Any unvested RSUs will be forfeited

in whole by Ms.

Meyers in the event she is terminated by the Company for cause.

Paul Ryan – Former Executive Vice

President, Authentication Segment

On March 1, 2023, the Company’s wholly owned

Subsidiary Trust Codes Global Limited (“Employer”) entered into an Employment Agreement with Mr.

Ryan with an initial term

of three years, until either party gives 90-day notice of non-renewal or otherwise terminated the agreement according to its terms.

the employment agreement, Mr.

Ryan is entitled to an annual base salary of NZD$ 160,000 until the

first month where Employer breaks even as determined by the Employe, and NZD$320,000 per annum gross thereafter.

In August 2023 Mr.

salary was increased to NZD$320,000 and reduced by ten percent (10%) with the salary reduction agreement.

On September 24, 2024, Mr.

notified us of his resignation and on October 4, 2024, we placed Mr.

Ryan on garden leave, meaning he remained employed by us but was

only working for us upon request.

Curt Kole – Former Executive Vice

President, Precision Logistics;

Executive Vice President, Global Sales and Strategy, PeriShip Global

On April 22, 2022, the Company’s wholly

owned Subsidiary PeriShip Global, LLC entered into an Employment Agreement with Mr.

Kole with an initial term of two years, which automatically

renews for additional one-year terms until either party gives 60-day notice of non-renewal or otherwise terminated the agreement according

to its terms.

Under the employment agreement, Mr.

Kole is entitled to an annual base salary of $ 230,000.

Additionally, pursuant to the employment agreement, on April 22, 2022, Mr.

Kole was awarded PSUs with a grant date value equal to his

annual base salary, each such unit representing the contingent right to receive one share of the Company’s common stock, par value

$0.001 per share, subject to the terms of the 2020 Plan.

These PSUs, except as otherwise provided in the award agreement, will vest, subject

to continuous employment and other conditions, as follows:

50% if the Company’s common stock price exceeds $5.00 per share for a

period of 20 consecutive days, and the remaining 50% if the Company’s common stock price exceeds $7.00 per share for a period of

20 consecutive days, in each case prior to the three-year anniversary of the grant date.

Pursuant to the employment agreement Mr.

will receive a commission of 1.5% on eligible annual sales in excess of $30,000,000, increasing to 2.0% on eligible annual sales in excess

of $32,000,000.

The employment agreement may be terminated by us for cause, by Mr.

Kole without good reason, or by delivering a non-renewal

If terminated by us without cause or by Mr.

Kole with good reason Mr.

Kole will be entitled to accrued but unpaid base salary

and expenses, a payment equal to 12 months of his then base salary if the Employment Agreement is terminated during the initial two year

term or a payment equal to 6 months of his then base salary if the Employment Agreement is terminated after the initial two year term,

and six months of benefits.

If terminated upon a non-renewal notice, Mr.

Kole will be entitled to any accrued and unpaid salary

and expenses prior to the effective date of his termination.

June 4, 2024, we terminated Mr.

Kole’s employment effective June 30, 2024 from all positions with the Company and its subsidiaries.

On June 30, 2024, the Company entered into Salary

Reduction Agreement with Mr.

Volk, as part of a salary reduction program for certain employees of the Company and its subsidiaries approved

by the Compensation Committee of the Company’s Board of Directors .

Volk had his annual base salary reduced by ten percent (10%)

during the term of the Salary Reduction Agreement.

In return for the reduction in his annual base salary, Mr.

Volk was entitled to receive

a grant of RSUs on July 1, 2024 and each 1st of January thereafter during the term of the Salary Reduction Agreement, each such RSU representing

the contingent right to receive one share of the Company’s common stock, par value $0.001 per share, subject to the terms of the

Company’s 2020 Equity Incentive Plan and form RSU award agreement, with the number of shares underlying the RSU awards to be determined

by dividing the projected amount of Mr.

Volk’s base salary reduction for the calendar year, respectively, by $1.60, rounded down

to the nearest number of whole shares.

Each RSU granted pursuant to the Salary Reduction Agreement was to vest in full on the 1st of January

following its grant date and is payable as soon as reasonably practicable after vesting.

The Salary Reduction Agreement terminated on

December 31, 2025 and as of the date hereof all RSUs granted pursuant to the Salary Reduction Agreement have fully vested.

Jennifer Cola –Chief Financial Officer

In connection with the Merger, on February 11,

2026, the Board of Directors approved the grant of a severance period for Ms.

Cola effective immediately and which will expire upon the

Effective Time of the Merger (the “Severance Period”), whereby Ms.

Cola will receive a continuation of her base salary and

benefits for a period of six months if she is terminated without cause during the Severance Period.

Also on February 11, 2026, the Company entered

into an Employment Agreement with Jennifer Cola, effective as of the Effective Time of the Merger.

As of the Effective Time, and subject

to the Closing of the Merger, Ms.

Cola is expected to continue in her position as Chief Financial Officer of the Company (the “Cola

Employment Agreement”).

Pursuant to the Cola Employment Agreement, should

it become effective, Ms.

Cola will receive an annual base salary of $180,000 and be eligible for an annual bonus for each calendar year

ending during the employment period, with a potential up to 50% of her base salary based on performance goals set by the Board of Directors

Cola shall be eligible to receive equity-based compensation award(s), as determined by the Board of Directors (or a subcommittee

thereof), from time to time.

In addition, in connection with and subject to entering into the Cola Employment Agreement, the Compensation

Committee of the Board of Directors approved the grant on the Effective Time of 130,000 restricted stock awards under the Company’s

2020 equity incentive plan, which shall vest on the Effective Time.

The Cola Employment Agreement is for an initial term of one year and

will thereafter be “at-will”, and may be terminated by either party during the initial term.

If terminated by Ms.

good reason, or by the Company without cause prior to the 6-month anniversary of the Effective Time, then Ms.

Cola shall be entitled to

an amount equal to her Base Salary that would have otherwise been paid until the conclusion of the initial term.

If the qualifying termination

occurs after the 6-month anniversary of the Effective Time, then Ms.

Cola shall be entitled to an amount equal to six (6) months of her

Term Incentive Plan

March 12, 2024, the Compensation Committee approved a short term incentive cash bonus plan.

The plan is available to nearly all of the

Company’s employees, including our named executive officers except for Mr.

Stedham and Mr.

Under the plan, Ms.

Meyers is eligible

to receive a cash bonus up to 15% of her annual base salary as of January 1 each year, Mr.

Volk is eligible to receive a cash bonus up

to 6% of his annual base salary as of January 1 each year, and during his employment Mr.

Kole was eligible to receive a cash bonus equal

to 6% of his annual base salary as of January 1 each year, subject to upward adjustment.

Under the Plan, 50% of the bonus is based on

achieving 100% of an Adjusted EBITDA performance goal to be set annually by the Compensation Committee.

Only if the Adjusted EBITDA target

is achieved, the remaining 50% of the bonus is based on achieving 100% of a revenue performance goal to be set annually by the Compensation

Under the plan, the bonus amount can be adjusted upward if the revenue performance goal is exceeded in an amount equal to the

total target bonus multiplied by the same percentage that revenue exceeds the revenue performance goal, up to a maximum of 150 percent.

No amounts were paid under the plan in fiscal year 2024.

On March 12, 2024, the Compensation

Committee approved a short term incentive cash bonus plan.

The plan is available to nearly all of the Company’s employees, including

our named executive officers except for Mr.

Stedham and Ms.

Under the plan, Mr.

Volk is eligible to receive a cash bonus up to 6%

of his annual base salary as of January 1 each year, subject to upward adjustment.

Under the Plan, 50% of the bonus is based on achieving

100% of an Adjusted EBITDA performance goal to be set annually by the Compensation Committee.

Only if the Adjusted EBITDA target is achieved,

the remaining 50% of the bonus is based on achieving 100% of a revenue performance goal to be set annually by the Compensation Committee.

Under the plan, the bonus amount can be adjusted upward if the revenue performance goal is exceeded in an amount equal to the total target

bonus multiplied by the same percentage that revenue exceeds the revenue performance goal, up to a maximum of 150 percent.

were paid under the plan in fiscal year ended December 31, 2025.

Outstanding Equity Awards at Fiscal Year-End

3 unchanged sentences

Shares, Units

Equity Incentive

Payout Value of

Shares, Units or

That Have Not

Paul Ryan (2)

Curt Kole (3)

(1) The amounts in these columns are calculated by multiplying the number of shares by the closing market

price of our Common Stock on December 31, 2024, of $1.36 per share.

(2) Paul Ryan served as our Executive Vice President, Authentication

Segment until October 4, 2024.

(3) Curt Kole served as our Executive Vice President

of Precision Logistics and as Executive Vice President, Global Sales and Strategy of PeriShip Global until June 4, 2024.

(4) These RSUs, which convert into common stock on a one-for-one basis, were granted on July 1, 2024 pursuant

to the Company’s salary reduction program, pursuant to which the number of RSUs was determined by dividing the amount of the grantee’s

salary reduction by $1.60.

Jennifer Cola

The amounts in these columns are calculated by multiplying the number of shares by the closing market price of our Common Stock on December 31, 2025, of $0.60 per share.

These RSUs, which convert into common stock on a one-for-one basis, were granted on January 1, 2025 pursuant to the Company’s salary reduction program, pursuant to which the number of RSUs was determined by dividing the amount of the grantee’s salary reduction by $1.60.

The RSUs will vest on January 1, 2026.

These RSUs, which convert into common stock on a one-for-one basis, were granted on July 19, 2023.

first tranche vested on June 19, 2024, and the remaining two tranches will vest in two equal installments on each of June 19, 2025 and

June 19, 2026, subject to the grantees’ continued service through each vesting date except as otherwise provided in the applicable

award agreement.

(6) These RSUs, which convert into common stock on a one-for-one basis, were granted on November 2, 2022.

The first and second tranches vested on each of November 2, 2023 and November 2, 2024, and the remaining tranche will vest on November

2, 2025, subject to the grantees’ continued service through each vesting date except as otherwise provided in the applicable award

(7) These PSUs were granted on June 19, 2023 and vest in three tranches, except as otherwise provided in the

award notice.

Tranche 1 will vest 150,000 shares on or after June 19, 2024 if our common stock trades at or above $2.21 per share for

20 consecutive days prior to June 19, 2027.

Tranche 2 will vest 200,000 shares on or after June 19, 2025 if our common stock trades at

or above $2.94 per share for 20 consecutive trading days prior to June 19, 2027.

Tranche 3 will vest 200,000 shares on June 19, 2027 if

our common stock trades at or above $3.68 per share for 20 consecutive trading days prior to June 19, 2027.

(8) These PSUs were granted on June 30, 2024 and vest in three tranches, except as otherwise provided in the

award notice.

Tranche 1 will vest 20,000 shares on or after June 18, 2025 if our common stock trades at or above $2.21 per share for 20

consecutive trading days prior to June 18, 2027.

Tranche 2 will vest 25,000 shares on or after June 18, 2025 if our common stock trades

at or above $2.94 per share for 20 consecutive trading days prior to June 18, 2027.

Tranche 3 will vest 30,000 shares on June 18, 2027

if our common stock trades at or above $3.68 per share for 20 consecutive trading days prior to June 18, 2027.

(9) These PSUs were granted on April 22, 2022 and vest in two equal tranches, except as otherwise provided

in the award notice.

Tranche 1 will vest on the earlier of April 22, 2024, or April 22, 2025 if our common stock during such period is

at or above $5.00 for 20 consecutive trading days.

Tranche 2 will vest on the earlier of April 22, 2024, or April 22, 2025 if our common

stock during such period is at or above $7.00 for 20 consecutive trading days.

(10) These PSUs were granted on July 20, 2023 and vest in three tranches, except as otherwise provided in the

award notice.

Tranche 1 will vest 35,000 shares on or after June 18, 2024 if our common stock trades at or above $2.21 per share for 20

consecutive trading days prior to June 18, 2027.

Tranche 2 will vest 40,000 shares on or after June 18, 2025 if our common stock trades

at or above $2.94 per share for 20 consecutive trading days prior to June 18, 2027.

Tranche 3 will vest 45,000 shares on June 18, 2027

if our common stock trades at or above $3.68 per share for 20 consecutive trading days prior to June 18, 2027.

(11) These PSUs were granted on February 16, 2022 and vest in two equal tranches, except as otherwise provided

in the award notice.

Tranche 1 will vest on the earlier of February 16, 2024, or February 16, 2025 if our common stock during such period

is at or above $5.00 for 20 consecutive trading days.

Tranche 2 will vest on the earlier of February 16, 2024, or February 16, 2025 if

our common stock during such period is at or above $7.00 for 20 consecutive trading days.

The first two tranches vested on June 19, 2024 and June 19, 2025 respectively, and the remaining tranche will vest on June 19, 2026, subject to the grantees’ continued service through the vesting date except as otherwise provided in the applicable award agreement.

These PSUs were granted on June 19, 2023 and vest in three tranches, except as otherwise provided in the award notice.

Tranche 1 will vest 150,000 shares on or after June 19, 2024 if our common stock trades at or above $2.21 per share for 20 consecutive days prior to June 19, 2027.

Tranche 2 will vest 200,000 shares on or after June 19, 2025 if our common stock trades at or above $2.94 per share for 20 consecutive trading days prior to June 19, 2027.

Tranche 3 will vest 200,000 shares on June 19, 2027 if our common stock trades at or above $3.68 per share for 20 consecutive trading days prior to June 19, 2027.

These PSUs were granted on June 30, 2024 and vest in three tranches, except as otherwise provided in the award notice.

Tranche 1 will vest 20,000 shares on or after June 18, 2025 if our common stock trades at or above $2.21 per share for 20 consecutive trading days prior to June 18, 2027.

Tranche 2 will vest 25,000 shares on or after June 18, 2025 if our common stock trades at or above $2.94 per share for 20 consecutive trading days prior to June 18, 2027.

Tranche 3 will vest 30,000 shares on June 18, 2027 if our common stock trades at or above $3.68 per share for 20 consecutive trading days prior to June 18, 2027.

These RSUs, which convert into common stock on a one-for-one basis, were granted on May 19, 2025 and will vest on May 19, 2027, subject to the grantees’ continued service through each vesting date except as otherwise provided in the applicable award agreement.

On February 11, 2026, the Compensation Committee of the Board of Directors approved the accelerated vesting of these awards which shall vest and be payable in shares of the Company’s common stock upon the earliest to occur of (i) Effective Time of the Merger or (ii) September 30, 2026, regardless of whether any performance conditions of such awards have been met, unless such awards have vested prior to such time pursuant to their terms.

Director Compensation

1 unchanged sentence

restricted stock and other equity linked grants under our equity incentive plans.

The Compensation Committee of the Board has approved

a director compensation policy (“Director Compensation Policy”) to govern the annual compensation payable to directors for

their service on our Board.

The Compensation Committee has reserved the right to make any necessary, appropriate or desirable changes

to the terms of the Policy.

The Compensation Committee of the Board of Directors

has approved a director compensation policy (“Director Compensation Policy”) to govern the annual compensation payable to

directors for their service on our board.

The Compensation Committee has reserved the right to make any necessary, appropriate, or desirable

changes to the terms of the Policy.

Pursuant to our Director Compensation Policy,

as amended, starting in fiscal year ended December 31, 2024, and until such time that our Compensation Committee or Board determines a

change in director compensation is necessary, appropriate or desirable, each non-employee director shall receive an annual award of 35,000

RSUs or 35,000 shares of restricted stock under the 2020 Plan (or a successor stockholder-approved plan thereto) on the first business

day following the date a quorum of stockholders meets and votes on proposals in an annual meeting of stockholders.

as amended, starting in fiscal year ended December 31, 2024, and until such time that our Compensation Committee or Board of Directors

determines a change in director compensation is necessary, appropriate or desirable, each non-employee director shall receive an annual

award of 35,000 RSUs or 35,000 shares of restricted stock under the 2020 Plan (or a successor stockholder-approved plan thereto) on the

first business day following the date a quorum of stockholders meets and votes on proposals in an annual meeting of stockholders.

Under our Director Compensation Policy in place

during fiscal year 2024 and as of the date hereof, a non-employee director may specify before the date that is 15 days preceding the annual

meeting of stockholders of the year prior to the year of grant whether he or she would prefer to receive his or her awards to be granted

in the following year to be in the form of RSUs or restricted stock;

provided, however, such choice will not be binding on the Compensation

The RSUs or restricted stock granted pursuant to the Director Compensation Policy will vest in full on the earlier of the one-year

anniversary of the date of grant subject to the non-employee director’s continued service to the Board through such date, or the

death or disability of the non-employee director, and will be payable upon the earlier of the director’s separation from service

as a director or, upon an earlier payment date elected by the director, provided that the election is made no later than the date that

is 15 days preceding the annual meeting of stockholders of the year prior to the year of grant.

during fiscal year ended December 31, 2024 and as of the date hereof, a non-employee director may specify before the date that is 15 days

preceding the annual meeting of stockholders of the year prior to the year of grant whether he or she would prefer to receive his or her

awards to be granted in the following year to be in the form of RSUs or restricted stock;

provided, however, such choice will not be binding

on the Compensation Committee.

The RSUs or restricted stock granted pursuant to the Director Compensation Policy will vest in full on

the earlier of the one-year anniversary of the date of grant subject to the non-employee director’s continued service to the Board

of Directors through such date, or the death or disability of the non-employee director, and will be payable upon the earlier of the director’s

separation from service as a director or, upon an earlier payment date elected by the director, provided that the election is made no

later than the date that is 15 days preceding the annual meeting of stockholders of the year prior to the year of grant.

The following table sets forth information about

2 unchanged sentences

Compensation Table” above for compensation earned by Mr.

Stedham as a member of the Board during fiscal year 2024.

Option Awards

Stedham as a member of the Board of Directors during the fiscal year ended

December 31, 2025.

Compensation ($) (3)

4 unchanged sentences

Howard Goldberg

Arthur Laffer

(1) Amounts in this column represent the grant date fair value of the awards, calculated in accordance with

Each of our directors received restricted stock awards except Mr.

Edmonds who received restricted stock units.

The assumptions

used in calculating the grant date fair value of the awards are set forth in Note 1 – Summary of Significant Accounting Policies

in the notes accompanying the financial statements.

(2) The table below sets forth the number of unvested stock awards and the aggregate number of options outstanding

held by each of our directors, except for Mr.

Art Laffer (4)

Amounts in this column represent the grant date fair value of the awards, calculated in accordance with ASC Topic 718.

Geller and Mr.

Goldberg received restricted stock awards and Mr.

Edmonds and Mr.

Greenberg received restricted stock units.

The assumptions used in calculating the grant date fair value of the awards are set forth in Note 1 – Summary of Significant Accounting Policies in the notes accompanying the financial statements.

The table below sets forth the number of unvested stock awards and the aggregate number of options outstanding held by each of our directors, except for Mr.

Stedham, as of December 31, 2025.

Please refer to the “Outstanding Equity Awards at

Fiscal Year End” table above for the number of unvested stock awards and options outstanding held by Mr.

Please refer to the “Outstanding Equity Awards at Fiscal Year End” table above for the number of unvested stock awards and options outstanding held by Mr.

Stedham as of December 31, 2025.

Aggregate Number of

E xcept for 56,819 PSUs held by Scott Greenberg, on February 11, 2026, the Board of Directors approved the accelerated vesting of the awards set forth below, which shall vest and be payable in shares of the Company’s common stock upon the Effective Time of the Merger, if such awards are outstanding at the Effective Time.

Unexercised Option Awards

Outstanding at December 31, 2025

Aggregate Number of

Unvested Stock Awards

4 unchanged sentences

Scott Greenberg

Arthur Laffer

(3) Does not include payments or benefits provided under the Company’s 2021 Stock Purchase Plan which

are generally available to all salaried employees.

Art Laffer (4)

Does not include payments or benefits provided under the Company’s 2021 Stock Purchase Plan which are generally available to all salaried employees.

Arthur Laffer resigned as a director of the Company on September 24, 2025, effective immediately.

Laffer’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Laffer resigned before the date a quorum of stockholders met and voted on proposals in the 2025 annual meeting of stockholders no compensation was paid to Dr.

Laffer in 2025.

Policies and Practices Related to the Grant

6 unchanged sentences

We do not currently have a formal policy with respect to the timing of option grants

as our current practice is to grant time- and performance-based RSUs to align executive compensation with shareholder return.

During the fiscal ended December 31, 2024, we

did not grant any named executive officers option awards in the period beginning four business days before and ending one business day

after the filing of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a current report on Form 8-K that disclosed

material nonpublic information.

as our current practice is to grant time- and performance-based RSUs to align executive compensation with stockholder return.

During the fiscal year ended December 31, 2025,

we did not grant any named executive officers option awards in the period beginning four business days before and ending one business

day after the filing of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a current report on Form 8-K that

disclosed material nonpublic information.

SECURITY OWNERSHIP

3 unchanged sentences

Plan Category

Number of securities

of securities

to be issued upon

1 unchanged sentence

warrants and rights

Weighted average

exercise price of

1 unchanged sentence

warrants and rights

Number of securities

of securities

remaining available for

3 unchanged sentences

securities reflected in

Equity compensation

plans approved by

security holders

1,308,491 (3)

Equity compensation

plans not approved

Equity compensation plans approved

by security holders

1,402,138 (2)

Equity compensation plans not

approved by security holders

(1) Represents the weighted-average exercise price of outstanding stock options.

2 unchanged sentences

Plan (the “2020 Plan”).

(2) Represents shares of common stock issuable upon exercise of stock options granted under the 2017 Equity

Incentive Plan (the “2017 Plan”).

(2) Includes 1,047,969 shares remaining available for issuance under the 2020 Plan, 354,169 shares remaining

available for issuance under the 2021 Plan.

(4) Includes individual grants to employees and consultants for services rendered to the Company which were

not made under the Company’s existing equity incentive plans.

(see Note 9 – Stockholder’s Equity in the notes accompanying the financial statements

for further information on the 2021 Plan).

Security Ownership of Management and Certain

1 unchanged sentence

The following table sets forth the number of shares

of our common stock beneficially owned as of February 27, 2025, by:

(i) those persons known by us to be owners of more than 5% of its

common stock;

of our common stock beneficially owned as of March 23, 2026, by:

(i) those persons known by us to be owners of more than 5% of its common

(ii) each director;

8 unchanged sentences

Beneficial Owner

Amount of Beneficial

of Beneficial

Common Stock (1)

1 unchanged sentence

Adam H Stedham (2)

Jennifer Cola

David Edmonds

2 unchanged sentences

Scott Greenberg

Arthur Laffer

All directors and executive officers as a group (8 persons)

Greater than 5% Stockholders

Geller Living Trust, dated July 26, 2002

* indicates less than 1%

(1) Based on 12,354,772 shares of common stock issued and outstanding as of February 27, 2025.

ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities.

is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days whether upon the exercise of options

Unless otherwise indicated in the footnotes to this table, we believe that each of the stockholders named in the table has

sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them.

This table does not

include any unvested RSUs or PSUs, stock options or warrants except for those vesting within 60 days.

As for the 5% stockholders, we are

relying upon reports filed by each 5% stockholder with the SEC.

Based on 13,119,065 shares of common stock issued and outstanding as of March 23, 2026.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities.

A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days whether upon the exercise of options or warrants.

Unless otherwise indicated in the footnotes to this table, we believe that each of the stockholders named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them.

This table does not include any unvested RSUs or PSUs, stock options or warrants except for those vesting within 60 days.

As for the 5% stockholders, we are relying upon reports filed by each 5% stockholder with the SEC.

Stedham is also a director of the Company.

Includes (i) 28,592 vested RSUs that become payable in shares of common stock upon Mr.

separation from service as a director of the Company and (ii) 152,174 shares of common stock underlying a presently exercisable convertible

promissory note in the principal amount of $175,000 with conversation price of $1.15 per share.

(4) Includes 48 shares of common stock held by Ms.

Meyers’ spouse.

(5) These shares of common stock are held by Trust Codes Limited.

Ryan may be deemed to have beneficial

ownership over the securities held by Trust Codes Limited.

Stedham’s separation from service as a director of the Company and (ii) 152,174 shares of common stock underlying a presently exercisable convertible promissory note in the principal amount of $175,000 with a conversation price of $1.15 per share.

Includes 50,217 vested RSUs that become payable in shares of common stock upon Mr.

Edmonds’ separation

from service as a director of the Company.

Edmonds’ separation from service as a director of the Company.

Includes (i) 35,000 unvested shares of restricted stock held by Mr.

Geller that will vest in full

on June 5, 2025, (ii) 370,034 shares of common stock held by the Geller Living Trust, dated July 26, 2002 (the “Geller Trust”),

(iii) 68,310 vested RSUs held by the Geller Trust that become payable in shares of common stock upon Mr.

Geller’s separation from

service as a director of the Company, (iv) 152,174 shares of common stock underlying a presently exercisable convertible promissory note

held by the Geller Trust in the principal amount of $175,000 with conversation price of $1.15 per share, (v) 3,000 shares of common stock

underlying stock options exercisable at $5.295 per share held by the Geller Trust and (vi) 7,000, 31,104 and 31,941 shares of common stock

underlying warrants exercisable at $4.60 per share, $3.215 per share and $4.60 per share, respectively, held by the Geller Trust.

(8) Includes (i) 35,000 unvested shares of restricted stock that will vest in full on June 5, 2025, (ii) 89,310

vested RSUs that become payable in shares of common stock upon Mr.

Geller that will vest in full on upon the earlier of the Effec tive Time of the Merger or October 9, 2026 , (ii) 405,034 shares of common stock held by the Geller Living Trust, dated July 26, 2002 (the “Geller Trust”), (iii) 68,310 vested RSUs held by the Geller Trust that become payable in shares of common stock upon Mr.

Geller’s separation from service as a director of the Company, (iv) 152,174 shares of common stock underlying a presently exercisable convertible promissory note held by the Geller Trust in the principal amount of $175,000 with conversation price of $1.15 per share, and (v) 31,104 shares of common stock underlying warrants exercisable at $3.215 per share held by the Geller Trust.

Geller is a co-trustee, along with his wife, of the Geller Trust and exercises voting and investment power over the shares held by the Geller Trust.

Includes (i) 35,000 unvested shares of restricted stock that will vest in full upon the earlier of the Effec tive Time of the Merger or October 9, 2026 , and (ii) 89,310 vested RSUs that become payable in shares of common stock upon Mr.

Goldberg’s separation from service as a director of the Company.

and (iii) 5,000 shares of common stock underlying stock options exercisable at $5.295 per share.

(9) Includes (i) 35,000 unvested shares of restricted stock that will vest

in full on June 5, 2025, (ii) 68,310 vested RSUs that become payable in shares of common stock upon Mr.

Greenberg’s separation from

service as a director of the Company, (iii) 43,478 shares of common stock underlying a presently exercisable convertible promissory note

in the principal amount of $50,000 with conversation price of $1.15 per share and (iv) 6,403 and 15,552 shares of common stock underlying

warrants exercisable at $4.60 per share, and $3.215 per share, respectively.

(10) Includes (i) 35,000 unvested shares of restricted stock that will vest in full on June 5, 2025, (ii) 89,310

vested RSUs that become payable in shares of common stock upon Mr.

Laffer’s separation from service as a director of the Company,

(iii) 25,600 and 10,800 shares of common stock underlying warrants exercisable at $4.60 per share, (iv) 31,104 shares of common stock

underlying warrants exercisable at $3.215 per share held by Jama Land, LLC, (v) 3,000 shares of common stock underlying stock options

exercisable at $4.025 per share, and (vi) 47,925 shares of common stock held by Jama Land, LLC.

Laffer is the managing member of Jama

The amount also includes 43,478 shares of common stock underlying a presently exercisable convertible promissory note held

by the 1065 Institute, Inc.

in the principal amount of $50,000 with conversation price of $1.15 per share.

Laffer is a director and

the Secretary of the 1065 Institute, Inc.

and may be deemed to beneficially own the securities held by the 1065 Institute, Inc.

Geller is a co-trustee, along with his wife, of the Geller Trust and exercises voting and investment

power over the shares held by the Geller Trust.

This information is derived from the Amendment No.

2 to Schedule 13D filed by Marshall

Geller and the Geller Trust on January 30, 2025.

The address for Marshall Geller and the Geller Trust is c/o VerifyMe, Inc.

801 International Parkway, Fifth Floor, Lake Mary, FL 32746.

Includes (i) 175,561 shares of common stock held by the Scott Greenberg Revocable Trust, (ii) 68,310 vested RSUs that become payable in shares of common stock upon Mr.

Greenberg’s separation from service as a director of the Company, (iii) 43,478 shares of common stock underlying a presently exercisable convertible promissory note in the principal amount of $50,000 with conversation price of $1.15 per share and (iv) 15,552 shares of common stock underlying warrants exercisable at $3.215 per share.

The table above

does not include the following grants:

• 60,000 PSUs granted to two members of the Board on April 7, 2022, which convert into common stock on a

one-for-one basis, that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan, vesting over a period of two to three years,

in two tranches, depending on certain criteria being met,

• 121,994 PSUs granted to two members of management on April 22, 2022, which convert into common stock on

a one-for-one basis, that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan, vesting over a period of two to three years,

in two tranches, depending on certain criteria being met,

• 56,819 PSUs granted to one member of the Board on March 15, 2023, which

convert into common stock on a one-for-one basis, that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan, vesting over

a period of two to three years, in two tranches, depending on certain criteria being met,

• 550,000 PSUs granted to our Chief Executive Officer, which convert into common stock on a one-for-one

basis, that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan on June 19, 2023 and vest over a period of four years, in

three tranches, depending on certain criteria being met,

• 195,000 PSUs granted to two members of management, which convert into common stock on a one-for-one basis,

2020 Equity Incentive Plan on June 19, 2023 and vest upon the earlier of the Effec tive

Time of the Merger or September 30, 2026, regardless of whether any performance conditions of such

awards have been met, unless such awards have vested prior to such time pursuant to their terms .

• 75,000 PSUs granted to one member of management, which convert into common stock on a one-for-one basis,

that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan on July 20, 2023 and vest over a period of four years, in three

tranches, depending on certain criteria being met,

2020 Equity Incentive Plan on July 20, 2023 and vest upon the earlier of the Effec tive

Time of the Merger or September 30, 2026, regardless of whether any performance conditions of such

awards have been met, unless such awards have vested prior to such time pursuant to their terms .

• 75,000 PSUs granted to one member of management, which convert into common stock on a one-for-one basis,

that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan on June 30, 2024 and vest over a period of three years, in three

tranches, depending on certain criteria being met, and

• 54,312 RSUs granted to four members of management, which convert into common stock on a one-for-one basis,

pursuant to the Company’s salary reduction program, which will vest on January 1, 2026.

2020 Equity Incentive Plan on June 30, 2024 and vest upon the earlier of the Effec tive

Time of the Merger or September 30, 2026, regardless of whether any performance conditions of such

awards have been met, unless such awards have vested prior to such time pursuant to their terms .

• 24,000 RSUs granted to our Chief Financial Officer, which convert into common stock on a one-for-one basis,

that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan on May 19, 2025, which will vest upon the earlier of the Effec tive

Time of the Merger or September 30, 2026 .

• 70,000 RSUs granted to two members of the Board of Directors, which convert into common stock on a one-for-one

basis, that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan on October 9, 2025, which will vest upon the earlier of the

Effec tive Time of the Merger or October 9, 2026.

• 68,028 RSUs granted to our Chief Executive Officer, which convert into common stock on a one-for-one basis,

that were granted under the VerifyMe, Inc.

2020 Equity Incentive Plan on June 19, 2023, which will vest on June

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

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of such spouse who has the same house as such person or who is a director or officer of any parent or subsidiary of our Company, had or

will have a direct or indirect material interest, other than compensation arrangements which are described under the sections entitled

“Executive Compensation” and “Director Compensation.”

will have a direct or indirect material interest during the specified period for which disclosure is required under Item 404(a) of regulation

S-K, other than compensation arrangements which are described under the sections entitled “Executive Compensation” and “Director

Compensation.”

25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory

notes for the aggregate principal amount of $1,100 thousand of which $475 thousand was purchased by related parties and entities related

to related parties including Adam Stedham, the Company’s President and CEO;

to related parties at the time or sale and who are considered a “related person” during the specified period for which

disclosure is required under Item 404(a) of regulation S-K, including Adam Stedham, the Company’s

President and CEO;

Scott Greenberg, the Company’s Chairman;

Kole, one of our named executive officers;

the Geller Trust;

and the 1065 Institute, Inc., a non-profit entity to which our director Dr.

and the 1065 Institute, Inc., a non-profit entity

to which our past director Dr.

Arthur Laffer serves as a director and secretary.

The notes are subordinated unsecured obligations of the Company and accrue interest

at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024.

notes will mature on August 25, 2026 unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock.

The Company may not redeem the notes prior to the maturity date.

The largest aggregate amount of principal outstanding on the notes since

they were issued was $1,100 thousand.

As of April 17, 2024 the amount outstanding on the notes was $1,100 thousand.

Between the date the

notes were issued and April 17, 2024, the Company has paid a total of $0 and $44 thousand in principal and interest.

As of December 31, 2025, $400 thousand was held by these

related parties.

The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of 8% per year payable

semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024.

The notes will mature on August 25,

2026 unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock.

The Company may not redeem the

notes prior to the maturity date.

The largest aggregate amount of principal outstanding on the notes since they were issued was $1,100

As of January 21, 2025, $350 thousand was converted to common stock, none of which was held by related parties .

As of December 31, 2025 the amount outstanding on the notes was $750 thousand.

Between the date the notes were issued and February 25,

2026, the Company has paid a total of $0 and $178 thousand in principal and interest.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

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or convenience is in our best interest to engage our independent registered public accounting firm to perform the services.

services provided, and fees charged by MaloneBailey were approved by our Audit Committee.

services provided, and fees charged by MaloneBailey, LLP (“MaloneBailey”) were approved by our Audit Committee.

Independence Analysis by Audit Committee

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Audit-Related Fees (2)

All Other Fees (4)

(1) Audit fees relate to services rendered for the audits of our annual financial statements, for the review

of our quarterly financial statements, and for services that are normally provided by the auditor in connection with statutory and regulatory

filings or engagements.

(2) Audit-related fees consist of fees for assurance and related services that are reasonably related to the

performance of the audit or review of our financial statements and are not reporter under “Audit Fees.”

Audit fees relate to services rendered for the audits of our annual financial statements, for the review of our quarterly financial statements, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements.

Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reporter under “Audit Fees.”

Tax fees relate to services performed in connection with the Company’s annual tax return.

(4) All other fees relate to services rendered in connection with our registration statement filings with

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Agreement and Plan of Merger dated February 11, 2026, by and among VerifyMe, Inc., VRME Subsidiary Corp., and Open World, Ltd.

(incorporated herein by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 12, 2026)

Certificate of Amendment to Amended and Restated Articles of Incorporation (incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 22, 2020)

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Certificate of Withdrawal of Certificate of Designation for Series C and Series D Convertible Preferred Stock (incorporated herein by reference from Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018)

Amended and Restated Bylaws of VerifyMe, Inc., as amended through July 24, 2020 (incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 29, 2020)

Form of Common Stock Purchase Warrant (incorporated herein by reference from Exhibit 4.3 to the Company’s Registration Statement on Form S-1/A (File No.

333-234155) filed on May 22, 2020)

Warrant Agent Agreement dated June 22, 2020 between the Company and West Coast Stock Transfer, Inc.

(incorporated herein by reference from Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on June 22, 2020)

Form of Common Warrant (incorporated herein by reference from Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on April 18, 2022)

Amended and Restated Bylaws of VerifyMe, Inc., as amended through July 8, 2025 (incorporated herein by reference from Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025).

Form of Common Warrant (incorporated here by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 14, 2025)

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Form of Indemnification Agreement (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 18, 2021)

Employment Agreement with Nancy Meyers, dated February 15, 2022 (incorporated herein by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K file on February 22, 2022)

Employment Agreement between PeriShip Global, LLC and Fred Volk III, dated April 22, 2022 (incorporated herein by reference from Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on April 26, 2022)

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Employment Agreement with Adam Stedham, effective June 19, 2023 (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 31, 2023)

Restricted Stock Unit Award Agreement between the Company and Patrick White dated March 15, 2023 (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 20, 2023)

Amended and Restated Employment Agreement with Adam Stedham dated February 11, 2026 and subject to effectiveness (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 12, 2026)

Employment Agreement with Jennifer Cola dated February 11, 2026 and subject to effectiveness (incorporated herein by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 12, 2026)

Restricted Stock Unit Award Agreement between the Company and Keith Goldstein dated July 31, 2023 (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 21, 2023)

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Restricted Stock Unit Award Agreement between the Company and Adam Stedham dated June 19, 2023 (incorporated herein by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023)

Restricted Stock Unit Award Agreement between the Company and Scott Greenberg dated March 15, 2023 (incorporated herein by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 20, 2023)

2017 Equity Incentive Plan (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 20, 2017)

Amendment to the 2017 Equity Incentive Plan (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 29, 2019)

2020 Equity Incentive Plan (incorporated herein by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-8 (File No.

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2021 Stock Purchase Plan (incorporated herein by reference from Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 28, 2021)

Non-Qualified Stock Option Agreement dated August 2017 between the Company and Patrick White (incorporated herein by reference from Exhibit 10.14 to the Company’s Registration Statement on Form S-1 (File No.

333-234155) filed on October 10, 2019)

Non-Qualified Stock Option Agreement dated April 17, 2018 between the Company and Patrick White (incorporated herein by reference from Exhibit 10.13 to the Company’s Registration Statement on Form S-1 (File No.

333-234155) filed on October 10, 2019)

Amendment to Non-Qualified Stock Option Agreement dated April 16, 2020 to that Non-Qualified Stock Option Agreement dated August 2017 and that Non-Qualified Stock Option Agreement dated April 17, 2018 between the Company and Patrick White (incorporated herein by reference from Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No.

333-237950) filed on May 1, 2020)

Incentive Stock Option Agreement dated August 14, 2019 between the Company and Patrick White (incorporated herein by reference from Exhibit 10.15 to the Company’s Registration Statement on Form S-1 (File No.

333-234155) filed on October 10, 2019)

Form of Restricted Stock Agreement (incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018)

Form of Director Non-Qualified Stock Option Agreement (immediate vesting) (incorporated herein by reference from Exhibit 10.20 to the Company’s Registration Statement on Form S-1 (File No.

333-237950) filed on May 1, 2020)

Form of Director Non-Qualified Stock Option Agreement (quarterly vesting) (incorporated herein by reference from Exhibit 10.21 to the Company’s Registration Statement on Form S-1 (File No.

Amendment to Non-Qualified Stock Option Agreements Non-Plan dated April 16, 2020 between the Company and Patrick White (incorporated herein by reference from Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No.

333-237950) filed on May 1, 2020)

Form of Restricted Stock Agreement pursuant to the 2017 Equity Incentive Plan (incorporated herein by reference from Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020)

Form of Restricted Stock Unit Agreement (immediate vesting) pursuant to the 2020 Equity Incentive Plan (incorporated herein by reference from Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020)

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Form of Restricted Stock Unit Award Agreement (performance) pursuant to the 2020 Equity Incentive Plan (incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023)

Professional Services Agreement between PeriShip Global (as successor to PeriShip, LLC) and FedEx Corporate Services, Inc.

dated June 1, 2019 (incorporated herein by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q filed on August 15, 2022)

Form of FedEx Transportation Services Agreement Pricing Agreement between PeriShip Global (as successor to PeriShip, LLC) and Federal Express Corporation, et al (incorporated herein by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q filed on August 15, 2022)

Amendment to Professional Services Agreement with FedEx Corporate Services, Inc.

dated August 25, 2022 (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2022)

Revolving Line of Credit Note between PeriShip Global LLC and PNC Bank, National Association, effective September 15, 2022 (incorporated herein by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 27, 2022)

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Waiver and Amendment to Loan Documents between PeriShip Global LLC and PNC Bank National Association effective August 7, 2024 (incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024)

Waiver and Amendment to Loan Documents between PeriShip Global LLC and PNC Bank, National Association, effective March 28, 2025 (incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025)

Waiver and Amendment to Loan Documents between PeriShip Global LLC and PNC Bank, National Association, effective December 31, 2025

Form of Convertible Subordinated Promissory Note (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 28, 2023)

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First Amendment to Consulting Agreement with Pentant LLC effective June 30, 2024 (incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024)

Form of RSU Award Agreement (incorporated herein by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 5, 2024)

Form of Salary Reduction Agreement (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 5, 2024)

Form of Inducement Letter Agreement dated January 13, 2025 (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 14, 2025)

Insider Trading Policy

Sales Agreement, dated as of March 6, 2025, between VerifyMe, Inc.

and Roth Capital Partners, LLC (incorporated herein by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on March 6, 2025)

Digital Channel Program Agreement (incorporated herein by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025)

Partner API Access Agreement (incorporated herein by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025)

Master Loan Agreement and Promissory Note with ZenCredit Ventures, LLC (incorporated herein by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025)

Promissory Note to ZenCredit Ventures, LLC (incorporated herein by reference from Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025)

Letter of Intent, dated January 2, 2026, between VerifyMe, Inc.

and Open World Ltd.(incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 5, 2026)

Form of Company Stockholder Support Agreement dated February 11, 2026 (incorporated herein by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 12, 2026)

Insider Trading Policy (incorporated herein by reference from Exhibit 19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024)

Subsidiaries of VerifyMe, Inc.

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Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Policy for the Recovery of Erroneously Awarded Compensation

Policy for the Recovery of Erroneously Awarded Compensation (incorporated herein by reference from Exhibit 97 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024)

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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

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# Denotes management compensation plan or contract

+ Schedules and similar attachments have been omitted pursuant to

Item 601(a)(5) of Regulation S-K of the Securities Act of 1933, as amended.

The Company will furnish a copy of any omitted schedule or

similar attachment to the Securities and Exchange Commission upon request.

† Certain portions of this exhibit have been omitted (indicated

by asterisks) pursuant to Item 601(b) of Regulation S-K of the Securities Act of 1933, as amended, because such omitted information is

(i) not material and (ii) would be competitively harmful if publicly disclosed.

FORM 10-K SUMMARY

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( Principal Executive Officer )

/s/ Nancy Meyers

Executive Vice President and Chief Financial Officer

/s/ Jennifer Cola

Chief Financial Officer

March 31, 2026

Jennifer Cola

( Principal Financial Officer and

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Howard Goldberg

/s/ Arthur Laffer

March 12, 2025

Arthur Laffer

/s/ David Edmonds

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Shareholders and Board

of Directors of

VerifyMe, Inc.

Opinion on the Financial Statements

Opinion on the Financial

We have audited the accompanying consolidated

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and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal

control over financial reporting.

These financial

statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not

required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we

are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

Critical Audit Matters

The critical audit matters are matters arising

Critical audit matters are matters arising

from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

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www.malonebailey.com

have served as the Company's auditor since 2018

served as the Company's auditor since 2018

March 30, 2026

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CURRENT ASSETS

Cash and cash equivalents including restricted cash

Cash and cash equivalents

Accounts receivable, net of allowance for credit loss reserve, $ 10 and $ 71 as of December 31, 2025 and December 31, 2024, respectively

Note receivable, net of allowance for credit loss reserve, $ 12 and $ 0 as of December 31, 2025 and December 31, 2024, respectively

Unbilled revenue

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Lease liability- current

Contingent liability-current

Convertible note – related party, current

Convertible note, current

TOTAL CURRENT LIABILITIES

LONG-TERM LIABILITIES

Contingent liability, non-current

Long-term lease liability

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85 shares authorized;

0.85 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

0.85 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respective l y

Common stock, $ 0.001 par value;

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OTHER INCOME (EXPENSE)

Interest expenses, net

Interest income (expenses), net

Change in fair value of contingent consideration

Loss on equity investment

Loss on sale of business

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WEIGHTED AVERAGE COMMON SHARE OUTSTANDING

(a) Includes share-based compensation of $1,555 thousand for the year ended December 31, 2024, and $1,675 thousand for the year ended

December 31, 2023.

(a) Includes share-based compensation of $801 thousand for the year ended December 31, 2025, and $1,555 thousand for the year ended December

The accompanying notes are an integral part of

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Adjustments to reconcile net loss to net cash provided by operating activities:

Allowance for bad debt

Allowance for expected credit losses

Stock based compensation

Loss on equity investment

Loss on sale of business

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Loss on disposal of equipment

Impairment on goodwill and intangible assets

Amortization and depreciation

Gain on lease termination

Unrealized gain on foreign currency transactions

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Purchase of patents

Leasehold improvements

Issuance of note receivable

Purchase of office equipment

Cash paid in business combination

Deferred implementation costs

Capitalized software costs

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CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from line of credit

Proceeds from convertible debt

Proceeds from warrant exercise

Proceeds from ATM

Proceeds from SPP Plan

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Repayment of debt and line of credit

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash

NET DECREASE IN CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH

NET DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH - BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH - END OF PERIOD

CASH AND CASH EQUIVALENTS - END OF PERIOD

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Lease modification

Conversion of convertible note to common stock and accrued interest

Change in fair value of interest rate, swap

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Balance at December 31, 2023

Restricted stock awards, net of shares withheld for employee tax

Restricted stock awards

Restricted stock units, net of shares withheld for employee tax

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Common stock issued for services

Common stock issued in relation to Acquisition

Repurchase of common stock

Treasury stock retired

Cancellation of Common stock

Accumulated other comprehensive loss

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Balance at December 31, 2024

Warrants exercise

Convertible note

Shares issued under ATM

Restricted stock awards

Restricted stock units, net of shares withheld for employee tax

Common stock issued in relation to Stock Purchase Plan

Common stock issued for services

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Balance at December 31, 2025

The accompanying notes are an integral

part of these unaudited consolidated financial statement

The accompanying notes are an integral part of these consolidated financial

VerifyMe, Inc.

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“us,” “our,” or the “Company”) was incorporated in the State of Nevada on November 10, 1999.

VerifyMe, is based in Lake Mary, Florida and its common stock, par value $ 0.001 per share, and certain warrants to purchase common stock

are traded on The Nasdaq Capital Market (“Nasdaq”) under the trading symbols “VRME” and “VRMEW,” respectively.

The Company is a specialized logistics company

that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions.

operates a Precision Logistics segment which includes the operations of our subsidiary PeriShip Global, LLC (“PeriShip Global”)

and accounts for nearly all VerifyMe revenue and an Authentication segment.

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.

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 deter counterfeit activities.

is based in Lake Mary, Florida and its common stock, par value $ 0.001 per share is traded on The Nasdaq Capital Market (“Nasdaq”)

under the trading symbol “VRME”.

The Company is a logistics company that specializes

in time and temperature sensitive products, as well as providing brand protection and enhancement solutions.

The Company operates a Precision

Logistics segment which includes the operations of our subsidiary PeriShip Global, LLC (“PeriShip Global”) which accounts

for nearly all VerifyMe revenue, and an Authentication segment.

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 deter counterfeit activities.

Further information regarding our business segments is discussed

The Company’s activities are subject to

significant risks and uncertainties.

See the “Risk Factors” and “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” sections in this report.

The Company’s activities are subject to significant risks and uncertainties.

See the “Risk Factors” and

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report.

Reclassifications

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The accompanying consolidated

financial statements include the accounts of VerifyMe and its wholly owned subsidiaries PeriShip Global and Trust Codes Global Limited

(“Trust Codes Global”).

Trust Codes Global was divested on December 8, 2024.

All significant intercompany balances and transactions

have been eliminated upon consolidation.

The consolidated financial statements are presented in accordance with accounting principles

generally accepted in the United States of America (“GAAP”).

financial statements include the accounts of VerifyMe and its wholly owned subsidiary PeriShip Global.

All significant intercompany balances

and transactions have been eliminated upon consolidation.

The consolidated financial statements are presented in accordance with accounting

principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

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Actual results could differ from these estimates.

Recent Accounting Pronouncements

In December 2025, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270):

Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content

of interim financial statements in accordance with U.S.

generally accepted accounting principles.

Per the FASB, the amendment does not

intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide

clarity and improve navigability of the existing interim reporting requirements.

The update will be effective for interim reporting periods

within annual reporting periods beginning after December 15, 2027.

We are assessing the effect of this update on our consolidated financial

statements and related disclosures.

In November 2025, the FASB issued ASU 2025-09,

Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements, which introduces five targeted improvements to better align hedge

accounting with entities’ risk management activities.

The update will be effective for annual reporting periods beginning after

December 15, 2026, and interim periods within those annual reporting periods.

Early adoption is permitted.

We are assessing the effect

of this update on our consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial

Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies

the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting

Standards Codification 606.

The update will be effective for annual reporting periods beginning after December 15, 2025, and interim periods

within those annual reporting periods.

Early adoption is permitted.

We are assessing the effect of this update on our consolidated financial

statements and related disclosures

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Recent Accounting Pronouncements

2023, the Financial Accounting Standards Board (“FASB”) issued Accounting

Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable

Segment Disclosures, which requires public entities with a single reportable segment to provide all the disclosures required by this standard

and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment

expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure(s)

of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the

CODM uses the reported measure(s) of a segment's profit or loss to assess performance and decide how to allocate resources.

is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, applied retrospectively

with early adoption permitted.

The Company adopted the new standard beginning January 1, 2024.

Note 15 – Segment Reporting has been

updated to reflect the new disclosure requirements and certain amounts have been reclassified in the Consolidated Statement of Operations.

There is no other impact of adoption of this standard on the Company’s consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09,

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ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.

The Company adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025

In November 2024, the FASB issued ASU 2024-03,

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The Company’s financial instruments consist

of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, equity investments, and long-term derivative

The carrying value of accounts receivable, unbilled revenue, accounts payable and accrued expenses approximate their fair

value because of their short maturities.

The Company believes the carrying amount of its notes payable approximates fair value based

on rates and other terms currently available to the Company for similar debt instruments.

of accounts receivable, note receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, and equity investments.

The carrying value of accounts receivable, note receivable, unbilled revenue, accounts payable and accrued expenses approximate their

fair value because of their short maturities.

The Company believes the carrying amount of its notes payable approximates fair value

based on rates and other terms currently available to the Company for similar debt instruments.

The Company follows FASB Accounting Standard Codification

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Derivative Asset

Contingent Consideration

Balance as of December 31, 2024

Change in fair value of contingent consideration

Foreign currency adjustment

Change in fair value to interest rate, SWAP, recognized in other comprehensive loss

Termination of SWAP, recognized in other comprehensive loss

Balance at December 31, 2025

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Segment Reporting

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Notes to the Consolidated Financial Statements

Business Combinations

The Company applies the provisions of ASC Topic

805, Business Combinations, in the accounting for business acquisitions.

ASC Topic 805 requires the Company to recognize separately from

goodwill the assets acquired and the liabilities assumed at their acquisition date fair values.

Goodwill as of the acquisition date is

measured as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired

and the liabilities assumed.

While the Company uses its best estimates and assumptions to accurately apply preliminary value to assets

acquired and liabilities assumed at the acquisition date, where applicable, these estimates are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments

in the current period, rather than a revision to a prior period.

Upon the conclusion of the measurement period or final determination

of the values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the Consolidated

Statements of Operations.

Accounting for business combinations requires management to make significant estimates and assumptions, especially

at the acquisition date, including estimates for intangible assets where applicable.

Although the Company believes the assumptions and

estimates made have been reasonable and appropriate, they are based in part on information obtained from management of the acquired companies

and are inherently uncertain.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions,

estimates, or actual results.

Basic and Diluted Net Loss per Share of Common Stock

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the year ended December 31, 2025, there were approximately 3,976,000 anti-dilutive shares consisting of 1,322,000 unvested performance

restricted stock units, 414,000 restricted stock units and restricted stock awards, 221,000 shares issuable upon exercise of stock options,

4,629,000 shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable

upon conversion of preferred stock.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Restricted Cash

The following table provides a reconciliation

of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts

in the consolidated statements of cash flows (dollars in thousands):

Schedule of restricted cash

December 31, 2024

December 31,2023

Cash and cash equivalents

Restricted cash

Total cash and cash equivalents including restricted cash

The Company classifies cash and cash equivalents

that are restricted from operating use for the next twelve months as restricted cash.

No cash was subject to restriction as of December

As of December 31, 2023, the Company held $ 63 thousand of cash subject to restrictions.

restricted stock units, 303,000 restricted stock units and restricted stock awards 1,555,000 shares issuable upon exercise of warrants,

652,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon conversion of preferred stock.

ended December 31, 2024, there were approximately 7,971,000 anti-dilutive shares consisting of 1,606,000 unvested performance restricted

stock units, 414,000 restricted stock units and restricted stock awards, 221,000 shares issuable upon exercise of stock options, 4,629,000

shares issuable upon exercise of warrants, 957,000 shares issuable upon conversion of convertible debt, and 144,000 shares issuable upon

conversion of preferred stock.

Concentration of Credit Risk Involving

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as of December 31, 2025, and 2024, respectively.

Equity Investments

When the Company does not have a controlling financial

interest in an entity but can exert influence over the entity’s operations and financial policies, the investment is accounted for

either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under applicable generally

accepted accounting policies.

The Company has elected the fair value option for its equity security under prepaid expenses and other current

assets on the Consolidated Balance Sheets, as it has determined the fair value best reflects the economic performance of the equity investment.

Changes in unrecognized gain or loss of the fair value of the equity investments are included in Other income (expense) on the accompanying

Consolidated Statements of Operations.

Note Receivable

Notes receivable are recorded at the principal

amount outstanding, plus accrued interest.

The Company evaluates the credit quality of notes receivable in accordance with ASC Topic 310,

“Receivables”, and assesses collectability based on historical experience, the financial condition of borrowers, and other

relevant information.

Interest income is recognized using the interest method when collection of principal and interest is considered

Notes are considered past due when payments are not received in accordance with contractual terms.

Inventory principally consists of canisters and

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the fair value of the assets.

During the year ended December 31, 2023, the Company impaired $ 100 thousand related to inventory in our

Authentication segment, related to raw material to record at fair market value.

Equipment for Lease

Equipment for lease principally consists of costs

associated with the development, certification and production of the VerifyChecker™ and the VerifyAuthenticator TM Smartphone

Authenticator technology.

These technologies are leased to customers typically for a period of one year in length with automatically renewable

leases cancellable by either party by written notice provided 90 days in advance.

We examined the effect of ASU No.

2016-02 Leases (Topic

842) and determined the impact is not material.

Our policy is to capitalize the costs related to this equipment and depreciate on a straight-line

basis over the estimated lives of the equipment which was determined to be 5 years.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Capitalized Software

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six years, using the straight-line method.

The Company will evaluate its software assets for impairment whenever events or change in circumstances

indicate that the carrying amount of such assets may not be recoverable.

The Company will evaluate its software assets for impairment whenever events or changes in

circumstances indicate that the carrying amount of such assets may not be recoverable.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Long-Lived Assets

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Notes to the Consolidated Financial Statements

In circumstances where the embedded conversion

option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible

instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative

In circumstances where the embedded conversion option in a convertible

instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are

required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments,

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or liabilities at the fair value of the instrument on the reclassification date.

Derivative instrument as assets or liabilities will be

classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected

Derivative instruments as assets or liabilities will

be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected

within 12 months of the balance sheet date.

Foreign Currency Translation

The functional currency of our New Zealand operations

is the local currency, New Zealand dollar (NZD).

The translation of the foreign currency into U.

dollars is performed for balance sheet

accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the weighted average

exchange rates prevailing during the year.

The unrealized gains and losses resulting from such translation are included as a component

of comprehensive income.

Translation gains and losses arising from currency exchange rate fluctuations on transactions denominated in

a currency other than the local functional currency are included in “General and administrative” on our Consolidated Statements

of Operations.

The unrealized foreign currency transaction gain/losses for the years ended December 31, 2024 and December 31, 2023, were

$ 6 thousand loss and $ 5 thousand gain, respectively.

Revenue Recognition

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shipment fees in gross revenue.

Under our Premium service line, we provide complete white-glove shipping monitoring and predictive analytics

This service includes customer web portal access, weather monitoring, temperature control, full-service center support and last

mile resolution.

Payment terms are typically 30 - 45 days.

Under our Premium service line, clients use our shipping monitoring,

predictive analytics, or exception management services.

Shippers use their own transportation rates, provided and charged directly by

their carrier, with our added services charged (i) directly by the carrier, under a “white label”

arrangement, which we refer to as our Premium service, or (ii) by us, which we refer to as our Direct Premium service.

These services

include customer web portal access, weather monitoring, temperature control, full-service center support and last mile resolution.

Under both service lines in our Precision Logistics

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in either service line.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Authentication

Our Authentication segment primarily consists

of our brand protection service line which consists of a custom suite of products that offer clients traceability and brand solutions.

of anti-counterfeit and brand protection.

Terms typically range between 30 and 60 days.

Our performance obligation is met, and revenue is recognized when our products are shipped

or delivered depending on the specific agreement with the customer.

The transaction fee is made up of fixed consideration based on the

related purchase order or agreement.

Warranties and other variable considerations are analyzed by the Company, in terms of historical

warranties, current economic trends, and changes in customer demand, and have been determined to be insignificant in the twelve months

ended December 31, 2024.

Our performance obligation is met, and revenue

is recognized when our products are shipped or delivered depending on the specific agreement with the customer.

The transaction fee is

made up of fixed consideration based on the related purchase order or agreement.

Warranties and other variable considerations are

analyzed by the Company, in terms of historical warranties, current economic trends, and changes in customer demand, and have been determined

to be insignificant in the twelve months ended December 31, 2025.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Stock-Based Compensation

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model include risk-free interest rates, expected volatility, and expected life of the stock options.

Changes in these assumptions can materially

affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods.

The value of the portion

of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line

Changes in these assumptions can

materially affect estimates of fair value stock-based compensation, and the compensation expense recorded in future periods.

of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the

straight-line method.

We recognize forfeitures as they occur with a reduction in compensation expense in the period of forfeiture.

For performance restricted

stock units (“RSU”) with stock price appreciation targets (see Note 10 – Stock Options, Restricted Stock and Warrants),

we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future

price paths over the RSU’s contractual life based on the appropriate probability distributions (which are based on commonly applied

Black Scholes inputs).

The fair value was determined by taking the average of the grant date fair values under each Monte Carlo simulation

We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing adjustment or reversal

based on actual achievement during the period.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

performance restricted stock units (“RSU”) with stock price appreciation targets (see Note 10 – Stock Options, Restricted

Stock and Warrants), we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took

different future price paths over the RSU’s contractual life based on the appropriate probability distributions (which are based

on commonly applied Black Scholes inputs).

The fair value was determined by taking the average of the grant date fair values under each

Monte Carlo simulation trial.

We recognize compensation expense on a straight-line basis over the performance period and there is no ongoing

adjustment or reversal based on actual achievement during the period.

We account for stock-based compensation awards

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existing guidance of Topic 718, with certain exceptions.

This update supersedes previous guidance for equity-based payments to nonemployees

under Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees.

All issuances of stock options or other equity

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paid cash for the services.

At the end of each financial reporting period, prior to vesting or prior to the completion of the services,

the fair value of the equity-based payments will be re-measured, and the non-cash expense recognized during the period will be adjusted

Since the fair value of equity-based payments granted to non-employees is subject to change in the future, the amount of

the future expense will include fair value re-measurements until the equity-based payments are fully vested or the service completed.

Advertising Costs

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by major tax jurisdictions due the carryforward of unutilized NOLs.

NOTE 2 – EQUITY INVESTMENTS

In December 2021, the Company acquired 8,841 shares

of 10 % Cumulative Convertible Series D Preferred Stock at a price of $ 10.00 per share as payment for a customer’s outstanding AR

balance of $ 88,410 .

This instrument is considered an equity security within the scope of Topic 321 since the issuing entity has the option

but no contractual obligation to redeem the preferred stock, and the Company can convert the preferred shares to common stock.

the year ended December 31, 2023, the Company determined that it would not be able to redeem the value of its investment and recorded

a loss of $ 100 thousand bringing down the value of the equity investment to $ 0 as of December 31, 2023.

The Company adopted ASU 2023-09 on a prospective basis for the

year ended December 31, 2025

NOTE 2 - NOTE RECEIVABLE

ZenCredit Agreement

On August 8, 2025, we entered into a Master Loan

Agreement and Promissory Note (the “Loan Agreement”) with ZenCredit Ventures, LLC (“ZenCredit”).

Pursuant to the

Loan Agreement, we agreed to loan ZenCredit up to $2 million.

Pursuant to the terms of the Loan Agreement, ZenCredit will pay us regular

quarterly interest payments at an annual interest rate of 16 % .

The term of the initial promissory note is nine months at which time

all accrued principal and interest is due to us unless we elect to make an Additional Loan (as such term is defined in the Loan Agreement)

subject to the terms of the Loan Agreement.

On August 11, 2025, we loaned ZenCredit $ 2 million in exchange for a promissory note

issued pursuant to the Loan Agreement.

As of December 31, 2025, the Company has received $ 80 thousand in interest payments.

As of December

31, 2025, the Company reserved $ 12 thousand allowance for credit loss on the note.

VerifyMe, Inc.

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Schedule of disaggregation of revenue

Authentication

Precision Logistics

Authentication

ProActive services

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Applying the practical expedient in ASC Topic

606, we recognize the incremental costs of obtaining contracts (i.e.

sales commissions) as an expense when incurred if the amortization

606, we recognize the incremental costs of obtaining contracts (i.e., sales commissions) as an expense when incurred if the amortization

period of the assets that we otherwise would have recognized is one year or less.

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NOTE 4 – BUSINESS COMBINATION

Trust Codes Global Limited

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

Global, the business and certain assets of Trust Codes Limited (“Trust Codes”), 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-drive engine to

inform and educate consumers of the product.

The Company accounted for the transaction as an acquisition of a business under ASC Topic

805 – Business Combination.

The purchase price was approximately $ 1.0 million which consisted of $ 0.36 million in cash

paid at closing and 353,492 shares of 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 was estimated at $ 1.1 million at the acquisition date, however the maximum

amount of the payment is unlimited.

The preliminary purchase price allocation was subject to change and was finalized in the fourth quarter

The goodwill recognized was due to the expected synergies from combining the operations of the acquiree with the Company.

of the goodwill recorded for financial statement purposes was deductible for tax purposes.

The Company incurred $ 278 thousand in relation

to acquisition related costs which were included in General and administrative, in the accompanying Consolidated Statements of Operations.

Trust Codes Global is included in the Authentication segment and the results of its operations have been included in the consolidated

financial statements beginning March 1, 2023.

The pro-forma financial information is immaterial to our results of operations and

impractical to provide.

The following table summarizes the purchase price

allocation for the acquisition (dollars in thousands).

Schedule of allocation for the acquisition

Fair value of contingent consideration

Stock (issuance of 353,492 shares of common stock) (a)

Total purchase price

Purchase price allocation:

Prepaid expenses

Property and Equipment, net

Developed Technology

Trade Names/Trademarks

Customer Relationships

Accounts payable and other accrued expenses

Current lease liability

Long term lease liability

(a) Stock issued was calculated based on the 15-day volume-weighted average price (“VWAP”) through February 28, 2023 calculated

On December 8, 2024 the Company sold Trust

Codes Global pursuant to a Share Sale Agreement with a related party, Paul Ryan, former Executive Vice President of the

Authentication Segment and employee of Trust Codes Global Limited.

On December 8, 2024, the Company sold Trust Codes

Global pursuant to a Share Sale Agreement with a related party, Paul Ryan, former Executive Vice President of the Authentication Segment,

and employee of Trust Codes Global Limited.

This divestiture did not qualify as a discontinued operation.

The purchase price per the agreement was $1 NZD.

recognized a loss of $ 0.1

million on the sale of the business.

The purchase price per the agreement

We recognized a loss of $ 0.1 million on the sale of the business.

Through his purchase, Mr.

Ryan assumed the remaining cash balance in the bank accounts of

$ 0.1 million and all

continuing obligations and liabilities of Trust Codes Global Limited.

The Trust Codes Global business was part of the Authentication

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Contingent Consideration

ASC Topic 805 requires that contingent consideration

to be recognized at fair value on the acquisition date and be re-measured each reporting period with subsequent adjustments recognized

in the consolidated statement of operations.

We estimate the fair value of contingent consideration liabilities using an appropriate

valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the

structure of the contingent consideration arrangement.

Contingent consideration is valued using significant inputs that are not observable

in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting.

We believe our estimates and assumptions

are reasonable;

however, there is significant judgment involved.

At each reporting date, the contingent consideration obligation is revalued

to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the consolidated

statements of operations, and could cause a material impact to, and volatility in, our results.

Changes in the fair value of contingent

consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or

earnings projections.

The Company divested the Trust Codes business

on December 8, 2024.

As of December 31, 2024, we had no current or non-current contingent consideration related to the acquisition of

Trust Codes on the Consolidated Balance sheets.

In 2024, payments of $ 53 thousand was paid for contingent consideration.

Ryan assumed the remaining

cash balance in the bank accounts of $ 0.1 million and all continuing obligations and liabilities of Trust Codes Global Limited.

Trust Codes Global business was part of the Authentication segment.

VerifyMe, Inc.

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We test goodwill at the reporting unit level.

ASC Topic 350, Intangibles Goodwill and

Other , permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of

a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill

impairment test.

Under ASC Topic 350, an entity is not required to perform a quantitative goodwill impairment test for a reporting

unit if it is more likely than not that its fair value is greater than its carrying amount.

A reporting unit is an operating segment,

or one level below an operating segment, as defined by U.S.

ASC Topic 350, “ Intangibles - Goodwill

and Other” (“ASC Topic 350”), permits an entity to first assess qualitative factors to determine whether it

is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it

is necessary to perform a quantitative goodwill impairment test.

Under ASC Topic 350, an entity is not required to perform

a quantitative goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying

A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S.

Determining the fair value of a reporting unit

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goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment.

September 24, 2024, Paul Ryan, Executive Vice President, Authentication Segment, notified us of his resignation.

During the third quarter

of fiscal year ended December 31, 2024, we identified concerns relating to the commercial viability of the Authentication segment.

a result, the Company made revisions to our internal forecasts and concluded that in accordance with ASC Topic 350 a triggering event

occurred indicating that potential impairment exists, which required the Company to conduct an interim test of the fair value of the goodwill

for the Authentication segment.

We performed a quantitative goodwill impairment test and determined the fair value of our reporting units

using a combination of an equity approach and a market approach, employing a guideline public company approach.

The results of our goodwill

impairment test indicated that the carrying value of the Authentication reporting unit exceeded its estimated fair value.

the Company recorded a goodwill impairment charge of $ 1,351 thousand during the year ended December 31, 2024, within goodwill and intangible

asset impairment on the consolidated statement of operations.

On December 8, 2024 we divested the Trust Codes business in the Authentication

We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators

August 26, 2025, FedEx Corporation notified providers, including PeriShip Global, that it would be providing preferred shipping services

internally and that the providers would no longer be approved FedEx preferred shippers effective September 24, 2025.

As a result, we made

revisions to our internal forecasts and concluded that in accordance with ASC 350 a triggering event occurred indicating that potential

impairment exists, which required the Company to conduct an interim test of the fair value of the goodwill for the Precision Logistics

We performed a quantitative goodwill impairment test and determined the fair value of our reporting units using a combination

of an income approach and a market approach, employing a guideline public company approach.

The results of our goodwill impairment test

indicated that the carrying value of the Precision Logistics reporting unit exceeded its estimated fair value.

As a result, the Company

recorded a goodwill impairment charge of $ 1,062 thousand during the year ended December 31, 2025, within goodwill and intangible asset

impairment on the consolidated statement of operations.

We will continue to monitor our goodwill and intangible assets for impairment

and conduct formal tests when impairment indicators are present.

Each of our two reportable segments represents

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below an operating segment, under ASC Topic 350, “ Intangibles - Goodwill and Other” .

We determined that we have two reporting

units for purposes of goodwill impairment testing, which represent our two reportable business segments, as discussed below.

We determined that we have

two reporting units for purposes of goodwill impairment testing, which represent our two reportable business segments, as discussed below.

Changes in the carrying amount of goodwill by

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Goodwill impairment charge

Foreign currency translation

Net book value at

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for goodwill, we do not have any intangible assets with indefinite useful lives.

The revisions to our internal forecasts resulted

in an interim triggering event for the three months ended September 30, 2024, indicating the carrying value of our long-lived assets

including patents and trademarks, customer relationships, and developed technology may not be recoverable.

Accordingly, the Company performed

an interim impairment test and assessed the recoverability of the related intangible assets by using level 3 inputs and comparing the

carrying value to the net undiscounted cashflow expected to be generated.

ASC Topic 360-10, “ Impairment or

disposal of long-lived assets (“ASC Topic 360”), provides guidance on accounting for the impairment and disposal of long-lived

assets, covering both tangible and intangible finite-lived assets.

The standard ensures that financial statements reflect the economic

reality of assets by properly accounting for declines in value or disposals.

Under ASC Topic 360, an entity must perform an analysis to

determine whether it is more likely than not that the fair value of a long lived asset is less than its carrying amount based on estimates

of future cash flows.

Determining the fair value of long-lived assets

is judgmental in nature and involves the use of significant estimates and assumptions.

These estimates and assumptions include revenue

growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market

conditions, and determination of appropriate market comparables.

Our fair value estimates are based on assumptions that we believe to

be reasonable but are unpredictable and inherently uncertain.

Actual future results may differ from those estimates.

The timing and frequency

of our long lived asset impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible

On August 26, 2025, FedEx Corporation notified

providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no

longer be approved FedEx preferred shippers effective September 24, 2025.

As a result, we made revisions to our internal forecasts that

resulted in an interim triggering event for the year ended December 31, 2025, indicating the carrying value of our long-lived assets including

internally used software, deferred implementation, trademarks, customer relationships, and non-compete and developed technology may not

be recoverable.

The analysis indicated that certain intangible assets were impaired.

The Company further concluded as of September 30, 2024 the carrying value exceeded its estimated fair value, which resulted in an impairment

The Company recorded an intangible impairment charge of $ 964 thousand during the year ended December 31, 2024, within goodwill

and intangible asset impairment on the consolidated statement of operations.

On December 8, 2024 we divested the Trust Codes business

in the Authentication segment.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

The Company further concluded during the year ended

December 31, 2025 the carrying value of the long-lived assets exceeded its estimated fair values, which resulted in an impairment charge.

We recorded an intangible asset impairment charge of $ 2,788 thousand during the year ended December 31, 2025, within goodwill and intangible

asset impairment on the consolidated statement of operations.

Intangible assets with finite lives are subject

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Patents and Trademarks

Customer Relationships

Developed Technology

Internally Used Software

Non-Compete Agreement

Deferred Implementation

Total Intangible Assets

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Patents and Trademarks

Capitalized Software

Customer Relationships

6 unchanged sentences

$ 946 thousand and $ 1,097 thousand for the years ended December 31, 2025, and December 31, 2024, respectively.

During the year ended

December 31, 2023, the Company impaired certain assets related to its Developed Technology and Patents by $ 90 thousand, to bring the gross

carrying amount related to these assets to zero, as these technologies are no longer in use.

During the year ended December 31, 2024,

the Company impaired certain assets by $ 964 thousand, to bring the gross carrying amount related to these assets to zero as a result of

the impairment analysis of long-lived assets under ASC 360.

During the years ended December

31, 2025, and 2024, the Company impaired certain assets by $ 2,788 thousand and $ 964 thousand, respectively, to bring the gross carrying

amount related to these assets to zero as a result of the impairment analysis of long-lived assets under ASC Topic 360.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Patents and Trademarks

As of December 31, 2025, our current patent and

trademark portfolios consist of nine granted U.S.

patents and two granted European patents, two pending foreign patent applications

and several foreign trademarks.

The Company abandoned one patents during the year ended December 31, 2024.

trademark portfolios consist of six granted U.S.

patents and one pending foreign patent application and several foreign trademarks.

The Company abandoned four patents during the year ended December 31, 2025.

The Company expects to record amortization expense

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federal statutory rate to the income tax provision for the years ended December 31, 2025, and 2024 is as follows (in thousands) :

Schedule of reconciliation of federal statutory tax rate

Year Ended December 31,

Schedule of income tax provision

Years Ended December 31,

Loss before income taxes

Total loss before income taxes

Income tax expense (benefit):

Years Ended December 31,

State and local

Total current

State and local

Total deferred

Total income tax expense (benefit)

Beginning in 2025 annual reporting,

the Company adopted ASU 2023-09 prospectively.

See Note 1 - Organization and Summary of Significant Accounting

Policies for additional details on ASU 2023-09.

A reconciliation of the U.S.

federal statutory income tax rate to our effective

tax rate for the year ending December 31, 2025 and December 31, 2024 is as follows (in thousands):

Schedule of reconciliation of federal statutory tax rate

For the Year Ended

December 31, 2025

For the Year Ended

December 31, 2024

Taxes under statutory US tax rates

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Increase (decrease) in valuation allowance

Permanent Differences

Change in State tax rate

Prior period true up

State & local taxes net of federal benefit

Income tax expense

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

The increase in the valuation allowance during

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utilized in the future.

Cash paid for income taxes, net of refunds received,

by jurisdiction for the years ended December 31, 2025 are as follows (in thousands):

Schedule of paid for income taxes

December 31, 2025

Cash paid for income taxes, net of refunds received

Deferred income taxes reflect the net tax effects

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Schedule of deferred tax assets and liabilities

TAX ASSETS AND LIABILITIES

Years Ended December 31,

Net operating loss carryforwards

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Stock options

Stock Purchase Plan (SPP)

Acquisition transaction costs

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Unrealized gain on investment

Capital loss carryforward

Accruals & other

Capital loss limitation and cash flow used

FV loss on equity investment

Accrued bonus compensation

Gross Deferred Tax Assets

Less valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Total deferred tax liabilities

Net deferred tax assets / (liabilities)

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Valuation allowance

Gross Deferred Tax Assets

Intangibles and other deferred tax liabilities

Net Deferred Tax Assets

In assessing the realizability of deferred tax

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As of December 31, 2025, the Company has net operating

loss carryforwards of $ 24.7 million for tax purposes, which will be available to offset future taxable income.

loss carryforwards of $ 25.3 million for tax purposes, which, subject to the application of potential limitations, will be available to offset future taxable income.

If not used, $6.6 million

of these carryforwards will expire beginning in 2026, and $18.9 million will carryforward indefinitely.

As of the year ended December

31, 2023, the Company has net operating loss carryforwards of $ 22.7 million for tax purposes, which will be available to offset future

taxable income.

If not used, $7.5 million of these carryforwards will expire beginning in 2024, and $15.2 million will carryforward indefinitely.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Utilization of the net operating losses (NOL)

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of NOL carryforwards that can be utilized annually to offset future taxable income.

Assuming the Merger is consummated in accordance with the terms of the Merger Agreement, these limitations will apply for tax periods following the Merger.

The Company completed the IRC Section 382 analysis,

in 2022, and determined that an ownership change occurred sufficient to impose additional limitations on the use of NOL carryforwards.

The Company has not completed the IRC Section 382 analysis in 2023 or 2024 and is not aware of any indicators that may impose additional

limitations on the use of NOL carryforwards.

in 2022, and determined that an ownership change occurred sufficiently to impose additional limitations on the use of NOL carryforwards.

The Company has not completed the IRC Section 382 analysis in 2023, 2024 or 2025.

The Merger is expected to result in an ownership change

and, consequently, application of these use limitation rules on the tax attributes of the Company for tax periods following the Merger.

As a result, following the Merger, we may incur larger federal and state income tax liabilities than we would have had we not experienced

an ownership change.

No tax benefit has been reported in the December

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repatriation tax on certain unremitted foreign earnings and provides a 100% deduction to domestic corporations for certain dividends received

from foreign corporations after Dec.

The Company divested of its foreign subsidiary on December 8, 2024, therefore, there will

be no future dividends from the earnings of our foreign subsidiary to result in U.S.

from foreign corporations after December 31, 2017.

The Company divested of its foreign subsidiary on December 8, 2024, therefore, there

will be no future dividends from the earnings of our foreign subsidiary to result in U.S.

federal income taxes.

In accordance with FASB

ASC 740 “Income Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available

evidence, some or all of the deferred tax assets may or will not be realized.

The Company has evaluated its ability to realize some or

all of the deferred tax assets on its balance sheet and has established a valuation allowance of approximately $ 8.9 million at December

The Company did not utilize any NOL deductions for the year ended December 31, 2024.

In accordance with FASB ASC Topic 740 “Income

Taxes”, valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all

of the deferred tax assets may or will not be realized.

The Company has evaluated its ability to realize some or all of the deferred tax

assets on its balance sheet and has established a valuation allowance of approximately $ 9.3 million at December 31, 2025.

did not utilize any NOL deductions for the year ended December 31, 2025.

The Company applied the "more-likely-than-not"

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in full and no future principal payments are due.

The RLOC and Term Note are guaranteed by VerifyMe and secured by the assets of PeriShip

Global and VerifyMe.

The PNC Facility is guaranteed by VerifyMe and secured by the assets of PeriShip Global

and VerifyMe.

The PNC Facility includes a number of affirmative

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has occurred or would occur upon such declaration of dividend.

On November 3, 2023, PeriShip Global

entered into a waiver and amendment to loan documents and received a waiver for certain events of default and entered into an amended

and restated loan agreement with PNC effective October 31, 2023, which provided amendments to a number of affirmative and restrictive

covenants applicable to PeriShip Global and extended the RLOC to September 30, 2024.

On August 14, 2024, the Company signed a waiver

and amendment which provided a waiver for a certain event of default and extended the line of credit to September 30, 2025.

PeriShip Global

was not in compliance with all affirmative and restrictive covenants under the PNC Facility as of December 31, 2024.

On February 28, 2025,

we received a waiver as of December 31, 2024 for certain events of default.

As of December 31, 2024, our short-term debt outstanding

under the Term Note was $ 500 thousand and total long-term debt outstanding under the Term Note was $ 375 thousand.

During the year ended

December 31, 2024, and December 31, 2023, the Company made a repayment of $ 500 thousand towards the principal of the outstanding Term

As of December 31, 2023, our short-term debt outstanding under the Term Note was $ 500 thousand

and total long-term debt outstanding under the Term Note was $ 875 thousand.

As of January 21, 2025 the Term Note was paid in full

and no future principal payments are due.

During the year ended December 31, 2023, $ 1,800

thousand was drawn on the RLOC, of which $ 1,800 thousand was repaid.

As of December 31, 2024, $ 0 was outstanding on the RLOC.

October 17, 2022, the Company entered into an interest rate swap agreement, with a notional amount of $ 1,958 thousand, effectively

fixing the interest rate on the Company’s outstanding debt at 7.602 % .

The Company has designated the intertest rate swap, expiring

September 2026, as a cash flow hedge and have applied hedge accounting.

The fair value of the derivative asset and liability associated

with the interest rate swap are not significant as of December 31, 2024, and as of December 31, 2023, respectively.

As of January 21,

2025, we terminated our interest rate swap agreement.

25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory

notes for the aggregate principal amount of $ 1,100 thousand of which $ 475 thousand was purchased

by related parties including certain members of management and the Board of Directors.

As of December 31, 2024, $ 450 thousand is held

by related parties after one member of management left the Company.

The notes are subordinated unsecured obligations of the Company and

accrue interest at a rate of 8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February

The notes will mature on August 25, 2026, unless earlier converted or repurchased at a conversion price of $1.15 per share of

common stock.

The Company may not redeem the notes prior to the maturity date.

For the year ended December 31, 2024, interest expense

related to the convertible debt was $ 88 thousand.

As of December 31, 2024, the amount outstanding on the convertible debt was $ 1,100 thousand

and included in Convertible note and Convertible note – related party on the accompanying Consolidated Balance Sheets.

of January 21, 2025, $ 350 thousand was converted to common stock, none of which was related parties.

On August 14, 2024, the Company signed a waiver and amendment which provided

a waiver for a certain event of default and extended the line of credit to September 30, 2025.

On February 28, 2025, we received a waiver

as of December 31, 2024 for certain events of default.

PeriShip Global was not in compliance with

all affirmative and restrictive covenants under the PNC Facility at December 31, 2025.

On March 26, 2026 , we received a waiver

as of December 31, 2025, for certain events of default.

On August 8, 2025, the Company extended the line of credit to September 30, 2026.

As of January 21, 2025, the Term Note balance

of $ 875 thousand was paid in full and no future principal payments are due.

As of December 31, 2025, $ 0 was outstanding on

Effective October 17, 2022, the Company entered

into an interest rate swap agreement, with a notional amount of $ 1,958 thousand, effectively fixing the interest rate on the Company’s

outstanding debt at 7.602 % .

The Company had designated the intertest rate swap, expiring September 2026, as a cash flow hedge and

have applied hedge accounting.

The fair value of the derivative asset and liability associated with the interest rate swap are not significant.

As of January 21, 2025, we terminated our interest rate swap agreement and $ 12 thousand was reclassified from accumulated other comprehensive

Convertible Debt

On August 25, 2023, the Company entered into a

Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory notes for the aggregate principal amount

of $ 1,100 thousand of which $ 475 thousand was purchased by related parties including certain members of management and the Board of Directors.

As of December 31, 2024, $ 450 thousand was held by related parties.

As of December 31, 2025, $ 400 thousand was held by related parties

after a board member left the Company.

The notes are subordinated unsecured obligations of the Company and accrue interest at a rate of

8% per year payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024.

The notes will

mature on August 25, 2026, unless earlier converted or repurchased at a conversion price of $1.15 per share of common stock.

may not redeem the notes prior to the maturity date.

For the year ended December 31, 2025 and December 31, 2024, interest expense related

to the convertible debt was $ 61 thousand and $ 88 thousand, respectively.

As of January 21, 2025, $ 350 thousand was converted to common

stock, none of which was related parties.

As of December 31, 2025 and December 31, 2024, the amount outstanding on the convertible debt

was $ 750 thousand and $ 1,100 thousand, respectively and included in Convertible note and Convertible note related party on the accompanying

Consolidated Balance Sheets.

NOTE 8 – CONVERTIBLE PREFERRED

The Company is authorized to issue Series A Convertible

Preferred Stock, par value of $0.001 per share (the “Series A”) and Series B Convertible Preferred Stock, par value of

$0.001 per share (the “Series B”).

As of December 31, 2025, and 2024, there were no shares of Series A outstanding

and 0.85 of a share of Series B outstanding convertible into 144,444 shares of common stock.

Each share of Series

A and Series B has limited voting rights, is entitled to participate with the common stock on liquidation and holders of Series A and

Series B are subject to beneficial ownership limitations.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

– CONVERTIBLE PREFERRED STOCK

is authorized to issue Series A Convertible Preferred Stock, par value of $ 0.001 per share (the “Series A”) and Series

B Convertible Preferred Stock, par value of $ 0.001 per share (the “Series B”).

As of December 31, 2024, and 2023, there

were no shares of Series A outstanding and 0.85 of a share of Series B outstanding convertible into 144,444 shares

of common stock.

Each share of Series A and Series B has limited voting rights, is entitled to participate with the common stock on liquidation

and holders of Series A and Series B are subject to beneficial ownership limitations.

NOTE 9 – STOCKHOLDERS’ EQUITY

The Company expensed $ 112 thousand and $ 388 thousand

related to restricted awards for the years ended December 31, 2024 and December 31, 2023, respectively.

related to restricted stock awards for the years ended December 31, 2025, and December 31, 2024, respectively.

The Company expensed $ 603 thousand and $ 912 thousand

related to restricted stock units for the years ended December 31, 2024 and December 31, 2023, respectively.

related to restricted stock units for years ended December 31, 2025, and December 31, 2024, respectively.

On August 25, 2023, the Company entered into a

Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory notes for the aggregate principal amount

of $ 1,100 thousand.

As of January 21, 2025, $ 350 thousand was converted to 313,520 shares of common stock, of which 22,359 were issued

from treasury.

On January 2, 2025, the Company issued 39,915

shares of common stock, of which 16,988 were issued from treasury, upon vesting of 61,011 restricted stock units, net of 21,096 shares

withheld for taxes related to stock grants on July 20, 2023 and July 1, 2024.

On March 31, 2025, the Company issued 60,000 shares

of restricted common stock, vesting immediately with a value of $ 41 thousand, for consulting services.

On September 30, 2025, the Company

issued an additional 60,000 shares of restricted common stock, vesting immediately with a value of $ 45 thousand, for consulting services.

On April 1, 2025, the Company issued 5,792 shares

of common stock upon vesting of 7,000 restricted stock units, net of 1,208 shares withheld for taxes related to a stock grant on September

On June 19, 2025, the Company issued 41,849 shares

of common stock from treasury, upon vesting of 68,027 restricted stock units, net of 26,178 shares withheld for taxes related to a stock

grant on June 19, 2023.

On June 30, 2025, the Company issued 2,741 shares

of common, upon vesting of 4,000 restricted stock units, net of 1,259 shares withheld for taxes related to a stock grant on January 1,

On November 3, 2025, the Company issued 30,882 shares

of common stock upon vesting of 46,336 restricted stock units, net of 15,454 shares of common stock withheld for taxes.

During the year ended December 31, 2025, the Company

issued 89,310 shares of common stock upon the separation of a former director, relating to 89,310 shares of restricted stock units that

had previously vested.

On March 31, 2024, the Company issued 30,000 of

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of $ 81 thousand, for consulting services.

On November 4, 2024, the Company

issued 54,843 shares of common stock upon vesting of 69,667 restricted stock units, net of 14,824 shares of common

stock withheld for taxes.

On November 4, 2024, the Company issued 54,843 shares

of common stock upon vesting of 69,667 restricted stock units, net of 14,824 shares of common stock withheld for taxes.

During the year ended December 31, 2024, the Company

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of common stock withheld for taxes.

2, 2023 the Company issued 56,272 shares of common stock upon vesting of 72,329 restricted stock units, net of 16,057 shares

of common stock withheld for taxes.

20, 2023, the Company issued 15,965 shares of common stock upon vesting of 22,807 restricted stock units, net of 6,842 shares of commons

stock withheld for taxes.

31, 2023, the Company issued 14,000 shares of common stock upon vesting of 20,000 restricted stock awards, net of 6,000 shares of common

stock withheld for taxes.

22, 2023, 750 shares of common stock were retired to cover taxes on the vesting of 2,500 restricted stock award.

31, 2023, the Company issued 1,750 shares of common stock upon vesting of 2,500 restricted stock units, net of 750 shares of common stock

withheld for taxes.

On February 28, 2023, 353,492 shares of common

stock were issued in relation to the acquisition of Trust Codes Global, see Note 4 – Business Combinations, for details.

On December 31, 2023, the Company issued 133,654

of restricted common stock, vesting immediately, with a value of $ 147 thousand, for consulting services.

During the year ended December 31, 2023, the Company

retired 5,515 shares of common stock held in Treasury and 1,496 shares of common stock outstanding, relating to issuances in prior periods

that have been forfeited or cancelled.

During the year ended December 31, 2023, the Company

issued 50,002 shares of common stock issued upon the separation of a former director, relating to 50,002 shares of restricted stock units

that had previously vested.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Non-Qualified Stock Purchase Plan

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2021 Plan is considered compensatory.

In relation to the 2021 Plan the Company expensed $ 4 thousand and $ 53 thousand for the years ended

December 31, 2024 and December 31, 2023, respectively.

During the years ended December 31, 2024, and December 31, 2023, the Company received

$ 21 thousand and $ 80 thousand, respectively, in proceeds related to the 2021 Plan.

Company has currently suspended new offering periods under the 2021 Plan.

In relation to the 2021 Plan the Company expensed $ 0 and $ 4 thousand for the years ended December

31, 2025 and December 31, 2024, respectively.

During years ended December 31, 2025 and 2024, the Company received $ 0 thousand and $ 21

thousand, respectively, in proceeds related to the 2021 Plan.

The Company has currently suspended new offering periods under the 2021

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Shares Held in Treasury

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an exercise price of $ 0.97 per share.

On August 31, 2023, six participants exercised

their options under the Company’s 2021 Plan, and as a result, 12,802 shares were issued from treasury, with an exercise price of

$ 0.96 per share.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

On February 28, 2023, fourteen participants exercised

their options under the Company’s 2021 Plan, and as a result, 57,245 shares were issued, of which 48,500 were issued from treasury,

with an exercise price of $ 1.19 per share.

Shares Repurchase Program

Effective July 1, 2022, the Company’s

Board of Directors approved a share repurchase program to allow the Company to spend up to $ 1.5

million to repurchase shares of its common stock, so long as the price does not exceed $5.00.

This plan ended on July 1, 2023.

During the year ended December 31, 2023, the Company repurchased 6,201

shares of common stock for $ 10

thousand under the Company’s repurchase program.

In December 2023, the Company’s Board of Directors approved a new share

repurchase program to allow the Company to spend up to $ 0.5

million to repurchase shares of its common stock so long as the price does not exceed $1.00 until December 14, 2024.

On November 26,

2024, we announced an extension of the $ 0.5

In December 2023, the Company’s Board of

Directors approved a share repurchase program to allow the Company to spend up to $ 0.5 million to repurchase shares of its common stock

so long as the price does not exceed $1.00 until December 14, 2024.

On November 26, 2024, the Company approved an extension of the $ 0.5

million share repurchase program to repurchase shares of the Company’s common stock through December 31, 2025.

repurchase program may be modified, suspended or discontinued at the discretion of the Board at any time.

During the year

ended December 31, 2024, the Company repurchased 21,100

shares for $ 18 thousand of common stock under the Company’s current program.

NOTE 10– STOCK

OPTIONS, RESTRICTED STOCK AND WARRANTS

The share repurchase

program may be modified, suspended, or discontinued at the discretion of the Board of Directors at any time.

During the year ended

December 31, 2025, the Company repurchased 272,177 shares for $ 221 thousand under the share repurchase program, which expired December

NOTE 10– STOCK OPTIONS, RESTRICTED STOCK

On November 14, 2017, the Executive Committee

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The 2017 Plan provided that directors, officers, employees, and consultants of the Company

were eligible to receive equity incentives under the 2017 Plan at the discretion of the Board or the Board’s Compensation Committee.

were eligible to receive equity incentives under the 2017 Plan at the discretion of the Board of Directors or the Board’s Compensation

On August 10, 2020, the Company’s Board

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awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period.

As of December 31, 2024, and 2023, the Company had no unvested stock

As of December 31, 2025, the Company has no outstanding stock options.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

During the year ended December 31, 2024, and 2023,

the Company expensed $ 0 thousand with respect to options.

During the year ended December 31, 2025, and 2024, the Company expensed

$ 0 thousand with respect to options.

As of December 31, 2025, and 2024, there was $ 0

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adjustment or reversal based on actual achievement during the period.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

The following table summarizes the unvested performance

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Balance at December 31, 2024

( 1,461,896 )

( 3,073,379 )

Balance at December 31, 2025

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warrants and the closing stock price of $0.60 for our common stock on December 31, 2025.

On January 13, 2025, the Company entered into

a warrant inducement agreement with an institutional investor and holder of existing warrants to purchase up to 1,461,896 shares of our

common stock.

The existing warrants were originally issued on April 14, 2022, with an exercise price of $ 3.215 per share and became exercisable

six months following issuance.

The net proceeds from the warrant exercise was $ 4.3 million.

In exchange for the investor’s exercise

of the existing warrants, the Company issued new warrants to purchase an equal number of shares at an exercise price of $ 4.00 per share.

The new warrants were immediately exercisable and have a contractual term of five and one-half years from the issuance date.

The Company recognized the fair value of the new

warrants using the Black-Scholes option pricing model.

The fair value of the new warrants was estimated at $ 3,971 thousand.

The transaction

was treated as an equity issuance, and the fair value of the new warrants was recorded in additional paid-in capital.

Direct transaction

costs totaling approximately $ 352 thousand, including legal fees and placement agent commissions, were also recorded as a reduction to

additional paid-in capital.

On June 23, 2025, the Company’s warrants listed on Nasdaq under

the symbol “VRMEW” (the “Uplist Warrants”) expired pursuant to the terms of the Form of Common Stock Purchase

On June 23, 2025, Nasdaq filed a Form 25 formalizing the suspension of the Uplist Warrants.

The following table presents the assumptions used to estimate the fair

value of the new warrants on January 13, 2025:

Schedule of assumptions

January 13, 2025

Risk free interest rate

Expected life

Expected volatility

Expected dividend

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

At-the-Market Equity Offering Program

On March 6, 2025, the Company entered into an

At-The-Market Sales Agreement (“ATM”) with Roth Capital Partners, LLC (“Roth”), pursuant to which the Company

may issue and sell, from time to time, shares of its common stock up to an aggregate offering price of $ 15.8 million (“ATM Program”).

Roth acts as the Company’s sales agent and is entitled to a 3.0 % commission on gross proceeds from sales under the program.

During the year ended December 31, 2025, and through the date of this

filing, the Company sold an aggregate of 628,432 shares of its common stock pursuant to the ATM program.

The Company provided notice on

February 11, 2026 to Roth of its election to terminate the ATM Program, which by the terms of the At-The-Market Sales Agreement became

effective on February 16, 2026, in connection with the Board of Directors’ approval of the Merger Agreement with Open World Ltd.

In connection with the ATM Program, the Company incurred direct legal

and audit fees totaling $ 209 thousand.

The costs were recorded as deferred offering costs within other current assets to be reclassified

to additional paid-in capital on a pro-rata basis as shares are issued.

For the year ended December 31, 2025, we reclassified $ 8 thousand

to additional paid-in capital on a pro-rata basis as shares were issued.

Upon terminating the program on February 16, 2026, we expensed

$201 thousand remaining deferred costs to general and administrative expenses.

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

NOTE 11— LOSS PER SHARE

35 unchanged sentences

and is recognized as compensation expense in the Consolidated Statements of Operations for matching contributions to the Plan.

has a statutory retirement savings scheme, Kiwisaver, in which New Zealand employees may participate.

The Company makes the required

by law contributions equal to three percent of each employee’s salary.

In the years ended December 31, 2024, and December 31, 2023,

the Company contributed a value of approximately $ 19

thousand and $ 10

thousand, respectively.

NOTE 13 – LEASES

18 unchanged sentences

For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed

We have operating leases for office facilities.

During 2025, we maintained operating leases for

office facilities.

We do not have any finance leases.

In January 2026, we entered into a lease amendment to terminate a facility lease

effective February 15, 2026 and adjusted our right-of-use assets and liabilities.

Lease expense is included in Management and technology

6 unchanged sentences

Total lease costs

Supplemental information related to leases was

as follows (dollars in thousands):

Schedule of supplemental information related to leases

Supplemental information related to leases was as follows (dollars in thousands):

December 31, 2025

10 unchanged sentences

Notes to the Consolidated Financial Statements

The following is a reconciliation of future undiscounted

cash flows to the operating lease liabilities on our consolidated balance sheets as of December 31, 2024 (in thousands):

Schedule of operating lease liabilities maturities

Year ended December 31,

Total future lease payments

imputed interest

Present value of future lease payments

current portion of lease liabilities

Long-term lease liabilities

NOTE 14 – CONCENTRATIONS

3 unchanged sentences

50 % of accounts receivable.

As of December 31, 2023, three customers accounted for 47 % of total accounts receivable.

As of December 31, 2024, two customers accounted for 36 % of total accounts receivable.

During the year ended December 31, 2025, and December

31, 2023, one vendor accounted for 99 % of transportation costs, in our Precision Logistics segment.

31, 2024, one vendor accounted for 89 % and 99 % of transportation costs, in our Precision Logistics segment, respectively.

NOTE 15 – SEGMENT REPORTING

As of December 31, 2024, we operated through two reportable business

As of December 31, 2025, we operated through two

reportable business segments:

(i) Precision Logistics and (ii) Authentication.

The Chief Executive Officer is

the chief operating decision maker (“CODM”).

These segments reflect the way the CODM evaluates the Company’s business

performance and allocates resources.

Reported revenue includes only the revenue generated by sales to external customers.

The Chief Executive Officer is the chief operating decision

maker (“CODM”).

These segments reflect the way the CODM evaluates the Company’s business performance and allocates resources.

The CODM assesses performance by using revenue, gross margin, operating expenses, and net earnings.

These metrics are analyzed by reviewing

budget and forecast versus actual and prior year versus current year reporting.

The various income performance measures are reviewed to

ensure proper pricing strategies, effective cost controls, and cash management across the organization.

Reported revenue includes only

the revenue generated by sales to external customers.

Precision Logistics:

This segment offers a

value-added service provider for time and temperature sensitive parcel management.

Through logistics management from a sophisticated IT

platform with proprietary databases, package and flight-tracking software, weather, traffic, as well as dynamic dashboards with real-time

This segment offers

a value-added service provider for time and temperature sensitive parcel management.

Through logistics management from a sophisticated

IT platform with proprietary databases, package and flight-tracking software, weather, traffic, as well as dynamic dashboards with real-time

visibility into shipment transit and last-mile events that are managed by a service center we provide our clients an end-to-end vertical

4 unchanged sentences

This segment specializes

in solutions that connect brands with consumers through their products.

Consumers can authenticate products with their smart phone prior

to usage, and brand owners have the ability to gather business intelligence while engaging directly with their consumers.

Our Authentication

segment also provides brand protection and supply chain functions such as counterfeit prevention.

in anti-counterfeit and brand protection.

We do not allocate the following items to the

general & administrative expenses, research and development and other income (expense).

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

general & administrative expenses and other income (expense).

The following table sets forth the revenue and operating results attributable

4 unchanged sentences

Authentication

Total Revenue

Gross Profit:

Precision Logistics

Authentication

Total Gross Profit

Segment Management and Technology - Precision Logistics

Segment Management and Technology - Authentication

Sales and marketing - Precision Logistics

Sales and marketing - Authentication

General and administrative

COST OF REVENUE

OPERATING EXPENSES

Management and technology

Research and development

Sales and marketing

Other Segment Items

Goodwill and Intangible asset impairment

LOSS BEFORE OTHER INCOME (EXPENSE)

OTHER INCOME (EXPENSE)

Total Segment expenses

Segment (Expense) Income

General and Administrative

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

Additional information relating to our business

3 unchanged sentences

Authentication

VerifyMe, Inc.

Notes to the Consolidated Financial Statements

NOTE 16 – SUBSEQUENT EVENTS

On February 28, 2025, we received a waiver as of December 31, 2024, for certain events of default of restrictive covenants under the PNC Facility.

On January 1, 2025, the Company granted 70,773

restricted stock units pursuant to the salary reduction program that will vest on January 1, 2026.

On January 1, 2025, the Company granted 16,000

restricted stock units that will vest over the next two years.

On March 26, 2026, we received a waiver as of

December 31, 2025, for certain events of default under the PNC Facility.

Effective February 15, 2026, the lease held by

our subsidiary PeriShip Global in Connecticut used in connection with our Precision Logistics segment was terminated pursuant to a lease

termination agreement entered into in January 2026.

See Item 2 “Properties” in this Form 10-K of VerifyMe, Inc.

ended December 31, 2025 (the “2025 Form 10-K”).

On February 11, 2026, we entered into an Agreement

and Plan of Merger (the “Merger Agreement”) with VRME Subsidiary Corp., a Nevada corporation, and our wholly owned subsidiary

(the “Merger Sub”) and Open World Ltd (“Open World”) pursuant to letter agreement previously entered into on January

Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will merge with

and into Open World, Merger Sub will cease to exist and Open World will become our wholly-owned subsidiary (the “Merger”).

Also on February 11, 2026, and in connection with

the Merger Agreement, we entered into stockholder support agreements whereby certain stockholder of the Company representing approximately

14% or more of the voting power in the aggregate of our common stock, including our directors and officers have agreed to vote their shares,

and any shares obtained from the date of the agreement, in favor of the issuance of the Company’s common stock in connection with

the Merger at a stockholder’s meeting.

Also on February 11, 2026, and in connection with

the Merger Agreement, we entered into an Amended and Restated Employment Agreement with Adam Stedham and an Employment Agreement with

Jennifer Cola, each agreement effective as of the Effective Time of the Merger.

Also on February 11, 2026, and in connection with

the Merger Agreement, our Board of Directors approved a severance period for Ms.

Cola effective immediately and which will expire upon

the Effective Time of the Merger (the “Severance Period”), whereby Ms.

Cola will receive a continuation of her base salary

and benefits for a period of six months if she is terminated without cause during the Severance Period.

Also on February 11, 2026, and in connection with

the Merger Agreement, we sent notice to Roth of our election to terminate the ATM Program, which by the terms of the At-The-Market Sales

Agreement became effective on February 16, 2026.

See Item 1 “Business - Recent Developments”

in the 2025 Form 10-K for additional information on the Merger Agreement, proposed Merger, consideration to be issued in connection with

the Merger, the stockholder support agreements, the employment agreements with Mr.

Stedham and Ms.

Cola, the Severance Period granted

Cola, the termination of the ATM Program, and matters ancillary thereto.

On January 2, 2026, the Company issued 47,464

shares of common stock, of which 16,988 were issued from treasury, upon vesting of 61,011 restricted stock units, net of 21,096 shares withheld for taxes related to stock grants

on July 20, 2023 and July 1, 2024.

25, 2023, the Company entered into a Convertible Note Purchase Agreement with certain investors for the sale of convertible promissory

notes for the aggregate principal amount of $ 1,100 thousand.

As of January 21, 2025, $ 350 thousand was converted to 313,520 shares of

common stock, of which 22,359 were issued from treasury.

On January 13, 2025, we entered into an

Inducement Letter Agreement with an institutional investor and holder of existing warrants to purchase up to 1,461,896

shares of our common stock, for $ 4.7 million in gross proceeds.

The existing warrants were originally issued on April 14, 2022, with an

exercise price of $3.215 per share, and became exercisable six months following issuance.

Pursuant to the Inducement

Letter Agreement, the holder agreed to exercise the existing warrants for cash at the exercise price of $ 3.215

per share in consideration for our agreement to issue a new unregistered warrant to purchase up to an aggregate of 1,461,896

shares of common stock at an exercise price of $ 4.00

The new warrant was immediately exercisable upon issuance and has a term of five and one-half years from the issuance

On January 21, 2025, we paid in full all outstanding principal and

interest under the Term Note.

In connection with the repayment of the Term Note we terminated our interest rate swap agreement with PNC

shares of common stock, of which 19,271 were issued from treasury, upon vesting of 70,773 restricted stock units, net of 23,309 shares

withheld for taxes related to stock grants on January 1, 2025.

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 9A. Controls and Procedures