VerifyMe(VRME) - 2024 Q4 - Annual Report

Financial Performance - Consolidated revenue for the year ended December 31, 2024, was $24,207 thousand, a 4$25,313 thousand in 2023, primarily due to a discontinued contract in the Precision Logistics segment [154]. - Gross profit for the year ended December 31, 2024, was $8,662 thousand, resulting in a gross margin of 36$23,766 thousand in 2024, down from $24,652 thousand in 2023, reflecting challenges during the peak season [153]. - The Authentication segment's revenue decreased to$441 thousand in 2024 from $661 thousand in 2023, with no growth during the year [153]. - Net loss for the year ended December 31, 2024, was$3,824 thousand, compared to a net loss of $3,390 thousand in 2023, primarily due to impairment charges [163]. Expenses - Research and development expenses decreased to$70 thousand in 2024 from $107 thousand in 2023, mainly due to fewer projects in the Authentication segment [158]. - General and administrative expenses decreased by$564 thousand to $3,852 thousand in 2024, primarily due to lower deal costs related to the acquisition of Trust Codes Global [157]. - Segment management and technology expenses increased by$357 thousand to $5,454 thousand in 2024, primarily due to the acquisition of Trust Codes Global [156]. Shareholder Actions - The company repurchased 21,100 shares of common stock for$18 thousand under the share repurchase program during the year ended December 31, 2024 [168]. - The company has established a share repurchase program funded by cash and cash equivalents, along with proceeds from convertible notes [175]. Debt and Compliance - As of December 31, 2024, the company had short-term debt of $500 thousand and long-term debt of$375 thousand under a Term Note, with a total repayment of $500 thousand made during the year [171]. - The company is required to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year, but was not in compliance with all covenants as of December 31, 2024 [173]. Impairment and Valuation - A goodwill impairment charge of$1,351 thousand was recorded during the year ended December 31, 2024, due to the carrying value of the Authentication reporting unit exceeding its estimated fair value [185]. - The Trust Codes acquisition in March 2023 involved significant estimates and assumptions impacting the financial statements [177]. Future Outlook - The company expects to fund operations primarily through current financial resources and future revenue, with potential for additional debt or equity issuance [176]. - The company anticipates growth through key acquisitions and organic means, aiming to accelerate business growth [176]. Contractual and Billing Information - Unbilled amounts are generally billed and collected within 30 to 60 days, with no significant changes in contract assets as of December 31, 2024 [179]. Interest Rate Management - The company entered into an interest rate swap agreement effective October 17, 2022, fixing the interest rate on outstanding debt at 7.602%, which was terminated on January 21, 2025 [174]. Revenue Sources - Over 95% of the company's revenue is derived from logistics management for time and temperature-sensitive packages, with the remaining from brand protection solutions [178].