VerifyMe, Inc.

Good morning and welcome to the VerifyME third quarter 2022 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Nancy Meyers, Senior Vice President, Finance and Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today for our earnings call presentation. On the call today, we have Scott Greenberg, Executive Chairman, Patrick White, CEO, Margaret Gazerlis, CFO, and Kurt Cole, Executive Vice President, Sales and Global Strategy, to give you an update on our third quarter 2022 results. Following our management presentation, we will have a Q&A session. I would like to bring your attention to the note on forward-looking statements on slide three. Today's presentation and the answers to questions include forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward-looking statements caption and on the risk factors of the company's annual report on Form 10-K and quarterly reports on Form 10-Q. I will now turn the call over to Scott Greenberg for some opening remarks.

Thank you, Nancy. Good morning, and welcome to our third quarter 2022 earnings conference call. The results and future outlook clearly show that we are making progress in transforming the company from a technology startup to a revenue-generating operating company focused on logistics, systems, customer engagement, and authentication. Today, Patrick will give an operations update, Margaret will give a financial review, and new to our mix, Kirk Cole will give an introduction and a further update on Pariship. Then we will follow with a Q&A session. Next slide, please. The next slide really just shows the financial and equity snapshot. The symbols verify me. We currently have 9 million shares outstanding. Our cash balance at the end of September was 3.7 million, and Margaret will talk about this in detail. But the good news on our debt, even though our debt is roughly the same as it was last quarter, it has now been turned over to a long-term debt, and we have a commercial relationship with PNC Bank. Our revenue trailing 12 months is 10.1 million, and the insider benefit ownership is approximately 20%. We did announce a share of purchase program on our last call, and there's approximately 1.4 remaining under the plan. With that being said, I'll now turn it over to Patrick.

Thank you, Scott. Good morning, everyone. Thank you for joining us today. Let's review our third quarter financial performance. Our quarterly consolidated revenue was an all-time record of $5.2 million, an increase of 1,638%, compared to 0.3 million for the three months ended September of 21. This, of course, was primarily attributable to the acquisition of the Perryship Global Logistics business, which we acquired in April of 22. Gross profit from operation was also a record $1.9 million. That equates to an overall gross margin of 36% for the three months ended September of 22, compared to 0.2 million, or 62%, for our legacy business for the three months ended in September of 21. The net loss was just 0.6 million or six cents fully diluted loss per share for the three months ended September 22. That compares to a net income of 7.2 million or 95% fully diluted earnings per share for the three months ended in September of 21. Now in 21, the profit we recorded last year was included approximately 8.2 million non-cash fair value gain related to the SPAC, which we wrote off in the second quarter of this year. Adjusted EBITDA was almost break-even as we reported a small $198,000 loss or a 35% improvement over the second quarter of 22. Scott will discuss this very positive outlook for this key metric during today's presentation. Our cash, as Scott mentioned at the end of the quarter, was a healthy $3.7 million. And it's also important to note that we entered into a banking facility that paid off a note from the purchase of Perryship in which we were able to record a negotiating debt-canceling gain of $300,000. As part of that transaction, we also obtained a $1 million revolving line of credit to back our cash position for operations. Let's now turn to the next slide of business highlights. First and foremost, we entered into a multi-year contract extension with our global logistics strategic partner FedEx, which is also our largest customer of Paryship Global. This extension now covers our relationship through 2026. Secondly, historically Paryship has never really advertised before. So we rolled out a social media campaign focused on increased visibility, and engagement to attract new proactive Pariship customers. The initiative is already providing leads and new customer sign-ups. I also think it's important to note that these new Pariship global customers we are onboarding will positively impact their revenue in Q4 and beyond. The Pariship business has an immediate sales cycle. For your information, a typical new account takes only one to two weeks to begin a new client relationship. We also reported that our Verify Me division, who has a growing mature pipeline of prospects, signed a new contract from that prospect list, which provides brand protection for an international $3.4 billion luxury apparel company. This is our second win in the apparel industry this year. The initial order is for one SKU. It's for 3.8 million units. And that particular order is in process and will be reflected in our Q4 numbers. Finally, as Scott mentioned, we have taken advantage of the very undervalued stock price as we have repurchased 74,530 shares of our common stock under the share repurchase program during the quarter. Let's go to the next slide. And I'm very pleased to introduce you to Kurt Cole, the Executive Vice President of Sales and Global Strategy at Pariship Global. Kurt will walk you through some of the exciting Pariship Global highlights. Kurt, the floor is yours.

Patrick, thank you, and welcome to everyone this morning. It's a pleasure to be joining you for the first time to talk a little bit about the business we're in, how we got here, our relationship with existing customers, and our outlook going forward. And with that, we've been in the business for 22 years, and this organization has been purpose-built for what we do. We occupy a space that straddles direct reporting on line of sight for in-transit shipments, as well as the alignment with our customers directly in the delivery of logistics management. We've been in the business, as I said, for over 20 years and have exclusively been partnered with FedEx, for those 22 years. We're big believers in that relationship. We're well aligned, we're well in place with those folks, and we're proud of that relationship. We currently have about 400 active customers. That varies from a month to month basis, but we're very proud that the retention of those customers is north of 80%. I think that speaks to the relationship that we have with our customers. And it also talks a little bit about our support from them in partnering in their most critical business. We're fortunate to be the distributors and managers of the largest vaccine company in the United States for the production of flu. And we're happy to say that on a year-over-year basis, we've been able to help them reduce reships, which is a direct metric of how successful their outbound customer experience is. As we approach the fourth quarter, this becomes our busiest time of the year, which is the natural peak in the parcel business. That has been enhanced with the ability to align ourselves with the Verify Me suite of services in an add-on basis. And we currently have several customers who we're engaged in discussions with as to how we align with those folks in the addition of the Verify Me suite of services from a customer experience perspective, serialization, and authentication. We also have expanded in the non-perishable market, and we use the expression of our four-legged stool. If we can satisfy one of those four elements, which are time, temperature, value, and criticality, we believe that we can help the customers. And that is our approach to each of them. We're working with FedEx currently on the development of a program to address the small and medium customers. which constitute 50% of the opportunities that they address. It's a highly underserved segment. It's something that we're purpose-built to address and are in the process of aligning our strategies now to approach the SAM market, which we believe is going to yield considerable results going forward as a result of the downturn in e-commerce, FedEx's adjustment in terms of capital expenditure, expenses related to sales, which will allow Pariship as an outsourced third-party relationship to attract those customers, to engage those customers at a cost much less than FedEx themselves can do so. That's a summary of the Pariship highlights. And with that, I'm going to turn the speaker back to Scott and Patrick. Thank you.

Thank you, Kurt. I would like to turn now to our Pariship sales by market sector slide. This slide shows the various market sectors that Pariship's clients are categorized. As you can see, 70% of Pariship's 400-plus clients provide revenue from the food and beverage industry. The second largest segment is the pharmaceutical industry, which logs in at 17%. One of our strategic goals is to grow the 17% pharma and the 7% healthcare segments. We have strategically targeted those segments as they have built-in protections from economic conditions, very large volumes, government backing, and they have a need for all of our technologies. CERT's team is focusing on building those segments, and this chart gives us you a periodic view of their successful transition. Now I want to turn the presentation back over to Scott, and he'll walk you through the outlook.

Thank you, Patrick.

As you can see from the results, the adjusted EBITDA in Q3 of a loss of $198,000 is approaching break-even. And as Kurt and Patrick mentioned, the fourth quarter is typically our strongest quarter. And now for the next statement, we say, and we add to that, is due to seasonality of the business and the addition of new customers in Q4 is expected to show significant improvement in both revenue and adjusted EBITDA. So not only do we believe that we're gaining from the seasonality, but as Kurt mentioned, some of the new customers on board should be beneficial to us as well. In addition, the legacy business of VerifyMe is starting to gain traction. is now projected to grow at least 50% per annum in 2022 and in 2023. As opposed to our prior estimates of 100%, while this is less, if you review the numbers, in order to get 50% in 2022, we need a very strong quarter from the VerifyMe technology. Based upon these positive developments, The company will review forecasts of revenue for 2023 after the completion of the fourth quarter, and we'll report back to our shareholders. And with that, I'd like to turn it back to Margaret.

Thanks, Scott. And good morning, everyone. Thank you for joining. As you have heard from Scott and Patrick, we continue showing improved results and have a positive outlook for the next quarter. Our Q3 revenue showed an improvement of 16% when compared to Q2 2022, and we had a significant improvement on the bottom line. Our adjusted EBITDA loss improved by 35%, and as Scott said, that we're approaching breakeven. Our business is seasonal, with the fourth quarter expected to be our strongest quarter this year, and to have a positive adjusted EBITDA as a result in Q4. I'd like to note here, that the significant loss in Q2 2022 related primarily to the SPAC, which resulted in a loss of 11 million when we decided not to extend the time in which the SPAC could complete an initial business combination. Next slide, please. The next slide shows revenue and gross profit margin in the last four years and illustrates our tremendous growth as a company. Revenue is near 10 million and only accounts for nine months out of the year. Our gross profit margin has decreased due to the nature of one of our new revenue streams that constitutes the majority of our revenue. However, gross profit has increased by 3 million or over 500%, and that's when comparing the nine months of 2022 to the full year of 2021. Next slide, please. Our key highlights here are that we are not burning cash and our cash and cash equivalents have remained steady since June 30th. The decrease since December 31st, 2021 relates to our acquisition of Pariship. Additionally, we were able to refinance the promissory note that we had issued in Q2 in connection with the Pariship acquisition. Originally, that would have been due in full by October 2023. We were able to negotiate with the holder of the promissory note on its payoff, which resulted in a gain on extinguishment of debt of approximately 0.3 million. And we were able to pay it off with the proceeds from a new term loan with PNC Bank that is payable in monthly installments over a four-year period starting September 2022. Furthermore, we have a $1 million revolving debt facility with PNC of which we have not yet withdrawn any funds. We continue to believe that we have sufficient cash to cover our operations for the foreseeable future as our business starts to generate cash. We plan to grow the business organically, but are always looking for opportunities to increase our shareholders' value. Now with that, I'd like to thank you for your participation and open the floor to any questions you might have.

We will now begin the question and answer session. To ask a question, you may press star then 1 on the telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question will come from Mike Petoskey with Barrington Research. You may now go ahead.

Hey, good morning, guys. So I guess I want to understand better, obviously, the fourth quarter and the revenue expectation and margin expectation is intuitive. But I was just curious, as somebody new to this business, you know, sort of how a full year generally, the seasonality sort of plays out. And then also sort of a second part is, Concerns around, you know, recessionary, you know, how this business acts in a recession and just things that may, you know, you possibly could do to mitigate. Thanks.

So let me start by answering the recession. While I can't claim that any business is, you know, recession-proof, one is 18% of our revenue is from pharmaceutical companies. and an overall 25% of our revenue from pharmaceutical and healthcare. The second thing that we hope for, which Kurt touched on today, as we are an outsourcing company, that typically could do it cheaper than companies that are doing this type of service in-house. When the economy is difficult and they look for ways to save money, typically a way to save money is by outsourcing services they currently do internally. So our goal is that if there is a downturn, is to get a higher percentage of their revenue stream, and Kurt mentioned the small and medium accounts as well, and add that into our mix of products to offset any recession or any downturn. So sometimes, you know, a company like ours, which is an outsource-based company, could perform well despite the economic conditions due to our customers wanting to save money and using us instead of doing it internally. As far as the revenue and the percentages and gross margin, let me hand that section over to Margaret.

Thanks, Scott. So as we move into Q4, we expect... that it's going to be a strong business. Now, in terms of exact percentages, we don't have that analysis yet. It's very difficult to understand because it's a new business for us. Historically, it has been around 33% to 35%. In terms of gross profit margin, we do expect for our gross profit margin to stay consistent to what it was this quarter. So around that 36%.

So I will say in our model, while we build our revenue stream up, we have been able to increase, at least in the first few quarters, the gross margin percentage over the historic gross margin percentage. And now really our goal is that we have that in good shape, is to start increasing the revenue stream. But I think the mix where Margaret said that about 33% of the revenue is typically generated in the fourth quarter for Parrot Ship is correct. Now on the verify me side, you heard my presentation that said that we should get 50% overall growth for the year. So based upon that, if you run the numbers, we're expecting a very strong quarter from the Verify Me business. And a lot of that has to do right now with the cannabis industry, which we're getting a lot of orders from. And, you know, the hope in that one is with the changes in the rules and the regulations of the cannabis industry going forward, that that could be a fast-growing sector for the company.

Okay. Can I just ask, what kind of step down, and maybe any of the Parachute folks on the call, what kind of step down is typical in terms of revs and margins going from Q4 to Q1?

As far as margin goes, we don't see, you know, we see the margin pretty much stable on a quarterly basis. So we haven't seen, at least in our ownership, great margin variations as a percentage on the quarter. But again, on the revenue side, I think if you take out the 33, you know, roughly the 33% that we have in Q4, the rest of the quarters, there are less seasonality on.

Let me just interject here that Q4, of course, is energized by the holiday gift giving. And then Q1 is energized with returns. So Pariship has a pretty strong first quarter historically, you know, in their mix. But as far as margins, as Scott said, they're pretty consistent across all four quarters.

Okay. Sorry. And I'm new to this idea and I'm brand new on the company. So if you're modeling on a quarterly basis, Q4 is strongest, Q1 is the next strongest, and then the other two are roughly equivalent to each other. Is that fair?

That's fair. Kurt, do you have any color on that?

No, Patrick. I think that you hit it pretty much on the head. We don't see a great deal of step down, if you will, from Q4 to the activity in December versus January. We obviously have softer quarters in the summer when demand is less. So your assessment relative to Q3 being relatively equal is on target. Okay. Thank you so much, guys. Really appreciate it.

Thank you, Mike.

Thanks, Mike. Our next question will come from Dan Orlow with Shield Street. You may now go ahead.

Good morning. Congrats. Nice quarter. Obviously, huge strategic shift in the focus of the business. Hoping to sort of carry some questions here. In terms of the four-part element test, I'm sorry, I only got time, temperature, criticality, and what was the fourth one? Sorry.

I think that would be value.

So as you think about sort of the market opportunity set for you, as you described as a technology solution, could you give a sense of sort of how scalable the business model is and how large is that addressable market? Even the fact that you guys have been in operations, you're credible, you know, how does that flow through over the course? And it's not for the sake of projections, just trying to get a sense of, How large is that market opportunity?

Well, I will say one thing, and then I'll hand it over to Kurt and Ben Patrick. The area of the small and medium-sized customers has been an area that's been ignored. And right now, we're focusing on that. And if you look at the total revenue and the total potential of That's a multiple of what we're currently doing. So in that regards, I think the opportunity is very significant and large. And since Kurt is dealing with that day to day, let him expand on that.

Thanks, Scott. As was stated, we are big believers in what's going to take place on a go forward basis in what we would call our traditional markets. The time tap temperature value and criticality, I think, encompasses both the healthcare side of our business, but certainly the driver and the experience that we come from is in the perishable market. It's our belief that the e-commerce swell that took place during the COVID has now normalized, if you will. And so we're looking to get a greater share of that business. We're, as I mentioned earlier, purpose-built for that in terms of scalability. The costs are covered at the outset. And then again, it is just onboarding existing opportunities in conjunction with the new opportunities that we're gaining through the VerifyMe suite of services. We expect that we should see considerable growth in the perishable market. The healthcare market will continue to grow as we believe that's going to be one of the biggest drivers of our growth long-term And I think we're perfectly, we're set to accommodate an additional 30 to 40% of the business without adding additional CapEx, but we're very bullish on what's going to take place on a go forward basis on Q2 and Q3 in our ability to service the SAM market, small and medium customer market at a cost lower than our existing strategic partners.

That's really, really interesting. Are you implicitly saying that there's cross-sell opportunities, which I guess Scott or Patrick alluded to, between the legacy verifying? I'm sorry, go ahead, please.

Yeah, we actually believe, and we're seeing that now, if you look at the parachute set of deliverables, having the track and trace and the anti-counterfeiting and the customer engagement, is another tool and another service to complete their portfolio of deliverables. So while we didn't base the acquisition based upon this, the acquisition was based upon the standalone marriage of Paraship, we believe this is another opportunity or add-on. Right now, there are some of Paraship's long-term customers that are looking to at the verify me technology particularly in the food and beverage business how that could help them um in addition to the perishable shipments that they do how they help them um with their with their company and one of them is a large meat supplier right now so they are complementary and it is a good differentiator that now parachute has that it didn't have before

How does this translate across the company in terms of legacy costs for VerifyMe in terms of reallocating internal resources, I guess, towards potentially servicing that additional market? Let me finish the point. Versus what you identified as sort of in pipeline, obviously a longer-term key statement. I'm just trying to understand how the cost curves are going to unfold over the next couple of quarters.

When you look at the course, there's three elements of the course. One is you have the public company course, which are there regardless of how we transform the company. And then two, you have the direct course for Verify Me. And then you have the direct course for Parachute for their product lines. I think, you know, upper management is obviously working on the overall solution, but right now the sales force is differentiated between the two. We don't have a combined sales force. So other than the executive team, we're really able to track the course and the workflow to the division that it pertains to. Now, when you look at VerifyMe, I'll call it everything's VerifyMe now, but if you look at the legacy technology, they have a much higher gross margin percentage. It could be 60% or more. So incremental revenue has a dramatic hit covering the overall expenses of the VerifyMe technology.

So I guess when you say that it'll be down 50% on legacy verifying me in terms of overall expectations, I'm just trying to understand what the expectation set is. I'm just trying to understand how that sort of like flows through in terms of probability of closing new legacy verifying me business.

Well, I could only report on where we are today. So last year, We did roughly $800,000 of revenue with the VerifyMe technology. Again, I'll define this as the VerifyMe technology, the anti-counterfeiting technology. Originally going into the year, we thought we could grow it by 100%, which would take it to $1.6 million roughly. If you looked at the three quarters and the numbers in the 10Q, we haven't approached the doubling. But yet we're expecting a very strong fourth quarter, which means that it should grow by overall for the year 50% for the entire year based upon the strong fourth quarter. So while not at the 100% growth we originally anticipated, 50% in a year is not so terrible neither. So we expect to grow to 50%.

But there's still the pipeline opportunity and maybe just timing differential for 2023, but you're not willing to discuss that yet until you've reported four Q numbers.

Yeah, we're willing to discuss Q4. I was saying we're projecting a very strong Q4. And then once we see Q4 in the pipeline, at year end, we'll project the next year again.

Okay. One more housekeeping note here. I'll go back in queue. Can you discuss the consolidated rate on the P&C term facility in the note in terms of are you guys, did you guys lock in on term before rates backed up or was it a variable and you're just on floating?

I'll let Margaret do that. So, Margaret, why don't we have the rate? Sure.

So, yes, we locked in the rate for the PNC loan. It's at 7.602%. We have a swap agreement to lock it in.

Okay. All right.

We wanted to do is we, you know, we wanted to make sure we knew our cost of money, you know, for a company our size and our position. not having to do a private debt deal or anything like that, and, of course, with the equity involved, we felt a four-year lock-in at 7.6% for a company like ours really was great, and it really shows after them doing the due diligence the confidence that they have in the company as well.

And if I just back the numbers to where we were from QQ, I mean, it really looks like you guys are really expecting a very nice 4Q, 1Q pair shift numbers based upon the original deal terms and what you have at this point. So it doesn't sound like there's any variation. In fact, it sounds like the pipelines in some regards continue to strengthen in terms of market opportunity as well as, you know, so the issues inside X haven't folded into any of your expectations.

That's correct. While our initial first few quarters of revenue was honestly less than anticipated. Those are the numbers if you compare it to the numbers of the company before. The pipeline is building. We're winning new customers. While this quarter's revenue was below expectations that we would have had, we still feel comfortable that the business should start growing again. Thanks for the time. I'll jump back in, too.

Thank you. Our next question will come from Jack Vanderaard with the Maxson Group. You may now go ahead.

Okay, great. Thanks, guys. I appreciate the update. Thanks for taking my questions. I'll start with a couple housekeeping questions. First question on the third quarter revenue. The 10Q is not out quite yet. So could you just parse out 3Q revenue between organic versus Pariship revenue like you did last quarter?

Sure. So for the third quarter, we have, sorry, we have $5 million for the Pariship and $179 for VerifyMe. Now, if you compare... to last year for verify me, it was 300. That really relates to the timing that slipped into Q4. So aside from our newer opportunities, that's probably the reason why we expect a strong Q4 as well, because there are some sales that slipped into Q4. Gotcha.

Okay. That makes sense. And then in terms of, Paraship, can you talk about Paraship's revenue year over year? So Paraship did $5 million in revenue in the third quarter, and then obviously it's going to be a big jump in the fourth quarter. Are you expecting year over year growth from Paraship?

We are not expecting year over year growth from Paraship. When we first took over Paraship, there was some losses of account in business. One of the areas that we have losses on is Alaska, among other things. But now, and also, you know, there's always some type of disruption in the transition and the sale and everything that was going on. But now that, you know, the team's in place, the transition has been accomplished, we expect and new customers are coming in. We feel cautiously optimistic about that the trend will start moving in the other direction. But in the past two quarters that we own them, the revenue is down.

Okay. Gotcha. And then, you know, obviously a lot of companies I follow have been dealing with – sorry, I have an echo on my line. Can you guys hear me okay? Yeah. Yes. Okay. A lot of companies I've been following have been citing material –

fx headwinds recently um you know parachute's a global supply chain company do you expect this the the fx headwinds to impact your business in the fourth quarter and is it baked into your 2023 outlook at all yeah currently we don't have a lot of um fx exposure while we do some outside you know outside the majority of our revenue currently is all um domestic and uh and canada but primarily domestic. So we don't have the currency exposure that other companies have and will have. I just wanted to add your question on when we're talking about revenue. The one thing that we didn't discuss, we discussed earlier, is just being a little bit repetitive, is that the margin for our file, though, is actually so far a bit upward. So while our revenue is down, we have had an increase in margin percentage from the prior year.

Okay, noted. Good. Positive that there's no impact really from FX or not as much because you're domestic mostly. And then good to hear the margin expansion. Yep.

Any inflationary issues, there's a pass-through from us to the clients.

Okay, so you have been raising your prices then to mitigate some of the inflationary pressures? In the markups, right. Okay, fantastic. And then Patrick, actually, can you maybe provide an update on your relationship with, I asked this last quarter, but can you give me an update on your relationship with Hewlett Packard and anything you're talking about them? Because I think they're going to help move the chains and get some momentum for Verify Me sales.

Yeah, we just concluded the term sheet for a new agreement. It is at HP Legal, and we're just waiting for them to do their finishing touches on getting the document for signature. It's a five-year renewal, and their worldwide sales force will be compensated in the form of commissions to hawk our products throughout the world. They are finally realizing that yellow UV ink that they've been selling is not really a counterfeit feature. It's more of a decoy. And their higher end clients, these are some of these guys are in the billions of units for like governments and pharma, need a real counterfeiting technology such as our ink tags. So yes, that contract is forthcoming and it's imminent.

Fantastic. Okay. And then just one more follow up for me. Looking at 2023, I believe the guidance, which is very, I would call it conservative, at least from your, maybe I won't put words in your mouth, but sounds like that doesn't bake in any cross selling synergies and you're still expecting 25 million in revenue, positive adjusted EBITDA. Given that you're winning, you mentioned you're winning new Perryship customers, which have a pretty quick sales cycle. and you're winning new very, uh, verify me core customer deals, um, are, it sounds like, I don't know, is there room for upside without, you know, raising your guidance? It seems like there's, there's levers for upside to it.

We're going to come out with a new guidance after the fourth quarter. And, um, All indications are that we'll have growth in both areas, Perryship and VerifyMe.

Yeah. And as I mentioned earlier, we will update our guidance at the end of the year end. But, you know, we wanted to, at the end, say numbers that we think are dramatic improvement and we could hit compared to our loss and very minimal revenue. to be EBITDA positive adjusted for the whole year. It's a big development for the company to be cash flow positive as well. But we will update the guidance, you know, when we see our first major quarter, you know, with the 33% plus revenue, we wanted to look at how the fourth quarter came out.

Okay. Fair enough. Makes sense. Thanks, guys. That's it for me.

Thanks, Jack.

Again, if you have a question, please press star then 1. Our next question will come from Jules Dixon-Mappas with a private investor. You may now go ahead. Yeah.

Can you hear me all right, sir? Yeah. Yes. Okay. I got a number of questions and I'll just go through them one by one. How much money do we have, Verify Me have for buyback since we've purchased shares How much is remaining from the $1.5 million?

$1.4 million.

We have $1.4 million left? Yes. So we've only spent $100,000 on buying back stock.

Well, the buyback was announced in a period, and then obviously when you come out with your earnings, you're in a blackout period. So the buyback was only announced last quarter.

Okay, so we have a million for it in order to put to work if we need to, to buy back shares.

That's correct.

Okay, the next question would be the value of Paraship as a standalone. If you had to sell it yesterday, what kind of ballpark figure would it be worth? Because it's worth more than when you bought it.

The answer is, you know, I'll leave that up to the analysts in the market. I will say, you know, we bought it for $10.5 million. It does $25 million in revenue. When we bought the company, it didn't have the extension with its large supplier and customer, which we accomplished. So we think, you know, it's worth, obviously, with that being accomplished and and our positive future outlook. We think it's an increased value, but I can't say here today what it's worth, because it's part of our long-term growth plan, and we think it's going to bring a lot of value to the company.

I think it already has brought a lot of value to the company. I'm glad we have it. Next question. Is there an exit strategy or are you going to try to grow this thing or sell it or partner with bigger names or what?

Well, you know, I believe we have a growth strategy that hopefully we talked about today, becoming a player in our overall market with new technology and organic growth and potential acquisitions. But, you know, we are employed by our shareholders, and we want to bring the shareholders the highest value. So we always, you know, have to look at different alternatives to get the shareholders' value or the best value. But right now, the operating plan is to grow this business.

Okay, good. Next question. Are there any new releases or new customers? And... Like our closing ratio, I think we've been talking to Hewlett Packard for a year or two. Is there anything that you can shine a light on there in terms of our progress with new areas for business development?

Yeah, Patrick, why don't you take that?

Well, I was just going to say that Hewlett Packard We're under a one-year extension. The original contract expired in August, and we've been talking since then, and it's been wrapped up. The terms are approved, and it's just a matter of paperwork at this point. But in regards to growth plans, there are so many I can't begin to tell you. You know, with a meteorologist, we have a Perry ship. There's a need out there to generate revenue from selling weather. which many companies pay for these days. It's a software play, so it's very low cost. VerifyMe has a food safety technology that we are planning to give the Perry ship to show their food and beverage clients. This technology will let the pharmaceutical or food and beverage company know if the temperature was ever too hot during the shipping of the product. therefore making it, rendering it useless. There's cross-selling of the VerifyMe technologies to enhance the Parishift offering to their clients so they can do consumer engagement and a strong interest from a lot of their clients for that, as well as building data intelligence. So as a software play, and Parishift can get into many things beyond just time and temperature and criticality, they can get into non-perishable items. So there's a focus there and there's some opportunities there that we're exploring. It's a tiger by the tail and software is very profitable.

If you look at specific customers, just recently, we signed up at the Verify Me Technology a big apparel company, and we're doing our first project with them. Secondly, we got a major increase in scope of business with a cannabis company. And those are the two of the drivers of the projected strong fourth quarter of the VerifyMe technology. On the Paraship side, some of their new customers are in the seafood and fish business, both in expansions, both in Florida. and in Hawaii, and then in addition, an alcohol company as well. So a lot of their expansions and new customers are coming in the food and beverage industry.

That's very good. Last question. I'm pretty sure I'm correct in this. Parachute is based primarily out of Connecticut and Texas. Is there any reason or... expectation to expand those locations or just keep things where they are because they're doing so good?

Right now, the locations are fine. You know, based upon business expansion, we might need to add people at the locations, but we're not looking at any geographical changes.

Okay. The last question, verify me, uh, I think on the webpage or something, you have an office in New York, UK, United Kingdom, China, India, and Switzerland. Do we just have people in the United States that service those areas or do we have physical brick and mortar or boots on the ground in those places? Because that would be overhead and is that overhead creating any revenue?

These are outside contractors working remotely. There's no brick and mortar outside the U.S. We have a corporate office in Rochester, New York, which is brick and mortar. But other than that, it's all remotely worked.

Okay, good. Any action in Switzerland? A long time ago, there was a customer called, I might mispronounce it or something, but it was like DKFSH or something. Are they still in play, or that's just a dead end?

No, DKFSH is a very large reseller of products into China, and they had been waiting for a new ink technology so that we can utilize Flexo printing and WebPress printing, which is ink. prevalent in those areas, which is non-digital. I mean, HP is a digital press. These are your more traditional label and packaging, and they have like 95% of the label and packaging market. I mean, they do the big numbers. So now that we have the ink technology in place with our strategic partner, ink's international, we are working with D cash and they have several prospects that we're working with them as we speak.

Well, um, I'm glad to hear that. But you mentioned something that I didn't catch. It's something like that now we have new ink what? Ink?

We have an ink tagging technology that is now able to be printed, continuous inkjet, for the flexo press industry and the web industry.

Did you say weapons?

Web. W-E-B. It's a web press. These are large rolls of paper, high speed.

Well, DKFH or whoever they are, please forgive me for scrambling up their name. They distribute throughout the Middle East and all parts of the globe, correct? They're huge in the Pacific Rim.

That's their Real bell winner.

Hey, Patrick, I hate to interrupt, but I think we are running out of time. So I think we have to cut off the questions at this point. But we are available for additional questions after the call. So I'd like to thank everybody for being on the call. And again, we are available. And, you know, we look forward to updating you on the quarter. and other press releases as we go along the corridor. So thanks for joining us on the call today.

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