VerifyMe, Inc.

Good day and welcome to the VerifyMe year-end 2023 financial results conference call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for 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. If you would like to withdraw your question, please press star, then two. Please note that today's event is being recorded. I would now like to turn the conference over to Nancy Myers, CFO of VerifyMe. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today for our earnings call presentation. On the call today, I'm joined by Adam Sedum, CEO and President, who will give an operations and strategic update. 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 Adam Stedham for some opening remarks.

Thank you, Nancy, and welcome, everyone. We recently had an extensive strategy call, so I anticipate this particular earnings call will be a little shorter than typical. During that strategy call, we stated that we expected to finish 2023 with more than $25 million in revenue. and better than breakeven adjusted EBITDA. We finished 2023 with $25.3 million in revenue and $0.4 million in adjusted EBITDA, which was supported by very healthy profits in Q4. And Nancy will discuss those more. During the strategy call, we also indicated we anticipate double-digit revenue growth in 2024. I reaffirmed the expectation for double-digit revenue growth in 2024 Now I do anticipate our H2 growth rate to exceed our H1 growth rate. The company had positive cash flow from operations in 2023. As for Q4, our ending total cash was 3.1 million. Our current maturities of long-term debt was 0.5 million and our total debt was 2.5 million. So as a result, we had cash net of debt of 0.6 million as compared to a negative 0.1 million at the end of September, 2023. So keep in mind this net cash position includes proceeds from convertible notes of 1.1 million and the company anticipates the majority of these notes will be converted as opposed to repaid with cash at maturity. So in summary, As a company, we're generating cash and we anticipate we will continue to generate cash throughout 2024. So at this point, I'd like to discuss our capital strategy a little bit. In Q4 of 2023, the company announced a share buyback program. Since putting that plan in place and entering a trading blackout, the share price has primarily traded above the short-term buyback that we established. We continue to have our announced buyback program in place, and we'll continue to evaluate our strategy around repurchasing shares. Throughout 2024, we'll monitor all available options to utilize our capital to maximize shareholder value. So at this point, let's shift the conversation to our two operating segments. During 2023, We primarily focused on creating the foundation for the company. We focused on operational efficiency and our go-to-market strategy for our Perryship business and precision logistics. We completed the TrustCodes acquisition for authentication segment, and we vertically integrated the TrustCodes technology stack with all of our existing customers. In addition, we defined a strategy to integrate this technology platform into commercial relationships across specific target industries. So the precision logistics segment, it completed 2023 with $24.7 million in revenue versus a pro forma fiscal 2022 revenue of $24 million. During 2023, We improved the gross margin significantly for precision logistics. Our Q1 2023 gross margin was 29%. And the average gross margin across quarters two, three, and four was 36%. Now, a small contributing factor to this improvement was the discontinued relationship with some lower margin customers. This did result in some impact on our Q4 2023 revenue in this segment. The precision logistics segment generated $8.6 million in revenue in Q4 2023. The net result for 2023 was the precision logistics segment experienced organic growth over our pro forma 2022 numbers, experienced a significant increase in gross margin dollars in 2023 versus 2024, including in Q4 2023 as compared to Q4 2022. So now let me shift to our authentication segment. The segment generated approximately $150,000 in revenue in Q4. We pointed out in our strategy call that the APAC portion of this segment had been experiencing challenges associated with difficult market conditions. We also discussed that we're seeing those conditions improve, and we anticipate they will contribute to our organic growth in 2024. This continues to be our feeling, our experience, and our expectation for 2024. In addition, we've added three sales associates to the team within this segment to accelerate our growth by increasing awareness of our industry-leading technology stack. During the strategy call where we discussed our technology, we stated that we now have all of our existing customers transitioned onto the TrustCodes technology platform. In addition, hopefully you saw our press release indicating that our technology platform is now integrated into Amazon's transparency program. We're excited by this recent development and We're pleased that Amazon's review of our platform has confirmed our belief about the significant value it delivers. In addition to that, we believe that we can provide meaningful support for Amazon's efforts to combat counterfeit products in the marketplace. This support will be good for Amazon, it's good for the brands sold in the Amazon marketplace, it's good for consumers, and it should be very good for VerifyMe shareholders. So I look forward to sharing more information about that relationship as it continues to develop. So at this point, I'll turn the call back over to Nancy Meyers, our CFO, and she'll provide a more detailed financial report.