VerifyMe, Inc.

For a discussion of the Company’s potential risks or uncertainties, please see “Part I—Item 1A—Risk Factors” and “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC, and “Part I—Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein. There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent Quarterly Reports on Form 10-Q, except as set forth below.

Our Precision Logistics segment relies on a new key strategic partner for shipping services for our customers and as a source for customers representing a substantial percentage of our revenues.

PeriShip Global partners with one major global carrier for its customers’ shipping needs. Our business is dependent, and we believe that it will continue to depend on our relationship with a new strategic partner. On August 26, 2025, our prior strategic partner notified providers, including PeriShip Global, that it would be providing preferred shipping services internally and that the providers would no longer be approved preferred shippers effective September 24, 2025. As such, PeriShip Global is no longer apreferred shipper with that strategic partner and our Precision Logistics segment can no longer offer our Proactive services to that strategic partner’s customers. We continue to provide our Premium services to that strategic partner’s customers. On September 24, 2025, we began offering Proactive services to customers of our new strategic partner.

While we work closely with this key strategic partner and have transportation services and pricing agreements in place covering the shipping services they provide to our customers, such agreements are subject to termination or modification from time to time. If our strategic partner is unwilling or unable to supply to us the shipping services we market and sell on acceptable terms, or at all, or otherwise elects to terminate its business relationship with us, we may not be able to obtain alternative shipping services from other providers on acceptable terms, in a timely manner, or at all, and our business may be materially and adversely impacted. We do not currently have any alternative shipping service suppliers from which we can obtain the shipping services we currently receive from our strategic partner. In addition, establishing the necessary information technology infrastructure and business relationship with our new key shipping service provider, or with other shipping services providers, may be costly and time consuming and may ultimately not be successful or cost-effective. Further, any increase in the prices charged by our single strategic partner or failure to perform by our strategic partner could cause our costs to increase or could cause us to experience short-term unavailability of shipping services on which our business relies.

In particular, delays and other shipping disruptions at our strategic partner significantly negatively impact our business. Our business involves the shipment of time and temperature sensitive goods, so our customers are significantly negatively impacted by delays and other shipping disruptions that cause product loss, spoilage and reputational harm. An increase in delays and other shipping disruptions on the part of our strategic partner could cause our clients to seek shipping solutions from our competitors who use alternative shipping service providers. If these events occur, it may reduce our profitability or may cause us to increase our prices. In addition, any material interruptions in shipping services by this strategic partner may result in significant cost increases and reduce sales, which could harm our business, financial condition and results of operations and may have a material adverse impact on our business.

As a result of the change in the strategic partner through which we provide our Proactive services, it is likely that our revenues from Proactive services will materially decline in the quarters ended December 31, 2025 and March 31, 2026 as compared to the quarters ended December 31, 2024 and March 31, 2025. We expect our Proactive services revenues to substantially recover during 2026 as we transition additional customers and increase our existing and new customer bases however, there can be no assurance that our Proactive service revenue will return to historical levels.

In addition, a material portion of our revenue has been generated by our prior strategic partner reselling our services to its customers under a “white label” arrangement, which we refer to as a Premium Service. We continue to provide our Premium services to our prior strategic partner’s customers, but it is unlikely that this will continue in the long-term. Under this arrangement we provide our logistics services to our prior strategic partner’s customers in exchange for a pre-negotiated service fee per shipment. Sales through our prior strategic partner accounted for approximately 16% of revenue of our Precision Logistics segment for the year ended December 31, 2024, and 17% for the year ended December 31, 2023. Our prior strategic partner provides its own service offering to its customers that competes with our Premium Services, and we expect revenue from our Premium Services in our Precision Logistics segment will likely decrease over time as our prior strategic partner competes with us for these customers. If we fail to offset any reduction in business for our Premium Services in our Precision Logistics segment through our Proactive Services or other service offerings, our business, financial condition and results of operations could be materially adversely affected.

Our business is subject to seasonal trends.

Historically, our operating results in the Precision Logistics segment have been subject to seasonal trends when measured on a quarterly basis. Our first and second quarters have traditionally been the weakest compared to our third and fourth quarters. This trend is dependent on numerous factors including economic conditions, customer demand and weather. Because revenue is directly related to the available working days of shippers, national holidays and the number of business days during a given period may also create seasonal impact on our results of operations. After the winter holiday season and during the remaining winter months, our freight volumes are typically lower because some customers reduce shipment levels. In addition, a substantial portion of our revenue is derived from customers in industries whose shipping patterns are tied closely to consumer demand which can sometimes be difficult to predict or are based on just-in-time production schedules. Therefore, our revenue is, to a large degree, affected by factors that are outside of our control. In addition, as a result of the change in the strategic partner through which we provide our Proactive services, it is likely that our revenues from Proactive services will materially decline in the quarters ended December 31, 2025 and March 31, 2026 as compared to the quarters ended December 31, 2024 and March 31, 2025 and we will not experience as much of a seasonal increase in our revenues during the fourth quarter of fiscal year ended December 31, 2025. There can be no assurance that our historic operating patterns will continue in future periods as we cannot influence or forecast many of these factors.