OPNW 10-Q
OpenWorld, Inc. (OPNW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM
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(Mark one)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
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| (Address of Principal Executive Offices) | (Zip Code) | |
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| (Registrant’s Telephone Number, Including Area Code) | ||
(Former Name, Former Address and Former Fiscal year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which Registered |
| The |
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T §
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company,” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ | |
| x | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares of common stock outstanding at November 7, 2025.
| 2 |
| PART I - FINANCIAL INFORMATION | ||
| ITEM 1. | Financial Statements | 4 |
| Consolidated Balance Sheets (Unaudited) | 4 | |
| Consolidated Statements of Operations (Unaudited) | 6 | |
| Consolidated Statements of Comprehensive Loss (Unaudited) | 7 | |
| Consolidated Statements of Cash Flows (Unaudited) | 8 | |
| Consolidated Statements of Stockholders' Equity (Unaudited) | 10 | |
| Notes to Consolidated Financial Statements (Unaudited) | 12 | |
| ITEM 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 30 |
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 40 |
| ITEM 4. | Controls and Procedures | 40 |
| PART II - OTHER INFORMATION | ||
| ITEM 1. | Legal Proceedings | 41 |
| ITEM 1A. | Risk Factors | 41 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 42 |
| ITEM 3. | Defaults Upon Senior Securities | 42 |
| ITEM 4. | Mine Safety Disclosures | 42 |
| ITEM 5. | Other Information | 42 |
| ITEM 6. | Exhibits | 43 |
| SIGNATURES | 44 | |
| 3 |
PART I - FINANCIAL STATEMENTS
ITEM 1.
VerifyMe, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
| September 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance for credit loss reserve, $ | ||||||||
| Note receivable, net of allowance for credit loss reserve, $ | ||||||||
| Unbilled revenue | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventory | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| PROPERTY AND EQUIPMENT, NET | $ | $ | ||||||
| RIGHT OF USE ASSET | ||||||||
| INTANGIBLE ASSETS, NET | ||||||||
| GOODWILL | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Term note, current | $ | $ | ||||||
| Accounts payable | ||||||||
| Other accrued expense | ||||||||
| Lease liability- current | ||||||||
| Convertible Note – related party, current | ||||||||
| Convertible Note, current | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Long-term lease liability | ||||||||
| Term note | ||||||||
| Convertible note – related party | ||||||||
| Convertible note | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Series A Convertible Preferred Stock, $ par value, shares authorized; shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Series B Convertible Preferred Stock, $ par value; shares authorized; shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| 4 |
| Common stock, $ par value; shares authorized; and shares issued, and shares outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid in capital | ||||||||
| Treasury stock as cost; and shares at September 30, 2025 and December 31, 2024, respectively | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
VerifyMe, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| NET REVENUE | $ | $ | $ | $ | ||||||||||||
| COST OF REVENUE | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Segment management and Technology(a) | ||||||||||||||||
| General and administrative (a) | ||||||||||||||||
| Research and development | ||||||||||||||||
| Sales and marketing (a) | ||||||||||||||||
| Goodwill and intangible asset impairment | ||||||||||||||||
| Total Operating expenses | ||||||||||||||||
| LOSS BEFORE OTHER INCOME (EXPENSE) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest income (expenses), net | ( | ) | ( | ) | ||||||||||||
| Other income, net | ||||||||||||||||
| Change in fair value of contingent consideration | ||||||||||||||||
| TOTAL OTHER INCOME, NET | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| LOSS PER SHARE | ||||||||||||||||
| BASIC | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| DILUTED | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | ||||||||||||||||
| BASIC | ||||||||||||||||
| DILUTED | ||||||||||||||||
(a) Includes share-based compensation of $92 thousand and $684 thousand for the three and nine months ended September 30, 2025, respectively, and $486 thousand and $1,183 thousand for the three and nine months ended September 30, 2024 respectively.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
VerifyMe, Inc.
Consolidated Statements of Comprehensive Loss
(Unaudited)
(In thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Change in fair value of interest rate, Swap | ( | ) | ||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| Total Comprehensive Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 7 |
VerifyMe, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Nine months ended | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Allowance for expected credit losses | ||||||||
| Stock based compensation | ||||||||
| Change in fair value of contingent consideration | ( | ) | ||||||
| Fair value of restricted stock awards and restricted stock units issued in exchange for services | ||||||||
| Loss on disposal of equipment | ||||||||
| Goodwill and intangible asset impairment | ||||||||
| Amortization and depreciation | ||||||||
| Gain on partial lease termination | ( | ) | ||||||
| Unrealized gain on foreign currency transactions | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Unbilled revenue | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable, other accrued expenses and net change in operating leases | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Note Receivable | ( | ) | ||||||
| Purchase of patents | ( | ) | ||||||
| Purchase of office equipment | ( | ) | ( | ) | ||||
| Capitalized software costs | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from Warrants Exercise | ||||||||
| Proceeds from SPP Plan | ||||||||
| Contingent consideration payments | ( | ) | ||||||
| Tax withholding payments for employee stock-based compensation in exchange for shares surrendered | ( | ) | ( | ) | ||||
| Increase in treasury shares (share repurchase program) | ( | ) | ( | ) | ||||
| Repayment of debt and line of credit | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash | ||||||||
| NET INCREASE(DECREASE) CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS INCLUDING RESTRICTED CASH - BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | $ | ||||||
| 8 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| 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 | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 9 |
VerifyMe, Inc.
Consolidated Statements of Stockholders' Equity
(Unaudited)
(In thousands, except share data)
| Series A | Series B | |||||||||||||||||||||||||||||||||||||||||||||||
| Convertible | Convertible | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Treasury | |||||||||||||||||||||||||||||||||||||||||||||
| Stock | Stock | Stock | Additional | Stock | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||
| Number of | Number of | Number of | Paid-In | Number of | Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Shares | Amount | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Restricted stock awards | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units, net of shares withheld for employee tax | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | |||||||||||||||||||||||||||||||||||||||||||||||
| Convertible | Convertible | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Treasury | |||||||||||||||||||||||||||||||||||||||||||||
| Stock | Stock | Stock | Additional | Stock | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||
| Number of | Number of | Number of | Paid-In | Number of | Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Shares | Amount | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units, net of shares withheld for employee tax | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of Common Stock | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| 10 |
| Series A | Series B | |||||||||||||||||||||||||||||||||||||||||||||||
| Convertible | Convertible | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Treasury | |||||||||||||||||||||||||||||||||||||||||||||
| Stock | Stock | Stock | Additional | Stock | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||
| Number of | Number of | Number of | Paid-In | Number of | Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Shares | Amount | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| 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 | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of Common Stock | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | |||||||||||||||||||||||||||||||||||||||||||||||
| Convertible | Convertible | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred | Preferred | Common | Treasury | |||||||||||||||||||||||||||||||||||||||||||||
| Stock | Stock | Stock | Additional | Stock | Accumulated Other | |||||||||||||||||||||||||||||||||||||||||||
| Number of | Number of | Number of | Paid-In | Number of | Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Shares | Amount | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Warrants exercise | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible note | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock awards | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock units, net of shares withheld for employee tax | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of Common Stock | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 11 |
VerifyMe, Inc.
Notes to the Consolidated Financial Statements (unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the Business
VerifyMe, Inc. (“VerifyMe,” “we,”
“us,” “our,” or the “Company”) was incorporated in the State of
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 below. 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
Certain amounts presented for the three and nine months ended September 30, 2024, reflect reclassifications made to conform to the presentation in our current reporting period. These reclassifications had no effect on the previously reported net loss.
Basis of Presentation
The accompanying unaudited interim consolidated 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 have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The Interim Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025. The accompanying Interim Statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The interim results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future interim periods.
Segment Reporting
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method by which to allocate resources and assess performance. The Company has two reportable segments, namely, (i) Precision Logistics and (ii) Authentication. See Note 12 Segment Reporting, for further discussion of the Company’s segment reporting structure.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. 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.
| 12 |
Notes to the Consolidated Financial Statements (unaudited)
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220). This standard requires disclosure of specific information about costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential effect that the updated standard will have on their financial statement disclosures.
Fair Value of Financial Instruments
The Company’s financial instruments consist of accounts receivable, unbilled revenue, accounts payable, notes payable and accrued expenses, equity investments, and long-term derivatives. 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.
The Company follows FASB Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs that are not corroborated by market data
The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2025 and December 31, 2024.
Amounts in Thousands ('000)
| Derivative Asset | ||||
| (Level 2) | ||||
| Balance as of December 31, 2024 | ||||
| Termination of SWAP, recognized in other comprehensive loss | ( | ) | ||
| Balance at September 30, 2025 | $ | |||
Revenue Recognition
The Company accounts for revenues according to ASC Topic 606, Revenue from Contracts with Customers which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.
The Company applies the following five steps, separated by reportable segments, in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements.
| · | identify the contract with a customer; |
| · | identify the performance obligations in the contract; |
| · | determine the transaction price; |
| · | allocate the transaction price to performance obligations in the contract; and |
| · | recognize revenue as the performance obligation is satisfied. |
| 13 |
Notes to the Consolidated Financial Statements (unaudited)
The Company generally considers completion of an agreement, or Statement of Work (“SOW”) and/or purchase order as a customer contract, provided collection is considered probable. For more detailed information about reportable segments, see Note 12 – Segment reporting.
Precision Logistics
Our Precision Logistics segment consists of two service lines, Proactive and Premium. Under our Proactive service line, clients pay us directly for carrier service coupled with our proactive logistics service. Terms typically range 7 days and no longer than 30 days. The Company has determined it is the principal and recognizes shipment fees in gross revenue. Under our Premium service line, we provide complete white-glove shipping monitoring and predictive analytics services. 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 both service lines in our Precision Logistics segment, our performance obligation is met, and revenue is recognized when the packages are delivered. The transaction fees consist of fixed consideration made up of amounts contractually billed to the customer. There are no variable considerations in the transaction fee, in either service line.
Authentication
Our Authentication segment primarily consists 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.
Goodwill
Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, Intangibles-Goodwill and Other, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test. The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.
The Company follows ASC Topic 260, Earnings Per Share, when reporting earnings per share resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss for each of the periods presented, common stock equivalents, including preferred stock, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same.
For the three and nine months ended September 30, 2025, and 2024, there were shares potentially issuable, that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. For the three and nine months ended September 30, 2025, there were approximately anti-dilutive shares consisting of unvested performance restricted stock units, restricted stock units and restricted stock awards, shares issuable upon exercise of warrants, shares issuable upon conversion of convertible debt, and shares issuable upon conversion of preferred stock. For the three and nine months ended September 30, 2024, there were approximately anti-dilutive shares consisting of unvested performance restricted stock units, restricted stock units, and restricted stock awards, shares issuable upon exercise of stock options, shares issuable upon exercise of warrants, shares issuable upon conversion of convertible debt, and shares issuable upon conversion of preferred stock.
| 14 |
Notes to the Consolidated Financial Statements (unaudited)
We account for stock-based compensation under the provisions of ASC Topic 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing 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 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 6 – 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 to non-employees in accordance with ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to nonemployees to that of employees under the 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 instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity-based payments are recorded as an expense over the service period, as if we had 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 accordingly. 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 is completed.
NOTE 2 – REVENUE
Revenue by Category
The following series of tables present our revenue disaggregated by various categories (dollars in thousands).
| Precision Logistics | Authentication | Consolidated | ||||||||||||||||||||||
| Revenue | Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Proactive services | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Premium services | ||||||||||||||||||||||||
| Brand protection services | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Precision Logistics | Authentication | Consolidated | ||||||||||||||||||||||
| Revenue | Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Proactive services | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Premium services | ||||||||||||||||||||||||
| Brand protection services | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| 15 |
Notes to the Consolidated Financial Statements (unaudited)
Contract Balances
The timing of revenue recognition, billings and cash collections results in unbilled revenue (contract assets) and deferred revenue (contract liabilities) on the consolidated balance sheets. Amounts charged to our clients become billable according to the contract terms, which usually consider the delivery completion. Unbilled amounts will generally be billed and collected within 30 days but typically no longer than 60 days. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within twelve months. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the nine-month period ended September 30, 2025, were not materially impacted by any other factors.
Applying the practical expedient in ASC Topic 606, we recognize the incremental costs of obtaining contracts (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. As of September 30, 2025, we did not have any capitalized sales commissions.
For all periods presented, contract liabilities were not significant.
The following table provides information about contract assets from contracts with customers:
| Contract Asset | ||||||||
| September 30, | ||||||||
| In Thousands | 2025 | 2024 | ||||||
| Beginning balance, January 1 | $ | $ | ||||||
| Contract asset additions | ||||||||
| Reclassification to accounts receivable, billed to customers | ( | ) | ( | ) | ||||
| Ending balance, September 30 (1) | $ | $ | ||||||
______________
| (1) |
NOTE 3 – BUSINESS COMBINATIONS
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. We recognized a loss of $
NOTE 4 – INTANGIBLE ASSETS AND GOODWILL
Goodwill
Goodwill represents costs in excess of values assigned to the underlying net assets of acquired businesses. Intangible assets acquired are recorded at estimated fair value. Goodwill is deemed to have an indefinite life and is not amortized but is tested for impairment annually, and at any time when events suggest an impairment more likely than not has occurred. We test goodwill at the reporting unit level.
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 amount. A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S. GAAP.
Determining the fair value of a reporting unit
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. We base our fair value estimates on assumptions 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
goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. 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 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
segment. 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 $
| 16 |
Notes to the Consolidated Financial Statements (unaudited)
Each of our two reportable segments represents an operating segment under ASC Topic 280, Segment Reporting. We test our goodwill at the reporting unit level, or one level 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.
Changes in the carrying amount of goodwill by reportable business segment for the nine months ended September 30, 2025, were as follows (in thousands):
| Authentication | Precision Logistics | Total | ||||||||||
| Net book value at | ||||||||||||
| January 1, 2025 | $ | $ | $ | |||||||||
| 2025 Activity | ||||||||||||
| Goodwill impairment charge | ( | ) | ( | ) | ||||||||
| Net book value at | ||||||||||||
| September 30, 2025 | $ | $ | $ | |||||||||
Intangible Assets Subject to Amortization
Our intangible assets include amounts recognized in connection with patents and trademarks, capitalized software and acquisitions, including customer relationships, tradenames, developed technology and non-compete agreements. Intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Amortization is recognized on a straight-line basis over the estimated useful life of the intangible assets. Intangible assets with definite lives are reviewed for impairment if indicators of impairment arise. Except for goodwill, we do not have any intangible assets with indefinite useful lives.
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 impairment.
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 three months ending September 30, 2025, indicating the carrying value of our long-lived assets including internally used software, deferred implementation, trademarks, customer relationships, 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, 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 three and nine months ended September 30, 2025, respectively, within goodwill and intangible asset impairment on the consolidated statement of operations.
Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and their respective balances were as follows (in thousands):
| September 30, 2025 | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Useful Life (Years) | ||||||||||||
| Patents and Trademarks | $ | $ | $ | |||||||||||||
| Developed Technology | ||||||||||||||||
| Internally Used Software | ||||||||||||||||
| Total Intangible Assets | $ | $ | $ | |||||||||||||
| December 31, 2024 | ||||||||||||||||
| Patents and Trademarks | $ | $ | ( | ) | $ | |||||||||||
| Customer Relationships | ( | ) | ||||||||||||||
| Developed Technology | ( | ) | ||||||||||||||
| Internally Used Software | ( | ) | ||||||||||||||
| Non-Compete Agreement | ( | ) | ||||||||||||||
| Deferred Implementation | ( | ) | ||||||||||||||
| Total Intangible Assets | $ | $ | ( | ) | $ | |||||||||||
| 17 |
Notes to the Consolidated Financial Statements (unaudited)
Amortization expense for intangible assets was
$
Patents and Trademarks
As of September 30, 2025, our current patent and trademark portfolios consist of six granted U.S. patents and one granted European patents, two pending foreign patent applications and several foreign trademarks.
The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows (in thousands):
| Fiscal Year ending December 31, | ||||
| 2025 (three months remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 5 – STOCKHOLDERS’ EQUITY
The Company expensed $
The Company expensed $
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 $
On January 2, 2025, the Company issued shares of common stock, of which were issued from treasury, upon vesting of restricted stock units, net of shares withheld for taxes related to stock grants on July 20, 2023 and July 1, 2024.
On March 31, 2025, the Company issued shares
of restricted common stock, vesting immediately with a value of $
On April 1, 2025, the Company issued shares of common stock upon vesting of restricted stock units, net of shares withheld for taxes related to a stock grant on September 1, 2024.
On June 19, 2025, the Company issued shares of common stock from treasury, upon vesting of restricted stock units, net of shares withheld for taxes related to a stock grant on June 19, 2023.
On June 30, 2025, the Company issued shares of common, upon vesting of restricted stock units, net of shares withheld for taxes related to a stock grant on January 1, 2025.
| 18 |
Notes to the Consolidated Financial Statements (unaudited)
Non-Qualified Stock Purchase Plan
On June 10, 2021, the stockholders of the Company
approved a non-qualified stock purchase plan (the “2021 Plan”). The 2021 Plan provides eligible participants, including employees,
directors and consultants of the Company, the opportunity to purchase shares of the Company’s common stock thereby increasing their
interest in the Company’s continued success. The maximum number of common stock reserved and available for issuance under the 2021
Plan is 500,000 shares. The purchase price of shares of common stock acquired pursuant to the exercise of an option will be the lesser
of 85% of the fair market value of a share (a) on the enrollment date, and (b) on the exercise date. The 2021 Plan is not intended to
qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).
The Company applied ASC Topic 718, Compensation-Stock Compensation and estimated the fair value using the Black-Scholes model, as the
2021 Plan is considered compensatory. In relation to the 2021 Plan the Company expensed $ thousand for the three and nine months ended
September 30, 2025, respectively. During the three and nine months ended September 30, 2024, the Company expensed $ and $ thousand,
respectively. During the nine months ended September 30, 2025 and 2024, the Company received $
Shares Held in Treasury
As of September 30, 2025, and December 31, 2024,
the Company had and shares, respectively, held in treasury with a value of approximately $
On February 29, 2024, seven participants exercised
their option under the Company’s non-qualified stock purchase plan, and as a result,
Shares Repurchase Program
In December 2023, the Company’s Board of
Directors approved a share repurchase program to allow the Company to spend up to $ 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 $
million share repurchase program to repurchase shares of the Company’s common stock through December 31, 2025. The share repurchase
program may be modified, suspended or discontinued at the discretion of the Board at any time. During the nine months ended September
30, 2025, the Company repurchased shares for $
On November 14, 2017, the Executive Committee of the Company’s Board of Directors adopted the 2017 Equity Incentive Plan (the “2017 Plan”) which covered the potential issuance of shares of common stock. 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.
On August 10, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”) and on September 30, 2020, the Company’s stockholders approved the 2020 Plan, which authorizes the potential issuance of up to shares of common stock. Upon effectiveness of the 2020 Plan the 2017 Plan was terminated. Shares of common stock underlying existing awards under the 2017 Plan may become available for issuance pursuant to the terms of the 2020 Plan under certain circumstances. Employees and non-employee directors of the Company or its affiliates, and other individuals who perform services for the Company or any of its affiliates, are eligible to receive awards under the 2020 Plan at the discretion of the Board of Directors or the Board’s Compensation Committee.
On March 28, 2022, the Company’s Board of Directors adopted the First Amendment to the 2020 Plan and on June 9, 2022, the Company’s stockholders approved the First Amendment to the 2020 Plan, which increased the shares authorized for potential issuance under the 2020 Plan to shares of common stock and extended the term of the 2020 Plan to June 9, 2023. On April 17, 2023, the Company’s Board of Directors adopted the Second Amendment to the 2020 Plan and on June 6, 2023, the Company’s stockholders approved the Second Amendment to the 2020 Plan, which increased the shares authorized for potential issuance under the 2020 Plan to shares of common stock and extended the term of the 2020 Plan to June 6, 2033, and increased the annual cap on director compensation by $50 thousand. On March 18, 2024, the Company’s Board of Directors adopted the Third Amendment to the 2020 Plan, which on June 4, 2024, was approved by the Company’s stockholders, which increased the shares authorized for potential issuance under the 2020 Plan to shares of common stock and extended the term of the 2020 Plan to June 4, 2034.
| 19 |
Notes to the Consolidated Financial Statements (unaudited)
The 2020 Plan, as amended, is administered by the Compensation Committee which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.
The aggregate fair market value (determined at the time of the grant) of stock with respect to which incentive stock options are exercisable for the first time by any individual during any calendar year (under all plans of the Company and its affiliates) shall not exceed $100 thousand, and the options in excess of $100 thousand shall be deemed to be non-qualified stock options, including prices, duration, transferability and limitations on exercise. The maximum number of shares of common stock that may be issued under the 2020 Plan pursuant to incentive stock options may not exceed, in the aggregate, .
The Company has issued non-qualified stock options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgements.
Stock Options
The following table summarizes the activities for the Company’s stock options as of September 30, 2025:
| Options Outstanding | ||||||||||||||||
| Weighted - | ||||||||||||||||
| Average | ||||||||||||||||
| Remaining | Aggregate | |||||||||||||||
| Weighted- | Contractual | Intrinsic | ||||||||||||||
| Number of | Average | Term | Value | |||||||||||||
| Shares | Exercise Price | (in years) | (in thousands)(1) | |||||||||||||
| Balance as of December 31, 2024 | $ | $ | - | |||||||||||||
| Granted | ||||||||||||||||
| Forfeited/Cancelled/Expired | ) | |||||||||||||||
| Balance as of September 30, 2025 | $ | - | $ | - | ||||||||||||
| Exercisable as of September 30, 2025 | $ | - | $ | |||||||||||||
| (1) |
| 20 |
Notes to the Consolidated Financial Statements (unaudited)
As of September 30, 2025, the Company had no outstanding stock options.
During the nine months ended September 30, 2025,
and 2024, the Company expensed $
As of September 30, 2025, there was $
Restricted Stock Awards and Restricted Stock Units
The following table summarizes the unvested restricted stock awards as of September 30, 2025:
| Weighted - | ||||||||
| Average | ||||||||
| Number of | Grant | |||||||
| Award Shares | Date Fair Value | |||||||
| Unvested at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ) | |||||||
| Balance at September 30, 2025 | $ | |||||||
As of September 30, 2025, total unrecognized share-based
compensation cost related to unvested restricted stock awards is $
The following table summarizes the unvested restricted stock units as of September 30, 2025:
| Weighted - | ||||||||
| Average | ||||||||
| Number of | Grant | |||||||
| Unit Shares | Date Fair Value | |||||||
| Unvested at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ) | |||||||
| Forfeited | ) | |||||||
| Balance at September 30, 2025 | $ | |||||||
As of September 30, 2025, total unrecognized share-based
compensation cost related to unvested time-based restricted stock units was $
| 21 |
Notes to the Consolidated Financial Statements (unaudited)
The following table summarizes the unvested performance-based restricted stock units as of September 30, 2025:
| Weighted - | ||||||||
| Average | ||||||||
| Number of | Number of | |||||||
| Unit Shares | Unit Shares | |||||||
| Unvested at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Forfeited/Cancelled | ) | |||||||
| Balance at September 30, 2025 | $ | |||||||
For restricted stock units with stock price appreciation targets, we applied a lattice approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the restricted stock unit’s contractual life based on the appropriate probability distributions (which are based on commonly applied Black Scholes inputs). The fair value of each grant 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 derived service period and there is no ongoing adjustment or reversal based on actual achievement during the period.
As of September 30, 2025, total unrecognized share-based
compensation cost related to unvested performance based restricted stock units was $
Warrants
The following table summarizes the activities for the Company’s warrants as of September 30, 2025:
| Number of Warrant Shares | Weighted- Average Exercise Price | Weighted - Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands)(1) | |||||||||||||
| Balance as of December 31, 2024 | ||||||||||||||||
| Issued | ||||||||||||||||
| Exercised | ) | |||||||||||||||
| Expired | ) | |||||||||||||||
| Balance as of September 30, 2025 | $ | |||||||||||||||
| Exercisable as of September 30, 2025 | $ | $ | ||||||||||||||
| (1) |
| 22 |
Notes to the Consolidated Financial Statements (unaudited)
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
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 $
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
Warrant. 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:
| January 13, 2025 | ||
| Risk free interest rate | ||
| Expected life | years | |
| Expected volatility | ||
| Expected dividend |
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 $
In connection with the ATM program, the Company
incurred direct legal and audit fees totaling $
During the three and nine months ended September 30, 2025, and as of the date of this filing, we have not sold any shares of common stock through the ATM.
NOTE 7—DEBT
PeriShip Global is a party to a debt facility
with PNC Bank, National Association (the “PNC Facility”). The PNC Facility includes a $
The PNC Facility includes a number of affirmative and restrictive covenants applicable to PeriShip Global, including, among others, a financial covenant to maintain a fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal year, affirmative covenants regarding delivery of financial statements, payment of taxes, and establishing primary depository accounts with PNC Bank, and restrictive covenants regarding dispositions of property, acquisitions, incurrence of additional indebtedness or liens, investments and transactions with affiliates. PeriShip Global is also restricted from paying dividends or making other distributions or payments on its capital stock if an event of default (as defined in the PNC Facility) has occurred or would occur upon such declaration of dividend. 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 in compliance with all affirmative and restrictive covenants under the PNC Facility at September 30, 2025. On August 8, 2025, the Company extended the line of credit to September 30, 2026.
| 23 |
Notes to the Consolidated Financial Statements (unaudited)
As of January 21, 2025, the Term Note balance
of $
As of September 30, 2025, $
Effective
October 17, 2022, the Company entered into an interest rate swap agreement, with a notional amount of $
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 $
NOTE 8—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
NOTE 9—INCOME TAXES
There are
Some of the federal tax carry forwards will expire
at various dates through 2037. Generally, these can be carried forward and applied against future taxable income at the tax rate applicable
at that time. We are currently using an effective income tax rate of
Utilization of the net operating losses (NOL) carryforwards may be subject to a substantial annual limitation as required by Section 382 of the IRC, due to ownership changes of the company that could occur in the future, as well as similar state provisions. In general, an “ownership change” as defined by Section 382 results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income.
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 did not utilize any NOL deductions for the nine months ended September 30, 2025.
NOTE 10– LEASES
The Company accounts for its leases under Accounting Standard Codification (“ASC”) Topic 842, “Leases”. The Company determines at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. We have elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. Our current long-term leases include an option to extend the term of the lease prior to the end of the initial term. It is not reasonably certain that we will exercise the option and have not included the impact of the option in the lease term for purposes of determining total future lease payments. As our lease agreement does not explicitly state the discount rate implicit in the lease, we use our promissory note borrowing rate to calculate the present value of future payments.
| 24 |
Notes to the Consolidated Financial Statements (unaudited)
In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred.
We have operating leases for office facilities. We do not have any finance leases.
Lease expenses are included in Segment management and technology expenses on the accompanying Consolidated Statements of Operations. The components of lease expense were as follows (in thousands):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Short-term lease cost | ||||||||||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
Supplemental information related to leases was as follows (dollars in thousands):
| September 30, 2025 | December 31, 2024 | |||||||
| Operating Lease right-of-use asset | $ | $ | ||||||
| Current portion of operating lease liabilities | $ | $ | ||||||
| Non-current portion of operating lease liabilities | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | ||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term for operating leases (years) | ||||||||
| Weighted average discount rate for operating leases | % | % | ||||||
The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our consolidated balance sheets as of September 30, 2025 (in thousands):
| Year ending December 31, | ||||
| 2025 (Excluding nine months ended September 30, 2025) | $ | |||
| 2026 | ||||
| 2027 | ||||
| Total future lease payments | ||||
| Less: imputed interest | ( |
) | ||
| Present value of future lease payments | ||||
| Less: current portion of lease liabilities | ( |
) | ||
| Long-term lease liabilities | $ | |||
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Notes to the Consolidated Financial Statements (unaudited)
NOTE 11– CONCENTRATIONS
For the three months ended September 30, 2025,
one customer represented
During the three and nine months ended September
30, 2025, one vendor accounted for
As of September 30, 2025, one customer made up
NOTE 12 – SEGMENT REPORTING
As of September 30, 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. 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 visibility into shipment transit and last-mile events that are managed by a service center we provide our clients an end-to-end vertical approach for their most critical service delivery needs. Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.
Authentication: This segment specializes in anti-counterfeit and brand protection.
We do not allocate the following items to the segments: general & administrative expenses and other income (expense).
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Notes to the Consolidated Financial Statements (unaudited)
The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated loss before income tax expense (in thousands):
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Precision Logistics | Authentication | Consolidated | Precision Logistics | Authentication | Consolidated | |||||||||||||||||||
| NET REVENUE | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| COST OF REVENUE | ||||||||||||||||||||||||
| GROSS PROFIT | ||||||||||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Management and technology | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||
| Other Segment Items | ||||||||||||||||||||||||
| Goodwill and Intangible asset impairment | ||||||||||||||||||||||||
| Total Segment expenses | ||||||||||||||||||||||||
| Segment (Expense) Income | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||
| General and Administrative | ( | ) | ( | ) | ||||||||||||||||||||
| Other Income | ||||||||||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
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Notes to the Consolidated Financial Statements (unaudited)
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| Precision Logistics | Authentication | Consolidated | Precision Logistics | Authentication | Consolidated | |||||||||||||||||||
| NET REVENUE | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| COST OF REVENUE | ||||||||||||||||||||||||
| GROSS PROFIT | ||||||||||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Management and technology | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||
| Other Segment Items | ( | ) | ||||||||||||||||||||||
| Goodwill and Intangible asset impairment | ||||||||||||||||||||||||
| Total Segment expenses (income) | ( | ) | ||||||||||||||||||||||
| Segment (Expense) Income | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||
| General and Administrative | ( | ) | ( | ) | ||||||||||||||||||||
| Other Income | ||||||||||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
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Notes to the Consolidated Financial Statements (unaudited)
NOTE 13 – SUBSEQUENT EVENTS
On October 9, 2025, the Company issued restricted stock awards vesting on October 9, 2026 to two members of the Board of Directors.
On October 10, 2025, the Company issued shares of common stock underlying vested restricted stock units to a former board member.
After the third quarter ended September 30, 2025, the Company discontinued one foreign patent application, and abandoned one US and one European patent because they have no current planned use.
On November 3, 2025, the Company issued shares of common stock upon vesting of restricted stock units, net of withheld for taxes related to a stock grant on November 2, 2022.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information in this Management’s Discussion and Analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and notes.
Cautionary Note Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,” “estimate,” “continue,” “intended,” “plan,” “could,” “target,” “potential,” “will,” “would,” “expect” and similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts contained in this report, including among others, our strategy, future operations, future financial position, future revenue, sources of future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements.
Our actual results and financial condition may differ materially from those expressed or implied in such forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.
For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and our other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements in this report are made only as of the date hereof or as indicated and represent our views as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise, except as required by law.
Overview
VerifyMe, Inc. (“VerifyMe,” the “Company,” “we,” “us,” or “our”), is a logistics company that specializes in time and temperature sensitive products, as well as providing brand protection and enhancement solutions. We operate a Precision Logistics segment which includes the operations of our subsidiary 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. 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 and diversion activities. Further information regarding our business segments is discussed below:
Precision Logistics: The Precision Logistics segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive perishable products. We manage complex industry-specific shipping logistic processes that require critical time, temperature control and handling to prevent spoilage and delayed delivery times and brand impairment. Utilizing predictive analytics from multiple data sources including flight-tracking, weather, traffic, major carrier feeds, and time of day data, we provide our clients an end-to-end vertical approach for their most critical service delivery needs. Using our proprietary IT platform, we provide real-time information and analysis to mitigate supply chain flow interruption, as well as delivering last-mile resolution for key markets, including the perishable healthcare and food industries.
Through our proprietary PeriTrack® customer dashboard, we provide an integrated tool that gives our customers an in-depth look at their shipping activities and allows them access to critical information in support of the specific needs of the supply chain stakeholders. We offer post-delivery services such as customized reporting for trend analysis, system performance reports, power outage maps, and other tailored reports.
Precision Logistics generates revenue from two business service models.
| · | ProActive Service – clients pay us directly for carrier service coupled with our proactive logistics assistance. |
| · | Premium Service – clients pay us directly or through our carrier partner for our complete white-glove shipping monitoring and predictive analytics service. This service includes customer web portal access, weather monitoring, temperature control, full-service center support and last mile resolution. |
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Products: The Precision Logistics segment includes the following bundled services as part of our service offerings to our customers:
| · | PeriTrack®: Our proprietary PeriTrack® customer dashboard was developed utilizing our extensive logistics operational knowledge. This integrated web portal tool gives our customers an in-depth look at their shipping activities based on real-time data. The PeriTrack® dashboard was designed to provide critical information in support of the specific needs of supply chain stakeholders and gives our customer resolution specialists a 360° view of shipping activity. PeriTrack® features tools tailored for shippers of perishable goods, which includes the In-Transit Shipment Tracker. This tool provides details on the unique shipper’s in-transit shipments, with the ability to select and analyze data on individual shipments. |
| · | Service Center: We have assembled a team of customer resolution specialists based in the U.S. This service team resolves shipping problems on behalf of our customers. The service center acts as a help desk and monitors shipping to delivery for our customers. |
| · | Pre-Transit Service: We help clients prepare their products for shipments by advising clients on packaging requirements for various types of perishable products. Each product type requires its own particular packaging to protect it during shipment, and we utilize our extensive knowledge and research to provide our customers with packaging recommendations to meet their unique needs. |
| · | Post-Delivery: We provide customized reporting for trend analysis, system performance reports, power outage maps, and many other reports to help our customers improve their processes and customer service outcomes. |
| · | Weather/Traffic Service: We have full-time meteorologists on staff to monitor weather. A package may experience a variety of weather conditions between the origin and destination, and our team actively monitors these conditions to maximize the number of timely and safely transmitted shipments. Similarly, traffic and construction also create unpredictable delays which our team works diligently to mitigate. If delays or other issues occur, we inform clients and work with them to proactively resolve such shipment issues. |
Authentication: The Authentication segment specializes in anti-counterfeit and brand protection. This is critical in the current landscape of increased counterfeit activity and customer expectations
Opportunities
Traditionally, most shipping businesses utilize the carrier’s data platform for tracking which generally informs the shipping enterprise, and their customers, when a package is in transit, when a package has been delivered, and some level of detail of the path which a package traveled. We believe taking the data feeds from a carrier and adding real-time visibility with predictive analytics and the human intervention factor of our service center gives us a competitive advantage against other third-party platforms that solely rely on the carrier’s data feeds. We utilize a variety of input sources beyond the carrier’s data feed. Our proprietary “Predictive Analytics” technology is fed real-time meteorology data, traffic and road construction data, and power grid information to help predict issues before they happen. If an alert is created the shipper and our service center will work to address the issue and save the perishable product from spoiling, saving the shipper significant costs and reducing the need to replace products that are no longer viable. We have meteorologists on staff that track world-wide weather patterns to address predicted issues before they happen. We believe the company has two significant areas of opportunity. First, our services are specifically designed to address the needs of small and medium size agriculture, food and beverage companies. Second, the pharmaceutical and healthcare industries represent significant opportunities due to the enhanced tracking and customer service associated with distribution of these products. We are focusing our sales emphasis on those industries.
Building logistics infrastructure is a capital-intensive process as the investment is locked in for a considerably long period. Due to the current economic environment, and our cost competitive offering, we believe companies may opt to outsource their precision logistics services to reduce their operational costs. The outsourcing of supply chain related and other logistics operations to service providers such as ours allows companies to improve the efficiency of their businesses by focusing their resources on core competencies. We believe outsourcing this function to our Precision Logistics segment provides the ideal solution for all parties involved.
Partnerships:
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 such, PeriShip Global is no longer a FedEx preferred shipper and our Precision Logistics segment can no longer offer our Proactive services to FedEx customers. We continue to provide our Premium services to FedEx customers. On September 24, 2025, we began offering Proactive services to the customers of an alternative Preferred Shipping Partner.
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On July 29, 2025, PeriShip Global entered into (i) a Digital Channel Program Agreement (the “Program Agreement”) and (ii) a Partner API Access Agreement (the “Integration Agreement” and together with the Program Agreement, the “Agreements”) with an alternative Preferred Shipping Partner (“Partner”). The Agreements provide PeriShip Global access to designated Partner services at promotional rates as part of a specialized logistics management services for time-sensitive and perishable shipments, including proactive monitoring, weather tracking, and issue resolution through certain digital channel program applications. Pursuant to the Integration Agreement, PeriShip Global will be permitted to develop Interfaces to certain Partner APIs, Access Services and Information (as such terms are defined in the Integration Agreement). The Agreements have a term of three years, subject to customary termination and renewal provisions.
Our Authentication segment has a contract with HP Indigo. We believe this partnership can be used to enable brand owners to securely prevent counterfeiting.
Current Economic Environment
In response to market conditions and lower demand some carriers have implemented strategies to address a potential global recession. We have seen a softening in demand for some services related to high-end perishable items which seem to be impacted by reduced discretionary spending by U.S. consumers. While a recession, whether global or more localized to the U.S., may decrease the demand for our services that are more discretionary in nature, we believe that the internal cost cutting measures, if implemented by carriers, may benefit out-sourced service providers. Additionally, the U.S. presidential administration has imposed tariffs on goods imported into the U.S. In response, several foreign governments have imposed new tariffs on certain goods imported from the U.S. and additional retaliatory measures against U.S. goods are expected. These or additional changes in U.S. or international trade policy, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions. We can provide no assurances that a decline in discretionary consumer spending will not have a negative impact on our revenues and results of operations.
Seasonality
We experience seasonal fluctuations in our net revenues from sales in our Precision Logistics segment. Revenues from sales are generally higher in the fourth quarter than in other quarters due to increased holiday shipments. While the fourth quarter is historically our highest revenue quarter, we expect revenues from Proactive services to decline in the quarter ended December 31, 2025 as compared to the quarter ended December 31, 2024 due to the previously disclosed loss of FedEx as a shipping supplier. The seasonality of our business may cause fluctuations in our quarterly operating results.
Recent Developments
FedEx
On August 26, 2025, the 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 such, PeriShip Global is no longer a FedEx preferred shipper and our Precision Logistics segment can no longer offer our Proactive services to FedEx customers. We continue to provide our Premium services to FedEx customers. As a result of this change, 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.
Partner Agreements
On July 29, 2025, PeriShip Global entered into a Program Agreement, and an Integration Agreement with an alternative Preferred Shipping Partner (“Partner”). The Agreements provide PeriShip Global access to designated Partner services at promotional rates as part of a specialized logistics management services for time-sensitive and perishable shipments, including proactive monitoring, weather tracking, and issue resolution through certain digital channel program applications. Pursuant to the Integration Agreement, PeriShip Global will be permitted to develop Interfaces to certain Partner APIs, Access Services and Information (as such terms are defined in the Integration Agreement). The Agreements have a term of three years, subject to customary termination and renewal provisions.
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.
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Nasdaq Deficiency Notice
On April 3, 2025, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based on the closing bid price of our common stock for 30 consecutive business days, we no longer meet Nasdaq Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of at least $1 per share (the “Minimum Bid Price Rule”). The Nasdaq Listing Rules provide a compliance period of 180 calendar days, or until September 30, 2025, in which to regain compliance with the Minimum Bid Price Rule. On October 1, 2025, we received written notice from the Listing Qualifications staff of Nasdaq providing a second 180 calendar day compliance period, or until March 30, 2026, in which to regain compliance with the Minimum Bid Price Rule. On October 17, 2025, we received written notice from the Listing Qualifications staff of Nasdaq stating that for the last 10 consecutive business days, the closing bid price of our common stock has been at $1.00 per share or greater, and accordingly, we regained compliance with the minimum bid price requirements set forth in The Nasdaq Listing Rules for continued listing on the Nasdaq Capital Market. Nasdaq informed us in the compliance notice that it now considers this matter closed.
Results of Operations
Comparison of the three months ended September 30, 2025, and 2024
The following discussion analyzes our results of operations for the three months ended September 30, 2025 and 2024.
| Revenue | Three Months Ended September 30, | |||||||
| (in thousands) | 2025 | 2024 | ||||||
| Precision Logistics | $ | 4,973 | $ | 5,303 | ||||
| Authentication | 60 | 132 | ||||||
| Total Revenue | $ | 5,033 | $ | 5,435 | ||||
Consolidated revenue decreased $402 thousand or 7% during the third quarter of 2025 compared to the third quarter of 2024. The decrease is primarily due to a $767 thousand decrease related to discontinued services with two customers in our Proactive services, partially offset by increased revenues from new and existing customers in the Precision Logistics segment. The decrease in revenue in our Authentication segment is primarily due to the divestiture of our Trust Codes Global business in December 2024.
| Gross Profit | Three Months Ended September 30, | |||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||||
| % of Revenue | % of Revenue | |||||||||||||||
| Precision Logistics | $ | 2,039 | 41 | % | $ | 1,777 | 34 | % | ||||||||
| Authentication | 34 | 57 | % | 118 | 89 | % | ||||||||||
| Total Gross Profit | $ | 2,073 | 41 | % | $ | 1,895 | 35 | % | ||||||||
Gross profit for the three months ended September 30, 2025, was $2,073 thousand, compared to $1,895 thousand for the three months ended September 30, 2024. The resulting gross margin was 41% for the three months ended September 30, 2025, compared to 35% for the three months ended September 30, 2024. The gross profit increase relates primarily to decreased costs related to our Proactive services.
Segment Management and Technology
Segment management and technology expenses decreased by $585 thousand to $744 thousand for the three months ended September 30, 2025, compared to $1,329 thousand for the three months ended September 30, 2024. The decrease relates primarily to the divestiture of Trust Codes Global in December 2024, a decrease in management wages and stock compensation expense, and the capitalization of development expense related to internally used software in our Precision Logistics segment.
General and Administrative Expenses
General and administrative expenses decreased by $109 thousand to $669 thousand for the three months ended September 30, 2025, compared to $778 thousand for the three months ended September 30, 2024. The decrease relates primarily to a decrease in stock-based compensation and management wages.
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Research and Development
Research and development expenses were $5 thousand for the three months ended September 30, 2025, and 2024, respectively.
Sales and Marketing
Sales and marketing expenses decreased by $164 thousand to $237 thousand for the three months ended September 30, 2025, compared to $401 thousand for the three months ended September 30, 2024. This improvement was primarily due to a decrease in headcount and travel expense in the Precision Logistics and Authentication segments.
Goodwill and Intangible Asset Impairment
As a result of a long-lived asset and goodwill asset impairment assessments performed in the third quarter of 2025, an intangible asset impairment charge of $2,788 thousand and a goodwill impairment charge of $1,062 thousand was recorded for the three months ended September 30, 2025 relating to the Precision Logistics segment. An intangible asset impairment charge of $901 thousand and a goodwill impairment charge of $1,351 thousand was recorded for the three months ended September 30, 2024 relating to Authentication segment.
Interest Income(Expense), net
Interest income, net was $67 thousand for the three months ended September 30, 2025, compared to interest expense, net of $29 thousand for the three months ended September 30, 2024. This increase primarily relates to a reduction of interest expense resulting from the repayment of the Term Note in the first quarter of 2025, an increase in interest income from the Company’s investment of proceeds from the warrants exercise in January 2025, and interest income earned on the promissory note with ZenCredit entered on August 8, 2025.
Net Loss
Consolidated net loss for the three months ended September 30, 2025, and 2024 was $3,356 thousand and $2,424 thousand, respectively. The increased loss relates primarily to the one time goodwill and intangible asset impairment, noted above, and the gain on change in fair value of the contingent consideration related to the acquisition of Trust Codes Global for the three months ended September 30, 2024 that did not recur in the three months ended September 30, 2025. The resulting consolidated loss per share for the three months ended September 30, 2025, and three months ended September 30, 2024, was $0.26 and $0.23 per basic and diluted share, respectively.
Comparison of the Nine months ended September 30, 2025, and 2024
The following discussion analyzes our results of operations for the nine months ended September 30, 2025, and 2024.
| Revenue | Nine Months Ended September 30, | |||||||
| (in thousands) | 2025 | 2024 | ||||||
| Precision Logistics | $ | 13,895 | $ | 16,161 | ||||
| Authentication | 113 | 385 | ||||||
| Total Revenue | $ | 14,008 | $ | 16,546 | ||||
Consolidated revenue decreased $2,538 thousand for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The decrease is primarily due to the decreased demand across several of our Proactive services customers, one customer’s shift to use their cold chain strategy, and a discontinued contract with one customer in our Premium services. The decrease in revenue in our Authentication segment is primarily due to the divestiture of our Trust Codes Global business in December 2024.
| Gross Profit | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||||
| % of Revenue | % of Revenue | |||||||||||||||
| Precision Logistics | $ | 5,080 | 37 | % | $ | 5,903 | 37 | % | ||||||||
| Authentication | 74 | 65 | % | 342 | 89 | % | ||||||||||
| Total Gross Profit | $ | 5,154 | 37 | % | $ | 6,245 | 38 | % | ||||||||
Gross profit for the nine months ended September 30, 2025, was $5,154 thousand, compared to $6,245 thousand for the nine months ended September 30, 2024. The resulting gross margin was 37% for the nine months ended September 30, 2025, compared to 38% for the nine months ended September 30, 2024. The gross profit decrease relates to the decrease in Premium services revenue which has higher margins than Proactive services, and the decrease in Authentication revenue from the divestiture of our Trust Codes Global business in December 2024. Our Proactive services gross margin percentage improved in 2025 compared to 2024.
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Segment Management and Technology
Segment management and technology expenses decreased by $1,599 thousand to $2,590 thousand for the nine months ended September 30, 2025, compared to $4,189 thousand for the nine months ended September 30, 2024. The decrease relates primarily to the divestiture of Trust Codes Global in December 2024 and gain on derecognized liability in our Authentication segment and a decrease in management wages and severance expense in our Precision Logistics segment.
General and Administrative Expenses
General and administrative expenses decreased by $539 thousand to $2,241 thousand for the nine months ended September 30, 2025, compared to $2,780 thousand for the nine months ended September 30, 2024. The decrease relates primarily to a decrease in stock-based compensation from $1,055 thousand for the nine months ended September 30, 2024 to $465 thousand for the nine months ended September 30, 2025.
Research and Development
Research and development expenses were $15 thousand and $65 thousand for the nine months ended September 30, 2025, and 2024, respectively.
Sales and Marketing
Sales and marketing expenses decreased by $194 thousand to $805 thousand for the nine months ended September 30, 2025, compared to $999 thousand for the nine months ended September 30, 2024. The decrease is primarily related to a reduction in employees and consultants in our Precision Logistics and Authentication segments.
Goodwill and Intangible Asset Impairment
As a result of a long-lived asset and goodwill asset impairment assessment performed in the third quarter of 2025, an intangible asset impairment charge of $2,788 thousand and a goodwill impairment charge of $1,062 thousand was recorded for the nine months ended September 30, 2025 relating to the Precision Logistics segment. An intangible asset impairment charge of $914 thousand and a goodwill impairment charge of $1,351 thousand was recorded for the nine months ended September 30, 2024 relating to Authentication segment.
Interest Income (Expense), net
Interest income was $121 thousand for the nine months ended September 30, 2025, compared to interest expense of $109 thousand for the nine months ended September 30, 2024. This increase in interest income primarily relates to the repayment of the Term Note in the first quarter of 2025 reducing interest expense as well as the increase in interest income from the Company’s investment of the proceeds from the warrants exercise in January 2025, and interest income earned on the Loan Agreement with ZenCredit entered on August 8, 2025.
Net Loss
Consolidated net loss for the nine months ended September 30, 2025, and 2024 was $4,218 thousand and $3,323 thousand, respectively. The increased loss relates primarily to the one time goodwill and intangible asset impairment, noted above, and the gain on change in fair value of the contingent consideration related to the acquisition of Trust Codes Global for the nine months ended September 30, 2024 that did not recur in the nine months ended September 30, 2025. The resulting consolidated loss per share for the nine months ended September 30, 2025, and nine months ended September 30, 2024, was $0.34 and $0.32 per basic and diluted share, respectively.
Liquidity and Capital Resources
Our operations provided $549 thousand of cash during the nine months ended September 30, 2025, compared to $302 thousand during the comparable period in 2024.
Cash used by investing activities was $2,566 thousand during the nine months ended September 30, 2025, compared to $353 thousand during the nine months ended September 30, 2024. The increase in spending in investing activities relates primarily to a Promissory Note of $2 million with ZenCredit entered into on August 8, 2025 and increased capitalized software costs in the nine months ended September 30, 2025.
Cash provided by financing activities during the nine months ended September 30, 2025, was $3,201 thousand compared to cash used in financing activities during the nine months ended September 30, 2024 of $438 thousand. The increased cash primarily relates to proceeds from the exercise of warrants, partially offset by the repurchase of shares under the repurchase program and repayment of the Term Note during the nine months ended September 30, 2025.
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On August 8, 2025, we entered into the Loan Agreement with ZenCredit. Pursuant to the Loan Agreement, we agreed to loan ZenCredit up to $2 million and on August 11, 2025 we loaned ZenCredit $2 million in exchange for a promissory note issued pursuant to the Loan Agreement. 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. As of September 30, 2025, we reserved $12 thousand allowance for expected credit loss on the Note.
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 per share. The new warrant was immediately exercisable upon issuance and has a term of five and one-half years from the issuance date.
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The Company recognized the fair value of the new warrants, calculated using the Black-Scholes option pricing model, as $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 March 6, 2025, the Company entered into an ATM with 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. Roth acts as the sales agent and is entitled to a 3.0% commission on gross proceeds from sales under the program.
In connection with the ATM, we incurred direct legal and audit fees totaling $150 thousand. These costs have been recorded as deferred offering costs within other current assets and will be reclassified to additional paid-in capital and amortized over a period of one year once shares are issued. Deferred offering costs will be assessed for recoverability at each reporting period. If management determines that the ATM program is not probable to be utilized, the deferred costs will be expensed to general and administrative expenses.
During the nine months ended September 30, 2025, and as of the date of this filing, we have not sold any shares of common stock through the ATM.
On September 22, 2022, we entered into the PNC Facility with PNC Bank, National Association. The PNC Facility includes a $1 million RLOC. The RLOC has no scheduled payments of principal until maturity, and bears interest per annum at a rate equal to the sum of Daily SOFR plus 2.85% with monthly interest payments. The RLOC is guaranteed by the Company and secured by the assets of PeriShip Global and the Company. As of September 30, 2025, $0 was outstanding on the RLOC. On August 8, 2025, the Company extended the line of credit to September 30, 2026.
The PNC Facility included a four-year Term Note for $2 million which matured in September of 2026 and required equal quarterly payments of principal and interest. The Term Note incurred interest per annum at a rate equal to the sum of Daily SOFR plus 3.1%. The PNC Facility is guaranteed by VerifyMe and secured by the assets of PeriShip Global and VerifyMe. As of January 21, 2025, the Term Note was paid in full and no future principal payments are due.
We believe that our cash and cash equivalents will fund our operations beyond the next 12 months. We may issue additional debt or equity as we grow our business which we expect to grow organically, and if the opportunity arises, through key acquisitions that will help accelerate the growth of our business.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies and Estimates
Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial position, results of operations or cash flows.
Goodwill
We have recorded goodwill as part of our acquisitions, which represents the excess of purchase price over the fair value of net assets acquired in the business combinations. Pursuant to ASC 350, the Company will test goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment test. The assessment considers factors such as, but not limited to, macroeconomic conditions, data showing other companies in the industry and our share price. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.
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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, the Company 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 us to conduct an interim test of the fair value of the goodwill for the Precision Logistics segment. 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, we recorded a goodwill impairment charge of $1,062 thousand during the three and nine months ended September 30, 2025, within goodwill and intangible asset impairment on the consolidated statement of operations.
Intangibles
We review long-lived assets for impairment when performance expectations, events, or changes in circumstances indicate that the asset’s carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiable cashflows by comparing the carrying value of the asset to the undiscounted cashflow. If the evaluation indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.
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 of the revised internal forecasts, the Company concluded in accordance with ASC 360 that this change was an interim triggering event for the three months ended September 30, 2025, indicating the carrying value of our long-lived assets including internally used software, deferred implementation, trademarks, customer relationships, non-compete 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. The analysis indicated that certain intangible assets were impaired. We recorded an intangible impairment charge of $2,788 thousand during the three months ended September 30, 2025, within goodwill and intangible asset impairment on the consolidated statement of operations.
Use of Non-GAAP Financial Measures
This Form 10-Q includes both financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”), as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to and should not be considered as alternatives to any other GAAP financial measures. They may not be indicative of the historical operating results of VerifyMe nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
VerifyMe’s management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. The Company believes that both management and shareholders benefit from referring to EBITDA and Adjusted EBITDA in planning, forecasting and analyzing future periods. Additionally, the Company believes Adjusted EBITDA is useful to investors to evaluate its results because it excludes certain items that are not directly related to the Company’s core operating performance. In particular, with regard to our comparison of Adjusted EBITDA for the three and nine months ended September 30, 2025, to the three and nine months ended September 30, 2024, we believe is useful to investors in understanding the results of operations. The Company’s management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison. The Company’s management recognizes that EBITDA and Adjusted EBITDA, as non-GAAP financial measures, have inherent limitations because of the described excluded items.
The Company defines EBITDA as net loss before interest (income) expense, income tax expense (benefit), and depreciation and amortization. Adjusted EBITDA represents EBITDA plus non-cash stock compensation expense, fair value of restricted stock units issued in exchange for services, severance expense, gain on derecognized liability, goodwill and intangible asset impairments, change in fair value of contingent consideration, and one-time professional expenses for acquisitions and divestiture. VerifyMe believes EBITDA and Adjusted EBITDA are important measures of VerifyMe’s operating performance because they allow management, investors and analysts to evaluate and assess VerifyMe’s core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.
A reconciliation of EBITDA and Adjusted EBITDA to the most comparable financial measure, net loss, calculated in accordance with GAAP is included in a schedule to this press release. The Company believes that providing the non-GAAP financial measure, together with the reconciliation to GAAP, helps investors make comparisons between VerifyMe and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules as the presentation here may not be comparable to other similarly titled measures of other companies.
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VerifyMe, Inc.
Consolidated EBITDA and Adjusted EBITDA Reconciliation
Table (Unaudited)
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net Loss (GAAP) | $ | (3,356 | ) | $ | (2,424 | ) | $ | (4,218 | ) | $ | (3,323 | ) | ||||
| Interest (income) expense, net | (67 | ) | 29 | (121 | ) | 109 | ||||||||||
| Amortization and depreciation | 281 | 306 | 853 | 905 | ||||||||||||
| Total EBITDA (Non-GAAP) | (3,142 | ) | (2,089 | ) | (3,486 | ) | (2,309 | ) | ||||||||
| Adjustments: | ||||||||||||||||
| Stock based compensation | - | 85 | 86 | 174 | ||||||||||||
| Fair value of restricted stock and restricted stock units issued in exchange for services | 92 | 401 | 598 | 1,009 | ||||||||||||
| Severance | 37 | - | 112 | 141 | ||||||||||||
| Change in fair value of contingent consideration | - | (475 | ) | - | (839 | ) | ||||||||||
| Gain on derecognized liability | (9 | ) | - | (109 | ) | - | ||||||||||
| Goodwill and intangible asset impairment | 3,850 | 2,252 | 3,850 | 2,265 | ||||||||||||
| One-time professional expenses for acquisitions/divestiture | 4 | - | 51 | - | ||||||||||||
| Total Adjusted EBITDA (Non-GAAP) | $ | 832 | $ | 174 | $ | 1,102 | $ | 441 | ||||||||
Recently Adopted Accounting Pronouncements
Recently adopted accounting pronouncements are discussed in Note 1 – Summary of Significant Accounting Policies in the notes accompanying the financial statements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s Chief Executive Officer, our principal executive officer, and Chief Financial Officer, our principal financial officer, have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2025, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2025, our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control over Financial Reporting
There have been no other changes in our internal controls over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
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 a preferred 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.
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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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Share Repurchase Plan
ISSUER PURCHASES OF EQUITY SECURITIES
| Period | Total Number of Shares (or Units) Purchased |
Average Price Paid per |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |
Approximate Dollar Value of Shares that | ||||
| 07/01/2025-07/31/2025 | - | - | - | $330 | ||||
| 08/01/2025-08/31/2025 | 70,689 | $0.98 | 70,691 | $262 | ||||
| 09/01/2025-09/30/2025 | - | - | - | $262 | ||||
| Total | 70,689 | $0.98 | 70,691 | $262 |
| (1) | 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. The share repurchase program may be modified, suspended or discontinued at the discretion of the Board at any time. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
During the three months ended September 30, 2025, no director or officer
of the Company
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ITEM 6. EXHIBITS
*Filed herewith
**Furnished herewith
+ 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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| VERIFYME, INC. | |
| Date: November 14, 2025 | By: /s/ Adam Stedham |
| Adam Stedham | |
|
Chief Executive Officer and President (Principal Executive Officer) | |
| Date: November 14, 2025 | By: /s/ Jennifer Cola |
| Jennifer Cola | |
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting |
44
Exhibit 10.1
UPS DIGITAL CHANNEL PROGRAM AGREEMENT
UPSDCPSP052025 (Single Payor)
This UPS Digital Channel Program Agreement (this “Agreement”) is made effective as of this July 28, 2025, (the “Effective Date”) by and between PeriShip Global, LLC, with a place of business at 265 E. Main Street, Branford, CT 06405 (“Developer”), and United Parcel Service, Inc., an Ohio corporation (“UPS Ohio”), and if Developer offers the UPS Digital Channel Program to Shippers (as defined below) outside the United States, UPS Worldwide Forwarding, Inc., a Delaware corporation (“UPS WWF”), each with a place of business at 55 Glenlake Parkway, NE, Atlanta, Georgia 30328 (UPS Ohio alone (for the United States), or UPS Ohio and UPS WWF collectively (outside the United States), “UPS”).
The parties wish to set forth the terms and conditions under which UPS offers, and Developer will participate in, a program that enables Developer to access designated UPS services at promotional rates as part of a Developer Offering (defined below) through certain of Developer’s applications (the “Application” and such program the “UPS Digital Channel Program”). Capitalized terms used herein but not defined have the meaning ascribed to such terms in the UPS Partner API Access Agreement between UPS Digital, Inc., and Developer with an effective date on or about July 28, 2025 (the “Integration Agreement”). In consideration of the mutual obligations, promises, and undertakings of the parties, the parties hereto agree as follows:
Developer Location: United States. This UPS Digital Channel Program Agreement may only be presented to, and its effectiveness is conditioned on execution by, an entity headquartered and established in the United States or one of the jurisdictions identified on Appendix 1 (Jurisdiction-Specific Amendment) (as identified here, the “Developer Location”).
1. DEFINITIONS
1.1 Affiliate means an entity that controls, is controlled by, or is under common control with a party to this Agreement.
1.2 Developer Offering means specialized logistics management services for time-sensitive and perishable shipments, including proactive monitoring, weather tracking, and issue resolution to ensure on-time delivery across the perishables industry that utilize transportation services provided by the UPS Group.
1.3 Integration Requirements means those requirements for integration or presentation of or with UPS technology set forth in the “Integration Requirements” section or appendix of the Integration Agreement.
1.4 Program Shipper means a Shipper domiciled in the Program Territory (as defined in Section 2.1) having a UPS Shipper Number assigned by UPS and who has completed Program Registration and wishes to avail itself of UPS Program Shipping Services (defined in Section 2.1).
1.5 Shipper means any Person that is not Developer and is authorized to use an Application to, among other things, access UPS Shipping Services as part of a Developer Offering and related Shipping Information consistent with the restrictions set forth in this Agreement. In no event may a Shipper be (i) a Person prohibited from receiving UPS Materials pursuant to Sections 11 (General Compliance; Insurance) and 12(b)(i) of the Integration Agreement; or (ii) a UPS Competitor.
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1.6 UPS Shipping Services means package and shipping services, including the labeling, rating, routing, recording, and tracking of shipments tendered to the UPS Group for delivery, and includes the UPS Program Shipping Services.
2. THE UPS DIGITAL CHANNEL PROGRAM
2.1 UPS Digital Channel Program Availability. Subject to Developer’s compliance with the terms and conditions of the Integration Agreement and this Agreement, Developer is authorized to make available as part of a Developer Offering to Program Shippers those UPS Shipping Services offered as part of the UPS Digital Channel Program or otherwise agreed by the parties in writing at the rates determined by UPS (such rates the “Program Rates” and such services the “Program Shipping Services”). UPS has provided the initial Program Rates to Developer, and Developer acknowledges receipt. UPS may change the Program Rates upon thirty (30) days’ written notice to Developer. The Program Rates and Program Shipping Services may only be made available to Program Shippers for shipments tendered through an Application originating from either (i) the Developer Location or (ii) a jurisdiction identified on Appendix 1 (Jurisdiction-Specific Amendment) or otherwise agreed by the parties in writing (the jurisdictions in (i) and (ii), collectively, the “Program Territory”). UPS (itself or through its Affiliates listed on Appendix 2 (UPS Service Entities) (such Affiliates, the “Service Entities”)) provides the Program Shipping Services. UPS may periodically update the UPS Terms in its sole discretion. Developer acknowledges and agrees that UPS may designate any of the Service Entities to (a) provide the UPS Services to the Program Shippers hereunder and (b) collect [***] charges hereunder from Developer. UPS may add or remove Affiliates as Service Entities and change the name and address of a Service Entity upon notice to Developer, and Developer agrees that a change in such details on an applicable UPS invoice or other UPS communication from the corresponding Service Entity constitutes sufficient notice of such changes.
2.2 Program Shipper Eligibility and UPS Registration. Eligibility to become a Program Shipper is within the discretion of UPS. Without limiting the generality of the foregoing, only Shippers that (i) are domiciled in the Program Territory; (ii) have a UPS Shipper Number when attempting to order a Developer Offering including package shipment using UPS Shipping Services via the Application; and (iii) have properly completed Program Registration will be eligible to become Program Shippers. Developer must not offer Program Registration in the UPS Digital Channel Program to any Shipper who does not meet the foregoing requirements.
2.3 Account Management and Shipper Charges.
(a) Account Management. UPS will create at least one UPS Shipper Number for each Application (each, a “Developer Shipper Number”) to be used for billing purposes as further described below in Section 2.3(b) (Shipper Charges). UPS, in its discretion, may create multiple Developer Shipper Numbers for the Application(s) to distinguish between Developer Applications, categories of Shippers (e.g., merchants versus consumers), or distinctions in its reasonable discretion, in which case Developer shall ensure that Shippers are assigned to the appropriate Developer Shipper Number when registering such Shippers as Program Shippers. Developer must not disclose the Program Rates to any third party, including the Program Shipper using the Program Shipping Services. Developer assumes responsibility at its sole cost and expense of registering, servicing, and billing Program Shippers for use of Program Shipping Services through the Application.
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(b) Shipper Charges. Developer is responsible for payment of all shipment transportation and related charges invoiced to a Developer Shipper Number, including without limitation all charges for Program Shipping Services third party billed to a Developer Shipper Number. UPS will invoice Developer on a [***] basis and Developer shall pay in full all such shipment transportation and related charges via electronic funds transfer within [***] days of receipt of a UPS invoice, or such longer period as may be specified by UPS upon thirty (30) days’ notice. Each Program Shipper that requests Program Shipping Services as part of a Developer Offering through the Application will be deemed the “Shipper” as that term is used in the UPS Tariff.
(c) Taxes. Developer shall, if and as directed by UPS, provide Sales Tax (as defined in Section 15.2) “no-pay” invoices or other billing or related tax documentation to Program Shippers. The foregoing requirement may be met through means mutually agreed by the parties in writing, such as the provision of such documentation to Program Shippers through a UPS portal linked in the Application. If required by UPS, Developer shall also collect and transmit, as directed by UPS, the tax ID and other relevant tax details of the Program Shippers to ensure compliance with applicable tax laws and regulations.
2.4 Conditions and Exclusions.
(a) No Intermediary. Developer must not enable or permit any third party (including but not limited to a distributor, provider, channel partner, or similar) or any Shipper or user of its Application or Interfaces acting other than for its Internal Purposes to (i) act as an intermediary between the Application and the ultimate shipper utilizing UPS Shipping Services under this Agreement, or (ii) register or extend registration to become a Program Shipper to such third party’s end users, licensees, or customers.
(b) Suspension. UPS may, in its sole discretion at any time, suspend access to the UPS Systems (including the Program Rates and Program Shipping Services) by Persons accessing the UPS Systems other than as explicitly permitted under this Agreement and the Integration Agreement.
2.5 Shipper Relationship. UPS acknowledges that all Shippers are joint customers of Developer and UPS. UPS retains sole discretion to contact any Shippers to promote UPS Shipping Services, and nothing in this Agreement will operate to prevent (i) standard UPS operational communications, or (ii) other UPS business units (i.e., non- UPS Digital Channel Program marketing units) from marketing communications to its customers who may be Program Shippers. Similarly, nothing in this agreement prevents Developer from standard communications and marketing with Shippers.
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3. COMPENSATION. There will be no compensation or payment by UPS to Developer arising from or related to this Agreement, including for any marketing expenses, promotional materials, or any related activities set forth in this Agreement.
4. ADVERTISING/PROMOTION RIGHTS AND OBLIGATIONS
4.1 Endorsement. During the Term of this Agreement, Developer shall endorse to its Shippers (i) the UPS Shipping Services made available through the UPS Digital Channel Program and (ii) UPS as a [***] shipping service provider for Developer Offerings. For avoidance of doubt, UPS acknowledges that Developer’s endorsement is not exclusive.
4.2 Promotion. Developer shall promote the Program Shipping Services, including by engaging in the following activities and responsibilities:
(a) maintaining a web page promoting the benefits provided by UPS Shipping Services made available hereunder through the UPS Digital Channel Program;
(b) including a URL or link to materials promoting the UPS Shipping Services made available through the Application pursuant to the UPS Digital Channel Program hereunder;
(c) collaborating with UPS throughout the Term to identify and target Developer customers that have not used Program Shipping Services with a Developer Offering;
(d) positioning information about UPS benefits within Developer electronic newsletter, trade publications, Developer publications, Shipper benefit guide or any other Shipper communication materials;
(e) making UPS a [***] carrier, appearing as a carrier in each Application; and
(f) deploying marketing language in each Application that highlights UPS as a preferred partner of Developer.
Any public statements or communications by Developer relating to UPS or the Program Rates and Program Shipping Services will require prior UPS written consent.
4.3 Authorization to Promote. Developer may promote UPS Shipping Services only with prior authorization and promotional material approved by UPS in each instance. Such authorization will extend only for the Term of the Agreement and may be terminated by UPS at any time upon written notice. Developer shall comply with the terms and conditions applicable to use of UPS intellectual property (including but not limited to trademarks) as set forth in the Integration Agreement, including the UPS Brand Guidelines. This limited right to use UPS’s trademarks, service marks, brand, and trade name in relation to this Agreement will automatically terminate upon the expiration or termination of this Agreement. In the event UPS determines, in its sole discretion, that Developer is using any of UPS’s trademarks, service marks, brand or trade name other than as expressly provided herein, Developer shall, upon the request of UPS, immediately cease such non-conforming use.
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4.4 UPS Assets. UPS will provide to Developer print-ready images for specialized Developer advertisements to be placed in Developer promotional materials such as website, email, or newsletters. Developer is responsible for the costs associated with placing the advertisements.
5. TERM; TERMINATION
5.1 Term. The term of this Agreement will commence on the Effective Date, and unless terminated earlier pursuant to the terms hereof, will continue for a period of [***] (the “Initial Term”). At the expiration of the Initial Term, and upon each anniversary thereof, this Agreement will be automatically renewed for successive one (1) year periods (each, a “Renewal Term”), unless either party notifies the other party in writing of its intent not to renew at least sixty (60) days prior to the end of the Initial Term or then-current Renewal Term, as applicable. The Initial Term and any Renewal Terms are collectively referred to herein as the “Term”. Notwithstanding anything to the contrary herein, this Agreement will automatically terminate upon the termination or expiration of the Integration Agreement for any reason.
5.2 Integration Deadlines. UPS may terminate or suspend this Agreement or the Program Rates if Developer has not completed the integration of all identified UPS APIs or other functionality in accordance with the terms of the Integration Agreement by all corresponding deadlines set forth therein.
5.3 Termination. This Agreement may be terminated by either party: (a) at any time upon thirty (30) days’ prior written notice; (b) immediately upon the commission of a material breach of this Agreement or the Integration Agreement which is not cured within fifteen (15) days following notice to the breaching party specifying such breach; or (c) immediately by either party upon (i) the institution by or against the other party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of the other party’s debts, (ii) the other party making an assignment for the benefit of creditors, or (iii) the other party’s dissolution or ceasing to do business.
5.4 Post-Termination Provision of UPS Shipping Services. Upon termination or expiration of this Agreement, UPS may, at its option, provide any discounted UPS Shipping Services to Shippers without restriction, including those who had been Program Shippers.
5.5 Effect of Termination. Upon termination or expiration of this Agreement for any reason, and except as may be authorized under a separate written agreement with a member of the UPS Group, Developer shall immediately discontinue all distribution of materials, brochures, or manuals that include any of UPS’s trademarks, service marks, brand marks, or trade names, and cease making Program Rates and Program Shipping Services available to any and all Shippers through the Application and Interface(s). For the avoidance of doubt, the foregoing provision does not restrict Developer’s ability to make UPS Shipping Services that are not Program Shipping Services (e.g., standard UPS Shipping Services offered at Program Rates) available to Shippers in accordance with a separate agreement between Developer and another member of the UPS Group.
5.6 Survival. Sections 5.4, 5.5, 5.6, 6, and 8 through 16 will survive (for the maximum period permitted by Applicable Law) any termination or expiration of this Agreement for any reason.
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6. CONFIDENTIALITY. Developer and UPS acknowledge that the contents of this Agreement will be deemed “Confidential Information” pursuant to the Integration Agreement and may not be disclosed by either party to any other Person without the consent of the other party, except as required by Applicable Law, or as approved by the parties in writing with respect to any promotional or related materials.
7. COMPLIANCE WITH LAWS. Each party shall comply with all domestic and foreign laws, rules, and regulations (including but not limited to the CAN-SPAM Act) applicable to its performance under this Agreement.
8. JURISDICTION-SPECIFIC TERMS. If the Developer Location identified on page 1 of this Agreement is not the United States, or when a Shipper originates a shipment from a jurisdiction identified on Appendix 1 (Jurisdiction-Specific Amendment), then the parties acknowledge and agree that the applicable terms of Appendix 1 for such jurisdiction(s) replace or modify those of the terms and conditions set forth herein.
9. NOTICES. All notices, requests, or other communications hereunder must be delivered in writing, sent by UPS Next Day Air® service, personal service, facsimile or by United States certified mail, return receipt requested, postage prepaid; to the addresses set forth below or such other address as changed through written notice to the other party.
| If to UPS: | If to Developer: |
| United Parcel Service | PeriShip Global, LLC |
| UPS Digital Channel Program Management Group | 265 E. Main Street |
| 55 Glenlake Parkway N.E. | Brandford, CT 06405 |
| Atlanta, Georgia 30328 | |
| With a copy to: | |
| UPS Legal Department | |
| 55 Glenlake Parkway, NE | |
| Atlanta, GA 30328 | |
| Attn: Global e-Commerce Strategy |
Notice given by personal service will be deemed effective on the date it is delivered, notice sent by UPS Next Day Air® service will be deemed effective one business day after dispatch, notice given by fax will be deemed effective on the date of transmission and notice mailed will be deemed effective on the third business day following its placement in the mail.
10. LIMITATION OF LIABILITY. Except as caused by Developer’s failure to (i) pay [***] and [***] charges or Taxes in accordance with Section 2.3 (Account Management and Shipper Charges) or (ii) comply with applicable law or Sections 2 (The UPS Digital Channel Program), or 6 (Confidentiality), in no event will either party, its Affiliates or its or their officers, directors, employees, agents, successors, or permitted assigns be responsible or liable for any indirect, incidental, consequential, special, exemplary, punitive or other damages, or loss resulting from interruption of business or loss of use or data arising out of performance under this Agreement, even if that party, its Affiliates, subsidiaries, parent, or any of their officers, directors, employees, agents, successors, or permitted assigns has been advised of the possibility of such damages, under any contract, negligence, strict liability or other theory, arising out of or relating in any way to this Agreement or its implementation. Other than for UPS’s indemnification obligations pursuant to Section 11, in no event will the total liability of UPS and its Affiliates under this Agreement exceed [***]. Notwithstanding the foregoing, any loss or damage to goods transported by UPS under, or otherwise incurred in connection with, the Program Shipping Services is governed by the applicable UPS Terms.
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11. INDEMNIFICATION. Each party (as the “Indemnifying Party”) shall indemnify, defend and hold harmless the other party, its Affiliates, and its and their officers, directors, employees, agents, successors, and permitted assigns (the “Indemnitees”) from and against all third party claims, liabilities, suits, demands, actions, fines, damages, losses, costs and expenses, including reasonable attorneys’ fees and court costs (collectively, “Claims”) (i) for injury to or death of any person, or damage to or loss of improvements to real property or tangible personal property, to the extent caused by the negligent acts or willful misconduct of the Indemnifying Party in its performance under this Agreement; and (ii) in the case of Developer, to the extent caused by Developer’s failure to comply with Applicable Law, Section 2 (The UPS Digital Channel Program), or Section 6 (Confidentiality). The limitation of liability of Section 10 will not apply to the indemnification obligations of Developer pursuant to clause (ii) of the preceding sentence. Notwithstanding the foregoing, neither party will be liable under the foregoing indemnification obligation to the extent that such Claim is caused by or results from the negligent acts or willful misconduct of the party seeking such indemnification, and UPS will not be liable under the foregoing indemnification obligation for Claims arising from or relating to the provision of the Program Shipping Services, including without limitation, the loss, damage, delay, misdelivery, or non-delivery of Facilitated UPS Shipments, the parties hereby acknowledging that such Claims will be governed by the applicable UPS Terms.
12. ASSIGNMENT. This Agreement, including any rights, licenses, or obligations under this Agreement, may not be assigned, delegated, transferred, or subcontracted by Assignment by Developer to any other Person or entity without the prior written consent of UPS, and any attempted assignment, delegation, transfer, or subcontract without such consent will be void. UPS may assign, delegate, transfer, or subcontract all or any part of this Agreement or any rights or obligations hereunder to any of its Affiliates without the need for any approval or consent from Developer. In particular, pursuant to where the Jurisdiction-Specific Terms Appendix attached hereto specifies an entity other than United Parcel Service, Inc. as “UPS” for purposes of performance under this Agreement, UPS has the right to assign its rights or obligations under this Agreement or subcontract without limitation to United Parcel Service, Inc., an entity established under the laws of the United States. Any Affiliate to which UPS has subcontracted or assigned rights or obligations will be a third-party beneficiary of Developer’s obligations under this Agreement with respect to all applicable rights and obligations, and as such will be entitled to enforce the terms of this Agreement. For purposes of this Agreement, “Assignment” includes, but is not limited to, any merger or sale of all or substantially all the assets of Developer, any sale or other transfer of thirty percent (30%) or more of the shares or voting interests of Developer or control thereof, or any transfer of this Agreement, or any portion hereof, whether by operation of law or otherwise. In the event of any Assignment of this Agreement with the prior written consent of UPS, this Agreement will be binding upon and inure to the benefit of each of the parties and their respective legal successors and permitted assigns.
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13. DISPUTE RESOLUTION, WAIVER OF JURY TRIAL; GOVERNING LAW. If a dispute arises out of or relates to this Agreement, or the breach thereof, and if such dispute cannot be settled through direct discussions between the parties hereto within thirty (30) days of first entering into such discussions or as otherwise mutually agreed upon by the parties hereto, such dispute will be resolved in accordance with the applicable dispute resolution terms set forth in the Integration Agreement. This Agreement will be governed by United States federal law. To the extent not preempted or governed by U.S. federal law, the validity, interpretation, and performance of this Agreement will be governed by the laws of the State of New York, U.S.A., excluding its conflict of law rules. THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO TRIAL BY JURY.
14. WAIVER; ENTIRE AGREEMENT; AMENDMENT. Waiver by either party of any breach or failure to comply with any provision of this Agreement by the other party will not be construed as or constitute a continuing waiver of such provision, or a waiver of any other breach of or failure to comply with any other provision of this Agreement. This Agreement, and its Appendices, exhibits, and attachments (if any), constitutes the entire understanding and agreement between the parties hereto concerning the subject matter of this Agreement. This Agreement may not be amended, supplemented, or modified except by a written document signed by both parties hereto.
15. TAXES.
15.1 UPS may charge, and Developer shall pay all applicable national, state, or local sales or use taxes, all duties, goods and services taxes and value added taxes, or similar types of transaction taxes that Developer is legally obligated to charge (collectively, “Taxes”). Developer may provide UPS an exemption certificate or equivalent information acceptable to the relevant taxing authority, in which case UPS will not collect the Taxes covered by such certificate. Developer agrees to indemnify and hold harmless UPS from any Taxes that are later determined to be due on any such transaction initially believed to be covered by an exemption certificate provided by Developer but found by the relevant taxing authority to be invalid or from any other Taxes that UPS is otherwise required to pay for which Developer is legally responsible. UPS is responsible for all income or profit taxes (including interest and penalties) arising from the provision of the UPS Shipping Services as contemplated under this Agreement.
15.2 All amounts payable by UPS to Developer pursuant to this Agreement do not include any goods and services, harmonized sales, value-added, sales, use, consumption, multi-staged, personal property, customs, excise, stamp, transfer, or similar taxes, duties, or charges, (collectively “Sales Tax(es)”) and all Sales Taxes are the responsibility and for the account of UPS. If Developer is required by law or by administration thereof to collect any applicable Sales Taxes from UPS, UPS will pay such Sales Taxes to Developer concurrent with the payment of any consideration payable pursuant to this Agreement, unless UPS qualifies for an exemption from any such applicable Sales Taxes, in which case Developer shall accept, in lieu of payment of such applicable Sales Taxes, delivery by UPS of such certificates, elections, or other documentation required by law or the administration thereof to substantiate and effect the exemption claimed by UPS. Where Developer is not required by law or by administration thereof to collect applicable Sales Taxes, UPS will be entitled to pay such Sales Taxes directly to the appropriate taxing authority.
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15.3 If UPS is required by law or administration thereof to deduct or withhold from any amount payable to Developer pursuant to this Agreement any amount as or on account of any taxes, UPS will make such deduction or withholding, pay or remit the full amount deducted or withheld (the “Withholding Amount”) to the relevant taxation authority in accordance with applicable law or the administration thereof, and after payment or remittance, furnish the Developer with a receipt or other documentation evidencing payment of the Withholding Amount. In the event that such withholding is required to be made by UPS, UPS will only be obligated under this Agreement to pay to the Developer the net amount equal to any amount otherwise payable to the Developer pursuant to this Agreement less the Withholding Amount.
15.4 If UPS is required by any applicable taxing or governmental authority to collect Sales Taxes or similar service taxes from any Shipper, or Developer on behalf of any Shipper, UPS will issue a request for payment to Developer for any such applicable Sales Taxes, and Developer shall pay, such Sales Tax amount. UPS may require Developer to provide a “no-pay” Sales Tax invoice to any corresponding Shipper(s), in which case(s), Developer shall promptly provide such documentation to such Shipper(s) and make supporting documentation of the same available to UPS promptly upon request. In accordance with and to facilitate the foregoing, Developer shall, consistently with Section 1.3, collect all necessary information from, and provide required documentation to, Program Shippers, as directed by UPS.
[Signature page follows]
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Each of the parties hereto has caused this Agreement to be executed by its duly authorized representative as of the date set forth below.
| UNITED PARCEL SERVICE, INC. | DEVELOPER: PeriShip Global, LLC | |||
| By: | [***] | By: | /s/ Adam Stedham | |
| Name: | [***] | Name: | Adam Stedham | |
| Title: | Director, Channel Partnerships | Title: | CEO | |
| Date: | 7/29/2025 | Date: | 7/29/2025 | |
| UPS WORLDWIDE FORWARDING, INC. | ||||
| By: | [***] | |||
| Name: | [***] | |||
| Title: | Director, Channel Partnerships | |||
| Date: | 7/29/2025 | |||
Exhibit 10.1
APPENDIX 1
Jurisdiction-Specific Amendment
If page 1 of this Agreement specifies a Developer Location other than the United States or when Developer makes available Program Rates to a Program Shipper for shipments originating in an Approved Jurisdiction identified in this Appendix 1, the following terms applicable for such specified jurisdiction replace or modify the referenced terms in the General Terms and Conditions. All terms in the General Terms and Conditions that are not specifically modified by the applicable jurisdiction-specific terms in this Appendix 1 remain unchanged and in full force and effect. For purposes of clarification, Developer is not authorized to offer Program Rates for shipments originating in a jurisdiction that is not the United States or identified on this Appendix 1.
The following are the only Approved Jurisdictions outside the United States:
[[INTENTIONALLY LEFT BLANK]]
[End of Appendix]
APPENDIX 2
UPS Service Entities
Exhibit 10.2
CERTAIN INFORMATION IDENTIFIED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) THE TYPE OF INFORMATION THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
UPS PARTNER
API ACCESS AGREEMENT
General Terms
Version P092024-C
This UPS API Access Agreement (the “Agreement”) is by and between UPS Digital, Inc. (“UPS”), having a principal place of business at 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328, and the Developer (defined below) and shall be effective on the date Developer first accepted the terms and conditions of this Agreement by electronic checkbox or, if later, the date last signed by UPS or Developer in the signature box below (the “Effective Date”).
Each of the parties hereto has caused this Agreement to be executed by its duly authorized representative as of the date set forth below.
| UNITED PARCEL SERVICE, INC. | DEVELOPER: PeriShip Global, LLC | ||||
| By: | [***] | By: | /s/ Adam Stedham | ||
| Name: | [***] | Name: | Adam Stedham | ||
| Title: | Director, Channel Partnerships | Title: | CEO | ||
| Date: | 7/29/2025 | Date: | 7/29/2025 | ||
UPS owns the UPS APIs and the Technical Documentation (both as defined below), and Developer desires to develop one or more Interfaces (as defined below) to the UPS APIs to facilitate access by Developer to the UPS Access Services (as defined below), at some point in the future;
Developer desires to license technology from an Authorized Vendor (as defined below) to use such solution(s) to, among other things, exchange information concerning UPS shipments with the Authorized Vendor and UPS on behalf of Shippers, including package manifest and tracking information.
UPS and Developer have entered in a Program Agreement (defined below) whereby Developer facilitates access to and UPS makes certain UPS Shipping Services available to Program Shippers upon the terms and conditions set forth therein;
Therefore, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, UPS agrees to grant permission and its consent, and Developer agrees to accept such permission and consent, to (a) develop Interfaces to the UPS APIs, (b) access the UPS Access Services, and (c) use the UPS Information, all as limited and restricted herein and in strict accordance with the terms and conditions of this Agreement, including all exhibits and other documents referenced herein.
1. Definitions. Defined terms used herein shall have the meanings ascribed to them below:
Account Information means information entered into an Application by (i) Developer, or (ii) a Shipper, and which relates to each such party’s UPS shipping activities, including such party’s UPS Shipper Number(s), UPS account IDs and passwords, and custom shipping instructions or business rules used to configure an Application to use UPS Shipping Services such as, without limitation, address information, service level selection, rates, fees, zones, commitments, and bundling criteria.
Affiliate means an entity that controls, is controlled by, or is under common control with a party to this Agreement.
API means application programming interface.
API Request means a request to the UPS APIs for information related to UPS Group package shipping, delivery, and related services transmitted through the Interface(s) (for Web Applications) or Authorized Vendor Products (for Plug-In Solutions).
API Shipping Information means all information provided by UPS in response to a Customer API Request. API Shipping Information constitutes Shipping Information.
Applicable Law means any applicable law (including Privacy Laws and those arising under common law), statute, regulation, rule, or any ruling of a court, other body of competent jurisdiction, reporting or licensing requirement, ordinance and other pronouncement having the effect of law of the United States, any foreign jurisdiction, or any domestic or foreign state, county, city, or other political subdivision, governmental, or regulatory authority that promulgated, interpreted, or enforced the same.
Application means a hosted application, platform, or solution of Developer that, among other functions and services Developer may make available therefrom, stores, uses, or processes UPS Information. For clarity, “Application” refers to the entire Developer application, platform, or solution described in the preceding sentence and not only those portions that process, use, or store UPS Information. For purposes of this Agreement, references to an “Application” include the Interfaces, even if the Interface functions as a separate resource linked to an Application.
Authorized Vendor means a third-party developer of Authorized Vendor Product that is authorized pursuant to a separate written agreement between such third-party developer and UPS to access the UPS APIs and exchange UPS Information on behalf of authorized shipping customers through such Authorized Vendor Product. All Authorized Vendors are set forth on Exhibit D hereto, which may be updated by Developer, with UPS’s written approval in each instance, from time to time.
Authorized Vendor Product means a third-party application and/or Engine that is (i) authorized to access the UPS APIs and exchange UPS Information on behalf of shipping customers, and (ii) integrated with an Application to enable Developer and its Shippers to exchange information with UPS concerning such Shippers’ UPS shipments, as set forth on set forth on Exhibit D hereto.
Claims has the meaning set forth in Section 15.
Comparisons has the meaning set forth in Section 4(c)(i).
Confidential Information means any data or information, other than Trade Secrets, that is of value to UPS and is not generally known to third parties or that UPS obtains from any third party and UPS treats as proprietary, whether or not owned by UPS. “Confidential Information” includes Security Elements and the terms of this Agreement, but it excludes Shipping Information and Account Information. “Confidential Information” does not include information that Developer can document was: (i) known by Developer at the time of receipt from UPS or a Shipper and not subject to any other nondisclosure agreement between the parties; (ii) as of the Effective Date, or has since become, generally known to the public through no fault or action of Developer; (iii) otherwise lawfully and independently developed by Developer without reference to Confidential Information of UPS; or (iv) lawfully acquired by Developer from a third party without any obligation of confidentiality.
Developer Location means the applicable jurisdiction of Developer’s establishment, as indicated on its UPS Developer Profile.
Developer Representatives has the meaning set forth in Section 8.
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Developer Security Elements has the meaning set forth in Section 2(c)(iii)(A).
Developer Shipping Cycle means the following activities undertaken in connection with Developer’s use of UPS Shipping Services for Developer’s Internal Purposes: (i) rating, manifesting, tendering, tracking, and receiving of packages in need of, or actually shipped using, UPS Shipping Services; and (ii) instructing a supplier to ship for the Developer’s benefit.
Effective Date has the meaning set forth in the Recitals.
Engine means an Application, Interface, or both, that functions without a user interface, i.e., as part of an overall or larger solution that provides access to the UPS Access Service.
Fees has the meaning set forth in Section 7.
Hosting Provider means an established and industry-recognized commercial third-party service provider that has contracted with Developer to host the Application at the third-party service provider’s location in the Permitted Territory. A Hosting Provider may not be any UPS Competitor.
Impacted Pages means all user-facing pages or screens of the Application that display UPS Information.
Interfaces means routines developed by Developer that exchange information with the UPS APIs. An Interface may be part of an Application or a resource linked to an Application, and it may incorporate Software.
Integration Requirements means those requirements set forth on Appendix 1.
Internal Purposes means a Person’s use within its own business, related to shipments of goods and products (i) sold by such Person to its customers or (ii) shipped to such Person, and for both (i) and (ii) tendered to UPS or its Affiliates for delivery. For clarity, Internal Purposes does not include the resale, distribution, redistribution, or granting of access to the UPS Materials to third parties, use of UPS Materials or Security Elements when performing services for the benefit of a third party, or use of UPS Materials or Security Elements to provide transportation or logistics services to a third party.
Notices has the meaning set forth in Section 17(j).
Permitted Territory means all countries and territories in which UPS provides pick-up and delivery service.
Person means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or other legal entity.
Personal Data means any information in any form (including without limitation documents, computer files, audiovisual recordings or livestreams, recordings of individuals on movie capturing devices, or any other form of information) that identifies or can be used to identify a natural person or household, directly or indirectly. Personal Data includes “personal data” as defined in the Regulation (EU) 2016/679 of the European Parliament and of the Counsel of 27 April 2016 and includes ‘personal data,’ ‘personal information,’ ‘personally identifiable information,’ and similar terms as used in any law.
Plug-In Application means an Application that is designed to be integrated with an Authorized Vendor Product (including, without limitation any portion thereof that constitutes an Engine) to access the UPS Access Services.
Plug-In Solution means the overall technology solution made available to Program Shippers for manifesting and tracking Program Shipments that includes the Plug-In Application, as integrated with the corresponding Authorized Vendor Product.
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Privacy Laws means (i) all applicable international, federal, state, provincial and local laws, rules, regulations, directives, and governmental requirements relating in any way to the privacy, confidentiality, or security of Personal Data; and (ii) all applicable provisions of Developer’s privacy policies, statements, or notices.
Program Agreement means the UPS Digital Channel Partner Agreement or similar partner program agreement entered into between Developer and a member of the UPS Group.
Program Rates has the meaning set forth in the Program Agreement.
Program Registration means the registration process required by UPS to access the UPS Shipping Services through an Application as described in the Integration Requirements and the Technical Documentation, including without limitation, the issuing of Shipper Security Elements to such Shipper.
Program Shipments means UPS shipments shipped using the Program Shipping Services and through an Application or Plug-In Solution.
Program Shipper means a Shipper domiciled in the Program Territory and who has completed Program Registration consistently with the requirements of this Agreement to avail itself of the Program Shipping Services.
Program Shipping Services has the meaning set forth in the Program Agreement.
Program Territory has the meaning set forth in the Program Agreement.
Security Elements means Developer Security Elements and Shipper Security Elements.
Shipper means any Person that is not Developer and is authorized to use an Application to, among other things, access UPS Shipping Services and related Shipping Information consistent with the restrictions set forth in this Agreement. In no event may a Shipper be (i) a Person prohibited from receiving UPS Materials pursuant to Sections 11 (General Compliance) and 12(b)(i); or (ii) a UPS Competitor. Shippers include Program Shippers.
Shipper Security Elements has the meaning set forth in Section 2(c)(iii)(B).
Shipper Shipping Cycle means the following activities undertaken in connection with a Shipper’s use of UPS Shipping Services for such Shipper’s Internal Purposes: (i) rating, manifesting, tendering, tracking, and receiving of packages in need of, or actually shipped using, UPS Shipping Services; and (ii) instructing a supplier or Shipper customer (e.g., merchandise return) to ship for the Shipper’s benefit.
Shipping Information means information relating to UPS Group package shipping, delivery, and related services that is (i) not Account Information; and (ii) provided by UPS in response to an API Request (including, without limitation, information provided by UPS through an Authorized Vendor Product).
Software means any computer code provided by UPS in object code format through the UPS Developer Portal, including the functionality listed as “Software” under Exhibit A. In some cases, Software may operate as an interface and by itself exchange information with the UPS APIs, in which cases such Software shall be deemed an “Interface” under this Agreement.
Technical Documentation means the technical descriptions and instructions for (i) creating Interfaces to the UPS APIs; (ii) using or incorporating any Software into an Interface; and (iii) registering Shippers for UPS Shipping Services. The Technical Documentation includes any Updates thereto and is hereby incorporated into this Agreement by this reference.
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Trade Secret means any information of UPS (which shall be deemed to include its associated companies) which is not commonly known by or available to the public, which (i) derives economic value, whether actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy and shall specifically include, without limitation, the Technical Documentation.
Update(s) means error corrections, modifications, updates, enhancements, or revisions to the UPS Materials.
UPS has the meaning set forth in the Recitals.
UPS Access Service means the hosted information services accessed using API Requests.
UPS APIs means the APIs listed on Exhibit A, or otherwise made available to Developer through the UPS Developer Portal, that accept and process queries for information.
UPS Brand Guidelines has the meaning set forth in Section 10(b).
UPS Competitor means any of the following: (i) FedEx Corporation, Deutsche Post AG, TNT Holding B.V, Amazon, Inc., or any other provider of shipping transportation or logistics services, including any national postal service (e.g., United States Postal Service), (ii) any Affiliate of an entity identified in section (i) of this definition, or (iii) any provider of supply chain visibility, audit, and/or optimization solutions or services.
UPS Developer Portal means the UPS developer portal website found at www.developer.ups.com, or its successor site through which UPS makes available, subject to the terms and conditions of this Agreement, certain UPS Materials.
UPS Developer Profile means the UPS.com account used to access the UPS Developer Portal under this Agreement.
UPS Group means UPS and its Affiliates.
UPS Indemnitees means the UPS Group and its officers, employees, agents, and contractors.
UPS Information means Shipping Information and Account Information.
UPS Marks has the meaning set forth in Section 10(b).
UPS Materials means the UPS APIs and any other functionality listed on Exhibit A or made available through the UPS APIs, the Technical Documentation, the Software, the UPS Systems, and UPS Information, collectively.
UPS Shipper Number means a shipping and/or billing account number issued by UPS.
UPS Shipper Profile means the UPS.com account or Developer Application account associated with a given Shipper.
UPS Shipping Services means package and shipping services, including the labeling, rating, routing, recording, and tracking of shipments tendered to the UPS Group for delivery, and includes the UPS Program Shipping Services.
UPS Systems means the UPS-owned or -controlled computer and network systems. The UPS Systems include the UPS APIs.
UPS Terms has the meaning set forth in the Integration Requirements.
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Web Application means an Application that is not a Plug-In Application.
2. UPS APIs.
a. License to the Technical Documentation and Software. During the Term, and subject to Developer’s compliance with this Agreement, UPS hereby grants a limited, revocable, non-exclusive, non-assignable, non-transferable license to Developer to use the Technical Documentation and Software for the sole purpose of developing and testing the Interfaces and integrating the Interfaces with the Application pursuant to the instructions and restrictions in the Technical Documentation. All uses not explicitly permitted herein are explicitly excluded.
b. Right to Access the UPS APIs. During the Term, and subject to Developer’s compliance with this Agreement, including the payment of all Fees charged by UPS or a member of the UPS Group for the UPS Access Services as set forth herein, UPS hereby permits and consents, on a limited, revocable, non-exclusive, non-assignable, non-transferable basis, to Developer:
i. testing from the Permitted Territory the functionality and compatibility with the UPS Systems of each Interface and/or Plug-In Solution; and
ii. using the Interfaces and/or Plug-In Solution to send API Requests from the Permitted Territory in commercial production.
c. Access Conditions. Notwithstanding anything to the contrary herein, the following conditions on the access rights granted hereunder apply:
i. Required API(s). Developer shall, prior to using any Application or Plug-In Solution in commercial production to make API Requests for Shipping Information, ensure that each such Application or Plug-In Solution integrates the UPS APIs listed on Exhibit A under “Required APIs” in accordance with the corresponding Technical Documentation. This requirement does not apply to any Software that operates as an Interface and for which the Technical Documentation indicates that Security Elements are issued by UPS through the Software; all such Security Elements are deemed “Developer Security Elements” under this Agreement.
ii. Impact on UPS Systems. Developer will not, and will ensure that Shippers and Hosting Providers do not, use the Interfaces or use or access the UPS Systems in any way which, in UPS’s reasonable judgment, adversely affects the performance or function of the UPS Systems, interferes with the ability of authorized Persons to access the UPS Systems, or constitutes an act of unfair competition in violation of Applicable Law. Without limiting the generality of the foregoing, Developer shall not associate, input, or upload to the UPS Systems (A) any virus, Trojan horse, worm, time bomb, malicious logic, trap or back door, or computer programming routine, device, or other feature, that is intended to delete, disable, damage, interfere with, intercept, expropriate, or provide unauthorized access to the UPS Systems, or any other software, program, data, device, system, or service; or (B) any materials that infringe the intellectual property rights of a third party.
iii. Use of Security Elements. Developer will not, and will ensure that each Application and Plug-In Solution will not, use any Security Elements for any purpose other than as specified in the Technical Documentation and herein. Developer may not disclose any Security Elements to any third-party Person. Developer’s right to access the UPS Materials or any Security Elements terminates automatically upon the cancellation or disabling of its UPS Developer Profile or such Security Elements, respectively. UPS may disable any Security Elements at any time in its sole discretion.
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A. Developer shall use the security elements issued by UPS and associated with its UPS Developer Profile and Application(s) (“Developer Security Elements”) solely in connection with (i) the development and testing of the Interfaces and Plug-In Solution; (ii) API Requests in connection with the Developer Shipping Cycle; (iii) the provision of Developer’s Account Information to the UPS Group; and (iv) as required to issue Shipper Security Elements. Developer shall associate the Developer Security Elements with all API Requests submitted to support the Developer Shipping Cycle. For clarity, except as required to issue Shipper Security Elements and as set forth below in Section 2(c)(iii)(C), in no instance may Developer use the Developer Security Elements or any Developer Account Information, to initiate shipments for any Person other than Developer or its Affiliates for their own Internal Purposes. For clarity, the foregoing does not prohibit Developer from making Program Shipping Services available to Program Shippers consistently with the requirements of this Agreement and the Program Agreement.
B. Developer shall use the security elements issued by UPS and associated with an Application or Plug-In Solution and a given Program Shipper’s UPS Shipper Profile (“Shipper Security Elements”) solely in connection with (i) API Requests associated with the corresponding Shipper Shipping Cycle; and (ii) the provision of Shipper’s Account Information to the UPS Group (whether directly through a Web Application or indirectly through a Plug-In Solution). Developer shall associate the applicable Shipper Security Elements with all API Requests submitted to support the corresponding Shipper Shipping Cycle. Developer shall not disclose or make available to a Program Shipper or any other third party its Shipper Security Elements.
C. Notwithstanding anything to the contrary in this Agreement, Developer is authorized to use Developer’s Account Information as the “bill to” or “third-party bill” criteria to initiate shipments on behalf of Program Shippers consistently with the requirements of the parties’ Program Agreement and (i) solely in response to a Program Shipper’s request made through an Application for Program Shipping Services; and (iii) where such Program Shipper is shipping such package for its Internal Purposes. Developer shall not permit any Person that is not a Program Shipper to manifest shipments with UPS through a Plug-In Solution or Web Application. Without limiting any other requirements set forth in this Agreement, Developer will ensure the Interfaces (for any Web Application) and the relevant Authorized Vendor Product (all Plug-In Solutions) associates, API Requests with the corresponding UPS Shipper Number assigned by UPS to such Program Shipper.
D. DEVELOPER SHALL BE SOLELY AND EXCLUSIVELY RESPONSIBLE FOR AND, AT ITS SOLE COST AND EXPENSE INDEMNIFY AND HOLD HARMLESS THE UPS INDEMNITEES FOR, ANY AND ALL DAMAGES INCURRED OR SUFFERED BY THE UPS INDEMNITEES ARISING OUT OF OR IN CONNECTION WITH ANY USE OF OR ACCESS TO UPS MATERIALS BY ANY PERSON THAT GAINS ACCESS THROUGH ANY ACT OR OMISSION OF THE DEVELOPER TO THE UPS MATERIALS THROUGH USE OF THE UPS DEVELOPER PROFILE, DEVELOPER SECURITY ELEMENTS OR SHIPPER SECURITY ELEMENTS, INCLUDING WITHOUT LIMITATION ANY DIRECT OR INDIRECT USE OR ACCESS, WHETHER OR NOT AUTHORIZED BY DEVELOPER; PROVIDED THAT THE FOREGOING OBLIGATION TO INDEMNIFY AND HOLD HARMLESS SHALL NOT APPLY TO ANY DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE , RECKLESSNESS, WILLFUL MISCONDUCT OF UPS.
iv. Requests for Shipping Information. Developer shall ensure that the Interfaces and Plug-In Solution will only transmit API Requests associated with actual Program Shipments or packages in need of shipment under the Program Shipping Services by or on behalf a Program Shipper.
v. Limits on Quantity of API Requests. Developer shall ensure that the Interfaces and Plug-In Solution do not submit more API Requests than are permitted in the corresponding Technical Documentation, and in no event shall more than a reasonable number of API Requests be submitted for substantially the same Shipping Information in any given twenty-four-hour period.
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vi. Support and Maintenance of Applications. Developer will, at its sole expense, provide all maintenance and support for the Interfaces (including any incorporated Software) and Applications. Developer shall promptly notify UPS of any defects or malfunctions in the UPS Materials of which it learns from any source.
vii. No Reverse Engineering. Developer will not, and will not enable or permit Developer Representatives, Shippers, Hosting Providers, or other third parties to, translate, decompile, reverse engineer, disassemble, attempt to derive the source code of, decrypt, modify, create derivative works of, or carry out any act otherwise restricted by copyright or other intellectual property rights in the Software or any part thereof (except and only to the extent permitted under Applicable Law).
viii. Access Conditions Specific to Certain UPS APIs. Notwithstanding anything to the contrary herein, the access rights granted herein to the UPS APIs are further conditioned or restricted as set forth on Exhibit A, which UPS may update from time to time upon notice to Developer. Developer acknowledges and agrees that continued submission of API Requests after an update to Exhibit A constitutes Developer’s acceptance of such updated terms corresponding to the UPS APIs to which Developer submitted such API Requests.
ix. Location-Based Restrictions. Developer acknowledges that (i) UPS may, in its sole discretion, prevent access to UPS Systems by Persons located outside the Permitted Territory; and (ii) not all UPS Access Services are available in all jurisdictions of the Permitted Territory. The jurisdictions in which each of the UPS APIs will return results are available in the Technical Documentation, which may be updated by UPS from time to time in its sole discretion.
d. Subcontractors. Without limiting the generality of Section 3(c) (No Engines or Private Labeling), Developer may permit its subcontractors to access and use the UPS Materials and Developer Security Elements solely as necessary to undertake the activities contemplated and permitted under this Agreement, provided that Developer shall ensure all such subcontractors’ compliance with the terms set forth in this Agreement. Developer shall be liable for all use of UPS Materials and Developer Security Elements by its subcontractors, whether or not authorized by Developer, as if such uses were undertaken by Developer.
e. Reasonable Assistance. UPS agrees to provide Developer with assistance relating to its integration and/or use of the APIs, as reasonably requested from time to time and at times reasonably agreed upon by UPS.
3. Shipper Access and Hosting; Conditions and Restrictions. The following conditions and restrictions apply in addition to those set forth in Section 2(c) above:
a. Shipper Access. Subject to Developer’s compliance with Section 3(b) (Hosting) below, Developer may make an Application or Plug-In Solution available to Program Shippers by hosting, provided that Developer may only permit Program Shippers to initiate API Requests after (i) completing the testing process and receiving written approval from UPS in accordance with Section 5 (Testing, Audit, and Compliance), (ii) UPS has assigned Shipper Security Elements to such Program Shipper, consistently with the requirements set forth in Section 2(c)(iii) (Use of Security Elements); and (iii) for each such Program Shipper, completing Program Registration for such Program Shipper.
b. Hosting. Developer may make Applications and Plug-In Solutions available to Program Shippers (for their own Internal Purposes) by hosting with such hosting performed by Developer, a Shipper, or a third-party Hosting Provider; provided that Developer shall, and shall ensure each Shipper and any Hosting Provider shall:
i. strictly comply with the access conditions and UPS Information use, display, and retention restrictions set forth in Sections 2-4 of this Agreement;
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ii. strictly comply with all Applicable Law, including all Privacy Laws, in connection with such hosting activities;
iii. ensure all Applications, Plug-In Solutions, and Interface(s) are hosted at a location in the Permitted Territory; and
iv. ensure that all API Requests are initiated from the Permitted Territory.
c. No Engines or Private Labeling. Except for Plug-In Applications, each Application and Interface must not be intended to integrate with, use, or function as (A) a module or Engine for a larger product or (B) part of any set of development tools. Except for Plug-In Applications, Developer shall not allow a Program Shipper or other third party to integrate any Interface or Application into or with another product that is then made available to others by any method, including hosting. Developer shall not permit or enable private label versions of any Interface or Application or otherwise operate, distribute, or license the operation of any Interface or Application under any brand or trade name other than those owned by Developer.
d. No Separate Fee or Charge. Developer will not, and will ensure that Hosting Providers and Authorized Vendors do not, charge any Shipper or other Person any separately-identified fee or other charge (e.g., transaction-based charges) to access or use the UPS Materials provided hereunder. For purposes of clarification only, when licensing or authorizing use of an Application to Shippers, Developer may charge professional services fees to install or integrate the Application into a Shipper’s existing environment.
e. UPS Partner Materials; Use in Production. If Developer has received an invitation from UPS to develop an Interface or Application (or portion thereof) using UPS Materials not publicly available in the Developer Portal (“UPS Partner Materials”), in no event is Developer permitted to use in commercial production any portion of the Application that uses the UPS Partner Materials without the prior written approval of UPS consistently with the requirements of Section 5 (Testing, Audit, and Compliance).
f. No Third Party Distributors. Except for the availability of a Plug-In Application within an Authorized Vendor Product, Developer shall not make any Interface or Application incorporating or linking to an Interface available to Shippers or other third parties through any third-party distribution (physical or by hosting) or reseller channel without UPS’s express written consent in each instance.
4. Use of UPS Information. Developer shall, and shall ensure its Hosting Providers and Authorized Vendors shall, only collect, use, display, process, disclose, or retain UPS Information within the Application as set forth herein. All other uses are strictly prohibited. For clarity, the parties recognize that Developer, Program Shippers, Authorized Vendors, and their Hosting Providers may hold or process separate copies of certain information that such parties submit to the UPS Systems in connection with receiving UPS Access Services, UPS Shipping Services, or both; the restrictions set forth below do not apply to any such information or any other information that is not UPS Information.
a. Use to Support the Shipping Cycles.
i. Developer may use, process, and copy UPS Information solely as necessary for the Applications to provide the services that support: (1) Developer in the Developer Shipping Cycle; and (2) the applicable Program Shipper in the Shipper Shipping Cycle. This authorization includes use of (A) Developer Account Information to manifest (a) UPS shipments by Developer for its own Internal Purposes and (b) to direct all billing for charges incurred in connection with Program Shipments to be invoiced to Developer, and (B) a given Program Shipper’s Account Information to manifest Program Shipments for such Shipper’s own Internal Purposes. However, other than as set forth in the preceding sentence, it expressly excludes utilizing Developer Account Information to enable the provision of any UPS Services to any Shipper or other third party.
ii. For clarity, each of the Developer Shipping Cycle and the Shipper Shipping Cycle includes using UPS Information: (A) to establish delivery dates, (B) to provide shipment pickup, drop off, and delivery information to its customers, (C) in the operation of its support service centers for the benefit of its customers, (D) to make payments of UPS invoices, and (E) to respond to billing inquiries from its customers.
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iii. Developer shall not combine UPS Information with any other data in a manner that would enable use of such UPS Information in a manner not explicitly authorized hereunder.
b. Distribution of UPS Information. Except as may be required by Applicable Law, Developer shall not distribute Account Information to any Person other than the Authorized Vendor (where its Authorized Vendor Product is incorporated into a corresponding Plug-In Solution used by a Program Shipper), Developer, or Program Shipper associated with such Account Information. Developer may distribute, or authorize the Authorized Vendor to distribute, Shipping Information only to:
i. the Program Shipper associated with such Shipping Information; or
ii. a Person that has a bona fide interest in the shipment associated with such Shipping Information (e.g., Program Shipper customer support personnel, consignee, or third-party payor), where such Shipping Information (1) was obtained from the UPS® Tracking API, (2) is a UPS 1Z number assigned to a shipment and obtained from the UPS® Shipping API, or (3) was obtained from the UPS® Time in Transit API, and (1)-(3) are disclosed as directed by:
A. Developer, if in connection with the Developer Shipping Cycle; or
B. the Program Shipper associated with such Shipping Information, if in connection with the Shipper Shipping Cycle.
c. Display of UPS Information. Developer covenants the following:
i. Comparisons. The Application may present comparisons of UPS Shipping Services against the services of other carriers (“Comparisons”) on Impacted Pages; provided that, (i) the Application will not generate any Developer-established rules-based Comparisons (i.e., pre-configured by Developer and not configured by the relevant Shipper) other than Comparisons based on service feature or time-in-transit.
ii. No Preference. Impacted Pages of an Application will not, directly or indirectly, promote over the UPS Shipping Services any offer of shipping services by any third-party carrier.
iii. Display of Results.
A. All UPS Shipping Services. Developer shall ensure each Application presents all UPS Shipping Service levels (e.g., Next Day Air® and UPS Ground®) that are available in the shipment country of origin for the corresponding Shipper and correspond to the request for shipping services made by such Shipper. For clarity, Developer shall ensure that the Application will only display UPS Program Shipping Services for proposed shipments where the Program Shipper is located, and the proposed shipment originates, in a jurisdiction of the Program Territory.
B. Confidentiality of Rates. Notwithstanding the other requirements of Section 4 of this Agreement, Developer will ensure that each Application presents to Program Shippers, shipping rates for Program Shipping Services consistently with the requirements and restrictions of the parties’ Program Agreement. Consistent with the foregoing, Developer must not display or present any rates for Program Shipping Services to Program Shippers as a separately-identified “UPS” or “transportation” charge or line item, i.e., the portion of Developer’s overall service charges that comprise UPS shipping costs incurred by Developer for Program Shipments.
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C. Estimated Delivery Notices. The Applications may present to Program Shippers estimated delivery notices consistent with the Shipping Information generated by UPS. However, the Applications shall not provide, within the Application or through any notices generated by the Application or Developer, estimated delivery dates for UPS Shipping Services based on Developer’s or a third party’s own calculation or analytics.
d. Prohibited Uses. All uses of UPS Information not explicitly permitted under this Agreement are strictly prohibited. Without limiting the generality of the foregoing:
i. Developer shall ensure that each Application, and any other product or service provided or developed by Developer, does not use UPS Information in any manner to itself calculate estimated delivery dates or determine other shipment status events for UPS Shipping Services. For clarity, this paragraph does not restrict the display of UPS Information on Impacted Pages consistent with the requirements of Section 4(c) (Display of UPS Information).
ii. The rights to use UPS Information do not include the right for Developer to, or to authorize any Hosting Provider or other Person (through manual or automated means) to: (A) aggregate UPS Information for multiple Shippers for any purpose; (B) use UPS Information to develop services or products other than the Application and its services; (C) use UPS Information to assist, directly or indirectly, in service or rate negotiations with any member of the UPS Group; (D) perform service or financial performance analytics regarding UPS Shipping Services (e.g., a post-delivery “dashboard” or “control tower”, audit, or the calculation of adjustments and refunds against UPS fees, or reconciliation of invoices for UPS Shipping Services); or (E) generate comparisons of UPS Shipping Services or financial performance with the services or financial performance of other carriers. The foregoing does not provide an exhaustive list of prohibited uses, but only examples thereof.
iii. Developer shall not combine UPS Information with any other data, such as combining UPS Information associated with one Shipper with UPS Information associated with another Shipper. Developer also shall not use the UPS Information or the UPS Access Service for machine learning purposes or to compile or create any database based on data or information made available through the UPS Access Service.
e. Deletion, Storage, and Retention Requirements: Developer shall, and shall ensure that any Hosting Provider or Authorized Vendor engaged by Developer shall:
i. Store Shipping Information obtained from the UPS® Time in Transit API for no longer than: (A) [***] days from the date of the API Request for such Shipping Information by Developer or the Shipper to which the Shipping Information relates and where the applicable shipping service level includes a guaranteed service refund (as described in the UPS Rate and Service Guide); or (B) [***] days from the API Request for Shipping Information by Developer or the Shipper to which the Shipping Information relates where the applicable service level does not include a guaranteed service refund.
ii. Store Shipping Information obtained from any UPS API other than the UPS® Time in Transit API for no longer than nine (9) months after the API Request for such Shipping Information by Developer or the Shipper to which the Shipping Information relates. Notwithstanding the foregoing, Developer may retain and use the Shipping Information described in the preceding sentence for up to three (3) years solely for Developer’s audit and legal or regulatory Internal Purposes.
iii. Irrevocably destroy all copies of UPS Information associated with a Shipper within five (5) business days of the earliest of: (A) such Shipper’s request for deletion of the same in the relevant Application; (B) such Shipper is no longer authorized by Developer to access the relevant Application; (C) such Shipper has not requested UPS Shipping Services through the relevant Application for one (1) year; or (D) such Shipper’s Shipper Security Elements are disabled or non-functioning. Notwithstanding the foregoing, if Developer or its Hosting Provider is required by Applicable Law to retain any such UPS Information for a longer period, Developer will, and will ensure that such Hosting Provider will, carry out such destruction within five (5) business days from the expiration of such required period.
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iv. Implement and maintain, consistent with Applicable Law, appropriate technical, physical, and organizational measures to protect UPS Information (including any Personal Data) processed by the Application(s) against accidental or unlawful destruction or accidental loss, alteration, unauthorized disclosure, or access.
5. Testing, Audit, and Compliance.
a. UPS Access. Developer will, at any time during the Term and upon UPS’s reasonable request, provide UPS or its representatives with: (i) access, at no charge, to its Interfaces, Applications, and Plug-In Solutions, including all Impacted Pages; and (ii) access to all books and records associated with this Agreement to ensure Developer’s compliance with the applicable Technical Documentation and this Agreement, provided that any of the foregoing access shall be at times reasonably agreed upon in advance by Developer, in a manner not to unreasonably interfere with Developer or its business or of that of a third party, and, provided further, that any information received or viewed by UPS shall be considered confidential information subject to the confidentiality provisions of this Agreement.
b. Testing. Developer shall submit its Interfaces, Applications, and Plug-In Solutions to UPS or its designee for testing and approval of the same by UPS or such designee. Developer shall pay the then-applicable testing fees and reasonably comply with all instructions of UPS or its designee’s testing personnel and provide UPS or its designee access to any relevant portions of the Plug-In Solution, Application or Interface for the purpose of determining compatibility with the requirements set forth in this Agreement and the Technical Documentation, including the UPS Systems. If, after an Application or Plug-In Solution is approved by UPS in accordance with this Section, UPS or its designee determines that any portion thereof is not compatible with the parties’ contractual obligations, UPS Systems, Integration Requirements, or the Technical Documentation, or Developer’s use of UPS Information does not comply with the requirements set forth herein, Developer shall make all changes requested by UPS or its designee, and, if required by UPS, submit its Plug-In Solution, Application(s), Interface, or both for testing at Developer’s expense. Developer shall not make any Plug-In Solution, Application, or UPS Information available to any Shippers in commercial production until it has received written approval by UPS or its designee. The requirements of this section shall apply to (a) any new or modified version of any Plug-In Solution, Application, or Interfaces that undergo a material change in functionality, operation, or use of UPS Information; and (b) any changes to Impacted Pages, including without limitation Program Registration.
c. Compliance with UPS Materials and Instructions. UPS may terminate, Update, alter, or supplement any or all of the UPS Materials and UPS Information available from the UPS Systems at any time. Developer shall ensure each Interface and Application complies with the requirements of all Updates to the UPS Materials (including to the Technical Documentation) within the stated timeframe communicated by UPS, or if no timeframe is so communicated, no later than six (6) months from the release of such Update. Developer consents to the receipt of all communications related to Updates and its use of the UPS Materials hereunder. Notwithstanding anything to the contrary herein, UPS may in its sole discretion request that Developer prevent access to and use of the Interfaces, any Authorized Vendor Product, and any Impacted Pages. Developer shall timely comply with any such request by UPS until UPS has (x) rescinded such request, and (y) provided Developer a written statement that such Interface(s) and/or Impacted Pages are compatible with the UPS Systems and comply with the requirements of this Agreement (including the Integration Requirements) and the Technical Documentation.
d. Developer Cooperation. Developer will fully cooperate with UPS to monitor and ensure each Authorized Vendor’s, Hosting Provider’s and Shipper’s compliance with the restrictions set forth herein. In the event that Developer becomes aware of any infringement or unauthorized use of the UPS Materials or Security Elements by any Person, Developer will promptly notify UPS in writing of such activity and reasonably cooperate with UPS in the investigation of the unauthorized activity and the enforcement of UPS’s rights to the UPS Materials.
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6. Ownership. Developer hereby acknowledges that the UPS Materials and the Security Elements are the sole property of UPS, its Affiliates, or its or their third-party licensors and that Developer has not acquired any ownership interest in the UPS Materials and will not acquire any ownership interest in the UPS Materials by reason of this Agreement. Other than as relates to the Technical Documentation and the Software, this Agreement does not constitute a license and only conveys limited, revocable, non-exclusive, and non-transferable rights to use the UPS Materials and the Security Elements in accordance with this Agreement. Developer shall not assign, copy, sell, lend, give, redistribute, resell, lease, license, market, transfer, disclose, or otherwise make the UPS Materials or Security Elements available in any manner to any third party except as expressly permitted under this Agreement, without the prior written consent of UPS.
7. Fees.
a. Fee Schedule and Invoicing. Developer shall, in consideration of the license, permissions, and consents granted by UPS herein, pay all fees for Developer’s use (whether in connection with the Developer Shipping Cycle or Shipper Shipping Cycle) of the UPS Access Services as set forth on the corresponding invoice(s) (“Fees”). UPS may delegate a member of the UPS Group to invoice Developer for and collect such Fees and Taxes (defined below) on behalf of UPS. Unless otherwise agreed by the parties in writing, all Fees shall be charged in accordance with the rates set forth on the UPS Developer Portal (https://developer.ups.com/pricing or its successor link, provided here for convenience only) at the time the API Requests using the applicable UPS API take place, which rates are incorporated herein by this reference. Unless otherwise determined by UPS (or its designated Affiliate), all Fees shall be invoiced and paid in United States dollars, and all references to monetary amounts herein or on the UPS Developer Portal are to United States dollars, unless payment in local currency is required by Applicable Law.
b. Waived Fees. Developer acknowledges that UPS may, for a time period to be determined in UPS’s sole and exclusive discretion, waive charges for the UPS Access Services. UPS reserves the right to (i) assess Fees for the UPS Access Services at any time and in its sole discretion by providing sixty (60) days’ Notice to Developer, and (ii) restrict use of the UPS Access Services unless and until Developer provides required payment information to support the same. Consistent with the foregoing, unless and until advised by UPS as described in this paragraph, the Fees for use of the [***] are waived.
c. Changes to Fees. UPS may alter (or impose new) rates applicable to use of the UPS Access Services in at any time in its sole discretion by providing sixty (60) days’ notice of updated the rates in writing or by posting such updated rates on the UPS Developer Portal. Developer acknowledges and agrees that its continued use of the UPS Access Services after UPS posts new or updated rates for such UPS Access Services constitutes its acceptance of the corresponding Fees charged by UPS or its Affiliate(s). Alternatively, Developer may terminate this Agreement without penalty within thirty (30) days of UPS posting the new or updated rates if it objects to such new or updated rates.
d. Taxes. In connection with any applicable Fees, UPS may charge, and Developer will pay, all applicable national, state, or local sales or use taxes, all duties, goods and services taxes, and value added taxes, or similar types of transaction taxes that UPS is legally obligated to charge (collectively, “Taxes”). Developer may provide UPS an exemption certificate or equivalent information acceptable to the relevant taxing authority, in which case UPS will not collect the Taxes covered by such certificate. Developer agrees to indemnify and hold harmless UPS from any Taxes that are later determined to be due on any such transaction initially believed to be covered by an exemption certificate provided by Developer but found by the relevant taxing authority to be invalid or from any other Taxes that UPS is otherwise required to pay for which Developer is legally responsible. UPS is responsible for all income or profit taxes (including interest and penalties) arising from the provision of the UPS Access Services under this Agreement.
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8. Confidentiality. Except as required by Applicable Law, Developer will not use (other than as permitted under this Agreement), disclose, or permit any Person to access any Confidential Information or Trade Secrets during the Term and for a period of five (5) years thereafter, and in the case of Trade Secrets, for so long as they remain so protected under Applicable Law. Developer may use and disclose Confidential Information and Trade Secrets only to its employees, contractors, agents, and consultants (“Developer Representatives”) who need to know such information for the purposes of Developer undertaking the activities contemplated by, and performing its obligations under, this Agreement. Developer shall (i) ensure that such Developer Representatives comply in all respects with this Section 8, and (ii) remain directly liable for any action or inaction by any Developer Representative to the same extent as if such action or inaction had been performed by Developer.
9. Term and Termination.
a. Term. This Agreement shall commence on the Effective Date and shall continue in effect unless earlier terminated in accordance with this Section 9 (the “Term”); provided however, this Agreement will automatically terminate upon Developer terminating its Developer Profile.
b. Termination.
i. For Convenience. Either party may terminate this Agreement at any time with or without cause on [***] written Notice to the other party.
ii. For Material Breach. Each party may terminate this Agreement at any time, effective upon Notice of termination to the other party and without the need to resort to legal action, upon the other party’s material breach of this Agreement that remains unremedied for a period of fifteen (15) days after receipt of Notice of such material breach.
iii. Immediate Termination. UPS has the right to terminate this Agreement immediately: (A) upon a breach by Developer of Sections 2 (UPS APIs), 3 (Distribution Conditions and Restrictions), 4 (Use of UPS Information), 5 (Testing, Audit, and Compliance), 8 (Confidentiality), 10 (Publicity and Third-Party Relations), 11 (General Compliance), 12(b) (Developer Representations and Warranties), or 17(e) (Assignment); (B) in the event of commencement of bankruptcy, corporate reorganization, or any other insolvency proceeding with respect to Developer; (C) in the event Developer has a receiver, administrator, administrative receiver, liquidator, or other similar officer appointed for whole or any part of its assets or business; or (D) in the event Developer is dissolved or passes a resolution for winding up or dissolution, or if a court makes an order to that effect.
iv. Termination of Program Agreement. Unless otherwise agreed by the parties in writing, this Agreement shall immediately terminate upon the termination (for any reason) or expiration of the parties’ Program Agreement. Upon such termination, Developer’s use of the UPS Materials and UPS Access Services shall be governed by the then-current UPS API Access Agreement posted on the UPS Developer Portal.
c. Suspension of Access. Without limiting any other rights or remedies, UPS has the right to limit, prohibit, or prevent access to any part of the UPS Systems at any time as UPS deems necessary in its sole discretion, including without limitation, to: (i) prevent access to the UPS Systems that is not in compliance with the terms and conditions of this Agreement; (ii) correct a material error in the UPS Systems; or (iii) comply with Applicable Law.
d. Effect of Termination. Upon the termination of this Agreement for any reason whatsoever:
i. all rights granted hereunder to use or make available the Interfaces (including any incorporated Software) or to exchange UPS Information with the UPS Systems will immediately terminate;
ii. all rights granted hereunder to use the UPS Access Service will immediately terminate, and Developer shall cease all access to the UPS Systems; and
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iii. Developer shall, within five (5) business days after such termination, (A) return to UPS all copies of the UPS Materials and all UPS Confidential Information and Trade Secrets, (B) delete all copies of such materials and any Security Elements stored on electronic media, and (C) certify in writing the deletion of same; and
iv. notwithstanding the foregoing, Developer may retain UPS Shipping Information received prior to the termination of the Agreement, provided that it is used, stored, and deleted consistently with the requirements of Section 4 (Use of UPS Information).
e. Shipper Contact. Developer acknowledges and agrees that UPS has the right within its sole discretion to notify Shippers of the termination or expiration of this Agreement and offer alternatives to receive UPS Shipping Services. In the event of any conflict between this provision and any provision of the Program Agreement handling the same subject matter of this Section 9(e) (Shipper Contact), the relevant provision of the Program Agreement shall prevail.
f. No Compensation. Developer will not be entitled to any compensation from UPS as a result of the termination of this Agreement.
10. Publicity and Third-Party Relations.
a. Third-Party Relations. Upon UPS’s request at any time, except to the extent specifically prohibited by Applicable Law, Developer will provide UPS with information, including the names of all Shippers, Authorized Vendors, and Hosting Providers and their contact information, and copies of correspondence relating to complaints with regard to UPS, the UPS Materials, or the UPS Services. Developer represents and warrants that all Shippers, Authorized Vendors, and Hosting Providers are informed in accordance with Applicable Law of the possibility of the provision of such information to UPS and, to the extent required by Applicable Law, have consented to the same. Developer acknowledges that Shippers are both customers of UPS and Developer. As such, except as otherwise set forth in the Program Agreement (which shall prevail in the event of any conflict with this Section 10(a) (Third Party Relations)), nothing in this Agreement will prevent or limit UPS from contacting its customers in any way, including, without limitation, Shippers.
b. Use of UPS Marks. Developer will comply at all times with the UPS Brand Guidelines (“UPS Brand Guidelines”), which can be found at https://brand.ups.com or its successor link, provided here for convenience only, in any use of marks owned by UPS (“UPS Marks”) in connection with the Applications and distribution of UPS Information permitted under this Agreement. Any authorization by UPS and the associated limited right to use the UPS Marks will extend only for the period of time and to the UPS Marks set forth in the authorization provided by UPS, but in no event longer than the Term, and may be terminated by UPS at any time upon written Notice.
c. Publicity. Except as expressly provided in this Agreement or the Program Agreement, each party agrees that it will not, without prior written consent of the other party in each instance: (i) use in advertising, publicity or otherwise the name of the other party or any of its Affiliates, or any partner or employee of the other party or its Affiliates, or any trade name, trademark, trade dress, or simulation thereof owned by the other party or any of its Affiliates; or (ii) represent, directly or indirectly, that any product or any service provided by such party has been approved or endorsed by the other party or any of its Affiliates.
11. General Compliance; Insurance.
a. General Compliance. Without limiting any other restrictions set forth herein, Developer shall (i) use the UPS Materials only in strict compliance with Applicable Law and in a fashion that does not, in the sole judgment of UPS, negatively reflect on the goodwill or reputation of UPS; and (ii) take no actions which would cause UPS to be in violation of any Applicable Laws. Any access to or use of the UPS Materials or Security Elements that is inconsistent with the terms herein is unauthorized and strictly prohibited without the express prior written consent of UPS. Developer shall comply, to the extent applicable, with the United States Export Administration regulations, the International Traffic in Arms regulations and any regulation or licenses administered by the Department of Treasury’s Office of Foreign Assets Control in (x) its use of UPS Materials and the UPS Access Services hereunder, and (y) in making Applications available to any Shipper.
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b. Insurance. During the Term, Developer will, at its sole expense, maintain adequate insurance to cover its obligations under the Agreement including, without limitation:
i. workers compensation insurance as required by law of the state of hire, which policy must be endorsed to provide a waiver of subrogation in favor of United Parcel Service of America, Inc.;
ii. employers liability insurance with a minimum limit of [***] ($[***]) each accident, [***] ($[***]) disease – policy limit, [***] ($[***]) disease – each Employee, or per statutory minimum limits if applicable;
iii. commercial general liability insurance including products and completed operations coverage with a minimum limit of liability for personal injury, bodily injury, including death resulting therefrom, and property damage of [***] ($[***]) per occurrence and [***] ($[***]) in the aggregate, or [***]($[***]) if on a “Gateway”. This coverage is to be provided on an “occurrence form”. United Parcel Service of America, Inc. and its respective subsidiaries, affiliates, officers, directors, agents, partners, shareholders, and employees will be named as additional insureds under this policy, and Developer’s insurance will be deemed as primary and non-contributory;
iv. privacy and network security/cyber insurance with minimum limit of [***] ($[***]) per claim/incident; [***] ($[***]) in the aggregate insuring against (i) loss or disclosure of confidential or personally identifiable information in hard copy or electronic form; (ii) loss of digital assets or data; (iii) data security breach; (iv) denial or loss of computer service and/or network outages, (v) transmission of malicious code to UPS or other third parties, (vi) failure to comply with applicable law or regulation, including consumer protection laws, regarding the collection, use or disposal of personal/consumer data. Such policy will provide coverage for actual or alleged errors and omissions arising out of the performance of or failure to perform all obligations of Developer under this Agreement, its agents and employees, including but not limited to claims, demands, damages, losses, or investigations resulting from or arising out of the services outlined in this Agreement;
v. errors and omissions liability insurance on a claims-made basis with a minimum limit of [***]($[***]) per claim and [***] ($[***]) in the aggregate.
vi. All of the above required coverages will be with insurance carriers that have a minimum A.M. Best rating of A-VII. All required policies of insurance must contain a provision mandating thirty (30) days advance written notice in the event of cancellation or material change in such policy. In the event that insurance limits required by this Section 11 are reduced by claims to a level below that required, Developer shall inform UPS and at its own expense, replenish such limits to the level required.
12. Representations and Warranties.
a. Mutual Representations and Warranties. Each party represents and warrants that it is validly existing and in good standing.
b. Developer Representations and Warranties. Developer represents and warrants that:
i. No Interfaces, Security Elements, or UPS Materials will be distributed to, accessed from, downloaded in, carried to, transshipped through, or exported to (A) a country or territory, or a Person who is a national or resident thereof, outside the Permitted Territory; or (B) any Person or organization on the United States Department of Treasury list of Specially Designated Nationals, or the United States Department of Commerce Denied Persons List or Entity List (as each may be amended from time to time);
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ii. Developer is not headquartered or incorporated in, a national resident or government of, nor is its Developer Location, a country or territory outside the Permitted Territory;
iii. Developer (A) has provided Shippers and Hosting Providers (including their authorized users) with all notice(s) required by Applicable Law, including, without limitation, all applicable Privacy Laws, such that UPS may process Personal Data provided to UPS as contemplated in accordance with applicable Privacy Laws and as set forth in the UPS Privacy Notice (which is available on ups.com, updated from time to time), and (B) to the extent required by Applicable Law, including without limitation, all applicable Privacy Laws, has collected their specific consent for each processing purpose, such as UPS marketing activities and notifications related to UPS Shipping Services;
iv. Developer will ensure the Developer Representatives process any Personal Data received from UPS in compliance with Applicable Law;
v. Developer Representatives have collected, processed, and disclosed all Personal Data provided to UPS in accordance with all Applicable Laws, and have the right and authority to provide such Personal Data to UPS for any lawful processing in accordance with the UPS Privacy Notice; and
vi. Developer will not, and will ensure that Hosting Providers do not, make any representation or warranty for or on behalf of the UPS Group as to Applications, Interfaces, UPS Materials, UPS Shipping Services, or otherwise.
13. Disclaimer of Warranties; No Assurances. UPS makes no assurances or representations to Developer in connection with any financial gain or other benefit that may result from the activities contemplated in this Agreement as regards Applications. THE UPS MATERIALS ARE PROVIDED “AS IS” AND IN THEIR PRESENT STATE AND CONDITION. NO WARRANTY, REPRESENTATION, CONDITION, UNDERTAKING OR TERM, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO THE CONDITION, QUALITY, AVAILABILITY, DURABILITY, PERFORMANCE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OR USE OF THE UPS MATERIALS OR OTHERWISE IS GIVEN OR ASSUMED BY UPS, ITS AFFILIATES, LICENSORS, AND SUPPLIERS OR THEIR AGENTS, AND ALL SUCH WARRANTIES, REPRESENTATIONS, CONDITIONS, UNDERTAKINGS, AND TERMS ARE HEREBY EXCLUDED TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW. UPS, ITS AFFILIATES, LICENSORS, AND SUPPLIERS MAKE NO WARRANTY WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE UPS MATERIALS. EXCEPT AS EXPRESSLY SET FORTH HEREIN AND WITHOUT LIMITING DEVELOPER’S OBLIGATIONS HEREIN REGARDING THE SAME, DEVELOPER MAKES NO WARRANTY, REPRESENTATION, CONDITION, UNDERTAKING OR TERM, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, REGARDING THE INTERFACES OR ACCESS TO THE UPS ACCESS SERVICES. UPS AND ITS AFFILIATES, LICENSORS, AND SUPPLIERS DO NOT GUARANTEE CONTINUOUS, UNINTERRUPTED, OR SECURE ACCESS TO THE UPS SYSTEMS, AND ACCESS TO SUCH SYSTEMS MAY BE INTERFERED WITH BY NUMEROUS FACTORS, MANY OF WHICH MAY BE OUTSIDE OF UPS’S CONTROL; UPS, ITS AFFILIATES, LICENSORS, AND SUPPLIERS ARE NOT LIABLE FOR ANY CLAIMS OR DAMAGES OF ANY TYPE CAUSED BY SUCH INTERFERENCE. SOME JURISDICTIONS DO NOT ALLOW LIMITATIONS ON IMPLIED WARRANTIES, SO THE LIMITATIONS AND EXCLUSIONS IN THIS SECTION 13 MAY NOT APPLY TO DEVELOPER. THIS AGREEMENT GIVES DEVELOPER SPECIFIC LEGAL RIGHTS. DEVELOPER MAY ALSO HAVE OTHER RIGHTS, WHICH VARY FROM JURISDICTION TO JURISDICTION. DEVELOPER AND UPS AGREE AND ACKNOWLEDGE THAT THE LIMITATIONS AND EXCLUSIONS OF LIABILITY AND WARRANTY PROVIDED IN THIS AGREEMENT ARE FAIR AND REASONABLE.
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14. Limitation of Liability.
a. NOTHING IN THIS AGREEMENT LIMITS OR EXCLUDES UPS’S LIABILITY FOR ANY ACT OR OMISSION, THE LIABILITY FOR WHICH MAY NOT BE LIMITED UNDER APPLICABLE LAW. SUBJECT TO THE FOREGOING, BUT NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, THE UPS GROUP SHALL NOT BE LIABLE TO DEVELOPER OR ANY SHIPPER OR OTHER THIRD PARTY FOR ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE, INCIDENTAL, OR SPECIAL DAMAGES, LOSS OF PROFITS, SAVINGS, OR REVENUE, OR LOSS OF DATA ARISING OUT OF THIS AGREEMENT, DUE TO BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), DELICT, OR OTHERWISE, OR USE OF THE UPS MATERIALS OR THE SECURITY ELEMENTS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE LIKELIHOOD OF SUCH DAMAGES OR LOSSES OCCURRING. THIS LIMITATION OF LIABILITY SHALL BE APPLICABLE ONLY TO THE EXTENT PERMITTED BY APPLICABLE LAW IN THE EVENT OF PERSONAL INJURY OR DEATH CAUSED BY UPS. WITHOUT IN ANY WAY LIMITING THE GENERALITY OF SECTION 13 (DISCLAIMER OF WARRANTIES; NO ASSURANCES), EXCEPT FOR CLAIMS FOR INDEMNIFICATION HEREUNDER OR OTHERWISE ARISING OUT OF OR IN CONNECTION WITH THE RECKLESSNESS OR WILLFUL MISCONDUCT OF UPS (“EXCLUDED CLAIMS”), IN NO EVENT SHALL THE UPS GROUP’S LIABILITY FOR ANY DAMAGES (DIRECT OR OTHERWISE), PENALTIES OR LOSS, REGARDLESS OF THE FORM OF ACTION OR CLAIM, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), DELICT OR OTHERWISE, EXCEED, IN THE AGGREGATE, ONE THOUSAND DOLLARS ($1,000 USD). DEVELOPER HEREBY WAIVES ANY CLAIM FOR DAMAGES, LOSSES, OR PENALTIES IN EXCESS OF ONE THOUSAND DOLLARS ($1,000) OF DEVELOPER OR ANY SUCH THIRD PARTY, OTHER THAN EXCLUDED CLAIMS.
b. WITH RESPECT TO ANY EVENT THAT CONSTITUTES A BREACH OF CONTRACT OR TORT (INCLUDING NEGLIGENCE), DEVELOPER MAY SEEK DAMAGES SOLELY IN ACCORDANCE WITH THE LIMITATIONS SET FORTH IN SECTION 13 (DISCLAIMER OF WARRANTIES; NO ASSURANCES) AND THIS SECTION 14. ANY CLAIM NOT MADE BY DEVELOPER WITHIN SIX (6) MONTHS AFTER THE FIRST EVENT GIVING RISE TO SUCH CLAIM WILL BE DEEMED IRREVOCABLY WAIVED.
15. Indemnification. Developer will, at Developer’s sole cost and expense, indemnify and hold harmless, and at UPS’s option defend, each of the UPS Indemnitees from and against any and all (i) losses or damages incurred directly or indirectly by, or (ii) actions, claims, or proceedings, initiated against, a UPS Indemnitee ((i) and (ii), “Claims”), that arise out of or relate to: (a) any license or authorization to use the Interfaces, Applications, Plug-In Solutions, or UPS Information; (b) any performance, non-performance, or malperformance issues related to the Interfaces, Plug-In Solutions, or Applications (excluding Claims based solely on the UPS Materials, but not excluding Claims based on the combination, operation, or use of the UPS Materials with anything other than UPS Materials), such as damages for the inability of any users to access the UPS Systems and manifest shipments with UPS; (c) any Claim that any Application, Plug-In Solution, or any portion or use thereof, or UPS’s authorized use of, Developer’s trademarks, service marks, names, or logos (excluding Claims based solely on the UPS Materials, but not excluding Claims based on the combination, operation, or use of the UPS Materials with non-UPS Materials) infringes or misappropriates the intellectual property rights of a third party or constitutes an act of unfair competition in violation of any Applicable Law; (d) any action or inaction (1) by Developer that constitutes, or (2) by a Developer Representative or Hosting Provider engaged by Developer that, if such action or inaction had been performed by Developer, would constitute, a breach of this Agreement or basis for indemnification hereunder; (e) use, processing, storage, or disclosure of UPS Information or Personal Data by Developer, Developer Representatives, an Application, Plug-In Solution, or Hosting Providers that is inconsistent with this Agreement or Applicable Law; or (f) any breach by Developer of its obligations under Sections 8 (Confidentiality) and 12 (Representations and Warranties) or Appendix 1 (Integration Requirements). UPS will, at its sole cost and expense, indemnify and hold harmless, and at Developer’s option defend, each of Developer and its officers, directors, owners, affiliates, parent company, agents, representatives, successors and assigns (the “Developer Indemnitees”) from and against any and all Claims alleging that the UPS Materials (alone and not in combination, operation, or use with anything other than UPS Materials) infringe or misappropriate such third-party’s intellectual property rights.
16. Country-Specific Terms. Reserved.
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17. General.
a. Dispute Resolution. Except for the right of either party hereto to apply to a court of competent jurisdiction for an injunction or other interim or equitable relief or provisional remedies available under Applicable Law to preserve the status quo pending the selection and confirmation of the arbitrators, or to prevent irreparable harm related to Developer’s use of the UPS Materials, Interfaces, or Security Elements in breach of this Agreement, and to enforce the award of the arbitrators, any controversy or Claim arising out of or relating to this Agreement or the breach thereof, will be settled exclusively by binding arbitration administered by the American Arbitration Association’s International Centre for Dispute Resolution in New York City, New York, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The parties hereby consent to such venue and waive and agree not to plead or claim that any such action or proceeding has been brought in an inconvenient forum. The award of the arbitrators will be final and binding, will be the sole and exclusive remedy between the parties regarding such dispute, and the parties explicitly waive request for review under Article V Section 1 of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Arbitration will be conducted by a panel of three members, one member selected by UPS, one member selected by Developer, and the third member, who will be chairman, selected by agreement between the other two members. The arbitrators will be attorneys with a background or training in technology law, computer science, or marketing of technology industry products. All arbitration proceedings will be conducted in the English language. Notwithstanding anything to the contrary in this Section 17(a), the arbitrator(s) appointed to resolve disputes may not award or rule on rescission, reformation, or other modification of this Agreement, or on issues of the ownership, validity, or registration of any intellectual property (including trademarks, service marks, trade names, proprietary information and know-how, and rights in content, materials, software and other technology) belonging to UPS or its Affiliates. The foregoing arbitration agreement between the parties and any questions regarding its validity and enforceability shall be exclusively governed by and construed in accordance with the laws of the State of New York, United States of America, exclusive of conflict or choice of law rules.
b. Governing Law and Language. This Agreement shall be construed, governed, interpreted by, and applied in accordance with the laws of the State of New York, United States of America, excluding (i) its conflicts of laws principles; (ii) the United Nations Convention on Contracts for the International Sale of Goods; (iii) the 1974 Convention on the Limitation Period in the International Sale of Goods; and (iv) the Protocol amending the 1974 Convention, done at Vienna April 11, 1980. The parties declare that they have required that this Agreement and all documents related hereto, either present or future, be drawn up in the English language only. To the fullest extent permitted by Applicable Law and consistent with valid entry into a binding agreement, the controlling language of this Agreement is English, and the parties agree that any translation of this Agreement has been provided solely for convenience. Les parties aux présentes ont exigé que la présente convention ainsi que tous les documents y afferents (actuels ou futurs) soient rédigés en langue anglaise. Dans toute la mesure permise par la loi, toute traduction de cette convention ne crée aucun lien contractuel entre les parties et est fournie à des fins d’information seulement. To the fullest extent permitted by Applicable Law, all correspondence and communications between Developer and UPS under this Agreement will be in the English language.
c. Waiver. UPS’s failure or delay to insist upon or enforce strict performance of any provision of this Agreement or right under law shall not be construed as a waiver of any provision or right, nor will it prevent or restrict the further exercise of the same right or provision.
d. Survival. The following Sections, and any other Sections of this Agreement that by their terms or purpose should survive, shall survive the termination of this Agreement for any reason: Sections 1 (Definitions), 4 (Use of UPS Information), 5 (Testing, Audit, and Compliance), 6 (Ownership), 8 (Confidentiality), 9 (Term and Termination), 13 (Disclaimer of Warranties; No Assurances), 14 (Limitation of Liability), 15 (Indemnification), 16 (Country-Specific Terms), and 17 (General) will survive the termination or expiration of this Agreement for any reason.
e. Assignment; Change of Control. Developer may not assign this Agreement or any of its rights or delegate any of its duties hereunder, by contract or operation of law, without UPS’s prior written consent, which consent may be withheld for any reason or no reason, and any attempt to do so by Developer shall be void. In the event of any assignment of this Agreement with UPS’s prior written consent, such assignment will be binding and inure to the benefit of each of the parties and their respective legal successors and permitted assigns. UPS may assign, delegate, or transfer all or any part of this Agreement or any rights hereunder without the need for any approval or consent from Developer.
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f. Independent Parties; No Third-Party Beneficiaries. Nothing in this Agreement or elsewhere shall be construed to make the parties partners, joint venturers, representatives, or agents of each other, nor shall either party, directly, indirectly, in writing or otherwise, so represent to any third person. The parties hereunder are acting in performance of this Agreement as independent contractors engaged in the operation of their own respective businesses, and nothing in this Agreement creates a statutory distributor, dealer, or sales agent contract. Neither party may assume or create any responsibility or obligation on behalf of the other party. Except for members of the UPS Group, no third party will have any right to enforce any of the terms of this Agreement.
g. Severability. If one or more provisions of this Agreement shall be held to be invalid or unenforceable, it is the parties’ intent that such provisions be replaced, reformed, or narrowed so that their original business purpose can be accomplished to the extent permitted by Applicable Law and that the remaining provisions of this Agreement shall not be affected thereby.
h. Force Majeure. UPS shall not be liable or responsible for any delay or failure in performance if such delay or failure is due to causes beyond its reasonable control, including but not limited to, acts of God, work stoppages, orders of government agencies, or acts of war or terrorism.
i. Remedies. Any remedies provided herein are non-exclusive, cumulative, and not in lieu of any other rights or remedies that may be available at law or in equity. Without limiting the generality of the foregoing, Developer agrees that UPS would have no adequate remedy at law available to it, and that monetary damages alone would not be an adequate remedy, for Developer’s breach or threatened breach of Sections 2(c) (Access Conditions), 3 (Distribution Conditions and Restrictions), 4 (Use of UPS Information), 5 (Testing, Audit, and Compliance), 6 (Ownership), 8 (Confidentiality), 10 (Publicity and Third-Party Relations), 11 (General Compliance), or 12(b) (Developer Representations and Warranties), and UPS therefore is entitled to specific performance or injunctive relief regarding the performance of Developer’s obligations under such Sections without any requirement of the posting of a bond, in addition to all other available remedies at law or in equity.
j. Notices. Except as otherwise noted herein, all notices, demands, or other communications required or permitted to be given under this Agreement (“Notices”) shall be in writing and shall be given as follows: (i) personal delivery, deemed effective upon receipt; (ii) United Parcel Service next day delivery, if available, notice deemed effective one business day after dispatch; or (iii) certified mail (return receipt requested, postage prepaid), pre-paid registered mail, or other form of recorded delivery in the applicable jurisdiction, in any case, notice deemed effective on the tenth (10th) business day following posting. Such Notices to be provided by a party will be sent to the other party using the information set forth below, or other such physical address provided in writing by the receiving party to the notifying party. Each party will send a courtesy copy of any Notices to the email addresses set forth below. For the avoidance of doubt, Notices may not be provided by telephone.
If by UPS: to the address associated with Developer’s UPS Developer Profile.
If by Developer: to UPS Digital, Inc., 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328, attention: UPS Legal Department, with a copy to UPS Legal, 55 Glenlake Parkway, N.E., Atlanta, Georgia 30328, or such other address as changed through thirty (30) days’ prior written Notice to Developer. All such Notices shall reference this Agreement and shall include a copy to UPS’s Legal Department at the UPS address set forth above.
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k. Entire Agreement; Construction, Headings. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes any prior written or oral agreements. Each party hereto represents and acknowledges that it has been provided with the opportunity to discuss and review the terms of this Agreement with counsel of its choice prior to execution, has been afforded a reasonable time to do so, and that it is freely and voluntarily signing this Agreement in exchange for the benefits provided herein. The headings in this Agreement and in any exhibits attached hereto are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” and “hereunder” when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision.
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APPENDIX 1
Integration Requirements
The requirements set forth herein are specific to Developers who have executed a Program Agreement. The requirements set forth under Section I (General Integration Requirements) apply to all Developers who have an executed Program Agreement.
| 1. | Program Registration. Developer will design the Application to direct each Shipper attempting to register as a Program Shipper (i) to link a pre-existing UPS Shipper Number; or (ii) if such proposed Program Shipper has no pre-existing UPS Shipper Number, to sign up for a new UPS Shipper Number at a UPS-designated landing page. To become a Program Shipper, Developer must ensure that (a) the UPS Shipper Number provided by such Program Shipper in accordance with the process described in the preceding sentence is assigned to such proposed Program Shipper’s account within the corresponding Application(s), and (b) the proposed Program Shipper has completed the Rate Acknowledgement Process. |
| 2. | Program Shipper Services and Billing Documentation. Developer will design the Application to make available (in a format approved by UPS) to each Program Shipper or set of Program Shippers, as advised by UPS, certain documentation provided by UPS relating to each such Shipper’s use of the Program Shipping Services as may be required under Applicable Law (as determined by UPS in is reasonable discretion). As stated in Section I.1.a above, Program Shippers are UPS customers in addition to Developer customers, and the foregoing requirements pertain to UPS’s legal obligations as relates such Program Shippers under Applicable Law. |
| 3. | UPS Terms and UPS Rate Acknowledgement Process. |
| a. | UPS Terms. UPS provides UPS Shipping Services to Shippers (including Program Shippers) subject to and as further described in (i) the applicable UPS Rate and Service Guides; (ii) the UPS Tariff/Terms and Conditions of Service published in the shipment origin country at the time of shipping (“UPS Tariff”), (iii) the UPS Privacy Notice, (iv) the condition that Program Shippers do not ship items on the applicable UPS List of Prohibited and Restricted Items for Shipping without an express written contract, and (v) any other terms and conditions required by UPS and corresponding to UPS Program Shipping Services ((i)-(iv) collectively the “UPS Terms”) all of which UPS may periodically update in its sole discretion. For clarity, the provision of UPS Shipping Services (including Program Shipping Services) to Shippers (including Program Shippers) denotes a direct contractual relationship between UPS and the Shippers, who are UPS customers in addition to Developer customers. UPS is responsible for obtaining each Program Shipper’s assent to the UPS Terms, and Developer shall abide by all such UPS Terms in the provision of its own services to such Program Shippers as relates to Program Shipments. |
| b. | UPS Rate Acknowledgement Process. Prior to making any UPS Shipping Services or shipping labels available for use by any Shippers, Developer shall present to and obtain the affirmative acceptance of each such Shipper to the rate acknowledgement set forth in Section I(1)(c) below (the “Rate Acknowledgement”) in a manner approved by UPS in writing (such process the “Rate Acknowledgement Process”). In the event a Shipper does not affirmatively accept the Rate Acknowledgement via the Rate Acknowledgement Process as provided for herein, Developer shall prohibit such Shipper from utilizing the Program Shipping Services through all Plug-In Solutions or Applications. Developer shall maintain records of the UPS Rate Acknowledgement Process documenting each UPS Rate Acknowledgement Process implemented throughout the Term and corresponding timeframes for the same (including all impacted user interface screens and functionality, e.g., documenting that a Shipper cannot proceed to manifest UPS shipments without clicking a mandatory checkbox). At the request of UPS, Developer will make available (i) the records described in the preceding sentence, and (ii) a custodian of records to testify, at UPS’s expense, to a Shipper’s assent to the UPS Rate Acknowledgement and the UPS Rate Acknowledgement Process in the Application using all available information, including, without limitation, the information collected by Developer pursuant to the preceding sentence. |
| APPENDIX 1 - 1 |
| c. | Rate Acknowledgement. Prior to making any Program Shipping Services or shipping labels available for use by any Application Shippers, Developer shall present to and obtain the affirmative acceptance of each such Shipper to the following disclaimer in accordance with the UPS Rate Acknowledgement Process: |
“I acknowledge and agree that all UPS shipping transportation services (and those provided by and its affiliates and business partners) ordered by my organization through PeriShip (“PeriShip Shipments”) use my organization’s UPS shipping account (“Company Account”) for identification purposes. I understand that the rates and services made available under my Company Account will not apply to any PeriShip Shipments. All charges incurred for PeriShip Shipments will be billed by UPS to PeriShip and charged to my organization by PeriShip pursuant to my organization’s agreement with PeriShip. All claims related to PeriShip Shipments (including, without limitation, for loss or damage) remain subject to the terms and conditions governing my Company Account, including without limitation, the UPS Tariff/Terms and Conditions of Service.”
| 4. | UPS Shipping Services and Requests. Developer shall not permit any Person that is not a Program Shipper to manifest Program Shipments with UPS through an Application or Plug-In Solution. Without limiting any other requirements set forth in this Agreement, Developer will ensure each Application and Plug-In Solution associates API Requests from Program Shippers (i) with the corresponding UPS Shipper Number provided by such Program Shipper as the “Shipper of Record” and, (i) where applicable, with an appropriate Developer Shipper Number as the “third-party bill” or “bill-to” field. |
| 5. | Timeline; Commercial Production: Developer will use commercially reasonable efforts to do the following by a date agreed in writing by the parties: (a) complete the testing and approval process set forth in Section 5 of the Agreement (Testing; Audit and Compliance); and (b) after the completion of (a), make registration in the UPS Digital Channel Program available to Shippers in commercial production. |
| 6. | No Distributed Interfaces. Consistent with Section 3(c) (No Engines or Private Labeling) of the Agreement, Developer shall not distribute or make available any Interface or Application as an Engine or other stand-alone product, service, or tool, including, without limitation, as part of an SDK or other distributed software package, or a hosted tool or service. Interfaces may only be accessed by Shippers as part of or through an Application in accordance with the requirements of this Agreement and the Program Agreement (e.g., not as a module, Engine or together with any third-party modules or Engines) unless agreed to in writing by UPS in each instance. |
| 7. | Additional APIs. |
| a. | The following UPS APIs (and related terms) are moved from the “Subscription APIs” Section of Exhibit A to the “Required APIs” Section of Exhibit A: UPS Shipping API and UPS Rating API. |
| 8. | Onboarding Configuration. Developer will configure the steps and processes for onboarding Program Shippers into the UPS Digital Channel Program, including the UPS Rate Acknowledgement Process, in accordance with the screen flow attached as Appendix 1-A (“Program Onboarding Configuration”) or as otherwise agreed to in writing by the parties. Until each Shipper has completed Program Registration, Developer shall include promotional language encouraging the Shipper to complete Program Registration on the Application screens where Shippers (i) manage shipping and carrier settings, and (ii) view and purchase shipping rates and labels, respectively. |
| APPENDIX 1 - 2 |
| 9. | Additional Requirements. Without in any way limiting the requirements set forth in this Agreement or the Technical Documentation, Developer shall ensure that all Program Shippers must periodically re-authenticate such Program Shipper’s identity in connection with such Program Shipper’s access and use of the Program Shipping Services in accordance with the Technical Documentation or at other commercially reasonable intervals. |
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| APPENDIX 1 - 3 |
APPENDIX 1-A
PROGRAM ONBOARDING CONFIGURATION
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| APPENDIX 1A - 1 |
EXHIBIT A
UPS® APIs, SOFTWARE, AND ADDITIONAL TERMS & CONDITIONS
| EXHIBIT A - 1 |
EXHIBIT B
[RESERVED]
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| EXHIBIT B - 1 |
EXHIBIT C
[RESERVED]
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| EXHIBIT C - 1 |
EXHIBIT D
Authorized Vendors and Authorized Vendor Products
EXHIBIT D -1
Exhibit 10.3
MASTER LOAN AGREEMENT
This Master Loan Agreement (the “Agreement”), by and between Zen Credit Ventures, LLC and its successors or assigns (“ZCV”) and Verify Me Inc. and its permitted successors and assigns (“Lender”) is effective this August 7, 2025 the first day on which all parties hereto have executed it. ZCV, Lender and any of their permitted successors or assigns are hereinafter referred to as the “Parties”.
The Lender agrees to lend TWO MILLION DOLLARS to ZCV (hereinafter the “Initial Loan”) and on the date of receipt of the Initial Loan funds into ZCV’s depository account as cleared funds, ZCV shall issue to Lender an executed Promissory Note (“Note”), with a payment schedule and terms in accordance with the terms of this Agreement. In the event that Lender and ZCV agree that Lender will lend additional funds to ZCV, any additional loans (each, an “Additional Loan”) shall be subject to this Agreement and ZCV shall issue Lender a separate Note with respect to each Additional Loan, with a payment schedule and terms in accordance with the terms of this Agreement.
| 1. | Interest. |
| (a) | Interest Rate. Except as provided in Section 2(d), principal amounts outstanding under this Agreement and any Notes shall bear interest at a rate per annum equal to SIXTEEN PERCENT (the “Interest Rate”). |
| (b) | Grace Period. Interest Rate shall begin to accrue on the Loan or any Additional Loan fourteen (14) business days after the Loan funds have been received into ZCV’s depository account as cleared funds ZCV (“Grace Period”), and the Note shall bear the date of the day after the Grace Period. |
| (c) | Computation of Interest. All computations of interest hereunder shall be made on the basis of a year of 365 days, and the actual number of days elapsed. Interest shall begin to accrue on the Loan on the date of this Note. On any portion of the Initial Loan or any Additional Loan that is repaid, interest shall not accrue on the date on which such payment is made. |
| (d) | Interest Rate Limitation. If at any time the interest rate payable on the Initial Loan or any Additional Loan (or on any Note) shall exceed the maximum rate of interest permitted under applicable law, such interest rate shall be reduced automatically to the maximum rate permitted. |
| 2. | Term of Note & Repayment |
| (a) | Repayment Obligation. The obligation to repay the Note is unconditional and is not subject to the underlying performance of ZCV. |
| (b) | Payment Schedule. The interest on the Loan shall be payable in 3 equal installments, beginning every third month after the Grace Period for the term of the Note (e.g., $12,000 for each installment on a $300,000 Loan). |
| (c) | Term of Note. On the conclusion of NINE (9) months from the specified date of each Note’s issuance (the “Note Maturity Date”), all amounts outstanding under that Note, and the corresponding Loan or Additional Loan, including principal, accrued and unpaid interest shall be due and payable. |
| (d) | Prepayment. ZCV may prepay the Initial Loan or any Additional Loan in whole or in part at any time or from time to time without penalty or premium by repaying the principal amount to be prepaid, together with accrued interest thereon to the date of prepayment. |
| 3. | Payment; Mechanics. |
| (a) | Manner of Payment. All payments of principal and interest shall be made in US dollars no later than 12:00 PM on the date on which such payment is due. Such payments shall be made by wire transfer to the Lender account at a bank specified by the Lender in writing to ZCV from time to time and shall be deemed made when a wire transfer is received by Lender in its designated depository account, which for the avoidance of doubt shall not be a subaccount with a broker-dealer. |
| (b) | Application of Payments. All payments shall be applied, first, to accrued interest, and second, to principal outstanding under this Note. |
| (c) | Business Day. Whenever any payment hereunder is due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day. “Business Day” means a day other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. |
| 4. | Representations and Warranties. ZCV represents and warrants to the Lender as follows: |
| (a) | Existence. ZCV is an entity duly formed, validly existing, and in good standing under the laws of the state of its organization. ZCV has the requisite power and authority to own, lease, and operate its property, and to carry on its business. |
| (b) | Compliance with Law. ZCV is in material compliance with all laws, statutes, ordinances, rules, and regulations applicable to or binding on ZCV, its property, and business and has all licenses necessary to conduct its business or required by applicable law. |
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| (c) | Power and Authority. ZCV has the requisite power and authority to own and operate its assets and carry on its business and to execute, deliver, and perform its obligations under this Agreement. |
| (d) | Authorization; No Violation; Execution and Delivery. The execution and delivery of this Agreement by ZCV and the performance of its obligations hereunder have been duly authorized by all necessary action in accordance with applicable law and will not (i) violate ZCV’s articles or certificate of organization or operating agreement (as applicable), and to ZCV’s knowledge, any provision of any law or any rule, regulation, judgment, order or ruling of any governmental authority, any agreement or any indenture, mortgage, or other instrument to which ZCV is a party or bound, or (ii) to ZCV’s knowledge, be in conflict with, result in a breach of, or constitute with the giving of notice or lapse of time, or both, a default under any such agreement, indenture, mortgage, or other instrument. All actions on the part of the managers or members (as applicable) of ZCV taken in connection with the execution and delivery, and the performance by ZCV of its obligations under this Agreement remain in full force and effect. ZCV has duly executed and delivered this Agreement. |
| (e) | Binding Agreement. This Agreement when executed and delivered by the parties will be, the legal, valid, and binding obligation of such party, enforceable against such party in accordance with its terms, subject only to limitations on enforceability imposed by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally, and (ii) general equitable principles. |
| (f) | Financial Statements; Disclosure. All ZCV financial statements or financial information provided to Lender in connection with, or to induce Lender to enter into, this Agreement fairly present the financial condition of ZCV in all material respects and the results of ZCV’s operations for the periods covered thereby, and all financial statements are prepared in accordance with generally accepted accounting principles consistently applied (“GAAP”), except, in the case of any unaudited financial statements, the omission of footnotes and, in the case of any interim financial statements, normal year-end adjustments. As of the date of such financial statements, there were no material liabilities of ZCV, fixed or contingent, not reflected in such financial statements or the notes thereto. Since the date of such financial statements, there has been no material adverse change in the financial condition or operations of such ZCV. |
| (g) | Consents and Approvals. To ZCV’s knowledge, no license of any governmental authority or of any party to any agreement to which ZCV is a party or by which it may be bound or affected, is necessary at the time this representation is being made, in connection with the execution, delivery, performance or enforcement of this Agreement, except such as have been obtained and are in full force and effect under this Agreement. |
| 3 |
| (h) | Loan Compliance. ZCV is in compliance with all of the material terms of any loan to which it is a party and no event of default exists under any such loan. |
| (i) | Litigation. There is no pending legal, arbitration, or governmental action or proceeding to which ZCV is a party, and to the best of ZCV’s knowledge, no such action or proceeding is threatened or contemplated. |
| (j) | Taxes. To ZCV’s knowledge, ZCV has: (i) filed or caused to be filed prior to delinquency all federal and all state and local tax returns that are required to be filed; (ii) paid all taxes as shown on such returns; and (iii) paid all other taxes, assessments and governmental charges or levies upon it and its property, income, profits and assets which are due and payable, except where the payment of such tax, assessment, governmental charge or levy is being contested in good faith and by appropriate proceedings and adequate reserves in compliance with GAAP have been set aside on ZCV’s books therefor. |
| (k) | Solvency. ZCV: (i) owns assets the present fair value of which are greater than the amount that will be required to pay the probable liabilities of ZCV’s then existing debts and liabilities as they become due and payable considering all financing alternatives and potential asset sales reasonably available to ZCV; and (ii) has capital that is not unreasonably small in relation to its respective business as presently conducted. |
| 5. | Notices. All notices and other communications relating to this Agreement, the Initial Loan, any Additional Loan or any Note issued in connection therewith, shall be in writing and shall be deemed given upon the first to occur of (x) deposit with the United States Postal Service or overnight courier service, properly addressed and postage prepaid; (y) transmittal by facsimile or e-mail properly addressed (with written acknowledgment from the intended recipient such as “return receipt requested” function, return e-mail, or other written acknowledgment); or (z) actual receipt by an employee or agent of the other party. Notices hereunder shall be sent to the following addresses, or to such other address as such party shall specify in writing (with a copy sent via email): |
| (a) | If to ZCV: | |
| ZenCredit Ventures, LLC | ||
| 201 S Biscayne Boulevard, 28th Floor, Miami FL 33140 | ||
| Attention: Gustavo Sansaloni | ||
| E-mail: [***] | ||
| Facsimile: [***] | ||
| (b) | If to Lender: | |
| Lender Name: Verify Me Inc. | ||
| Address: 801 International Parkway, Fifth Floor, Lake Mary, FL 32746 | ||
| Attention: Adam Stedham | ||
| Email: [***] |
| 4 |
| 6. | Governing Law, Jurisdiction and Resolution of Disputes. The Parties acknowledge that ZCV, and its servicing agent, FNC Services, LLC, maintain an office in New York, New York, and that the State of New York has a substantial relationship to the Parties and this Agreement, the Initial Loan, any Additional Loan or any Note(s) issued in connection therewith. Matters of construction, validity and performance of this Agreement and any Note(s) issued hereunder, and any claim, controversy, dispute, or cause of action (whether in contract, tort, or otherwise) based on, arising out of, or relating to this Agreement, the Initial Loan, any Additional Loan or any Note(s) issued in connection therewith, and the transactions contemplated hereby (a “Dispute”) shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and performed in such State (without regard to principles of conflict of laws) and any applicable law of the United States of America). |
| (a) | Submission to Jurisdiction/Venue. The Parties permanently, irrevocably and unconditionally (i) agree that any action, suit, or proceeding arising from or relating to a Dispute, including without limitation any proceeding or action brought to compel or enjoin an arbitration proceeding, or to confirm, vacate or modify an arbitration award (a “Dispute Proceeding”), may only be brought in the state and federal courts located within the State of New York sitting in New York County, (the “Venue Courts”), (ii) submit to the exclusive jurisdiction of the Venue Courts with respect to any Dispute Proceeding, and (iii) waive any objection that they may now or hereafter have to the laying of venue in the Venue Courts or the exercise of jurisdiction by the Venue Courts over any Dispute Proceeding, including any defense of lack of jurisdiction, improper venue or inconvenient forum. Notwithstanding the foregoing, final judgment in any Dispute Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. |
| (b) | Mandatory Mediation And Arbitration. Notwithstanding Section 7(a) herein, before any Dispute Proceeding is formally commenced, the parties shall (i) first attempt to resolve the Dispute and any potential Dispute Proceeding by reasonable discussion in the form of informal mediation, and (ii) if reasonable discussion and informal mediation between the parties is not successful, shall be submit any Dispute to arbitration before the American Arbitration Association, in accordance with the then-prevailing Commercial Arbitration Rules of the AAA (the “Rules”). The arbitration shall be held in New York, New York at a location chosen and supplied by ZCV. Any and all discussions and arbitration demands made pursuant to this Section 6(b) shall be confidential and shall be treated as compromise and settlement negotiations. No Party may initiate or continue any Dispute Proceeding prior to engaging in reasonable discussions, giving written notice of the Party’s belief that further reasonable discussions would be futile and engaging in Arbitration through completion. Any Dispute Proceeding commenced in violation of this section shall be dismissed or stayed, without requiring any Party to post a bond or undertaking (or in the event that a bond or undertaking is required as a matter of law, then any such bond or undertaking shall be in a nominal amount). |
| 5 |
| (c) | Jury Waiver. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY DISPUTE PROCEEDING, OR WITH RESPECT TO ANY COUNTERCLAIMS, CROSS-CLAIMS OR THIRD PARTY CLAIMS RELATED THERETO. |
| 7. | Cross Default. (i) The occurrence of an uncured payment related event of default under any other loan to which ZCV is a party, or (ii) the occurrence of an uncured default which results in the acceleration and demand for payment of all principal and interest owed under any other loan to which ZCV is a party and has defaulted on for a reason other than a payment related event of default, will cause all amounts due pursuant to this Agreement to become immediately due and payable. |
| 8. | Remedies. In the event that ZCV concedes, or an arbitrator or court of competent jurisdiction finds, that ZCV is in material default of its obligations to Lender hereunder, ZCV shall consent to, and shall not oppose, the appointment of an independent third party for the purposes of acting as a trustee administrator (the “Trustee Administrator”). The Trustee Administrator shall be selected, and may be changed from time to time at the sole discretion of, ZCV. The Trustee Administrator shall: manage ZCV’s business portfolio, provide reporting to the Lender of the same, and make available payments of ZCV’s obligations, including the obligations of ZCV to Lender hereunder and under any Note(s). In addition, the Trustee Administrator shall oversee the winding down or winding up of ZCV and shall act as the appropriate liaison between ZCV and all third party services used by ZCV in its business operations and/or joint ventures, such as bookkeeping, accounting, auditing, and collections. Lender shall have the right, but not the obligation, to elect the remedy of the appointment of a Trustee Administrator following the good faith discussions and Arbitration as detailed in paragraph 7(b), above, and that election shall serve as a waiver of any other remedies at law or equity against ZCV, including the right to commence a Dispute Proceeding. |
| 9. | Successors and Assigns. Neither this Agreement nor any Note(s) issued thereunder, nor any rights or obligations arising thereunder or related thereto, may be assigned or transferred by the Lender to any individual, corporation, company, limited liability company, trust, joint venture, association, partnership, unincorporated organization, governmental authority, or other entity without ZCV’s prior written consent (which consent will not be unreasonably withheld, particularly in the event of the death, disability or insolvency of Lender or the assignment of Lender’s assets to a trust, or the assignment to Lender’s successor, assign, heir, executor or immediately family member). ZCV may assign its rights and obligations hereunder (and under any Note(s) issued hereunder), to any company affiliate of ZCV or to any successor of ZCV (including any entity which purchases the majority of the assets of ZCV) in which the current managers of ZCV continue to manage the affiliate or successor company. |
| 10. | Integration. This Agreement constitute the entire contract between ZCV and the Lender with respect to the subject matter hereof and supersedes all previous agreements and understandings, oral or written, with respect thereto (other than any Note(s) previously issued by ZCV for the benefit of Lender, which shall remain enforceable by the noteholder against ZCV and its successors and assigns). |
| 6 |
| 11. | Amendments and Waivers. No term of this Agreement may be waived, modified, or amended, except by an instrument in writing signed by the Party to be so bound. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. |
| 12. | Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not render such term or provision invalid or unenforceable in any other jurisdiction nor shall it affect any other term or provision of this Agreement or any outstanding Note(s) issued hereunder, all of which shall remain in full force and effect. |
| 13. | Counterparts/Execution. This Agreement and any amendments, waivers, consents, or supplements hereto (and any Note(s) issued hereunder) may be executed in counterparts, each of which shall constitute an original, but all of which taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page by facsimile or in electronic (“pdf” or “tif”) format shall be as effective as delivery of a manually executed counterpart of this Note. The words “execution,” “signed,” “signature,” and words of similar import in this Note shall be deemed to include electronic and digital signatures and the keeping of records in electronic form, each of which shall be of the same effect, validity, and enforceability as manually executed signatures and paper-based recordkeeping systems, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 U.S.C. § 7001 et seq.), the Electronic Signatures and Records Act of 1999 (N.Y. State Tech. Law §§ 301-309), and any other similar state laws based on the Uniform Electronic Transactions Act. This Agreement shall be construed as having been negotiated and drafted by both Parties, the authorized agents and signatories of whom are sophisticated businesspeople, and both Parties have availed themselves of the opportunity to review the document with the legal counsel of their choosing. No ambiguities shall be resolved against either party as “the drafter”. By signing on behalf of an entity, a signatory affirmatively represents that the signatory is duly and properly authorized to bind that entity, and that by so signing on behalf of that entity, the signatory intends to and hereby does so bind that entity to the terms and conditions of this Agreement. |
[Signature Page Follows]
| 7 |
IN WITNESS WHEREOF, the Parties have executed this Master Loan Agreement as of
| Lender Name: Verify Me Inc. | ZenCredit Ventures, LLC | |||
| By: | /s/ Adam Stedham | By: | /s/ Avi Ellman | |
| Name: | Adam Stedham | Name: | Avi Ellman | |
| Title: | Authorized Member | Title: | Manager | |
| Date: | 8/8/2025 | Date: | 8/7/2025 | |
| Email: | [***] | |||
8
Exhibit 10.4
| PROMISSORY NOTE | |
| Note Amount: $2,000,000 | Issue Date: August 11, 2025 |
FOR VALUE RECEIVED, ZenCredit Ventures, LLC, a Delaware limited liability company (“ZCV”) hereby promises to pay to the order of VerifyMe Inc. or the permitted successors or assigns then holding title to this document in due course (the “Noteholder”) the principal amount of TWO MILLION dollars ($2,000,000) (the “Note Funds”), together with all accrued interest thereon, as provided in this Promissory Note (this “Note”).
| 1. | Payment Dates. |
(a) Payment Dates. The interest due and payable under this Note shall be payable in 3 equal installments of EIGHTY THOUSAND dollars ($80,000) beginning on November 11, 2025 and every third month thereafter for the term of this Note. On May 11, 2026 (the “Note Maturity Date”), the full balance of this Note, including principal, accrued and unpaid interest, shall be due and payable.
(b) Prepayment. ZCV may prepay the balance of the Note Funds in whole or in part at any time or from time to time without penalty or premium by repaying the principal amount to be prepaid, together with accrued interest thereon to the date of prepayment.
| 2. | Interest. |
(a) Interest Rate. Except as provided in Section 2(c), below principal amounts outstanding under this Note shall bear interest at a rate per annum equal to SIXTEEN percent (16%) (the “Interest Rate”). Interest Rate shall be applicable and begin to accrue after the Note Funds have been received and cleared in ZCV’s depository account, which date shall be the beginning of the Term of the Note.
(b) Computation of Interest. All computations of interest hereunder shall be made a monthly basis. Interest shall begin to accrue on the Note Funds on the date of this Note. On any portion of the Note Funds that is repaid, interest shall not accrue on the date on which such payment is made.
(c) Interest Rate Limitation. If at any time the interest rate payable on the Loan shall exceed the maximum rate of interest permitted under applicable law, such interest rate shall be reduced automatically to the maximum rate permitted.
| 3. | Payment; Mechanics. |
(a) Manner of Payment. All payments of principal and interest shall be made in US dollars no later than 12:00PM on the date on which such payment is due. Such payments shall be made by wire transfer to the Noteholder’s depository account specified by the Noteholder in writing to ZCV, and shall be deem made when a wire transfer is initiated by ZCV with ZCV’s bank from a ZCV depository account in which funds sufficient to cover the wire transfer are on deposit.
(b) Application of Payments. All payments shall be applied, first, to accrued interest, and second, to principal outstanding under this Note.
(c) Business Day. Whenever any payment hereunder is due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day. “Business Day” means a day other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
| 4. | Representations and Warranties. ZCV represents and warrants to Noteholder as follows: |
(a) Existence. ZCV is an entity duly formed, validly existing, and in good standing under the laws of the state of its organization. ZCV has the requisite power and authority to own, lease, and operate its property, and to carry on its business.
(b) Compliance with Law. ZCV is in compliance with all laws, statutes, ordinances, rules, and regulations applicable to or binding on ZCV, its property, and business.
(c) Power and Authority. ZCV has the requisite power and authority to execute, deliver, and perform its obligations under this Note.
(d) Authorization; Execution and Delivery. The execution and delivery of this Note by ZCV and the performance of its obligations hereunder have been duly authorized by all necessary action in accordance with applicable law. ZCV has duly executed and delivered this Note.
| 5. | Notices. All notices and other communications relating to this Note shall be in writing and shall be deemed given upon the first to occur of (x) deposit with the United States Postal Service or overnight courier service, properly addressed and postage prepaid; (y) transmittal by facsimile or e-mail properly addressed (with written acknowledgment from the intended recipient such as “return receipt requested” function, return e-mail, or other written acknowledgment); or (z) actual receipt by an employee or agent of the other party. Notices hereunder shall be sent to the following addresses, or to such other address as such party shall specify in writing (with a copy sent via email): |
(a) If to ZCV:
ZenCredit Ventures, LLC
201 S Biscayne Boulevard, 28th Floor, Miami FL 33140
Attention: Gustavo Sansaloni
Facsimile: (786) 922-4757
E-mail: [***]
(b) If to Noteholder:
Lender Name: VerifyMe Inc.
Lender Address: 801 International Parkway, Fifth Floor, Lake Mary, FL 32746
Attention: Adam Stedham
Email: [***]
| 2 |
| 6. | Governing Law, Jurisdiction and Resolution of Disputes. The Parties acknowledge that ZCV, and its servicing agent, FNC Services, LLC, maintain an office in New York, New York, and that the State of New York has a substantial relationship to the Parties and this Note, the Note Funds (and any Additional Note(s) issued to the Noteholder). Matters of construction, validity and performance of this Note, and any claim, controversy, dispute, or cause of action (whether in contract, tort, or otherwise) based on, arising out of, or relating to this Note or the Note Funds, and the transactions contemplated hereby (a “Dispute”) shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and performed in such State (without regard to principles of conflict of laws) and any applicable law of the United States of America). |
(a) Submission to Jurisdiction/Venue. The Parties permanently, irrevocably and unconditionally (i) agree that any action, suit, or proceeding arising from or relating to a Dispute, including without limitation any proceeding or action brought to compel or enjoin an arbitration proceeding, or to confirm, vacate or modify an arbitration award (a “Dispute Proceeding”), may only be brought in the state and federal courts located within the State of New York sitting in New York County, (the “Venue Courts”), (ii) submit to the exclusive jurisdiction of the Venue Courts with respect to any Dispute Proceeding, and (iii) waive any objection that they may now or hereafter have to the laying of venue in the Venue Courts or the exercise of jurisdiction by the Venue Courts over any Dispute Proceeding, including any defense of lack of jurisdiction, improper venue or inconvenient forum. Notwithstanding the foregoing, final judgment in any Dispute Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Mandatory Mediation And Arbitration. Notwithstanding Section 6(a) herein, before any Dispute Proceeding is formally commenced, the parties shall (i) first attempt to resolve the Dispute and any potential Dispute Proceeding by reasonable discussion in the form of informal mediation, and (ii) if reasonable discussion and informal mediation between the parties is not successful, shall be submit any Dispute to arbitration before the American Arbitration Association, in accordance with the then-prevailing Commercial Arbitration Rules of the AAA (the “Rules”). The arbitration shall be held in New York, New York at a location chosen and supplied by ZCV. Any and all discussions and arbitration demands made pursuant to this Section 6(b) shall be confidential and all discussions and informal mediation efforts shall be treated as compromise and settlement negotiations. No Party may initiate or continue any Dispute Proceeding prior to engaging in reasonable discussions, giving written notice of the Party’s belief that further reasonable discussions would be futile and engaging in Arbitration through completion. Any Dispute Proceeding commenced in violation of this section shall be dismissed or stayed, without requiring any Party to post a bond or undertaking (or in the event that a bond or undertaking is required as a matter of law, then any such bond or undertaking shall be in a nominal amount).
| 3 |
(c) Jury Waiver. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY DISPUTE PROCEEDING, OR WITH RESPECT TO ANY COUNTERCLAIMS, CROSS-CLAIMS OR THIRD PARTY CLAIMS RELATED THERETO.
| 7. | Successors and Assigns. This Note may not be assigned or transferred by Noteholder to any individual, corporation, company, limited liability company, trust, joint venture, association, partnership, unincorporated organization, governmental authority, or any other entity, without ZCV’s prior written consent (which consent will not be unreasonably withheld, particularly in the event of the death, disability or insolvency of Noteholder or the assignment of Lender’s assets to a trust, or the assignment to Lender’s successor, assign, heir, executor or immediately family member). ZCV may assign its rights and obligations hereunder to any company affiliate or successor of ZCV (including any entity which purchases the majority of the assets of ZCV) in which the current managers of ZCV continue to manage the affiliate or successor company. |
| 8. | Integration/Conflicts. This Note constitute the entire contract between ZCV and Noteholder with respect to the subject matter hereof and supersedes all previous agreements and understandings, oral or written, with respect thereto. The terms of this Note shall control over any conflicting terms in any other agreement or document. |
| 9. | Amendments and Waivers. No term of this Note may be waived, modified, or amended, except by an instrument in writing signed by ZCV and Noteholder. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. |
| 10. | Severability. If any term or provision of this Note is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not render such term or provision invalid or unenforceable in any other jurisdiction nor shall it affect any other term or provision of this Note, all of which shall remain in full force and effect. |
| 11. | Counterparts/Execution. This Note and any amendments, waivers, consents, or supplements hereto may be executed in counterparts, each of which shall constitute an original, but all of which taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page by facsimile or in electronic (“pdf” or “tif”) format shall be as effective as delivery of a manually executed counterpart of this Note. The words “execution,” “signed,” “signature,” and words of similar import in this Note shall be deemed to include electronic and digital signatures and the keeping of records in electronic form, each of which shall be of the same effect, validity, and enforceability as manually executed signatures and paper-based recordkeeping systems, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 U.S.C. § 7001 et seq.), the Electronic Signatures and Records Act of 1999 (N.Y. State Tech. Law §§ 301-309), and any other similar state laws based on the Uniform Electronic Transactions Act. The terms of this Note shall be construed as having been negotiated and drafted by both Parties, the authorized agents and signatories of whom are sophisticated businesspeople, and both Parties have availed themselves of the opportunity to review the document with the legal counsel of their choosing. No ambiguities shall be resolved against either party as “the drafter”. By signing on behalf of an entity, a signatory affirmatively represents that the signatory is duly and properly authorized to bind that entity, and that by so signing on behalf of that entity, the signatory intends to and hereby does so bind that entity to the terms and conditions of this Note. |
| 4 |
IN WITNESS WHEREOF, ZCV has executed this Note as of August 11, 2025.
| ZenCredit Ventures, LLC | ||
| By: | /s/ Avi Ellman | |
| Name: Avi Ellman | ||
| Title: Authorized Member | ||
| Date: 8/11/2025 | ||
| ACKNOWLEDGED AND ACCEPTED BY | |
|
VerifyMe, Inc.
|
|
| /s/ Adam Stedham | |
| Lender Name: Adam Stedham | |
| Title: Lender | |
| Date: 8/11/2025 |
5
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Adam Stedham, certify that:
1. I have reviewed this quarterly report on Form 10-Q of VerifyMe, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 14, 2025
| /s/ Adam Stedham | |
|
Adam Stedham Chief Executive Officer and President (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Jennifer Cola, certify that:
1. I have reviewed this quarterly report on Form 10-Q of VerifyMe, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 14, 2025
| /s/ Jennifer Cola | |
|
Jennifer Cola Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of VerifyMe, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof, I, Adam Stedham, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The quarterly report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Adam Stedham | |
|
Adam Stedham Chief Executive Officer and President (Principal Executive Officer) |
Date: November 14, 2025
In connection with the quarterly report of VerifyMe, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof, I, Jennifer Cola, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The quarterly report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Jennifer Cola | |
|
Jennifer Cola Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Date: November 14, 2025
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to VerifyMe, Inc. and will be retained by VerifyMe, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.