VRME VerifyMe Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):

August 25, 2023

 

VerifyMe, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada	001-39332	23-3023677
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
801 International Parkway, Fifth Floor, Lake Mary, Florida		32746
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:  (585) 736-9400

 

_____________________

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		VRME		The Nasdaq Capital Market
Warrants to Purchase Common Stock		VRMEW		The Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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.  ¨

 

 

Item 1.01

Entry into a Material Definitive Agreement.

 

The information contained in Item 2.03 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

On August 25, 2023, VerifyMe, Inc. (the “Company”) entered into a Convertible Note Purchase Agreement (the “Purchase Agreement”) with the investors named therein (the “Investors”) for the sale of convertible promissory notes (“Notes”) in the aggregate principal amount of $1.1 million (the “Private Placement”). The Company intends to use the net proceeds from the Private Placement for general corporate purposes.

 

The Notes are subordinated unsecured obligations of the Company and accrue interest payable semiannually at a rate of 8% per year. The Notes will mature on August 25, 2026 (the “Maturity Date”), unless earlier converted or repurchased. Holders may convert all or any portion of their notes at any time prior to the Maturity Date. The conversion price is $1.15 per share of the Common Stock, which is equal to the Nasdaq Official Closing Price of the Common Stock on the trading day immediately preceding the Closing Date. The Company may not redeem the Notes prior to the Maturity Date.

 

Several of the Investors in the Private Placement are or are affiliated with Adam Stedham, the Company’s President and CEO; Scott Greenberg, the Company’s Chairman; Marshall Geller, a director; and Arthur Laffer, a director.

 

The offer and sale of the Notes was not registered under the Securities Act of 1933, as amended (the “1933 Act”), and the Notes were issued and sold in a private placement pursuant to Section 4(a)(2) of the 1933 Act and Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission (the “SEC”) under the 1933 Act. Each of the Investors represented that it is an “accredited investor” within the meaning of Rule 501 of Regulation D, was acquiring the Notes for its own account, and had no direct or indirect arrangement or understanding with any other persons to distribute or regarding the distribution of such Notes. The Notes were offered and sold without any general solicitation by the Company or its representatives.

 

The foregoing summaries of the Purchase Agreement and the Notes are subject to and qualified in their entirety by the terms of the Purchase Agreement and the Notes, forms of which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated by reference herein.

 

Item 3.02

Unregistered Sales of Equity Securities.

 

The information contained in Item 2.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. Neither this Current Report on Form 8-K nor any of the exhibits attached hereto is an offer to sell or a solicitation of an offer to buy convertible promissory notes or any other securities of the Company.

 

Item 7.01

Regulation FD Disclosure.

 

On August 28, 2023, VerifyMe, Inc. (the “Company”) issued a press release announcing the Private Placement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein. 

 

The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under such section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)     Exhibits.

 

 

Exhibit No.	Description
10.1*	Form of Convertible Note Purchase Agreement
10.2	Form of Convertible Subordinated Promissory Note
99.1	VerifyMe, Inc. Press Release dated August 28, 2023
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*

Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

 

 

SIGNATURE

 

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 hereunto duly authorized.

 

	VerifyMe, Inc.
Date: August 28, 2023	By:	/s/ Adam Stedham
		Adam Stedham
		Chief Executive Officer and
		President

 

 

 

 

 

 

Exhibit 10.1

 

CONVERTIBLE NOTE PURCHASE AGREEMENT

 

This Convertible Note Purchase Agreement, dated as of August 25, 2023 (this “Agreement”), is entered into by and among VerifyMe, Inc., a Nevada corporation (the “Company”), and the persons and entities listed on the schedule of purchasers attached hereto as Schedule I (each an “Purchaser” and, collectively, the “Purchasers”).

 

RECITALS

 

A.       On the terms and subject to the conditions set forth herein, each Purchaser is willing to purchase from the Company, and the Company is willing to sell to such Purchaser, a convertible promissory note in the principal amount set forth opposite such Purchaser’s name on Schedule I hereto.

 

B.       Capitalized terms not otherwise defined herein shall have the meaning set forth in the form of Note (as defined below) attached hereto as Exhibit A.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.       The Notes

 

(a)       Issuance of Notes. Subject to all of the terms and conditions hereof, the Company agrees to issue and sell to each of the Purchasers, and each of the Purchasers severally agrees to purchase, a convertible subordinated promissory note in the form of Exhibit A hereto (each, a “Note” and, collectively, the “Notes”) in the principal amount set forth opposite the respective Purchaser’s name on Schedule I hereto. The obligations of the Purchasers to purchase Notes are several and not joint. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Notes.

 

(b)       Delivery. The sale and purchase of the Notes shall take place at a closing (the “Closing”) to be held at such place as the Company and the Purchasers may determine as of the date of this Agreement, but in no event later than September 30, 2023 (the “Closing Date”). At the Closing, the Company will deliver to each Purchaser the Note to be purchased by such Purchaser, against receipt by the Company of the corresponding purchase price set forth on Schedule I hereto (the “Purchase Price”). Each of the Notes will be registered in such Purchaser’s name in the Company’s records. The Company may conduct one or more additional closings (each, an “Additional Closing”) within 45 days from the Closing Date, to be held at such place and time as the Company and the Purchasers participating in such Additional Closing may determine (each, an “Additional Closing Date”). At each Additional Closing, the Company will deliver to each of the Purchasers participating in such Additional Closing the Note to be purchased by such Purchaser, against receipt by the Company of the corresponding Purchase Price. Each of the Notes will be registered in such Purchaser’s name in the Company’s records.

 

 

(c)       Use of Proceeds. The proceeds of the sale and issuance of the Notes shall be used for the purchase by the Company for general working capital purposes.

 

2.       Minimum Required and Maximum Purchases. Notwithstanding anything in this Agreement to the contrary, the Closing shall not occur and (i) the Company shall have no obligation to issue any Notes hereunder, and (ii) the Purchaser shall have no obligation to purchase any Notes hereunder unless a minimum of $1 million Notes are being purchased on the Closing Date. The total amount of Notes issued on the Closing Date and all Additional Closings shall not exceed $1.5 million.

 

3.       Representations and Warranties of the Company. The Company represents and warrants to each Purchaser that:

 

(a)       Organization, Good Standing, Qualification. The Company (i) is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its organization; and (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted.

 

(b)       Authority. The execution, delivery and performance by the Company of this Agreement and the Note (each a “Transaction Document” and collectively the “Transaction Documents”) to be executed by the Company and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

 

(c)       Enforceability. Each Transaction Document executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

 

(d)       Non-Contravention. The execution and delivery by the Company of the Transaction Documents to which is a party and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Company’s articles of incorporation or by-laws (as amended, the “Organization Documents”) or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien upon any property, asset or revenue of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

 

 

(e)       Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, without limitation, the stockholders of any Person) is required in connection with the execution and delivery of the Transaction Documents to which is a party and the performance and consummation of the transactions contemplated thereby, other than such as have been obtained and remain in full force and effect and other than such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement and other than the necessary company approvals for the authorization of any securities of the Company into which the Notes may be converted.

 

(f)       No Violation or Default. To the knowledge of the Company, it is not in violation of or in default with respect to (i) its Organization Documents or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; or (ii) any material mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound (nor is there any waiver in effect which, if not in effect, would result in such a violation or default), where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a material adverse effect on the Company.

 

4.       Representations and Warranties of Purchasers. Each Purchaser, for that Purchaser severally (and not jointly with any other Purchaser), represents and warrants to the Company upon the acquisition of a Note as follows:

 

(a)       Authorization. The Purchaser has full power and authority to enter into the Transaction Documents. The Transaction Documents to which the Purchaser is a party, when executed and delivered by the Purchaser, will constitute valid and legally binding obligations of the Purchaser, enforceable in accordance with their terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b)       Purchase Entirely for Own Account. This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation to the Company, which by the Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the Notes to be acquired by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Notes.

 

(c)       Access to Information; Suitability. Purchaser is familiar with the business, financial condition and operations of the Company and the terms of the Notes, and has had access to such information concerning the Company and the Notes as it deems necessary to enable it to make an informed investment decision concerning the purchase of the Notes. Purchaser understands and accepts that the purchase of the Notes involves various risks, has independently evaluated the fairness of the price of the Notes and is satisfied with such price, and has such knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of acquiring the Notes and of making an informed investment decision with respect thereto. Purchaser confirms that it is not relying on any communication (written or oral) of the Company or any of its Affiliates, as investment or tax advice or as a recommendation to purchase the Notes. Purchaser is able to bear the economic risk of their investment in the Company and has adequate means of providing for their current needs and possible personal contingencies with no need for liquidity in this investment. In making this statement, consideration has been given to whether Purchaser could afford to hold their investment in the Company for an indefinite period of time and whether, at this time, they could afford a complete loss of their investment in the Notes. Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Notes or made any finding or determination concerning the fairness or advisability of this investment.

 

 

(d)       Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

 

(e)       No Public Market. The Purchaser understands that no public market now exists for the Notes, and that the Company has made no assurances that a public market will ever exist for the Notes.

 

(f)       Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Purchaser agrees to furnish any additional information requested by the Company or any of its Affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Notes. Purchaser acknowledges that it has completed the Investor Questionnaire contained in Exhibit B and that the information contained therein is complete and accurate as of the date thereof and is hereby affirmed as of the date hereof and as of the date of the Closing. Any information that has been furnished or that will be furnished by Purchaser to evidence its status as an accredited investor is accurate and complete, and does not contain any misrepresentation or material omission.

 

(g)       Foreign Investors. If the Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Code), the Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Notes, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Notes

 

 

(h)       No General Solicitation. Neither the Purchaser, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including, through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Notes.

 

(i)       No “Bad Actors”. Each Purchaser: (i) if a natural person, represents on its behalf; or (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock corporation or other entity, represents on its behalf and the behalf of its officers, directors and principal stockholders, connected with the Purchaser at the time of this Agreement, that it is not subject to any “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act.

 

(j)       Residence. If the Purchaser is an individual, then the Purchaser resides in the state or province identified in the address of the Purchaser set forth on Schedule I; if the Purchaser is a partnership, corporation, limited liability company or other entity, then the office or offices of the Purchaser in which its principal place of business is identified in the address or addresses of the Purchaser set forth on Schedule I.

 

(k)       Independent Counsel and Advisors. Such Purchaser represents (i) that such Purchaser has had the opportunity to consult with independent legal counsel and other advisors of such Purchaser’s choice and either has done so regarding such Purchaser’s rights and obligations under this Agreement and the Notes or hereby waives such Purchaser’s right to do so, (ii) that such Purchaser is entering into this Agreement and is purchasing the Notes knowingly, voluntarily, and of such Purchaser’s own free will, (iii) that such Purchaser is relying on such Purchaser’s own judgment in doing so, and (iv) that such Purchaser fully understands the terms and conditions contained herein and in the Notes.

 

(l)       Confidentiality. The Purchaser and its representatives will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement, unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this section by the Purchaser), (b) is or has been independently developed or conceived by the Purchaser without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Purchaser by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that the Purchaser may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any affiliate, partner, member, stockholder, or wholly owned subsidiary of such Purchaser in the ordinary course of business, provided the Purchaser informs such person that such information is confidential and directs such person to maintain the confidentiality of such information; or (iii) as may otherwise be required by law, regulation, rule, court order or subpoena, provided that the Purchaser promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure. It is further expressly acknowledged that nothing in this section or otherwise in this Agreement shall limit or otherwise apply to disclosure by the Purchaser or any of its representatives in connection with any supervisory examination by, or communication with, any banking regulatory authority with jurisdiction over the Purchaser or any of its affiliates, and that neither the Purchaser nor any of its representatives shall have any obligation to notify the Company of any such examination or communication.

 

 

5.       Conditions to Closing of the Purchasers. Each Purchaser’s obligation at the Closing is subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by such Purchaser:

 

(a)       Representations and Warranties. The representations and warranties made by the Company in Section 3 hereof shall have been true and correct when made, and shall be true and correct on the Closing Date.

 

(b)       Completion of Due Diligence. Each Purchaser has completed to its satisfaction its due diligence and reviewed all documents and other information required for such Purchaser to make an informed decision with respect to the purchase of the Notes.

 

(c)       Governmental Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Notes.

 

(d)       Officers’ Certificate. The Company shall have delivered to each Purchaser a certificate by a duly authorized officer of the Company, dated as of the date of each closing, with respect to (i) the accuracy of the representation and warranties of the Company contained in this Agreement and (ii) the Company’s compliance in all material respects with all agreements and satisfaction of all conditions on its part to be performed or satisfied under this Agreement at or prior to the applicable closing.

 

(e)       Secretary’s Certificate. The Company shall have delivered to each Purchaser a certificate, dated as of the date of each closing, signed by the Secretary of the Company certifying (i) that the Amended and Restated Articles of Incorporation and Amended and Restated Bylaws of the Company are true and complete, have not been modified and are in full force and effect, (ii) that the resolutions of the Board of Directors approving this Agreement and the transactions contemplated hereby, including the sale and issuance of the Notes, are in full force and effect and have not been modified, and (iii) as to the incumbency of the officers of the Company.

 

(f)       Good Standing Certificate. The Company shall have obtained a good standing certificate or similar certificate issued by the Secretary of State of the State of Delaware and any other state or jurisdiction where the Company is qualified to conduct business dated within thirty (30) days prior to the Closing Date and shall have delivered such certificate(s) to the Purchasers at or prior to such Closing or Additional Closing, as applicable.

 

(g)       Transaction Documents. The Company shall have duly executed and delivered to the Purchasers this Agreement and each Note issued hereunder, and related agreements satisfactory to the Investor.

 

(h)       Minimum Purchases: A minimum purchase of $1 million Notes is being made in the Closing pursuant to Section 2 hereof.

 

 

6.       Conditions to Obligations of the Company. The Company’s obligation to issue and sell the Notes at the Closing is subject to the fulfillment, on or prior to the Closing Date, of the following conditions, any of which may be waived in whole or in part by the Company:

 

(a)       Minimum Purchases. A minimum purchase of $1 million Notes is being made in the Closing pursuant to Section 2 hereof.

 

(b)       Representations and Warranties. The representations and warranties made by the Purchasers in Section 4 hereof shall be true and correct when made, and shall be true and correct on the Closing Date.

 

(c)       Governmental Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Notes.

 

(d)       Purchase Price. Each Purchaser shall have delivered to the Company the Purchase Price in respect of the Note being purchased by such Purchaser referenced in Section 1(b) hereof.

 

7.       Additional Closings. On or prior to the applicable Additional Closing Date, the Company shall have duly executed and delivered to the Purchasers participating in such Additional Closing each Note to be issued at such Additional Closing and shall have delivered to such Purchasers fully executed copies, if applicable, of all documents delivered to the Purchasers participating in the initial Closing. Each Purchaser shall have executed and delivered this Agreement, and shall have delivered to the Company the Purchase Price in respect of the Note being purchased by such Purchaser referenced in Section 1(b) hereof.

 

8.        Rank; Other Debt.

 

(a)       Subordination. This Note, together with all other Notes, is junior and subordinated in right or payment to all current and future bank or other institutional financing. Pursuant to the terms of the Note Purchase Agreement, each Purchaser hereby subordinates all of the indebtedness arising under its Note or Notes to the indebtedness owing by the Company, and each Purchaser agrees not to demand, accept or receive, directly or indirectly, any payment of principal, premium or interest upon account of its Note or Notes, or any collateral therefore, in contravention hereof.

 

(b)       Bankruptcy Event. The parties hereto acknowledge that this Note Purchase Agreement is a “subordination agreement” as described in 11 U.S.C. § 510(a) which will be effective before, during, and after the commencement of a bankruptcy case by or against the Company or otherwise.

 

 

9.       Miscellaneous

 

(a)       Waivers and Amendments. Any provision of this Agreement and the Notes may be amended, waived or modified only upon the written consent of the Company and a Majority in Interest of Purchasers; provided however, that no such amendment, waiver or consent shall: (i) reduce the principal amount of any Note without the affected Purchaser’s written consent, (ii) reduce the rate of interest of any Note without the affected Purchaser’s written consent or (iii) increase the Conversion Price of any Note without the affected Purchaser’s written consent. Any amendment or waiver effected in accordance with this paragraph shall be binding upon all of the parties hereto. Notwithstanding the foregoing, this Agreement may be amended to add a party as an Purchaser hereunder in connection with Additional Closings without the consent of any other Purchaser, by delivery to the Company of a counterparty signature page to this Agreement together with a supplement to Schedule I hereto. Such amendment shall take effect at the Additional Closing and such party shall thereafter be deemed an “Purchaser” for all purposes hereunder and Schedule I shall be updated to reflect the addition of such Purchaser.

 

(b)       Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions of the State of New York or of any other state.

 

(c)       Pari Passu Notes. Investor acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Notes. In the event Investor receives payments in excess of its pro rata share of the Company’s payments to the Investors of all of the Notes, then Investor shall hold in trust all such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other holders upon demand by such holders.

 

(d)       Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

 

(e)       Expenses. The Company and the Purchasers, severally, shall pay their own costs and expenses incurred with respect to the negotiation, execution, delivery and performance of this Agreement.

 

(f)       Successors and Assigns. Subject to the restrictions on transfer described in Sections 9(g) and 9(h) below, the rights and obligations of the Company and the Purchasers shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

(g)       Registration, Transfer and Replacement of the Notes. The Notes issuable under this Agreement shall be registered notes. The Company will keep, at its principal executive office, books for the registration and registration of transfer of the Notes. Prior to presentation of any Note for registration of transfer, the Company shall treat the Person in whose name such Note is registered as the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in any Note, the holder of any Note, at its option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s principal executive office, and promptly thereafter and at the Company’s expense, except as provided below, receive in exchange therefor one or more new Note(s), each in the principal requested by such holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such Person or Persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on such Note or, if no interest shall have yet been so paid, dated the date of such Note.

 

 

(h)       Assignment by the Company. The rights, interests or obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of a Majority in Interest of Purchasers.

 

(i)       Entire Agreement. This Agreement together with the other Transaction Documents constitute and contain the entire agreement among the Company and Purchasers and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

 

(j)       Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and emailed, mailed or delivered to each party as follows: (i) if to an Purchaser, at such Purchaser’s address, email address or facsimile number set forth in the Schedule of Purchasers attached as Schedule I, or at such other address, email address or facsimile number as such Purchaser shall have furnished the Company in writing, or (ii) if to the Company, at the Company’s address or email address set forth on the signature page to this Agreement, or at such other address or email address as the Company shall have furnished to the Purchasers in writing. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by email or facsimile, (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four days after being deposited in the U.S. mail, first class with postage prepaid.

 

(k)       Separability of Agreements; Severability of this Agreement. The Company’s agreement with each of the Purchasers is a separate agreement and the sale of the Notes to each of the Purchasers is a separate sale. Unless otherwise expressly provided herein, the rights of each Purchaser hereunder are several rights, not rights jointly held with any of the other Purchasers. Any invalidity, illegality or limitation on the enforceability of the Agreement or any part thereof, by any Purchaser whether arising by reason of the law of the respective Purchaser’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to other Purchasers. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(l)       Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement.

 

 

(m)       Delivery by Facsimile or Email. This Agreement and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or email (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com), shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto shall raise the use of a facsimile machine or email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or email as a defense to the formation or enforceability of this Agreement and each such party forever waives any such defense.

 

 

 

(Signature Page Follows)

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Convertible Note Purchase Agreement to be duly executed and delivered as of the date first written above.

 

 

 

	VERIFYME, INC.,
	a Nevada corporation

 

 

	By:
	Name:	Adam Stedham
	Title:	Chief Executive Officer

 

	Address:
	801 International Parkway, Fifth Floor
	Lake Mary, FL 32746

Email:

[________]

 

 

 

[Signature Page to Convertible Note Purchase Agreement]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Convertible Note Purchase Agreement to be duly executed and delivered as of the date first written above.

 

	Purchaser:
	Name:
	Address:

 

 

 

[Signature Page to Convertible Note Purchase Agreement]

 

 

SCHEDULE I

 

SCHEDULE OF PURCHASERS

 

 

Exhibit A

 

FORM OF NOTE

 

See Attached.

 

 

Exhibit B

 

INVESTOR QUESTIONNAIRE

 

See Attached.

 

 

 

 

 

 

Exhibit 10.2

 

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

PAYMENTS UNDER THIS CONVERTIBLE SUBORDINATED PROMISSORY NOTE ARE SUBJECT TO THE SUBORDINATION PROVISIONS SET FORTH HEREIN AND IN THE CONVERTIBLE NOTE PURCHASE AGREEMENT (AS HEREINAFTER DEFINED).

 

VERIFYME, INC.

 

CONVERTIBLE SUBORDINATED PROMISSORY NOTE

 

Principal Amount: $______________

Issuance Date: [_________], 2023

 

For value received, VerifyMe, Inc., a Nevada corporation (“Company”), hereby promises to pay to the order of [________________________] (“Purchaser”), the principal sum of $[___________]. This convertible promissory note (the “Note”) is issued pursuant to the terms of that certain Convertible Promissory Note Purchase Agreement (the “Purchase Agreement”) dated as of even date herewith between the Company and Purchaser. Interest shall accrue on the outstanding principal amount of this Note at the rate of eight percent (8%) per annum, computed on the basis of the actual number of days elapsed and a year of 365/366 days, and shall not compound. Interest on this Note shall commence with the date hereof and shall continue accruing on the outstanding principal until paid in full or otherwise converted pursuant to the terms of Section 4 below. Unless earlier converted into Conversion Shares pursuant to Section 4, the principal and accrued and unpaid interest of this Note will be due and payable by the Company on the Maturity Date (as defined below). All payments of principal and interest on the Maturity Date shall be in lawful money of the United States of America. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Purchase Agreement.

 

The following is a statement of the rights of Purchaser and the conditions to which this Note is subject, and to which Purchaser, by the acceptance of this Note, agrees:

 

1.     Payments

 

(a)   Principal. Unless a Note is previously converted, no payments of principal shall be required until the Maturity Date.

 

 

(b)   Interest. Accrued interest on this Note shall be payable semi-annually. Interest shall be paid by the Company in cash.

 

(c)   Prepayment. The principal amount of the Notes may not be prepaid by the Company prior to the Maturity Date unless the Majority in Interest of Purchasers has consented to such payment.

 

2.     Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note:

 

(a)   Failure to Pay. The Company shall fail to pay (i) any principal payment on the due date hereunder or (ii) any interest payment or other payment required under the terms of this Note or any other Transaction Document on the date due and such payment shall not have been made within ten (10) business days following the Company’s receipt of written notice to the Company of such failure to pay; or

 

(b)   Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing; or

 

(c)   Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company, or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 60 days of commencement.

 

(d)   Breach of Representation or Warranty. Other than as specifically set forth in another clause of this Section 2, the Company breaches any representation or warranty in the Purchase Agreement or violates any of the terms, including the covenants, of this Note, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of three (3) consecutive Trading Days.

 

 

3.     Rights of Purchaser upon Default. Upon the occurrence of any Event of Default (other than an Event of Default described in Sections 2(b) or 2(c)) and at any time thereafter during the continuance of such Event of Default, Purchaser may, with the written consent of a Majority in Interest of Purchasers, by written notice to the Company, declare all outstanding Obligations payable by the Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction Documents to the contrary notwithstanding. Upon the occurrence of any Event of Default described in Sections 2(b) or 2(c), immediately and without notice, all outstanding Obligations payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction Documents to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence and during the continuance of any Event of Default, Purchaser may, with the written consent of a Majority in Interest of Purchasers, exercise any other right power or remedy granted to it by the Transaction Documents or otherwise permitted by law, either by suit in equity or by action at law, or both.

 

4.     Conversion.

 

(a)   Optional Conversion. Purchaser is entitled to, at any time or from time to time, convert the Conversion Amount (as defined below) into Conversion Shares, at a conversion price equal to $1.15 (the “Conversion Price”) (which was the higher of (i) the average daily volume-weighted average price of the Company’s common stock, par value $0.001 per share (“Common Stock”) on the Nasdaq Capital Market for the five days ending on the last trading day immediately preceding the Closing Date and (ii) the Nasdaq Official Closing Price of the Common Stock on the trading day immediately preceding the Closing Date, as defined in the Purchase Agreement), subject to equitable adjustments resulting from any stock splits, stock dividends, stock combinations, recapitalizations or similar events. For purposes of this Note, the “Conversion Amount” shall mean the sum of (A) all or any portion of the outstanding principal amount of this Note, as designated by the Purchaser upon exercise of its right of conversion plus (B) all accrued and unpaid interest.

 

(b)   Conversion Procedure. Conversion shall be effectuated by delivering by email, mail or other delivery method to the Company of the completed form of conversion notice attached hereto as Annex A (the “Notice of Conversion”), executed by Purchaser evidencing Purchaser's intention to convert this Note. No fractional shares of Common Stock or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date on which notice of conversion is given (the “Conversion Date”) shall be deemed to be the date on which the Company receives by email, mail or other means of delivery used by Purchaser the Notice of Conversion (such receipt being evidenced by electronic confirmation of delivery by email or confirmation of delivery by such other delivery method used by Purchaser). Delivery of a Notice of Conversion to the Company shall be given by Purchaser pursuant to the notice provisions set forth in the Purchase Agreement. The Company shall promptly deliver the Conversion Shares to Purchaser after receipt of the Notice of Conversion from the Purchaser. Conversion Shares may be delivered in certificated form, in electronic book-entry form on the Company’s records with its transfer agent, or delivered by DWAC so long as the Company is then DWAC Operational and the Conversion Shares are not required to bear a restrictive legend. Conversion Shares shall be deemed delivered (i) if delivered in certificated form, upon Purchaser’s actual receipt of the Conversion Shares in certificated form at the address specified by Purchaser in the Notice of Conversion, as confirmed by written receipt, (ii) if by book entry form, upon Purchaser’s actual receipt of a statement evidencing the issuance of the Conversion Shares in book-entry form with the Company’s transfer agent at the address specified by Purchaser in the Notice of Conversion, as confirmed by written receipt and (iii) if delivered by DWAC, upon deposit into Purchaser’s brokerage account.

 

 

(c)   Other Adjustments. If, at any time after the Issuance Date, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Company shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Company or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Company, then Purchaser shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which Purchaser would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of Purchaser to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Company shall not effectuate any transaction described in this Section 4 unless (a) it first gives, to the extent practicable, at least five (5) days prior written notice of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time Purchaser shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Company) assumes by written instrument all of the obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(d)   Stock Split Adjustment. If, at any time while any portion of this Note remains outstanding, the Company effectuates a forward stock split or reverse stock split of its Common Stock or issues a dividend on its Common Stock consisting of shares of Common Stock or otherwise recapitalizes its Common Stock, the Conversion Price shall be proportionally adjusted to reflect such action.

 

(e)   Principal Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of this Note or otherwise pursuant to the terms of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion of the Notes without breaching the Company’s obligations under the rules or regulations of the Nasdaq Capital Markets (the number of shares which may be issued without violating such rules and regulations, including rules related to the aggregate of offerings under NASDAQ Listing Rule 5635(d). In the event that the Company is prohibited from issuing shares of Common Stock pursuant to this Section 4(e), the Company shall pay in cash the remaining unconverted principal amount of this Note.

 

5.     Definitions. As used in this Note, the following capitalized terms have the following meanings:

 

“Business Day” shall mean any day other than a Saturday, Sunday and other day on which commercial banks in New York, New York are authorized or required by law to close.

 

 

“Common Stock” shall mean a class of equity securities of the Company that does not entitle the holder thereof to receive distributions prior or in priority to any other class of equity securities but specifically excluding any class of equity securities constituting profits interests.

“Conversion Shares” means the shares of Common Stock issuable upon conversion of the Notes.

 

“DWAC Operational” means that the Common Stock is eligible for clearing through the Depository Trust Company (“DTC”) via the DTC’s Deposit Withdrawal Agent Commission or “DWAC” system and active and in good standing for DWAC issuance by the Transfer Agent (as defined herein).

 

“Event of Default” has the meaning given in Section 2 hereof.

 

“Purchaser” shall mean the Person specified in the introductory paragraph of this Note or any Person who shall at the time be the registered holder of this Note.

 

“Purchasers” shall mean the Purchasers that have purchased Notes.

 

“Majority in Interest of Purchasers” shall mean Persons holding more than two-thirds of the aggregate outstanding principal amount of Notes.

 

“Maturity Date” shall mean [__________].¹

 

“Obligations” shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Company to Purchaser of every kind and description, now existing or hereafter arising under or pursuant to the terms of this Note and the other Transaction Documents, including all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by the Company hereunder and thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U. S. C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.

 

“Purchase Agreement” shall mean the Convertible Note Purchase Agreement (as amended, modified or supplemented), by and among the Company and the Purchasers (as defined in the Purchase Agreement) party thereto.

 

“Notes” shall mean the convertible subordinated promissory notes issued by the Company pursuant to the Purchase Agreement.

 

“Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.

 

 

¹ This is the date that is the 36-month anniversary from the date of this note.

 

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Transaction Documents” shall mean this Note, each of the other Notes and the Purchase Agreement.

 

6.      Subordination.

 

(a)   Subordination. This Note, together with all other Notes, is junior and subordinated in right or payment to all current and future bank or other institutional financing. Pursuant to the terms of the Purchase Agreement, Purchaser hereby subordinates all of the indebtedness arising under the this Note to the indebtedness owing by the Company to the extent and in the manner hereinafter set forth, and Purchaser agrees not to demand, accept or receive, directly or indirectly, any payment of principal, premium or interest upon account of this Note, or any collateral therefore, in contravention hereof.

 

(b)   Bankruptcy Event. This Note is a “subordination agreement” as described in 11 U.S.C. § 510(a) which will be effective before, during, and after the commencement of a bankruptcy case by or against the Company or otherwise.

 

7.      Most Favored Lender. While this Note is outstanding, the Company shall not issue another convertible promissory note with more favorable terms to the purchaser than this Note, unless the Company amends the terms of this Note so that it is no less favorable than the terms of such other convertible promissory note.

 

8.     Miscellaneous

 

(a)   Successors and Assigns; Transfer of this Note or Securities Issuable on Conversion Hereof.

 

(i)   Subject to the restrictions on transfer described in this Section 7(a), the rights and obligations of the Company and Purchaser shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

(ii)   With respect to any offer, sale or other disposition of this Note or securities into which such Note may be converted, Purchaser will give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of Purchaser’s counsel, or other evidence if reasonably satisfactory to the Company, to the effect that such offer, sale or other distribution may be effected without registration or qualification under any federal or state law then in effect. Upon receiving such written notice and reasonably satisfactory opinion, if so requested, or other evidence, the Company, as promptly as practicable, shall notify Purchaser that Purchaser may sell or otherwise dispose of this Note or such securities, all in accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 7(a) that the opinion of counsel for Purchaser, or other evidence, is not reasonably satisfactory to the Company, the Company shall so notify Purchaser promptly after such determination has been made. Each Note thus transferred and each certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Securities Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. Subject to the foregoing, transfers of this Note shall be registered upon registration books maintained for such purpose by or on behalf of the Company. Prior to presentation of this Note for registration of transfer, the Company shall treat the registered holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatsoever, whether or not this Note shall be overdue and the Company shall not be affected by notice to the contrary.

 

 

(iii)   Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of a Majority in Interest of Purchasers.

 

(b)   Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and a Majority in Interest of Purchasers; provided, however, that no such amendment, waiver or consent shall: (i) reduce the principal amount of this Note without Purchaser’s written consent, or (ii) reduce the rate of interest of this Note without Purchaser’s written consent unless in the case of (i) or (ii) all Notes are similarly amended in a proportionate manner. Any amendment effected in accordance with this subsection (b) shall be binding upon Purchaser regardless of whether Purchaser consented to such amendment.

 

(c)   Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and mailed, emailed or delivered to each party at the respective addresses of the parties as set forth in the Convertible Purchase Agreement, or at such other address as the Company shall have furnished to Purchaser in writing. All such notices, requests, demands, consents, instructions and other communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by email (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four days after being deposited in the U.S. mail, first class with postage prepaid.

 

(d)   Pari Passu Notes. Purchaser acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Notes. In the event Purchaser receives payments in excess of its pro rata share of the Company’s payments to the Purchasers of all of the Notes, then Purchaser shall hold in trust all such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other holders upon demand by such holders.

 

(e)   Payment. Unless converted into or paid in the Company’s Common Stock pursuant to the terms hereof, payment shall be made in lawful tender of the United States.

 

(f)   Usury. In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

 

 

(g)   Waivers. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

 

(h)   Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions of the State of New York, or of any other state.

 

(i)   Waiver of Jury Trial; Judicial Reference. By acceptance of this Note, Purchaser hereby agrees and the Company hereby agrees to waive their respective rights to a jury trial of any claim or cause of action based upon or arising out of this Note or any of the Transaction Documents.

 

(j)   Counterparts. This Note may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement.

 

(k)    Delivery by Facsimile or Email. This Note and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or email (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com), shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto shall raise the use of a facsimile machine or email to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or email as a defense to the formation or enforceability of this Note and each such party forever waives any such defense.

 

 

 

(Signature Page Follows)

 

 

The Company has caused this Note to be issued as of the date first written above.

 

	VERIFYME, INC.,
	a Nevada corporation,
	By:
	Name: Adam Stedham
	Title: Chief Executive Officer

 

Agreed and Accepted:
Purchaser:

 

 

[Signature Page to VRME Convertible Promissory Note]

 

 

ANNEX A

 

VERIFYME, INC.

 

NOTICE OF CONVERSION

 

(To Be Executed by the Registered Holder in Order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $ ________________ of the principal amount of its VerifyMe Inc. (the “Company”), Convertible Promissory Note issued on ______________ (the “Note”) into shares of Common Stock of the Company, according to the conditions of the Note, as of the date written below. After giving effect to the conversion requested hereby, the outstanding principal amount of such Note is $______________, absent manifest error.

 

Pursuant to the Note, certificates representing Common Stock upon conversion must be promptly delivered from the date of delivery of the Notice of Conversion to the Company.

 

	Conversion Date
	Applicable Conversion Price
	Signature
	Print Name
	Address

 

 

 

 

 

 

Exhibit 99.1

 

Leadership Team Leads $1.1 Million Convertible

Note Capital Raise

 

 

Lake Mary, FL – August 28, 2023 – PRNewswire — VerifyMe, Inc. (NASDAQ: VRME) together with its subsidiaries, Trust Codes Global Limited (“Trust Codes Global”) and PeriShip Global LLC (“PeriShip Global”), (together “VerifyMe,” “we,” “our,” or the “Company”) provides brand owners time and temperature sensitive logistics, supply chain traceability and monitoring, authentication, anti-counterfeiting, and data-rich brand enhancement services, announced today that on Friday August 25, 2023 it closed (the “Closing Date”) a private placement (the “Offering”) of 8% unsecured convertible subordinated promissory notes due in 2026 (the “Notes”) to accredited investors as defined by Regulation D, Rule 501(a) under the Securities Act of 1933, as amended (the "Securities Act") led by the CEO and the Board of Directors and investors from the financial community for aggregate net proceeds of $1.1 million.

 

 

 

The notes are general unsecured obligations of the Company and will accrue interest payable semiannually in arrears on February 25 and August 25 of each year, beginning on February 25, 2024, at a rate of 8% per year. The notes will mature on August 25, 2026 (the “Maturity Date”), unless earlier converted or repurchased.

 

Holders may convert all or any portion of their notes at any time prior to the Maturity Date. The conversion price is $1.15 per share of the Common Stock, which is equal to the Nasdaq Official Closing Price of the Common Stock on the trading day immediately preceding the Closing Date. The Company may not redeem the Notes prior to the Maturity Date.

 

President and Chief Executive Officer, Adam Stedham said, “We appreciate this show of support from both our Board of Directors and external investors, as well as the flexibility this capital provides as we continue to advance the key objectives targeted at delivering strong growth in 2024 and beyond. As I articulated on our Q2 2023 earnings call we are optimistic about the growth prospects in both our Authentication and Precision Logistics Segments. While we do not anticipate requiring additional cash resources in the short term, we felt it prudent to take this step to ensure, regardless of the macro-environment, that we have adequate cushion to allow us to execute on our growth strategy and provide strong returns to our shareholders.”

 

 

The opportunity for this additional financing initially arose from our CEO, the Chairman of the Board and other Board members who together remain confident in the new direction of the Company and collectively wanted to convey their strong commitment by leading this capital raise. In addition, our external investors are providing a show of support which we believe further expands our strategic financial relationships and strengthens our foundation for growth.

 

The Notes and any shares of the Company’s common stock issuable upon conversion of the Notes have not been and will not be registered under the Securities Act, any state securities laws or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

 

This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.

 

About VerifyMe, Inc.

VerifyMe, Inc. (NASDAQ: VRME), together with its subsidiaries, Trust Codes Global and PeriShip Global, is a specialized software and process technology driven traceability services provider.  The company operates an Authentication Segment and a Precision Logistics Segment to provide item level traceability, anti-diversion and anti-counterfeit protection, brand protection and enhancement technology solutions, as well as specialized logistics for time and temperature sensitive products. VerifyMe serves customers worldwide. To learn more, visit www.verifyme.com.

 

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including statements regarding the Company’s strategic reorganization, its position to provide value to its customer and shareholders, and expectations related to its customer base and revenue growth. The words "believe," "will,” “may,” “continue,” “anticipate,” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include our engagement in future acquisitions or strategic partnerships that increase our capital requirements or cause us to incur debt or assume contingent liabilities, the successful integration of our acquisitions (including the assets of PeriShip Global and Trust Codes Global), our reliance on one key strategic partner for shipping services in our Precision Logistics Segment, competition including by our key strategic partner, seasonal trends in our business, sever climate conditions, the highly competitive nature of the industry in which we operate, our brand image and corporate reputation, impairments related to our goodwill and other intangible assets, economic and other factors such as recessions, downturns in the economy, inflation, global uncertainty and instability, the effects of pandemics, changes in United States social, political, and regulatory conditions and/or a disruption of financial markets, reduced freight volumes due to economic conditions, reduced discretionary spending in a recessionary environment, global supply-chain delays or shortages, fluctuations in labor costs, raw materials, and changes in the availability of key suppliers, our history of losses, our ability to use our net operating losses to offset future taxable income, the confusion of our name brand with other brands, the ability of our technology to work as anticipated and to successfully provide analytics logistics management, our ability to manage our growth effectively, the small number of customers that account for our revenue, our ability to successfully develop and expand our sales and marketing capabilities, risks related to doing business outside of the U.S., intellectual property litigation, our ability to successfully develop, implement, maintain, upgrade, enhance, and protect our information technology systems, our reliance on third-party information technology service providers, our ability to respond to evolving laws related to information technology such as privacy laws, risks related to deriving revenue from some clients in the cannabis industry, our ability to retain key management personnel, our ability to work with partners in selling our technologies to businesses, production difficulties, our inability to enter into contracts and arrangements with future partners, our ability to acquire new customers, issues which may affect the reluctance of large companies to change their purchasing of products, acceptance of our technologies and the efficiency of our authenticators in the field, our ability to comply with the continued listing standards of the Nasdaq Capital Market, and our ability to timely pay amounts due and comply with the covenants under our debt facilities. These risk factors and uncertainties include those more fully described in VerifyMe’s Annual Report and Quarterly Reports filed with the Securities and Exchange Commission, including under the heading entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. Any forward-looking statement made by us herein speaks only as of the date on which it is made. 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 any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

 

For Other Information Contact:

Company: VerifyMe, Inc.

Email: IR@verifyme.com

Website: http://www.verifyme.com

 

 

 

 

 

 

v3.23.2

Cover	Aug. 25, 2023
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 25, 2023
Entity File Number	001-39332
Entity Registrant Name	VerifyMe, Inc.
Entity Central Index Key	0001104038
Entity Tax Identification Number	23-3023677
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	801 International Parkway
Entity Address, Address Line Two	Fifth Floor
Entity Address, City or Town	Lake Mary
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32746
City Area Code	(585)
Local Phone Number	736-9400
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock, par value $0.001 per share
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	VRME
Security Exchange Name	NASDAQ
Warrants to Purchase Common Stock
Title of 12(b) Security	Warrants to Purchase Common Stock
Trading Symbol	VRMEW
Security Exchange Name	NASDAQ

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