This Management's Discussion and Analysis of Financial Condition and Results of
Operation and other parts of this Report contain forward-looking statements that
involve risks and uncertainties. All forward-looking statements included in this
Report are based on information available to us on the date hereof, and except
as required by law, we assume no obligation to update any such forward-looking
statements. Our actual results may differ materially from those anticipated in
these forward-looking statements as a result of various factors. The following
should be read in conjunction with our annual financial statements contained
elsewhere in this Report.



  22


  Table of Contents




Overview



VerifyMe, Inc. ("VerifyMe") together with its subsidiaries PeriShip Global, LLC
("PeriShip Global") and Trust Codes Global Limited ("Trust Codes Global"),
(together the "Company," "we," "us," or "our"), is a software driven predictive
analytics logistics provider of high-touch end-to-end logistics management,
which represents most of our current revenue stream. In addition, VerifyMe
technologies provide product traceability, brand protections services, and
consumer engagement solutions. Our operations are split into two segments:
PeriShip Global Solutions and VerifyMe Solutions. Through our PeriShip Global
Solutions segment we provide a value-added service for time and temperature
sensitive parcel management driven by a proprietary software platform that
provides predictive analytics from key metrics such as flight-tracking, weather,
and traffic, all delivered to customers via a secure portal. The portal provides
real-time visibility into shipment transit and last-mile events, with dynamic
dashboards. All aspects of the of the shipping journey is managed by a dedicated
call center. Using our proprietary logistics solution, 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. Through our VerifyMe Solutions segment, our technologies
provide unit level traceability, brand protection, and consumer engagement
solutions allowing brand owners to gather business intelligence, cross-sell
products, monitor product diversion through the supply chain and build brand
loyalty through interaction utilizing our unique dynamic codes which are read by
consumers with their smart phones. Further information regarding our business
segments is discussed below:



PeriShip Global Solutions: The PeriShip Global Solutions segment specializes in
predictive analytics through its proprietary software platform 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 extended delivery
times. Utilizing predictive analytics from multiple data sources including
weather, traffic, flight data, 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 the 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.



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. In addition, we provide proactive alerts to
address on-coming weather issues to make changes in scheduling to meet critical
deadlines for shipments. We offer post-delivery services such as customized
reporting for trend analysis, system performance reports, power outage maps, and
other tailored reports.

PeriShip Global generates revenue from three business service models.

· Proactive Service - PeriShip Global clients pay us directly for carrier service

coupled with our proactive logistics assistance.

· Direct Premium Service -PeriShip Global clients pay us directly for carrier

service coupled with our complete white-glove shipping monitoring and

predictive analytics service. This service includes the customer web portal

access, weather monitoring, temperature control, full call center support and

last mile resolution.

· Indirect Premium Service - Our carrier partner also offers a "white label"

version of our Premium Service to its customers and pays us a fixed contractual


   fee.

PeriShip Service Products: The PeriShip Global Solutions 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

and alerts 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.

· Call Center Service: PeriShip Global has assembled a team of customer

resolution specialists based in the U.S. This human intervention service team

resolves shipping problems on behalf of our customers. The call center acts as


   a help desk and monitors shipping to delivery for our customers.

· Pre-Transit Service: PeriShip Global helps 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 the shipment, and we utilize our extensive knowledge and

research to provide our customers with packaging recommendations to meet their


   unique needs.




  23


  Table of Contents

· Post-Delivery: PeriShip Global provides 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: PeriShip Global has 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 minimize the changes of timely and safe transit of shipments.

Similarly, traffic and construction also create unpredictable delays which our

team works diligently to mitigate. If delays or other issues occur the PeriShip

team informs clients and works with them to pro-actively resolve such shipment


   issues.




VerifyMe Solutions: The VerifyMe Solutions segment specializes in traceability
to connect brands with consumers through their product. Through VerifyMe
technologies brand inspectors can authenticate product with visible and
invisible unique to product serialized codes. Brand owners have the ability to
gather business intelligence while engaging directly with their consumers and
can receive programmable alerts related to counterfeit products or if their
products are in unexpected geographical markets. Consumers can authenticate
products with their smart phone prior to usage and engage with the brand in
unique and innovative ways. Engagement can come in many forms such as free
giveaways, product specifications, seed to table tracking, cross-selling of
products, contests, videos, and recipes.



VerifyMe Products: VerifyMe has a custom suite of products that offer clients
traceability and consumer engagement. These products are combined with "software
as a service" or "SAAS" which is stored in the cloud and accessed through the
internet.

· VerifyMe Engage™ for consumer engagement allowing the brand owner to gather

business intelligence and engage with their customers

· VerifyMe Authenticate™ using rare earth-based ink taggants for instant

authentication of labels, packages and products

· VerifyMe Track & Trace™ for unit level traceability and supply chain control

PeriShip Global and VerifyMe Synergies:


We believe that PeriShip Global and our VerifyMe solutions have synergistic
product centric technology platforms and combined have a compelling technology
offering for brand owners. For example, currently PeriShip Global ships vaccines
for major pharmaceutical companies. With the addition of VerifyMe technology,
PeriShip Global can add unit level traceability and authentication to protect
clients' vaccines from product diversion and sub-standard counterfeits. In
addition, VerifyMe's consumer engagement solutions could give PeriShip Global
food and beverage clients the ability to gather rich business intelligence, turn
"unknown consumers" into "known consumers" and build customer loyalty with
engagement functions like videos, discounts, contests, etc.



PeriShip Global Opportunities



According to a 2023 report entitled, "Perishable Goods Transportation Market in
the US 2023-2027", written by Infiniti research Limited, the Perishable Goods
logistics market size was $4.0 billion in 2022 and is estimated to be $4.3
billion in 2023 and is expected to grow to $5.9 billion by 2027. That represents
a compound average market acceleration with a growth rate of approximately

8%
per year.



This report is based on perishable product segments including meat, poultry,
seafood, dairy, fruits and vegetables, and bakery and confectionary. PeriShip
Global services all of these product segments



Currently 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 PeriShip Global's call center gives us a major
competitive advantage against other third-party platforms that solely rely on
the carrier's data feeds. PeriShip Global utilizes a variety of input sources
beyond just the carrier's data feed. PeriShip Global's 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 call 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. PeriShip Global has two meteorologists on staff that track
world-wide weather patterns to address predicted issues before they happen. We
believe the Pharmaceutical and healthcare industries represent the biggest areas
of opportunity and we are focusing our PeriShip Global sales emphasis on those
industries. In addition, we feel that combining VerifyMe's solutions into the
product offering for PeriShip Global clientele, including food and beverage and
healthcare industries, gives PeriShip Global a competitive advantage to generate
revenue by enhancing PeriShip Global's clients' ability to grow revenue, gain
business intelligence and build brand loyalty.



  24


  Table of Contents




The current global logistics industry worldwide is facing an economic slowdown.
We believe this represents an opportunity for PeriShip Global since major global
carriers are cutting internal staff and are reducing research and development
investments. To maintain their credibility in the market, these carriers will
need to ensure they meet their customers' demands for time and temperature
sensitive shipments, while maintaining their overheads. We believe outsourcing
this function to PeriShip Global provides the ideal solution for all parties
involved.



Building logistics infrastructure is a capital-intensive process as the
investment is locked in for a considerably long period. Due to the current
economic downturn, we believe several companies will opt to outsource their
logistics services to reduce their operational costs and maintain cash flows.
The outsourcing of supply chain related and other logistics operations to
service providers such as PeriShip Global which allows companies to improve the
efficiency of their businessed by focusing their resources on core competencies.



VerifyMe Opportunities

We believe VerifyMe's products have applications in many areas. Currently, we are aggressively marketing opportunities in the following areas:

· Food and Beverage - Food safety is becoming more common as supply chains become

more global and as imaging and manufacturing technology become more accessible.

Food traceability, sustainability and carbon neutral production is becoming a

significant consideration for brand and governments. We believe our unit level

traceability and authentication solutions can help brands tell their story

about sustainability and battle against tainted or substandard foods and

beverages.

· Pharmaceuticals/nutraceuticals - We believe counterfeit prescription

pharmaceuticals and nutraceuticals are a growing problem, widely recognized as

a public health risk and a serious concern to public health officials, private

companies, and consumers. Counterfeiting can apply to both branded and generic

products and counterfeit pharmaceuticals may include products with the correct

ingredients but fake packaging, with the wrong ingredients, without active

ingredients or with insufficient active ingredients. The United States enacted

legislation requiring the implementation of a comprehensive system designed to

combat counterfeit, diluted or falsely labelled pharmaceuticals, referred to as

serialization or electronic pedigree (e-Pedigree). Our consumer facing visible

codes and unique pigments embedded in the ink of a unique serialized barcode

can provide a layered security foundation for a customer solution in this

market. We are seeking to expand our business in this market and believe that

as additional pharmaceutical companies seek to comply with the legislation, our

products will provide attractive alternatives to address the need for product

identifiers.

· Consumer Products -We believe our technology solutions are particularly suited

for the cosmetics, health and beauty and apparel industries. We give the

consumer the ability to test a product's authenticity instantly with a

smartphone. We can protect brand owners from liability litigation, product

diversion and lost financial sales with our consumer facing visible codes and

unique ink pigments which can be incorporated in dyes and used by manufacturers

in these industries to combat counterfeiting and piracy of actual physical

goods. Our pigments expressed as inks can also be used on packaging, as well as

to track products that have been lost in transit, whether misplaced or stolen.






In addition, in each of these markets, our SaaS software allows brand owners and
consumers to track the products and will alert the consumer or brand owner of
product diversion with 24/7 monitoring. As each product has a unique code, this
allows consumers and brand owners to authenticate the product in real time and
link directly to the brand owner's website for additional product information,
discounts, and more.



Results of Operations

Comparison of the Years Ended December 31, 2022, and 2021





The following discussion analyzes our results of operations for the years ended
December 31, 2022, and 2021. The following information should be considered
together with our financial statements for such periods and the accompanying
notes thereto.



Revenue



                                      Twelve Months Ended
                                         December 31,
                                  2022                   2021
                             (In thousands)         (In thousands)
PeriShip Global Solutions   $         18,190                      -
VerifyMe Solutions                     1,386                    867
 Total Revenue              $         19,576       $            867




  25


  Table of Contents




Consolidated revenue for the year ended December 31, 2022, was $19,576 thousand,
a 2,158% increase compared to $867 thousand, for the year ended December 31,
2021. The increase in revenue primarily relates to the acquisition of the
PeriShip Global business on April 22, 2022, which contributed $18,190 thousand
for the twelve months ended December 31, 2022. VerifyMe Solutions segment
increased revenue by $519 thousand, a 60% increase, primarily driven by growth
in our agriculture segment.



Gross Profit



                                                           Twelve Months Ended
                                                               December 31,
                                             2022                                       2021
                             (In thousands)        % of Revenue         (In thousands)         % of Revenue
PeriShip Global Solutions              5,505                    30 %                   -                     -
VerifyMe Solutions                       983                    71 %                 599                    69 %
 Total Gross Profit         $          6,488                    33 %   $             599                    69 %





Consolidated gross profit for the years ended December 31, 2022, and 2021, was
$6,488 thousand and $599 thousand, respectively. The resulting gross margin was
33% for the year ended December 31, 2022, compared to 69% for the year ended
December 31, 2021. The decrease in our gross margin is due to the acquisition of
the PeriShip Global business which has significantly lower margins than the
VerifyMe Solutions segment.

General and Administrative Expenses


General and administrative expenses were $8,428 thousand for the year ended
December 31, 2022, compared to $4,216 thousand for the year ended December 31,
2021, an increase of $4,212 thousand. The increase related to the acquisition of
the PeriShip Global business, and primarily made up of salaries and related
expenses for approximately 35 employees in the IT and operations department.



Research and Development

Research and development expenses increased by $38 thousand to $89 thousand for the year ended December 31, 2022, from $51 thousand for the year ended December 31, 2021. The increase related to the acquisition of the PeriShip Global business and research and development related to their IT platform.





Sales and Marketing



Sales and marketing expenses for the year ended December 31, 2022, were $1,718
thousand compared to $1,163 thousand for the year ended December 31, 2021, an
increase of $555 thousand. The increase is related to the acquisition of the
PeriShip Global business, primarily consisting of salaries and related expenses
for four employees.



Net Income (Loss)



Our net loss for the year ended December 31, 2022, was $14,398 thousand,
compared to net income of $3,612 thousand for the year ended December 31, 2021.
The decrease was primarily due to the impairment of the SPAC of $10,932 thousand
during 2022 compared to an unrealized gain on the SPAC of $8,371 in 2021,
partially offset by a gain on extinguishment of debt of $326 thousand and the
changes discussed above for the acquisition of the PeriShip Global business. The
resulting consolidated loss per diluted share for the year ended December 31,
2022, was $1.70 compared to a consolidated income per diluted share of $0.49 for
the year ended December 31, 2021.

Liquidity and Capital Resources


Our operations used $2,551 thousand of cash during the year ended December 31,
2022, compared to $3,254 thousand during the year end December 31, 2021. The
decrease in cash used from operations is due to a net change in non-cash
addbacks to net income and the acquisition of PeriShip Global, which generates
cash, that occurred during the year ended December 31, 2022.



Net cash used in investing activities was $7,884 thousand for the year ended
December 31, 2022, compared to $2,851 thousand for the year ended December 31,
2021.  During the year ended December 31, 2022, $7,500 thousand was used for the
acquisition of the PeriShip Global business. The use of cash in 2021 relates
primarily to the acquisition of sponsor units in the SPAC of $2,593 thousand.



  26


  Table of Contents




Net cash provided by financing activities for the year ended December 31, 2022,
was $4,424 thousand compared to $7,588 thousand for the year ended December 31,
2021, related to proceeds from debt and offerings of our common stock in 2022
and 2021.



On April 12, 2022, we entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with the selling stockholder and certain
directors, providing for the issuance and sale to purchasers therein of an
aggregate of 880,208 shares of our common stock, pre-funded warrants to purchase
up to 675,000 shares of our common stock, and warrants to purchase up to
1,555,208 shares of our common stock, for gross proceeds to us of approximately
$5.0 million and net proceeds of $4.6 million. The pre-funded warrant was
exercisable immediately and terminated when fully exercised and had an exercise
price of $0.001 per share. The pre-funded warrant was fully exercised in August
2022, with an exercise price of $0.001, and as a resulted, 675,000 shares of our
common stock were issued. The warrants are exercisable for a period of five
years commencing six months from the date of issuance and have an exercise price
of $3.215 per share. The warrants contain price adjustment provisions which may,
under certain circumstances, reduce the applicable exercise price. The
transaction closed on April 14, 2022.



On September 22, 2022, we entered into the PNC Facility with PNC Bank, National
Association. The PNC Facility includes a $1 million RLOC with a term of
one-year, expiring in September 2023. 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 PNC Facility
also includes a four-year Term Note for $2 million which matures in September of
2026 and requires equal quarterly payments of principal and interest. The Term
Note incurs interest per annum at a rate equal to the sum of Daily SOFR plus
3.1%. The RLOC and Term Note are guaranteed by the Company and secured by the
assets of PeriShip and the Company.



The PNC Facility includes a number of affirmative and restrictive covenants
applicable to PeriShip, 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 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. We were in compliance with all affirmative and
restrictive covenants under the PNC Facility at December 31, 2022.



Effective October 17, 2022, we entered into an interest rate swap agreement,
with a notional amount of $1,958 thousand, effectively fixing the interest rate
on our outstanding debt at 7.602%.



Of the proceeds of $2.0 million, we used $1.8 million to settle debt outstanding
issued in connection with the PeriShip Global acquisition, including the
redemption of 61,000 shares of our common stock. As of December 31, 2022, our
short-term debt outstanding under the Term Note was $0.5 million and total
long-term debt outstanding under the Term Note was $1.4 million.



We believe that our cash and cash equivalents, together with the net proceeds
from the April 12, 2022, offering and proceeds from debt issued, will fund our
operations for the next 12 months.



In June 2022, we announced a new $1.5 million share repurchase program to
repurchase shares of the Company's common stock commencing July 1, 2022, for a
period of 12 months. This new repurchase program replaces our existing share
repurchase program that was due to expire in August 2022 and is now terminated.
To date, 158,906 shares have been purchased for a total of $215 thousand and a
remaining $1,285 thousand may be purchased under the program.



We expect to grow our business organically and through key acquisitions that
will help accelerate the growth of our business. We expect to continue to fund
our operations primarily through utilization of our current financial resources
and future revenue and may issue additional debt or equity.

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 have
identified that the estimates used in the valuation of the assets of the
PeriShip acquisition are critical and require significant judgment. We believe
estimates and assumptions related to these 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.



Revenue Recognition




We recognize revenue based on the principals established in ASC Topic 606,
"Revenue from Contracts with Customers." Revenue recognition is made when our
performance obligation is satisfied at a point in time of delivery of the
service. Over 90% of our revenue is derived from logistics management for time
and temperature sensitive packages with the remaining from our traceability
solutions. Our terms vary based on the solutions we offer and are examined on a
case-by-case basis. For licensing of our VerifyInkTM technology we depend on the
integrity of our clients' reporting.



  27


  Table of Contents





The timing of revenue recognition, billings and cash collections results in
billed accounts receivable, and unbilled revenue when billings occur after the
end of the month (contract assets) on the consolidated balance sheets. Amounts
charged to our clients become billable when the performance obligation has been
met at a point in time. Unbilled amounts will generally be billed and collected
within 30 days but typically no longer than 60 days. These assets are reported
on the consolidated balance sheets on a contract-by-contract basis at the end of
each reporting period. Changes in the contract assets increased significantly as
of December 31, 2022, compared to December 31, 2021, due to the business
combination. No other factors materially impacted the balances.



Business Combinations



Accounting for business combinations requires management to make significant
estimates and assumptions to determine the fair values of assets acquired and
liabilities assumed at the acquisition date. Although we believe the assumptions
and estimates we have made in relation to the acquisition of the PeriShip
business are appropriate, they are based, in part, on historical experience and
information obtained from management of the acquired companies and are
inherently uncertain. Critical estimates in valuing certain acquired intangible
assets include, but are not limited to, future expected cash flows including
revenue growth rate assumptions from product sales, customer contracts and
acquired technologies, estimated royalty rates used in valuing technology
related intangible assets, and discount rates. The discount rates used to
discount expected future cash flows to present value are typically derived from
a weighted-average cost of capital ("WACC") analysis and adjusted to reflect
inherent risks. Unanticipated events and circumstances may occur that could
affect either the accuracy or validity of such assumptions, estimates or actual
results.




We allocate the fair value of the purchase price of our acquisitions to the
tangible assets acquired, liabilities assumed, and intangible assets acquired,
based on their estimated fair values at acquisition date. The excess of the fair
value of the purchase price over the fair values of these net tangible and
intangible assets acquired is recorded as goodwill. Management's estimates of
fair value are based upon assumptions believed to be reasonable, but our
estimates and assumptions are inherently uncertain and subject to refinement. As
a result, during the measurement period, which will not exceed one year from the
acquisition date, we may record adjustments to the assets acquired and
liabilities assumed with the corresponding offset to goodwill. After the
conclusion of the measurement period or final determination of the fair value of
the purchase price of our acquisitions, whichever comes first, any subsequent
adjustments are recorded to our Consolidated Statements of Operations…

Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

Goodwill



We have recorded goodwill as part of our acquisition of the PeriShip business,
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.
For our annual goodwill impairment test as of December 31, 2022, we performed a
qualitative assessment as permitted by ASU 2017-04 for our reporting unit
PeriShip Global and determined that it was more likely than not that the fair
value exceeded their respective carrying value.



Stock-based Compensation



We account for stock-based compensation under the provisions of FASB ASC 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.



For RSUs 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 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.



  28


  Table of Contents




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 ("ASU 2018-07"),
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 completed.

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.

© Edgar Online, source Glimpses