OMQS 10-Q
OMNIQ Corp. (OMQS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended:
For the transition period from________ to__________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||
| OTCMKTS |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| (Do not check if a smaller reporting company) | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: shares of common stock, $ par value, as of November 4, 2025.
TABLE OF CONTENTS
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMNIQ CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (In thousands, except share and per share data) | As of | |||||||
| September 30, 2025 | December 31, 2024 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation | ||||||||
| Goodwill | ||||||||
| Trade name, net of accumulated amortization | ||||||||
| Customer relationships, net of accumulated amortization | ||||||||
| Other intangibles, net of accumulated amortization | ||||||||
| Right of use lease asset | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Line of credit | ||||||||
| Accrued payroll and sales tax | ||||||||
| Notes payable – current portion | ||||||||
| Lease liability – current portion | ||||||||
| Related party advances | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Accrued interest and accrued liabilities, related party | ||||||||
| Notes payable, less current portion | ||||||||
| Related party notes payable | ||||||||
| Lease liability | ||||||||
| Other long term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Series A Preferred stock; $ par value; shares designated, shares issued and outstanding | ||||||||
| Series B Preferred stock; $ par value; share designated, shares issued and outstanding | ||||||||
| Series C Preferred stock; $ par value; shares designated, shares issued and outstanding, respectively | ||||||||
| Common stock; $ par value; shares authorized; and shares issued and outstanding, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated (deficit) | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Total OmniQ stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and equity (deficit) | $ | $ | ||||||
The accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.
F-1
OMNIQ CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| For the Three months ended | For the Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (In thousands, except share and per share data) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Research & Development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expenses) income | ( | ) | ||||||||||||||
| Gain on debt settlement | ||||||||||||||||
| Total other expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Loss Before Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for Income Taxes | ||||||||||||||||
| Current | ( | ) | ( | ) | ||||||||||||
| Total Provision for Income Taxes | ( | ) | ( | ) | ||||||||||||
| Income (loss) from continuing operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from discontinued operations (net of tax) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Reconciliation of net loss to net loss attributable to common shareholders | ||||||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Less: Dividends attributable to non-common stockholders’ of OmniQ Corp | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to common stockholders’ of OmniQ Corp | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net income (loss) per share - basic attributable to common stockholders’ of OmniQ Corp | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||||||||||
The accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.
F-2
OMNIQ CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| Series C | Additional | Accumulated Other | Total Stockholders’ | |||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Equity | |||||||||||||||||||||||||||
| (In thousands) | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | (Deficit) | ||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| ESPP Stock Issuance | - | |||||||||||||||||||||||||||||||
| Stock and Warrant issued for services | - | - | ||||||||||||||||||||||||||||||
| Acquisition of Codeblocks | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| ESPP Stock Issuance | - | |||||||||||||||||||||||||||||||
| Stock and Warrant issued for services | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| ESPP Stock Issuance | - | |||||||||||||||||||||||||||||||
| Stock and Warrant issued for services | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Sale of assets from division | ||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net (loss) income | - | - | ||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Shares returned and canceled | - | ( | ) | |||||||||||||||||||||||||||||
| Adjustment of goodwill portion of divestiture | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Conversion of debt to equity | ||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying unaudited notes should be read in conjunction with these condensed unaudited consolidated financial statements.
F-3
OMNIQ CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
For the nine months ended September 30,
| (In thousands) | 2025 | 2024 | ||||||
| Cash flows from operations | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Stock and warrant issued for services | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of ROU asset | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Inventory | ||||||||
| Other assets | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Accrued interest and accrued liabilities, related party | ( | ) | ||||||
| Accrued payroll and sales taxes payable | ||||||||
| Lease liability | ( | ) | ( | ) | ||||
| Deferred tax assets, net | ( | ) | ||||||
| Other liabilities | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Cash paid for divestiture | ( | ) | ||||||
| Purchase of intangible assets | ||||||||
| Proceeds from sale of property and equipment | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from ESPP stock issuance | ||||||||
| Payments on notes/loans payable | ( | ) | ( | ) | ||||
| Proceeds from draw on line of credit | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Effect of foreign exchange rates on cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Non-cash activities: | ||||||||
| Stock issued for services | $ | $ | ||||||
| Declared dividends payable | $ | $ | ||||||
| Cancelation of lease | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | $ | |||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
OMNIQ CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements include the accounts of OMNIQ Corp, and its wholly owned subsidiaries, referred to herein as “we,” “us,” “OMNIQ,” or the “Company.” Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). Interim disclosures generally do not repeat those in the annual statements.
We describe our significant accounting policies in Note 2 of the notes to consolidated financial statements in the 2024 Form 10-K. During the nine-month period ended September 30, 2025, there were no significant changes to those accounting policies.
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic EPS for the nine-months ended September 30, 2025, and 2024 were and , respectively. Diluted net loss per share of common stock is the same as basic net loss per share of common stock because the effects of potentially dilutive securities are antidilutive.
September 30, 2025 | September 30, 2024 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Potential shares excluded from diluted net loss per share | ||||||||
F-5
NOTE 2 – LIQUIDITY AND CAPITAL RESOURCES
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. The following are the principal conditions or events which potentially raise substantial doubt about the company’s ability to continue as a going concern:
| ● | Balancing the need for operational cash with the need to add additional products. | |
| ● | Timely and cost-effective development of products | |
| ● | Working
capital deficit of $ | |
| ● | Accumulated
deficit of $ | |
| ● | Multiple years of losses from operations |
Management Evaluation
Management considers the conditions outlined above as the most significant factors in raising substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.
Management’s Plans to Mitigate and Alleviate Conditions or Events
| ● | Management is continuing to evaluate operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations. | |
| ● | Management has placed a strategic focus on increasing sales with prime customers. | |
| ● | Sales efforts are focused on the most profitable product lines. |
NOTE 3 – CONCENTRATIONS
For the nine-months ended September 30, 2025 and the year ended December
31, 2024, one customer accounted for
Accounts receivable at September 30, 2025 and December 31, 2024 are made
up of trade receivables due from customers in the ordinary course of business. One customer accounted for
For the nine months ended September 30, 2025 one vendor made up
The concentrations are based on the continuing operations and do not include operations from subsidiaries sold.
F-6
NOTE 4 – BUSINESS ACQUISITION
CodeBlocks LTD
On January 30, 2024, OMNIQ’s wholly owned subsidiary, Dangot Computers Ltd. (“Dangot”), entered into a Share Purchase
Agreement (the “Purchase Agreement”) with CodeBlocks Ltd. (CodeBlocks”) and CodeBlocks’ owners, Alina Lifshits
and Erez Attia pursuant to which Dangot, acquired all of the capital stock of CodeBlocks in exchange for NIS (approximately
US $ ). The purchase Agreement closed on February 1, 2024. As noted in Note 12, this entity was sold on
June 30, 2025.
NOTE 5 – INVENTORY
Inventory consisted of the following as of:
| In thousands | September 30, 2025 | December 31, 2024 | ||||||
| Raw materials | $ | $ | ||||||
| Inventory in transit | ||||||||
| Finished goods | ||||||||
| Less allowance for obsolescence | ( | ) | ( | ) | ||||
| Total inventories (continuing operations) | ||||||||
| Inventories related to discontinued operations | ||||||||
| Total inventories | $ | $ | ||||||
NOTE 6 – CREDIT FACILITIES AND LINE OF CREDIT
We maintain operating lines of credit, factoring and revolving credit facilities with banks and finance companies to provide us with working capital.
On
January 18, 2024, the Company’s wholly owned subsidiary, Quest Marketing, Inc. (“Quest”) entered into a Purchase and
Sale Agreement with Prestige Capital Finance, LLC (“Prestige”), in which Quest has sold, transferred and assigned all of
its rights, title, and interest to specific accounts receivable owed to Quest. The maximum outstanding balance of Quest to Prestige shall
be $
F-7
NOTE 7 – OTHER NOTES PAYABLE
| (In thousands) | September 30, 2025 | December 31, 2024 | ||||||
| Note payable other | ||||||||
| Related party note payable | ||||||||
| Total | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term notes payable | $ | $ | ||||||
Notes Payable Other
On
July 29, 2021, the Company entered into a long-term loan from Leumi Bank totaling NIS
On
August 11, 2021, the Company purchased vehicles using cash and financing of NIS
On
September 13, 2022, the Company entered into a long-term loan from Hapoalim Bank totaling NIS
During
the year ended December 31, 2023, the Company entered into a short-term loan Hapoalim Bank totaling NIS
During
the year ended December 31, 2023, the Company entered into a short-term loan from Bank Leumi totaling NIS
On
September 21, 2023, the Company entered into a long-term loan from Tzameret Mimunim totaling
As of September 30, 2025, the Company was not in compliance with certain financial covenants related to the Bank Leumi and Bank Hapoalim debt. The Company’s failure to comply with these financial covenants could result in an event of default under its debt agreements. Therefore, we reclassified the total balance as current debt on the balance sheet. The Company is actively pursuing options to address its noncompliance. The lenders have not requested early repayment of the loan as of the date when these financial statements were available to be issued.
As
part of the sale of the Quest division and it’s assets, and as discussed in Note 11, the Company entered into a Promissory Note
which bears interest at
F-8
NOTE 8 – OTHER INCOME
For
the nine months ended September 30, 2024, the Company received government relief funds in the amount of approximately NIS
NOTE 9 – STOCKHOLDERS’ EQUITY
PREFERRED STOCK
Series A
As
of September 30, 2025, there were Series A preferred shares designated and Series A preferred shares outstanding.
Series B
As of September 30, 2025, there was preferred share designated and preferred shares outstanding.
Series C
As
of September 30, 2025, there were Series C Preferred Shares (“Series C”) authorized with issued and outstanding.
The Series C shares have preferential rights above common shares and the Series B Preferred Shares and is entitled to receive a quarterly
dividend at a rate of $ per share per annum and have a liquidation preference of $
COMMON STOCK
In October 2021, OMNIQ’ Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain in the employ of and attract new employees, directors, officers, consultants, advisors, and employees to the Company. Pursuant to the Plan, shares of the Company’s common stock, par value $ (the “Shares”), were set aside and reserved for issuance. The Plan was approved by our stockholders at the December 2021, shareholders’ meeting. No options were issued in the nine months ended September 30, 2025, except those mentioned below.
In
December 2015, our Board of Directors approved the OMNIQ. Employee Stock Purchase Plan (the “ESPP”). For the nine months
ending September 30, 2024, employees purchased shares or $
April 8, 2024, Stockholders approved the amendment of the Company’s Certificate of Incorporation to increase the amount of authorized common stock to shares.
During June of 2025, the Company issued stock options or warrants to 47 employees and consultants for the purchase of an aggregate shares of stock at between $ and $ per share. The Company’s CEO was issued options for shares at $ and warrants were issued to a company he is affiliated with for shares at exercise price of $ per share, which was above the market price at the time of issuance. The options have a year expiration period and vested immediately. The Black Scholes calculation used approximately % volatility for the stock and approximately $ was booked as a compensation expense related to these options and warrants.
In
July 2025, the Company settled approximately $
NOTE 10 – BUSINESS SEGMENT
The Company operates in a single reportable segment, referred to as providing solutions including software, communications, and automated management service. The business is managed by the chief executive officer who is the Chief Operating Decision Maker (CODM). The CODM evaluates segment performance based on operating income (loss) for purposes of allocating resources and evaluating financial performance. The accounting policies of our single reportable segment are the same as those for the Company as a whole.
F-9
NOTE 11 – DISCONTINUED OPERATIONS
As discussed in the prior Form 10Q and the relevant Form 8-K, on July 11, 2025, OmniQ Corp., a Delaware corporation (the “Company”), together with its subsidiaries, Quest Marketing, Inc., HTS Image Processing, Inc., OmniQ Vision Inc., HTS Image Ltd., OmniQ Technologies Ltd., and Dangot Computers, Ltd. (collectively, the “Sellers”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Summit Junction Holdings LLC, a Delaware limited liability company (the “Buyer”).
Pursuant to the Purchase Agreement, the Sellers agreed to sell, and Buyer agreed to purchase, substantially all of the assets and assume certain liabilities mainly associated with the Company’s legacy business line, including its integrated hardware, software, and automation solutions business, (the “Transferred Business”). The Transaction was consummated on July 11, 2025. Although the Purchase Agreement is dated as of June 30, 2025, the parties executed the agreement and consummated the Transaction on July 11, 2025.
The
aggregate consideration for the Transaction is approximately $
The
sale resulted in a net gain on disposal of approximately $
The net gain (APIC) was calculated as follows (in thousands):
| Change in Value | ||||
| Cash and cash equivalents | $ | ( | ) | |
| Accounts receivable, net | ( | ) | ||
| Inventory, net | ( | ) | ||
| Other current assets | ( | ) | ||
| Property and equipment, net of accumulated depreciation | ( | ) | ||
| Accounts payable and accrued liabilities | ||||
| Other current liabilities | ( | ) | ||
| Related party notes payable | ( | ) | ||
| Additional paid-in capital | $ | ( | ) | |
Details of net loss from discontinued operations, net of taxes, are as follows (in thousands):
| Nine months ended | September 30, 2025 | September 30, 2024 | ||||||
| Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Selling, general and administrative | ||||||||
| Research & Development | ( | ) | ||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Interest expense | ||||||||
| Other (expenses) income | ||||||||
| Current tax | ||||||||
| Net Loss from Discontinued Ops (Net of Tax) | $ | $ | ||||||
| Three months ended | September 30, 2025 | September 30, 2024 | ||||||
| Revenues | $ | |||||||
| Cost of goods sold | ||||||||
| Selling, general and administrative | ||||||||
| Research & Development | ( | ) | ||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Interest expense | ||||||||
| Other (expenses) income | ||||||||
| Current tax | ||||||||
| Net Loss from Discontinued Ops (Net of Tax) | $ | $ | ||||||
F-10
Because the transaction was effective June 30,2025, no assets or liabilities disposed in the sale were included on the balance sheet as of September 30, 2025. The balances of the disposed assets and liabilities as of December 31, 2024 were as follows:
| Assets | ||||
| Current Assets | ||||
| Accounts receivable, net | $ | |||
| Inventory, net | ||||
| Prepaid expenses | ||||
| Other current assets | ||||
| Total current assets | ||||
| Property and equipment, net of accumulated depreciation | ||||
| Right of use lease asset | ||||
| Total Assets | $ | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | $ | |||
| Accrued payroll and sales tax | ||||
| Lease liability – current portion | ||||
| Other current liabilities | ||||
| Total Current Liabilities | ||||
| Deferred revenue | ||||
| Lease liability | ||||
| Total liabilities | $ |
Cash flows related to the discontinued business have not been segregated and are included in the condensed consolidated statements of cash flows. The following table provides supplemental cash-flow information for the discontinued operations (in thousands):
| Nine months ended September 30, 2025 | Nine months ended September 30, 2024 | |||||||
| Depreciation and amortization | ||||||||
| Capital expenditures | ( | ) | ||||||
| Other significant non-cash items | ||||||||
| Cancelation of lease | ||||||||
The assets sold include, among other things, accounts receivable, inventory, tangible personal property, intellectual property, contract rights, books and records, and other assets used or held for use in connection with the Transferred Business. Certain assets were excluded from the Transaction, including the Company’s cash and cash equivalents and all assets not related to the Transferred Business. Buyer assumed only those liabilities specified in the Purchase Agreement, and the Company retained all other liabilities, including those unrelated to the Transferred Business or expressly excluded.
The Purchase Agreement contains customary representations, warranties, and covenants, including pre-closing operating covenants, post-closing indemnification provisions, and certain limitations on liability. The Transaction and Purchase Agreement were approved by the Company’s Board of Directors effective June 30, 2025 following completion of a fairness opinion, dated June 27, 2025, from an independent financial advisor.
In connection with the closing, the Company and Buyer entered into and delivered various ancillary agreements, including a Bill of Sale, Assignment and Assumption Agreement, Trademark Assignment Agreement, Promissory Note, Intellectual Property License Agreement, and Transition Services Agreement. The Company also entered into a consent agreement with its largest vendor Bluestar to consent to the transfer of the liabilities owed to it from the Company to the Buyer. Due to an entity affiliated with Shai Lustgarten, the Company’s CEO as a principal member of the Buyer, the transaction is deemed related party.
Pursuant
to his employment contract, the CEO, Shai Lustgarten is entitled to a bonus equal to
Based
on ASC 850-10, ASC 845-10, ASC 820, and SEC Staff Accounting Bulletin Topics 5.G, 5.T, and 1.B.1, the transaction represents a capital
contribution from the CEO to the Company. While a fairness opinion was obtained, it does not fully satisfy ASC 820 fair value measurement
requirements for full recognition. Accordingly, the $
NOTE 12 – LITIGATION
On
November 3, 2024 a commercial real estate company filed a lawsuit against Dangot Computers, OmniQ Technologies and some of Dangot’s
officers alleging breach of a letter of intent for a lease arrangement. The claims were brought in an Israeli court. The initial claim
against Dangot Computers is NIS
In
March 2025, the Company was named a defendant in a case involving a consultant who was terminated and who claims he is owed approximately
$
On June 30, 2025, the Company’s subsidiary Dangot Computers reached
at settlement with one of its vendors in Israel related to past due rebates and price protection payments entitled under prior agreements.
The vendor agreed to pay Dangot Computers, approximately USD$
NOTE 13 – SUBSEQUENT EVENTS
On November 10, 2025, with effective date of November 1, 2025, the Board
of Directors agreed to extend the employment contract of Shai Lustgarten, which previously was set to expire in 2027, is now set to expire
November 1, 2029.
F-12
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by, or that include the words “may”, “could”, “would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”, “project”, “intend”, “foresee” and similar expressions. These statements include, among others, statements regarding our expected business outlook, anticipated financial and operating results, our business strategy and means to implement the strategy, our objectives, the amount and timing of capital expenditures, the likelihood of our success in expanding our business, financing plans, budgets, working capital needs, and sources of liquidity. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.
Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the expansion of product offerings geographically or through new marketing applications, the timing and cost of planned capital expenditures, competitive conditions, and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. In addition, even if our actual results are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results may not be indicative of results or developments in subsequent periods. Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to, the following:
| ● | Our ability to raise capital when needed and on acceptable terms and conditions; | |
| ● | Our ability to manage credit and debt structures from vendors, debt holders, and secured lenders. | |
| ● | Our ability to manage the growth of our business through internal growth and acquisitions; | |
| ● | Competitive pressures; | |
| ● | Our ability to attract and retain management, and to integrate and maintain technical information and management information systems. | |
| ● | Compliance with laws and regulations, including those relating to environmental matters, corporate governance matters and tax matters, as well as any future changes to such laws and regulations; and |
For a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our 2024 Form 10-K and Item 1A — “Risk Factors” in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025, as well as other reports and registration statements filed by us with the SEC. These factors should not be construed as exhaustive and should be read with other cautionary statements in this Quarterly Report on Form 10-Q and our other public filings. For more information about us and the announcements we make from time to time, visit our website at www.omniq.com.
Introduction
We use patented and proprietary artificial intelligence (AI) technology to deliver machine vision image processing solutions including data collection, real-time surveillance and monitoring for supply chain management, homeland security, public safety, traffic & parking management, and access control applications.
The technology and services we provide help our clients move people, assets, and data safely and securely through airports, warehouses, schools, national borders, and many other applications and environments.
Our principal solutions include hardware, software, communications, and automated management services, technical service and support. Our highly tenured team of professionals has the knowledge and expertise to simplify the integration process for our customers. We deliver practical problem-solving solutions backed by numerous customer references.
Our customers include government agencies, healthcare, universities, airports, municipalities and more. We currently engage with several billion-dollar markets with double-digit growth, including the Global Safe City market and the Ticketless Safe Parking market.
The following is a discussion of our financial condition, results of operations, financial resources, and working capital. This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements contained in this Form 10-Q.
3
OVERVIEW
Pursuant to the asset sale described in the Notes to the Financial Statements, the assets of one division was sold during the second quarter of 2025. Accordingly, the financial statements have reclassified the related revenues and expenses from both prior periods and the current period into a single line item for “Discontinued Operations” on the face of the financial statements, with further detail provided in the accompanying Notes.
The Company’s sales from operations for the nine months ended September 30, 2025, were $24 million, a decrease of approximately $2.8 million, or 10%, over the nine months ended September 30, 2024.
The loss from operations for the nine months ended September 30, 2025, was $1.3 million, a decrease of $1.8 million compared with the loss in the nine months ended September 30, 2024, of $3.1 million. Basic loss per share from continuing operations for the nine months ended September 30, 2025, was $0.09 versus loss of ($0.46) per share for the same period in 2024.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2025, the Company had cash in the amount of $679 thousand and a working capital deficit of $11.8 million, compared to cash in the amount of $2.3 million, and a working capital deficit of $54 million as of December 31, 2024. The Company had stockholders’ deficit attributable to OmniQ stockholders of $13 million and $43.9 million as of September 30, 2025, and December 31, 2024, respectively. This decrease in our stockholders’ deficit was primarily attributable to the sale of one of the divisions at June 30, 2025.
The Company’s accumulated deficit was $124.7 million and $123.9 million as of September 30, 2025, and December 31, 2024.
The Company’s operations provided net cash of $5.4 million and provided $230 thousand in the nine months ended September 30, 2025, and 2024, respectively. The increase in cash used by operations of $5.2 million is due to an increase in accounts receivables being received as well as reliance on accounts payable being accrued.
The Company’s cash used in investing activities was $2.5 million for the nine months ended September 30, 2025, compared to cash used by investing activities of $87 thousand for the nine months ended September 30, 2024.
The Company’s financing activities used $2 million of cash during the nine months ended September 30, 2025, and used $2.4 million during the nine months ended September 30, 2024. During the nine months ended September 30, 2025, the Company made payments of $3.4 million on its notes payable, compared to the payments of $2.7 million for the nine months ended September 30, 2024.
4
Results of Operations
The following tables set forth certain selected unaudited condensed consolidated statement of operations data for the periods indicated in dollars. In addition, we note that the period-to-period comparison may not be indicative of future performance.
| Three months ended September 30, | Variation | |||||||||||||||
| In thousands | 2025 | 2024 | $ | % | ||||||||||||
| Revenue | $ | 8,826 | $ | 9,454 | $ | (628 | ) | (6.64 | )% | |||||||
| Cost of Goods sold | $ | 5,867 | $ | 7,362 | $ | (1,495 | ) | (20.31 | )% | |||||||
| Gross Profit | $ | 2,959 | $ | 2,092 | $ | 867 | 41.44 | % | ||||||||
| Operating Expenses | $ | 3,550 | $ | 2,879 | $ | 671 | 23.31 | % | ||||||||
| Loss from operations | $ | (591 | ) | $ | (787 | ) | $ | 196 | (24.90 | )% | ||||||
| Net loss | $ | (747 | ) | $ | (1,600 | ) | $ | 853 | (53.31 | )% | ||||||
| Net Loss per common Share from continuing operations | $ | (0.06 | ) | $ | (0.08 | ) | $ | 0.02 | (26.60 | )% | ||||||
Revenues
For the three months ended September 30, 2025 and 2024, the Company generated net revenues in the amount of $8.8 million and $9.5 million, respectively. The decrease between the three-month periods was attributable to the focusing on more profitable revenue and timing on some orders.
Cost of Goods Sold
For the three months ended September 30, 2025 and 2024, the Company recognized a total of $5.9 million and $7.43 million, respectively, of cost of goods sold. For the three months ended September 30, 2025 and 2024, cost of goods sold were 66% and 78% of net revenues, respectively.
Operating expenses
Total operating expenses for the three months ended September 30, 2025 and 2024 recognized was $3.6 million and $2.9 million, respectively, representing a 23% increase. The increase is related to the additional commissions incurred on the sale of the division.
Research and Development – Research and development expenses for the three months ended September 30, 2025 and 2024 totaled $436 thousand and $492 thousand, respectively.
Selling, general and Administrative – Selling, general and administrative expenses for the three months ended September 30, 2025 and 2024 totaled $2.9 million and $2.1 million, respectively, representing a 41% increase. The increases are related to increases in salaries for key people in 2025 relative to 2024.
Depreciation – Depreciation expenses for the three months ended September 30, 2025 and 2024 totaled $17 thousand and $85 thousand, respectively, representing an 80% decrease.
Intangible amortization – Intangible amortization expenses for the three months ended September 30, 2025 and 2024 totaled $245 thousand and $228 thousand, respectively.
Other income and expenses
Interest Expense – Interest expense for the three months ended September 30, 2025 totaled $248 thousand, as compared to $250 thousand for the three months ended September 30, 2024.
| For the nine months ended September 30, | Variation | |||||||||||||||
| In thousands | 2025 | 2024 | $ | % | ||||||||||||
| Revenue | $ | 24,213 | $ | 27,040 | $ | (2,827 | ) | (10.45 | )% | |||||||
| Cost of Goods sold | 17,089 | 20,820 | (3,731 | ) | (17.92 | )% | ||||||||||
| Gross Profit | 7,124 | 6,220 | 904 | 14.53 | % | |||||||||||
| Operating Expenses | 8,392 | 9,275 | (883 | ) | (9.52 | )% | ||||||||||
| Loss from operations | (1,268 | ) | (3,055 | ) | 1,787 | (58.49 | )% | |||||||||
| Net loss | (784 | ) | (6,743 | ) | 5,959 | (88.37 | )% | |||||||||
| Net Loss per common Share from continuing operations | $ | 0.09 | $ | (0.46 | ) | $ | 0.55 | (118.61 | )% | |||||||
5
Revenues
For the nine months ended September 30, 2025 and 2024, the Company generated net revenues in the amount of $24.2 million and $27.0 million, respectively. The decrease between the nine-month periods was attributable to the decrease in demand.
Cost of Goods Sold
For the nine months ended September 30, 2025 and 2024, the Company recognized a total of $17.1 million and $20.8 million, respectively, of cost of goods sold. For the nine months ended September 30, 2025 and 2024, cost of goods sold were 71% and 77% of net revenues, respectively.
Operating expenses
Total operating expenses for the nine months ended September 30, 2025 and 2024 recognized was $8.4 million and $9.3 million, respectively, representing a 9.5% decrease. The decreases are related to the cost reduction plan put in place by management.
Research and Development – Research and development expenses for the nine months ended September 30, 2025 and 2024 totaled $1.4 million and $1.3 million, respectively.
Selling, general and Administrative – Selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024 totaled $6.2 million and $6.9 million, respectively, representing a 10.5% decrease. The decreases are related to the cost reduction plan put in place by management.
Depreciation – Depreciation expenses for the nine months ended September 30, 2025, and 2024 totaled $53 thousand and $284 thousand, respectively.
Intangible amortization – Intangible amortization expenses for the nine months ended September 30, 2025, and 2024 totaled $713 thousand and $686 million, respectively.
Other income and expenses
Interest Expense – Interest expense for the nine months ended September 30, 2025 totaled $651 thousand, as compared to $820 thousand million for the nine months ended September 30, 2024.
Inflation
The Company’s results of operations have not been materially affected by inflation and management does not expect inflation to have a material impact on its operations in the future.
Off- Balance Sheet Arrangements
The Company currently does not have any off-balance sheet arrangements.
Cybersecurity
Risk Management and Strategy
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.
Managing Material Risks & Integrated Overall Risk Management
We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our management team continuously evaluates and addresses cybersecurity risks in alignment with our business objectives and operational needs.
Oversee Third-party Risk
Because we are aware of the risks associated with third-party service providers, we have implemented stringent processes to oversee and manage these risks. We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards. The monitoring includes annual assessments of the SOC reports of our providers and implementing complementary controls. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third-parties.
Risks from Cybersecurity Threats
We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.
6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2025. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to the previously reported material weakness in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of September 30, 2025. Although we have determined that the existing controls and procedures are not effective, the deficiencies identified have not been deemed material to our reporting disclosures.
Material Weakness in Internal Control over Financial Reporting
In connection with the audit of our financial statements for the year ended December 31, 2024, we identified a material weakness in our internal control over financial reporting. Specifically, we identified a material weakness in our controls related to segregation of duties and other immaterial weaknesses in several areas of data management and documentation.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
7
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 30, 2025, the Company’s subsidiary Dangot Computers reached a settlement with one of its vendors in Israel related to past due rebates and price protection payments entitled under prior agreements. The vendor agreed to pay Dangot Computers, approximately USD$1.2 million over a 12 month period, based on certain milestones related to additional purchases. These payments are being treated as reduction in Cost of Goods sold upon receipt from the Vendor.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission this Form 10-Q, including exhibits. You may read and copy all or any portion of the registration statement or any reports, statements, or other information in the files at SEC’s Public Reference Room located at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m.
You can request copies of these documents upon payment of a duplicating fee by writing to the Commission. You may call the Commission at 1-800-SEC-0330 for further information on the operation of its public reference room. Our filings, including the registration statement, will also be available to you on the website maintained by the Commission at http://www.sec.gov.
We intend to furnish our stockholders with annual reports which will be filed electronically with the SEC containing the consolidated financial statements audited by our independent auditors, and to make available to our stockholder’s quarterly reports for the first three quarters of each year containing unaudited interim consolidated financial statements.
Our website is located at http://www.omniq.com. The Company’s website and the information contained on that site, or connected to that site, is not part of or incorporated by reference into this filing.
8
ITEM 6. EXHIBITS
EXHIBIT INDEX
| 10.1 | Employment Agreement by and Between the Company and Shai Lustgarten effective November 1, 2025 | |
| 31.1 | Certification of our Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of our Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 14, 2025
| OMNIQ CORP. | ||
| By: | /s/ Shai Lustgarten | |
| Shai Lustgarten | ||
| Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board | ||
10