UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended
SECURITIES EXCHANGE ACT OF 1934
Commission
File Number:
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (zip code)
(Issuer’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None.
| Title of class | Trading symbol | Name of each exchange on which registered | ||
| OTCMKTS |
Securities registered under Section 12(g) of the Exchange Act: None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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 and post 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 | ||
| 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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes
The
aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which
the common equity was last sold or the average bid and asked price of such common equity, as of the last business day of the registrant’s
most recently completed second fiscal quarter, June 30, 2025, was $
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: shares of common stock were outstanding as of April 14, 2026.
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K 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. These factors should not be construed as exhaustive and should be read with the other cautionary statements in this Annual Report on Form 10-K.
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 Annual Report on Form 10-K, 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 |
Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission (“SEC”), we are under no obligation to publicly update or revise any forward-looking statements after we file this Annual Report on Form 10-K, whether as a result of any new information, future events or otherwise. Investors, potential investors and other readers are urged to consider the above-mentioned factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results or performance.
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PART I
ITEM 1. BUSINESS
General
OMNIQ Corp., a Delaware corporation, formerly Quest Solution, Inc., together with its wholly owned and majority owned subsidiaries, referred to herein as “we”, “us”, “our,” “OMNIQ,” or the “Company,” was incorporated in 1973. Since its incorporation, the Company has been involved in various lines of business.
Our Company
From 2008 to 2013, we were in the business of developing oil and gas reserves. In January 2014, we determined it was in the best interest of our stockholders to focus on operating companies with a track record of positive cash flows and larger existing revenue bases. Our strategy developed into leveraging management’s relationships in the business world for investments for us.
Since 2014, we have made the following acquisitions resulting in us becoming a leading provider of computerized and machine-vision image-processing solutions:
| ● | Quest Solutions, Inc. (January 2014) | |
| ● | Bar Code Specialties, Inc. (November 2014) | |
| ● | HTS Image Processing, Inc. (October 2018) | |
| ● | EyepaxIT Consulting LLC. (February 2020) | |
| ● | Dangot Computers Ltd. (July 2021) |
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.
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Recent Developments
Our Strategy
Our plan is to focus on operational excellence and cost reduction, addressing the balance sheet debt and executing our business plan that is based on revenue growth and technological leadership. We intend to continue to identify synergies within the Company to offer a more complete line of products, services, and technological solutions to customers throughout the world. Furthermore, the markets in which OMNIQ operates are undergoing consolidation, and OMNIQ continues to identify strategic companies in data collection, mobile systems, integrations, and other complementary technologies for potential future acquisition in order to become the leading specialty integrator within our served markets.
We are a provider of products and solutions for three main markets: hospitality, transportation, and public safety. We have expanded our product solutions, which are based on artificial intelligence and machine-learning algorithms, offering computer-vision applications. Our product offerings have established us as an innovative and technological company. We are a pioneer in providing cutting-edge technology solutions to the markets we serve.
The Company delivers these solutions to customers operating complex environments, including hospitals, campuses, airports, municipalities, and enterprise facilities. As customer requirements evolve, the Company provides technologies designed to improve operational visibility, efficiency, and infrastructure management. We simplify the integration process because of our experienced team of professionals. We deliver problem-solving solutions backed by numerous customer references. We offer comprehensive packaged and configurable software.
Our software offering is a mix of internally developed and third-party software.
Our practical AI-based vision solutions are currently in use for sensitive Homeland Security anti-terror projects and automated parking solutions. Inspired by time-critical “friend or foe” decision-making processes, our patented algorithms are based on a combination of cognitive science and machine-learning-based pattern-recognition technology which is arbitrated through a multi-layered decision-making process that offers both speed and accuracy.
Our experienced team of consulting and integration professionals guide companies through the entire development and deployment process, from selecting technology, to the successful company-wide rollout of a customized solution that fits their unique requirements.
The Company offers a full suite of configurable packaged software solutions that provide customers with unique solutions with significant business Return on Investment (“ROI”), including:
Technology Platform Overview
The Company’s technology platform combines proprietary computer vision software, artificial intelligence models, and edge computing infrastructure to analyze visual data captured from networked cameras and imaging sensors. The platform processes vehicle and pedestrian activity in real time, enabling automated identification, event detection, and operational analytics across large physical environments.
The architecture is designed to operate across distributed edge devices and centralized management systems, allowing customers to deploy machine vision capabilities across multiple locations while maintaining centralized visibility and control. The platform integrates with existing security systems, transportation infrastructure, and enterprise software through open interfaces and APIs, enabling organizations to incorporate visual intelligence into existing operational workflows.
The system supports a range of analytics, including vehicle recognition, license plate identification, zone-based monitoring, behavioral detection, occupancy analysis, and event-triggered alerts. Data generated by the platform is processed to support automated enforcement, operational decision making, and infrastructure monitoring while allowing operators to review events and maintain historical records of activity across monitored environments.
The platform is designed to scale across citywide deployments, transportation systems, campuses, and enterprise facilities where continuous monitoring and real-time operational intelligence are required.
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Machine Vision Solutions
The Company develops and deploys AI-based machine vision solutions designed to monitor, identify, and analyze vehicles and pedestrian activity in real time across transportation infrastructure, public safety environments, and enterprise facilities. These systems combine computer vision algorithms with networked camera infrastructure to identify vehicles, license plates, and behavioral patterns, enabling automated enforcement, traffic monitoring, and operational oversight. The platform integrates with existing infrastructure and third-party systems to provide real-time alerts, analytics, and operational data for customers operating large and complex environments.
Vehicle Recognition and License Plate Identification
The Company provides vehicle recognition capabilities that identify license plates and vehicle attributes such as make and color. These technologies are used by municipalities, airports, campuses, and private facilities to support access control, parking management, security monitoring, and law enforcement activities. Systems can automatically identify vehicles of interest, detect policy violations, and generate alerts or enforcement actions based on predefined rules.
Mobile License Plate Inventory (MLPI)
The Company’s MLPI platform enables patrol vehicles or operational fleets to capture license plates and vehicle attributes while in motion. The system allows operators to monitor large geographic areas efficiently while validating permits, identifying unauthorized vehicles, and detecting violations such as overstays or restricted-zone access. Mobile deployments are commonly used in municipal enforcement programs, university campuses, and airport environments where large parking areas must be monitored continuously.
Highway Monitoring and Safe City Enforcement (Q-Shield)
The Company provides AI-based roadway monitoring solutions designed to support safe city initiatives and traffic enforcement programs. These systems monitor vehicles traveling on highways and major roadways, detect violations, and generate real-time alerts when vehicles associated with law enforcement databases or enforcement rules are identified. Deployments support transportation agencies and public safety organizations seeking to improve roadway safety and enhance investigative capabilities.
Zone-Based Monitoring and Compliance Detection
The Company’s machine vision platform supports zone-based monitoring across controlled environments using configurable virtual zones. These systems detect vehicle movement and presence within defined operational areas and identify unauthorized entry or policy violations. Such capabilities are deployed in large campuses, logistics centers, and airport facilities where vehicle movement must be monitored across multiple controlled areas.
Airport and Transportation Operations
The Company deploys license plate recognition and vehicle monitoring solutions at airports and transportation hubs to support parking operations, curbside traffic management, and operational oversight. These systems automate vehicle identification at entry and exit points, assist operators in locating vehicles within large parking environments, and provide real-time visibility into traffic activity within high-volume transportation facilities.
High-Occupancy Vehicle (HOV) Lane Monitoring
The Company provides AI-based vehicle occupancy detection designed to support high-occupancy vehicle lane enforcement and compliance monitoring. Computer vision models analyze live roadway imagery to identify and count passengers within moving vehicles, allowing transportation agencies to monitor HOV lane compliance without manual inspection.
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People Counting and Safety Line Crossing
The Company offers people-counting and safety monitoring solutions that analyze pedestrian movement within defined areas. The system detects individuals crossing predefined virtual lines or entering monitored zones and generates alerts when safety or operational thresholds are exceeded. These analytics support transit stations, campuses, and public facilities where operators require automated monitoring of passenger flow and crowd activity.
Face Capture and Identity Monitoring
The Company provides machine vision solutions capable of capturing facial images within controlled environments to support security monitoring and identity verification workflows. These systems record facial imagery associated with access events, security alerts, or operational records and maintain visual data that may support investigative review and operational oversight in secure environments.
Our Target Markets
The main markets we target are Public Safety, Hospitality, and Supply Chain Management. Within the Public Safety market, our groundbreaking AI-based vision solutions are currently in use for sensitive Homeland Security anti-terror projects and discerning customers within the access control, airport, border crossing, municipality safety, and parking industries. We seek to utilize our expertise and software solutions in markets which provide the greatest opportunity to increase margins. Within the Supply Chain Management market, we believe we can further develop our existing customer base that needs to replace their legacy systems with practical modern AI solutions.
We believe integrating our patented and proprietary AI technology into our existing Supply Chain offerings will allow for automated logistics monitoring and optimization, creating operational efficiencies at higher margins for us and our customers.
Our Sales Strategy
Our direct sales teams are supported by systems engineers with tenured experience in the mobile industry. The sales organization’s growth mirrors the addition of new products and services. Sales team members are organized by industry, areas of opportunity, areas of expertise, and territory. Our sales teams address national accounts, offering a broad array of unique solutions for key lines of business applications, which provide opportunities for upselling and cross-selling to our customers. For the Israeli market, we have direct sales teams that are organized by industry and product line. In Israel, we also offer comprehensive technical service and support which increases customer confidence and supports the sales process.
Sales personnel are supported internally by support staff who coordinate logistics, as well as by members of the systems engineering and software teams who provide technical expertise.
Competition
The machine vision market is competitive and includes both large established providers and smaller niche companies focused on specific applications or end markets. The Company competes across vehicle recognition, traffic monitoring, public safety, parking, and access control solutions. While many competitors provide only one component of the overall offering, OMNIQ delivers a total solution that includes hardware, software, deployment, and support. The Company also believes its data privacy infrastructure is a meaningful differentiator for customers requiring secure architecture, controlled data access, and responsible management of sensitive vehicle and image data.
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Human Capital
OMNIQ’s operating philosophy is growth and continued success, which requires management and employees to work together in a spirit of cooperation and teamwork. Our core values emphasize an environment where safety, diversity, inclusion, talent development, training, and retention are top priorities. This has enabled us to meet various challenges over the years. Our progress reflects this strong, mutual commitment between the Company and its employees. We believe our employees are our greatest asset. We remain focused on providing friendly and safe working conditions, providing competitive pay, offering quality benefits, producing revenue for the continued growth of the Company, and supporting the communities in which we operate. We realize our success is a direct result of the hard work and dedication of our employees. Each employee at OMNIQ is a contributing partner in our future growth, and we strive to maintain a mutually beneficial culture that also fosters the professional development of each employee.
As of December 31, 2025, we had approximately 134 employees. Of these employees, 127 are salaried personnel (including commissioned employees) and 7 are hourly personnel. Our employees perform the following functions: sales, assembly and warehouse, technical services, and office and administrative support. We believe we have good relationship with our employees. Generally, the total number of employees does not significantly fluctuate throughout the year.
Concentrations
For the year ended December 31, 2025, no customer accounted for more than 10% of the Company’s revenues from continuing operations. For the year ended December 31, 2024, no customer accounted for more than 10% of the Company’s revenues from continuing operations.
Accounts receivables are made up of trade receivables due from customers in the ordinary course of business. As of December 31, 2025 and 2024, no customer accounting for more than 10% of the outstanding receivables from continuing operations.
Accounts payable from continuing operations are made up of payables due to vendors in the ordinary course of business as of December 31, 2025 and 2024. Two vendors made up 25% and one vendor made up 12% of our payables for the year ended December 31, 2025 and 2024, respectively.
Available Information
OMNIQ’s website, www.omniq.com, and the information contained on that site, or connected to that site, are not part of or incorporated by reference into this filing.
We file electronically with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Copies of these reports, proxy and information statements and other information may be obtained by electronic request at the following e-mail address: [email protected]. We use the Investor section of our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor section of our website, in addition to following press releases, SEC filings, and public conference calls and webcasts.
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ITEM 1A. RISK FACTORS
This section is not required for smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
This section is not required for smaller reporting companies.
ITEM 1C. CYBERSECURITY
We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
We
engage consultants or other
Our
cybersecurity incident response and vulnerability management policies are designed to escalate certain cybersecurity incidents to members
of management, depending on the circumstances, including our Chief Executive Officer. In addition,
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ITEM 2. PROPERTIES
OMNIQ’s corporate offices are currently located at 692 W. Confluence Ave, Murray, UT 84123. Our executive management, sales, operations, accounting, and administrative functions are located at the corporate offices. The corporate office annual lease expense is $180 thousand. The space is under a seven-year lease and expires June 2032.
We lease office and warehouse space for our satellite sales and technical support staff in Anaheim, California. Signed a new lease March 2023 and annual lease expense is $46 thousand.
Dangot’s corporate offices are currently located at Yad Harutzim 14 Tel-Aviv, Israel. The main corporate office, Yad Harutzim 14, serves as the company’s main building on the 2nd and 3rd floors, used by the management and most of the sales staff, technicians, etc. The corporate office annual lease expense is NIS 720,000. The space is under a 12 month lease which expired December 2025 and currently operates under a month to month lease as no extension has been entered into with the Landlord.
We lease office space (Gamdan- 1st floor) for our finance and service department at Yad Harutzim 14 Tel-Aviv, Israel. The lease provides for monthly payments of NIS 18,840. The lease expired December 2025 and currently operates under a month to month lease as no extension has been entered into with the Landlord.
We lease office and space for our technical support staff at Rival Street, Tel-Aviv, Israel. The lease provides for monthly payments of NIS 13,000 (approximately USD$4,079). The lease expired as December 31, 2025
ITEM 3. LEGAL PROCEEDINGS
The Company was named a defendant in a case involving a former employee who claims he is owed approximately $60 thousand in unpaid commissions. This case was settled in February 2024.
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 21 million approximately US $5.6 million. The Company believes that it has meritorious defenses to such action and intends to vigorously defend itself. At this early stage, it is not possible to fully assess the chances of a lawsuit. The judge has referred the matter to mediation and the company believes that its exposure is significantly lower than the original claim.
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 $389,000 in unpaid fees and commissions. The Company believes it has multiple defense and cross claims against the former consultant and is evaluating its response to the lawsuit, but plans to vigorously defend the suit.
ITEM 4. MINE SAFETY DISCLOSURES
NONE.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
On October 8, 2021 the Company’s common stock became available on The Nasdaq Stock Market LLC under the symbol “OMQS”. Before then, shares of OMNIQ’s common stock were not traded on an established market. OMNIQ’s common stock was traded through broker/dealers and in private transactions, and quotations reported on the OTCQB under the symbol “OMQS”. OTCQB quotations reflected interdealer prices, without mark-up, mark-down or commission and may not represent actual transactions. No dividends have been declared or paid on OMNIQ’s common stock and none are likely to be declared or paid in the near future.
| Common Stock | ||||||||
| High | Low | |||||||
| Period for the stock prices by quarter | ||||||||
| Fiscal Year Ended December 31, 2024: | ||||||||
| Fiscal Quarter Ended March 31, 2024 | $ | 0.69 | $ | 0.33 | ||||
| Fiscal Quarter Ended June 30, 2024 | $ | 0.81 | $ | 0.11 | ||||
| Fiscal Quarter Ended September 30, 2024 | $ | 0.33 | $ | 0.11 | ||||
| Fiscal Quarter Ended December 31, 2024 | $ | 0.25 | $ | 0.12 | ||||
| Fiscal Year Ended December 31, 2025: | ||||||||
| Fiscal Quarter Ended March 31, 2025 | $ | 0.35 | $ | 0.11 | ||||
| Fiscal Quarter Ended June 30, 2025 | $ | 0.13 | $ | 0.04 | ||||
| Fiscal Quarter Ended September 30, 2025 | $ | 0.16 | $ | 0.05 | ||||
| Fiscal Quarter Ended December 31, 2025 | $ | 0.27 | $ | 0.08 | ||||
Equity Compensation Plan Information
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | 3,053,733 | $ | 3.29 | 825,523 | ||||||||
In October 2021, OMNIQ’s Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain and attract new employees, directors, officers, consultants, advisors and employees to the Company. Pursuant to the Plan, 1,118,856 shares of the Company’s common stock, par value $0.001 (the “Shares”), were set aside and reserved for issuance. The Plan was approved by our stockholders at the December 2021, shareholders’ meeting. On February 25, 2022, the Company granted 792,500 stock options. These options were granted to employees as part of the Plan. On October 23, 2022 19,000 stock options were granted to employees as part of the Plan. No shares were issued under the Plan in 2024. During June of 2025, the Company issued stock options or warrants to 47 employees and consultants for the purchase of an aggregate 1,035,000 shares of stock at between $0.06 and $0.07 per share. The Company’s CEO was issued options for 50,000 shares at $0.07 and warrants were issued to a company he is affiliated with for 100,000 shares at exercise price of $0.07 per share, which was above the market price at the time of issuance. The options have a 5 year expiration period and vested immediately. The Black Scholes calculation used approximately 109.7% volatility for the stock and approximately $63,000 was booked as a compensation expense related to these options and warrants.
Securities Authorized for Issuance under Equity Compensation Plans
The information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Annual Report on Form 10-K, and is incorporated herein by reference.
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Dividends and other Distributions
OMNIQ has never declared or paid any cash dividends on its common stock. The Company currently plans to retain future earnings to finance the growth and development of its business and does not anticipate paying any cash dividends in the foreseeable future. OMNIQ may incur indebtedness in the future which may prohibit or effectively restrict the payment of dividends. Any future determination to pay cash dividends will be at the discretion of OMNIQ’s Board of Directors. The Company’s Series C Preferred Stock pays a 6% dividend, but the Company has been unable to make such dividend payments, thus those dividends are accrued quarterly. Accrued but unpaid dividends do not bear interest.
Recent Sales of Unregistered Securities
In December 2025, the Company sold 3,375,000 shares of common stock for proceeds of $337,500. The Company also sold pre-funded warrants for $600,000, which is eligible to be exercised into 6,000,000 shares of common stock.
Issuer Purchases of Equity Securities
The Company did not repurchase any of its equity securities during the year ended December 31, 2025 or 2024.
ITEM 6. [RESERVED]
Reserved.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion summarizes the financial position of OMNIQ, Corp. and its consolidated subsidiaries as of December 31, 2025, and its consolidated results of operations for the year ended December 31, 2025, and should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K. The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties (see discussion of “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K). Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.
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Pursuant to the asset sale described in the Notes to the Financial Statements, the assets of one division were 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 consolidated revenue for the year ended December 31, 2025 were $33 million, representing a decrease of $1.9 million from the year ended December 31, 2024 of $34.9 million. Revenues in 2025 and 2024 are presented in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“Topic 606”).
Net loss attributable to common stockholders’ of OMNIQ Corp was $169 thousand in 2025, a decrease of $9.9 million from the 2024 loss of $10 million. Basic loss per share attributable to common stockholders was $0.01 for the year 2025 compared to $0.94 loss per share for the year 2024.
GOING CONCERN
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 $13.2 million as of December 31, 2025 |
| ● | Accumulated deficit of $124 million as of December 31, 2025 |
| ● | Multiple years of losses from operations |
| ● | Year over year decrease in sales |
| ● | Noncompliance with certain debt covenants |
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 evaluating 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. |
| ● | The Company has implemented an aggressive debt settlement plan with its vendors and debt holders to clean up the Balance Sheet presentation and during the year was able to settle many debts for a discount. Short term liabilities for the Company decreased from $86.3 million to roughly $27.7 million, showing the efforts of management are working. |
| ● | In December 2025 management finalized an equity raise which resulted in approximately $941,000 net cash received from investors. |
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Overview – Results of Operations
The following table sets forth certain selected condensed 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.
| For the year ended | Variation | |||||||||||||||
| In thousands | 2025 | 2024 | $ | % | ||||||||||||
| Revenue | $ | 32,950 | $ | 34,881 | $ | (1,931 | ) | (5.54 | )% | |||||||
| Cost of Goods sold | $ | 23,912 | $ | 29,251 | $ | (5,339 | ) | (18.25 | )% | |||||||
| Gross Profit | $ | 9,038 | $ | 5,630 | $ | 3,408 | 60.53 | % | ||||||||
| Operating Expenses | $ | 12,884 | $ | 12,252 | $ | 632 | 5.16 | % | ||||||||
| Loss from operations | $ | (3,846 | ) | $ | (6,622 | ) | $ | 2,776 | (41.92 | )% | ||||||
| Net loss | $ | (137 | ) | $ | (10,002 | ) | $ | 9,865 | (98.63 | )% | ||||||
| Net Loss per common Share from continuing operations | $ | (0.01 | ) | $ | (0.94 | ) | $ | 0.93 | (98.70 | )% | ||||||
Revenues
Revenue for the years ended December 31, 2025 and 2024 were generated from the sales of AI service contracts, software, and related services provided by the Company to its customers. For the years ended December 31, 2025 and 2024, the Company recognized $33 million and $34.9 million in net revenues, respectively. This represents a decrease of 5.5%. The decrease was due to two main factors: (1) The decrease in deliverables, and (2) a delay in the timing of a significant customer project.
Cost of Goods Sold
For the years ended December 31, 2025 and 2024, the Company recognized a total of $23.9 million and $29.3 million, respectively, of cost of goods sold. Cost of goods sold was 72.6% of revenues for 2025 and 83.9% of revenue for 2024. Our gross margin percentage has remained relatively stable in an industry that is experiencing gross-margin pressure.
Operating Expenses
For the years ended December 31, 2025 and 2024, operating expenses were $12.9 million and $12.3 million, respectively. This represents an increase of $696 thousand, or 6%, which is due to increase in our selling general and administrative expenses in 2025. The following explains in detail the change in operating expenses.
Research & Development – Research and development for the years ended December 31, 2025 and 2024 totaled $2 million and $1.9 million, respectively. This represents an increase of $164 thousand or 9%, which is due to increase in costs for developing software.
Selling, General and Administrative – Selling, General and Administrative expenses were $9.8 million for the year ended December 31, 2025, compared to $9.1 million for the year ended December 31, 2024, representing an increase of $685 thousand, or 7%. The change was due to increased focus on sales efforts.
Depreciation – Depreciation for the year ended December 31, 2025 was $80 thousand compared to $347 thousand for the year ended December 31, 2024. This represents a decrease of $267 thousand, or 77%, attributable to a reduction in fixed assets.
Intangible Amortization – Intangible amortization expense for the year ended December 31, 2025 was $965 thousand, compared to $915 thousand for the year ended December 31, 2024.
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Other Income and Expenses
The Company incurred $1.2 million in interest expense for the year ended December 31, 2025, compared to $1.1 million for the year ended December 31, 2024. The interest expense is comprised of interest incurred on promissory notes payable, the company’s line of credit, and vendor payables.
Foreign Currency Transactions
The Company has multiple subsidiaries conducting operations in Israel, therefore there were transactions denominated in currency other than US dollars for both 2025 and 2024. Foreign transaction gains and losses are reported on the consolidated statement of operations and comprehensive loss and were included in the amount of loss from comprehensive income.
Provision for Income Taxes
For the year ended December 31, 2025, the Company has $495 thousand of current income tax expense (US State & Local and Foreign).
For the year ended December 31, 2024, the Company has $698 thousand of current income tax benefit (US State & Local and Foreign).
Net loss
The Company realized a net loss of $137 thousand for the year ended December 31, 2025, compared to a net loss of $10 million for the year ended December 31, 2024. The decreased loss in 2025 is due primarily to drastic improvements by management to increase gross margins while at the same time trimming overhead.
Liquidity and Capital Resources
As of December 31, 2025, the Company had cash in the amount of $679 thousand and a working capital deficit of $13.2 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 $12.7 million and $43.9 million as of December 31, 2025 and 2024, respectively. This reduction in our stockholders’ deficit was primarily due to the sale of the Quest division in June 2025.
The Company’s accumulated deficit was $124.1 million and $123.9 million as of December 31, 2025 and 2024, respectively.
The Company’s operations provided net cash of $7.5 million and $2.4 million for the years ended December 31, 2025 and 2024, respectively. The increase of cash from operations of $5.1 million is primarily a result of increase in receivables and other liabilities.
The Company’s cash used in investing activities was $3 million for the year ended December 31, 2025 compared to cash used by investing activities of $32 thousand for the year ended December 31, 2024.
The Company’s financing activities used $1.7 million of cash during the year ended December 31, 2025, and used $2.9 million during the year ended December 31, 2024. During the year ended December 31, 2025, the Company made payments of $3.4 million on its notes payable, compared to the year ended December 31, 2024, when the Company made payments of $3.2 million on its notes payable. Additionally, the Company received $685 thousand in the year ended December 31, 2025 on its line of credit and had $292 thousand on the Company’s line of credit during the year ended December 31, 2024. The Company raised net proceeds of $941 thousand in the year ended December 31, 2025 and no funds for the year ended December 31, 2024.
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Off-Balance Sheet Arrangements
The Company currently does not have any off-balance sheet arrangements.
Critical Accounting Policies
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The application of many accounting principles requires us to make assumptions, estimates, and/or judgments that affect the reported amounts of assets, liabilities, revenues, and expenses in our consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates, and/or judgments, however, are often subjective and may change based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts first become known. We believe the following critical accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates, and/or judgments. See also note 2 to our consolidated financial statements for a summary of our significant accounting policies.
Revenue Recognition
We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied.
We combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. Our contracts are typically governed by a customer purchase order or work order. The contract generally specifies the delivery of what constitutes a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers.
As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue.
A contract liability is recognized as deferred revenue when we invoice customers, or receive customer cash payments, in advance of satisfying the related performance obligation(s) under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.
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We have four main revenue streams: (1) Hardware sales, (2) Hardware installation/configuration, (3) Hardware service contracts, and (4) Third-party software sales. For all these revenue streams, our performance obligations are satisfied at a point in time, and therefore, revenue is recognized at the point in time when a customer takes control of the good or asset created by the service. Factors that may indicate transfer of control are when we have the right to receive payment for the good or service, when the legal title of the asset has been transferred, physical possession of the asset has been transferred, the customer obtains the significant risks and rewards of ownership of the asset, and the customer accepts the asset. For some customers, control is transferred when the customer, or the customer’s courier, picks up the hardware from our warehouse. For other customers, control is transferred upon delivery. For hardware sales which also include installation and/or configuration as a single performance obligation, control is transferred only when the hardware is delivered and installed/configured. For hardware service contracts and for third-party software sales, the Company acts as the agent in the transaction, and thus recognizes revenue on a net basis at a point in time when the transaction has been facilitated.
We leverage drop-ship shipments with many of our partners and suppliers to deliver hardware to our customers without having to physically hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-ship arrangements on a gross basis as the principal in the transaction when the product is received by the customer because we control the product prior to transfer to the customer. We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if something were to happen to the hardware during shipping, we set the price of the product charged to the customer, we assume credit risk for nonpayment by our customer, and we work closely with customers to determine their hardware specifications.
Management reviews historical returns on at least an annual basis to determine the need for an allowance for sales returns. Historically, sales returns have been extremely limited, with the effect on the financial statements immaterial. Sales returns during any particular year are so small and so infrequent that management determined that any material reserve against sales returns would likely not be appropriate.
Definite-lived Intangible Assets Impairment Evaluation
The Company periodically evaluates the carrying value of definite-lived intangibles when events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of its use of acquired assets or its overall business strategy, and significant industry or economic trends. The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded no impairment loss for definite-lived intangible assets during the years ended December 31, 2025 and 2024.
When the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset.
If the Company’s revenues or other estimated operating results are not achieved at or above our forecasted level, and the Company is unable to recover such costs through price increases, the carrying value of certain of the Company’s intangible assets may prove to be unrecoverable and we may incur impairment charges of definitive-live intangible assets.
Indefinite-lived Intangible Assets, Including Goodwill
Indefinite-lived intangible assets, including goodwill, are not amortized but are required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company is permitted the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the fair value of the Company’s reporting unit is less than its corresponding carrying value. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its corresponding carrying value then the Company is not required to take further action. However, if the Company concludes otherwise, then the Company must calculate the fair value of the reporting unit and compare it with its carrying amount, including Indefinite-lived intangible assets and recognize impairment equal to the difference between the carrying amount of the reporting unit and its fair value, considering the related income tax effect from any tax-deductible goodwill.
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Stock Based Compensation
We periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. We account for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by Financial Accounting Standards Board (the “FASB”) where the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period.
We record stock-based compensation expense according to the provisions of ASC Topic 718, Compensation – Stock Compensation (“Topic 718”). Topic 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Under the provisions of Topic 718, the Company determines the appropriate fair value model to be used for valuing share-based payments and the amortization method for compensation cost.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates the expected volatility and expected option life consistent with Topic 718. The expected volatility of the Company’s common stock at the date of grant is estimated based on a historic volatility rate and the expected option life is calculated based on historical stock options as the best estimate of future exercise patterns. The dividend yield assumption is based on historical and anticipated dividend payouts. The risk-free interest rate assumption is based on observed US treasury rates consistent with the expected life of each stock option grant. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. Compensation expense is recorded for all stock options expected to vest based on the amortization of the fair value at the date of grant on a straight-line basis primarily over the vesting period of the options.
Foreign conflicts
We are closely monitoring developments in the war in Israel including potential impacts to the Company’s business, customers, suppliers, employees, and operations in Israel, the Middle East and elsewhere. At this time, impacts to the Company are expected to be minimal but is subject to change given the volatile nature of the situation.
Additional accounting policies can be found in Note 2 to our Audited Consolidated Financial Statements.
Recently adopted accounting pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU is effective for the Company’s fiscal December 31, 2025 year-end.
Recent Accounting Pronouncements not yet adopted
In November 2024, the FASB issued ASU 2024-03 “Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)” to improve the disclosures about an entity’s expenses. Upon adoption, we will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for our 2027 annual period, and our interim periods beginning in 2028, with early adoption permitted. The standard can be applied either prospectively or retrospectively. We are currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The standard changes when capitalization of internal-use software costs begins and updates the related guidance for modern software development methods. The Company is evaluating the impact of this guidance on the timing of capitalization, amortization, and related disclosures. The standard is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This section is not required for smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item are included as a separate section of this report commencing on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
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ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure and Control Procedures
We maintain “disclosure controls and procedures”, as such terms are defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports 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 (“CEO”) and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosures. The Company acknowledges that any controls and procedures can provide only reasonable assurances of achieving the desired control objectives.
We have carried out an evaluation as required by Rule 13a-15(d) under the supervision of and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025. Based upon their evaluation, the Chief Executive Officer and Principal Accounting Officer concluded that, as of December 31, 2025, the Company’s disclosure controls and procedures were not effective. 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.
(b) Management’s Report on Internal Controls over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Principal Accounting Officer, and affected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting cannot provide absolute assurance of achieving their objectives. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgement and breakdowns resulting from human failures. Due to their inherent limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. It is possible to design safeguards to reduce, but not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Management has used the framework set forth in the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on such evaluation, our CEO concluded that, as of December 31, 2025, our internal controls over financial reporting were not effective.
As a result of our evaluation, 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.
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Our management is composed of a small number of professionals resulting in a situation where limitations on segregation of duties exist. Accordingly, and as a result of the material weakness identified above, we have concluded that the control deficiencies result in a reasonable possibility that a material misstatement of the annual or interim financial statements may not be prevented on a timely basis by the Company’s internal controls. We continue to employ and refine a structure in which critical accounting policies, issues and estimates are identified, and together with other complex areas, are subject to multiple reviews by executives. In addition, we evaluate and assess our internal controls and procedures regarding our financial reporting, utilizing standards incorporating applicable portions of the Public Company Accounting Oversight Board’s 2009 Guidance for Smaller Public Companies in Auditing Internal Controls Over Financial Reporting as necessary on an on-going basis.
While the material weakness set forth above was the result of the scale of the Company’s operations and is intrinsic to its small size, the Company believes the risk of material misstatements relative to financial reporting are mitigated through management review.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by its registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permits the Company to provide only management’s report in this annual report.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISTICTIONS THAT PREVENT INSPECTIONS
NONE
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table presents information with respect to our officers and directors as of the date of this Report:
| Name | Age | Positions | ||
| Shai Lustgarten | 55 | CEO and Chairman | ||
| Guy Elhanani | 52 | Director |
Background of our officers and directors
The following is a brief account of the education and business experience during at least the past five years of our officers and directors, indicating each person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Shai S. Lustgarten, was appointed the Company’s CEO in April 2017 and served as the Company’s interim Chief Financial Officer (“CFO”) from December 2018 through September 2019 and again from November 2023 and is still the interim CFO as of the date of this report. Mr. Lustgarten had been the Chief Executive Officer of Teamtronics, Inc. beginning June 2016. Teamtronics manufactures rugged computers and electronic equipment mainly used in the Gas and oil industry. From 2014 to 2017, Mr. Lustgarten was the Chief Executive Officer at Micronet Limited Inc., a developer and manufacturer of mobile computing platforms for integration into fleet management and mobile workforce solutions listed on the Tel Aviv Stock Exchange. From 2013 to 2014, Mr. Lustgarten served as EVP Business Development and Head of the Aerospace and defense Division of Micronet EnertecTechnologies, a technology company listed on the NASDAQ Capital Market. From 2009 to 2013 Mr. Lustgarten was VP of Sales, Marketing and CMO of TAT Technologies, a world leading supplier of electronic systems to the commercial and defense markets. His prior experience also includes serving as CEO of T.C.E. Aviation Ltd. in Belgium and serving from 1993 to 1997 as the assistant to the Military Attaché at the Embassy of Israel in Washington, DC. He received his Bachelor of Science degree in Business Management & Computer Science from the University of Maryland.
Guy Elhanani became a director of the Company in August 2021. Mr. Elhanani is a qualified CFO with experience leading financial strategies to facilitate company growth. Mr. Elhanani is serving since 2023 as the CFO of Tarya Ltd. , a public Fintech company which its shares are traded in the Tel Aviv Stock Exchange. . Mr. Elhanani has been the CFO of Sirin Labs since 2017 till 2021. Sirin Labs is a multinational, high-tech company specializing in secured mobile phones. From 2015 to 2017, Mr. Elhanani was the CFO of SalesTech, an online internet technology servicing company. Mr. Elhanani has also served as the CFO of other companies, including: Micronet Ltd. (2012-2015); InterLogic Ltd. (2007-2012); and Finotec Group Inc. (2006-2007). From 2003 to 2006, Mr. Elhanani was the corporate controller of On Track Innovations Ltd. From 1999 to 2003, Mr. Elhanani was a senior auditor at Kesselman and Kesselman (PWC Israel). Mr. Elhanani was a lecturer at IVC College in Israel from 2014 to 2018 and at Hebrew University in Jerusalem from 2001 to 2003. Mr. Elhanani has also served as a board member for various companies, including: General Robotics (2017-2021); Effective Space Solutions (2017-2021); Octopus Systems (2017-2021); and Infinity AR (2017-2019). Mr. Elhanani received a B.A. in Accounting and Economics, and a Master of Business Administration, specializing in finance, from Hebrew University.
Our Board seeks members from diverse professional backgrounds who combine a solid professional reputation and knowledge of our business and industry with a reputation for integrity. Our Board does not have a formal policy concerning diversity and inclusion but is in the process of establishing a policy on diversity. Diversity of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate Governance Committee considers when recommending director nominees to our Board. Our Board also seeks members that have experience in positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our Company. While the Board has continued its efforts to identify candidates that have such experience, they have currently been unable to identify any such candidates which fulfill the diversity requirement with the requisite professional experience.
Family Relationships
There are no family relationships among and between the issuer’s directors, officers, persons nominated or chosen by the issuer to become directors or officers, or beneficial owners of more than ten percent of any class of the issuer’s equity securities.
ITEM 11. EXECUTIVE COMPENSATION
The table below shows the compensation for services in all capacities we paid during the year ended December 31, 2025 and 2024 to the individuals serving as our principal executive officers (whom we refer to collectively as our “named executive officers”);
| Name and Principal Position | Year | Salary ($) |
Bonus ($) |
Stock Awards |
Option Awards | All Other Compensation |
Total | |||||||||||||||||||||
| In thousands | ||||||||||||||||||||||||||||
| Shai Lustgarten | 2025 | 700 | 1,942 | - | 10 | 28 | $ | 2,680 | ||||||||||||||||||||
| Chief Executive Officer and Interim CFO | 2024 | 637 | 25 | - | - | 28 | $ | 690 | ||||||||||||||||||||
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Bonuses
Any bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the named executive’s responsibilities with the Company. As we continue to grow, more defined bonus programs may be established to attract and retain our employees at all levels.
Employment Contracts
In February 2020, we entered into an employment agreement with Mr. Lustgarten, the Company’s CEO, (the “Lustgarten Agreement”) pursuant to which Mr. Lustgarten shall continue to serve as the Company’s CEO. Pursuant to the Lustgarten Agreement, the Company shall pay Mr. Lustgarten an annual base salary of $560,000. Mr. Lustgarten shall also be eligible to receive i) equity awards pursuant to the Company’s Equity Incentive Plans and ii) certain milestone bonuses as set forth in the Lustgarten Agreement. In the event Mr. Lustgarten’s employment is terminated by Mr. Lustgarten for good reason, or terminated by the Company without cause, Mr. Lustgarten shall be entitled to the greater of (i) the unpaid base salary or (ii) one year’s base salary. 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. In addition, Mr. Lustgarten’s base salary was revised to increase 5% per year for cost of living increases. In the revised employment agreement the Executive is eligible for performance-based bonuses tied to market capitalization, including a $100,000 bonus when the Company’s market capitalization exceeds $10 million for 30 consecutive trading days and additional one-time bonuses equal to 1% of market capitalization for each subsequent $10 million increase maintained for 30 consecutive trading days, payable in cash or stock at the Executive’s option. In alignment with the terms of his employment contract, Mr. Lustgarten earned a bonus of $1.7 million on the sale of the Quest Solution business at June 30, 2025. This amount has been accrued on the books of the company, but has not been paid as of December 31, 2025 or as of the date of this filing.
At the sole discretion of our Board, all officers are entitled to merit-based cash and equity bonuses.
Director Compensation
| Name | Year | Fees Earned or Paid in Cash ($) |
Stock Awards |
Option Awards |
Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation |
All Other Compensation |
Total | ||||||||||||||||||||||||
| In thousands | ||||||||||||||||||||||||||||||||
| Yaron Shalem (1) | 2025 | 4 | - | - | - | - | - | 4 | ||||||||||||||||||||||||
| 2024 | 24 | - | - | - | - | - | 24 | |||||||||||||||||||||||||
| Mina Teicher (1) | 2025 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| 2024 | 24 | - | - | - | - | - | 24 | |||||||||||||||||||||||||
| Guy Elhanani | 2025 | 78 | - | 3 | - | - | - | 81 | ||||||||||||||||||||||||
| 2024 | 24 | - | - |
- | - | - | 24 | |||||||||||||||||||||||||
1 – Resigned from the Board on January 31, 2025.
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The employment agreements for our named executive officers generally provide that in the event of termination of such executive’s employment for any reason, or if the executive resigns, the Company is required to pay certain separation benefits, including (i) unpaid annual salary earned through the termination date; (ii) unused vacation; (iii) accrued and unpaid expenses; and (iv) other vested and accrued benefits to which he is entitled under the Company’s employee benefit plan. In the event the executive voluntarily resigns for “good reason” (as defined in each executive’s respective Employment Agreement) or the Company terminates their employment for any reason other than for cause (as defined in each executive’s respective Employment Agreement), the Company will be required to pay certain termination benefits, including (i) a lump sum payment equal to the greater of (A) unpaid annual salary through the end of the Initial Term or Renewal Term (as those terms are defined in each executive’s respective Employment Agreement) or (B) two years of annual salary, and (ii) COBRA reimbursement.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors, executive officers or any associate or affiliate of our Company during the last two fiscal years is or has been indebted to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
CORPORATE GOVERNANCE
Board Leadership Structure and Risk Oversight
Our Board currently consists of 2 members: Mr. Shai Lustgarten and Mr. Guy Elhanani.
One of the key functions of our Board is to provide oversight of our risk management process. Our Board administers this oversight function directly, with support from its three standing committees—the Audit Committee, the Compensation Committee, and the Corporate Governance/Nominating Committee. The information set forth in Item 1C is also incorporated herein by reference.
Director Independence
Pursuant to Item 407(a)(1)(ii) of Regulation S-K promulgated under the Securities Act, we have adopted the definition of “independent director” as set forth in Rules 5000(a)(19) and 5605(a)(2) of the rules of the Nasdaq Stock Market. The Board determined that Mr. Guy Elhanani qualifies as “independent directors” pursuant to such rules.
Board Committees
We have three standing committees: the Audit Committee, the Compensation Committee, and the Corporate Governance/Nominating Committee. We believe that the members of the Audit Committee, Compensation Committee and Corporate Governance/Nominating Committee are deemed to be “independent” pursuant to the NASDAQ listing standards and applicable SEC rules. We believe that all members of our Board have been and remain qualified to serve on the committees of our Board and have the experience and knowledge to perform the duties required of the committees.
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Audit Committee
The Audit Committee consists of Mr. Guy Elhanani, whereby Mr. Elhanani is the Chairperson. Our Board has determined that Mr. Elhanani qualifies as an “audit committee financial expert,” as defined under the rules of the SEC.
The primary responsibility of the Audit Committee is to oversee our financial reporting process on behalf of the Board and report the results of their activities to the Board. The Audit Committee’s responsibilities include providing assistance to the Board relating to:
| ● | the integrity of the Company’s financial statements and the related public reports; | |
| ● | disclosures and regulatory filings in which they appear; | |
| ● | the systems of internal control over financial reporting, operations, and legal/regulatory compliance; | |
| ● | the performance, qualifications, and independence of the Company’s independent accountants; | |
| ● | the performance, qualifications, and independence of the Company’s internal audit function, and | |
| ● | compliance with the Company’s ethics policies and applicable legal and regulatory requirements. |
Our Audit Committee charter is available on the “About Us” subpage of our website (www.omniq.com).
Compensation Committee
The Compensation Committee consists of Mr. Guy Elhanani,. Mr. Elhanani serves as Chairperson.
The Compensation Committee’s responsibilities include, among others:
| ● | approve annually the corporate goals and objectives applicable to the compensation of the CEO and/or President, evaluate at least annually the CEO’s and/or President’s performance in light of those goals and objectives, and determine and approve the CEO’s and/or President’s compensation level based on this evaluation; | |
| ● | review matters relating to executive succession and management development; | |
| ● | formulate, evaluate, and approve compensation for the Company’s officers; | |
| ● | formulate, evaluate, and approve cash incentives and deferred compensation plans for executives; | |
| ● | formulate, administer, and—when appropriate—recommend to the Board for approval, incentive compensation plans and equity-based plans; and | |
| ● | approve employment contracts, severance agreements, change in control provisions, and other compensatory arrangements with Company executives. |
The Compensation Committee has the authority, in its sole discretion, to select, retain, and obtain the advice of a compensation consultant as necessary to assist with the execution of its duties and responsibilities.
Our Compensation Committee charter is available on the “About Us” subpage of our website (www.omniq.com).
| 24 |
Corporate Governance/Nominating Committee
The Corporate Governance/Nominating Committee consists of Mr. Guy Elhanani. Mr. Elhanani serves as Chairperson.
The Corporate Governance/Nominating Committee’s responsibilities include, among others:
| ● | develop and oversee the Company’s corporate governance practices and procedures. Which includes identifying best practices, reviewing, and recommending to the Board for approval any changes to the documents, policies, and procedures in the Company’s corporate governance framework; | |
| ● | establish procedures for the director nomination and to determine the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director; | |
| ● | identify and screen individuals qualified to become members of the Board, consistent with the above criteria, considering any director candidates recommended by the Company’s stockholders; | |
| ● | oversee a process for an annual evaluation of the Company’s CFO and/or President; and | |
| ● | develop and oversee a process for an annual evaluation of the Board and its committees, including a formal assessment of each individual director. |
Our Corporate Governance/Nominating Committee charter is available on the “About Us” subpage of our website (www.omniq.com).
Clawback Policy
On December 1, 2023 the Board adopted the OMNIQ Corp. Clawback Policy (the “Clawback Policy”), providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Clawback Policy has been filed herewith and can also be found at www.omniq.com/investor-lounge.
Involvement in Certain Legal Proceedings
Our directors and executive officers have not been involved in any of the following events during the past ten years:
| 1. | any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; | |
| 2. | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| 3. | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; | |
| 4. | being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | |
| 5. | being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| 6. | being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
| 25 |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial ownership of our Common Stock as of December 31, 2025: (i) by each of our directors, (ii) by each of our executive officers, (iii) by our executive officers and directors as a group, and (iv) by each person or entity known by us to beneficially own 5% or more of any class of our common stock. As of December 31, 2025, there were 15,102,930 shares of our common stock outstanding.
| Name of Beneficial Owner | Amount of Beneficial Ownership | Percentage of Shares Outstanding |
||||||
| Shai Lustgarten (Chairman and CEO & Interim CFO)1 | 3,426,822 | 22 | % | |||||
| Yaron Shalem2 | 49,464 | 0.3 | % | |||||
| Guy Elhanani4 | 60,000 | 0.4 | % | |||||
| Mina Teicher5 | 10,000 | 0.1 | % | |||||
| All Executive Officers and Directors as a group (4 individuals) | 3,546,286 | 22.60 | % | |||||
| Carlos Nissensohn 3 | 1,019,667 | 6.55 | % | |||||
| 1. | Includes 420,000 shares issuable upon the exercise of options. Also includes (i) 1,056,822 shares and shares issuable upon the exercise of warrants held by beneficially owned by Mr. Lustgarten. | |
| 2. | Includes 20,000 shares issuable upon exercise of options. Also includes 29,464 shares. Yaron Shalem resigned from the Board of Directors on January 31, 2025. | |
| 3. | Includes 739,308 shares held by Campbeltown Consulting Ltd., which is beneficially owned by Mr. Carlos J. Nissensohn. Also includes (i) 57,026 shares and (ii) 223,333 shares issuable upon exercise of options and warrants. | |
| 4. | Includes 60,000 shares issuable upon exercise of options. | |
| 5. | Includes 10,000 shares issuable upon exercise of options. Mina Teicher resigned from the Board of Directors on January 31, 2025. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
In February 2020, OMNIQ entered into a consulting agreement with Mr. Carlos J. Nissensohn and/or an entity under his control, a consultant to the Company and principal stockholder, (the “Nissensohn Agreement”) pursuant to Mr. Nissensohn and/or an entity under his control will provide certain consulting services to the Company. The Nissensohn Agreement has a four-year term and automatically renews for additional one-year periods unless either party elects to terminate the Nissensohn Agreement. Pursuant to the Nissensohn Agreement, we will pay Mr. Nissensohn a monthly fee of $30,000. Mr. Nissensohn shall also be eligible to receive certain milestone bonuses as set forth in the Nissensohn Agreement. Mr. Nissensohn is a principal stockholder of the Company. Mr. Nissensohn is the father of Neev Nissenson, former board member and former CFO.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.
| 26 |
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) The following documents are filed under pages F-1 through F-29 and are included as part of this Form 10-K:
(a)(2) Financial statement schedules are omitted as they are not applicable.
(a)(3) Exhibits required by Item 601 of Regulation S-K are incorporated herein by reference and are listed on the attached Exhibit Index, which begins immediately following the financial statements of this Annual Report on Form 10-K.
ITEM 16. FORM 10-K SUMMARY.
NONE.
| 27 |
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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: April 15, 2026
| OMNIQ CORP. | ||
| By: | /s/ Shai Lustgarten | |
| Shai Lustgarten | ||
| Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Shai Lustgarten | Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer | April 15, 2026 | ||
| Shai Lustgarten | ||||
| /s/ Guy Elhanani | Director | April 15, 2026 | ||
| Guy Elhanani |
| 28 |
OMNIQ CORP.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of OMNIQ CORP.
Opinion on the Financial Statements
We did not audit portions of December 31, 2025, and 2024, consolidated financial statements for Dangot Computers, Ltd., a wholly owned subsidiary. The portions not audited by us include assets of $13.1 million and $17.4 million as of December 31, 2025, and 2024, respectively, and total revenues of $29.9 million and $30.5 million for the years ended December 31, 2025, and 2024, respectively. Those portions of December 31, 2025, and 2024, consolidated financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as they relate to the amounts included for Dangot Computers, Ltd. is based solely on the reports of the other auditors.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a deficit in stockholders’ equity and has sustained recurring losses from operations. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. Management’s plans with regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Goodwill and Intangible Assets— Refer to Note 9 to the financial statements
As described in Note 9, the Company has $4.2 million of intangible assets and $3.3 million of goodwill. Management performs impairment evaluations at least annually and engaged a third-party specialist to assist in valuing these assets using management’s projected cash flows and market inputs.
We identified the valuation of goodwill and intangible assets as a critical audit matter because the impairment analyses involved significant judgment in developing projected cash flows and key assumptions, including revenue growth, profitability, working capital and capital expenditure assumptions, and terminal value inputs, and because the resulting fair values were compared to the related carrying amounts as of December 31, 2025.
Our audit procedures included evaluating the competence and objectivity of the Company’s specialist; reconciling the projections used in the valuation analyses to management’s forecasts; independently recalculating elements of the undiscounted cash flow analyses; evaluating the reasonableness of significant assumptions and terminal value inputs; and involving our valuation specialist to assess the valuation methodology and key assumptions.
Discontinued Operations – Refer to Note 15 to the financial statements
As described in Note 15, the Company entered into an Asset Purchase Agreement to sell substantially all of the assets and certain liabilities associated with its legacy Quest business line on June 30, 2025, for aggregate non-cash consideration primarily consisting of debt assumed by the buyer.
We identified the accounting and presentation for the disposal transaction as a critical audit matter because significant auditor judgment was required to evaluate whether the transaction was a sale to a third party or a transfer under common control and to assess the resulting financial statement presentation and disclosures. Judgment was also required to evaluate the identification and carrying values of the assets and liabilities derecognized and the appropriate cutoff of revenues and expenses associated with the disposed operations.
Our audit procedures included evaluating management’s conclusions regarding the nature of the transaction and the absence of common control; examining the terms of the sale agreement and related-party disclosures; testing the identification and carrying values of the assets and liabilities included in the disposal group; recalculated the gain or loss recognized, as applicable; performing procedures to evaluate whether revenues and expenses were recorded in the appropriate period relative to the sale date; and evaluating whether the presentation of the gain, discontinued operations results, and related disclosures were consistent with applicable U.S. GAAP and SEC requirements.
/s/
Haynie
April 15, 2026
We have served as the Company’s auditor since 2019.
| F-2 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
OMNIQ CORP.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Dangot Computers Ltd. (the "Company") as of December 31, 2025, and 2024, and the related consolidated statements of operations and comprehensive loss, change in stockholders' equity (deficit). and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the "Financial Statement"). In our opinion, the consolidated financial statement present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024 and the results of its operation and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the board of directors and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters.
We have served as the Company's auditor since 2021.
BARZILY AND CO., CPA’s
Jerusalem, Israel
April 15 ,2026
| F-3 |
OMNIQ CORP.
CONSOLIDATED BALANCE SHEETS
| (In thousands, except share and per share data) | As of | |||||||
| December 31, 2025 | December 31, 2024 | |||||||
| 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 | ||||||||
| Related party advances | ||||||||
| Note payable – related party, short term | ||||||||
| Notes payable – current portion | ||||||||
| Lease liability – current portion | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Accrued interest and accrued liabilities, related party | ||||||||
| Related party notes payable | ||||||||
| Notes payable, less current portion | ||||||||
| Lease liability | ||||||||
| Other long term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (See Note 13) | ||||||||
| 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; shares issued and outstanding, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated (deficit) | ( | ) | ( | ) | ||||
| Accumulated other comprehensive (loss) income | ( | ) | ||||||
| Total OMNIQ stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and equity (deficit) | $ | $ | ||||||
The accompanying notes are integral to these consolidated financial statements.
| F-4 |
OMNIQ CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the year ended | ||||||||
| December 31, | ||||||||
| (In thousands, except share and per share data) | 2025 | 2024 | ||||||
Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Research & Development | ||||||||
| Selling, general and administrative | ||||||||
| Depreciation | ||||||||
| Goodwill impairment | ||||||||
| Amortization | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other (expenses) income | ( | ) | ||||||
| Total other (expenses) income | ( | ) | ||||||
| Net (Loss) Income Before Income Taxes | ( | ) | ( | ) | ||||
| Provision for Income Taxes | ||||||||
| Current | ( | ) | ||||||
| Total (Provision) Benefit for Income Taxes | ( | ) | ||||||
| Net Income (Loss) before discontinued Operations | $ | ( | ) | $ | ( | ) | ||
| Income (Loss) from Discontinued Operations, net of taxes | ( | ) | ||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Reconciliation of net loss to net loss attributable to common shareholders: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Less: Dividends attributable to non-common stockholders’ of OMNIQ Corp | ( | ) | ( | ) | ||||
| Net loss attributable to common stockholders’ of OMNIQ Corp | $ | ( | ) | $ | ( | ) | ||
| Net (loss) per share - basic & diluted attributable to common stockholders’ of OMNIQ Corp | $ | ) | $ | ) | ||||
| Net (loss) per share for continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net income (loss) per share for discontinued operations | $ | $ | ( | ) | ||||
| Weighted average number of common shares outstanding – basic & diluted | ||||||||
The accompanying notes are integral to these consolidated financial statements.
| F-5 |
OMNIQ CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the Years Ended December 31, 2025 and 2024
| 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 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| CodeBlocks Acquisition | ||||||||||||||||||||||||||||||||
| ESPP Stock Issuance | - | |||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | |||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Shares returned and canceled | ( | ) | ||||||||||||||||||||||||||||||
| ESPP Stock Issuance | - | |||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||
| Sale of assets from division, net of tax | - | - | ||||||||||||||||||||||||||||||
| Conversion of debt to equity | - | |||||||||||||||||||||||||||||||
| Sale of prefunded warrants | - | - | ||||||||||||||||||||||||||||||
| Sale of stock | - | |||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss before discontinued operations | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying notes to the financials should be read in conjunction with these financial statements.
| F-6 |
OMNIQ CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
| (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 | ||||||||
| 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 | ( | ) | ||||||
| Payment for acquisition | ( | ) | ||||||
| Cash paid for divestiture | ( | ) | ||||||
| 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 | ||||||||
| Net proceeds from issuance of common stock | ||||||||
| 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: | ||||||||
| Declared dividends payable | $ | $ | ||||||
| Debt conversion | $ | $ | ||||||
| Right of use asset acquired in exchange for lease liability | $ | $ | ||||||
| New lease entered | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | $ | |||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
The accompanying notes are integral to these consolidated financial statements.
| F-7 |
OMNIQ CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2025 and 2024
NOTE 1 – NATURE OF OPERATIONS
OMNIQ Corp., a Delaware corporation, formerly Quest Solution, Inc., together with its wholly owned and majority owned subsidiaries, referred to herein as “we”, “us”, “our,” “OMNIQ,” or the “Company,” was incorporated in 1973. Since its incorporation, the Company has been involved in various lines of business.
From 2008 to 2013, we were in the business of developing oil and gas reserves. In January 2014, we determined it was in the best interest of our stockholders to focus on operating companies with a track record of positive cash flows and larger existing revenue bases. Our strategy developed into leveraging management’s relationships in the business world for investments for us.
Since 2014, we have made the following acquisitions resulting in us becoming a leading provider of computerized and machine-vision image-processing solutions:
| ● | Quest Solution, Inc. (January 2014) | |
| ● | Bar Code Specialties, Inc. (November 2014) | |
| ● | HTS Image Processing, Inc. (October 2018) | |
| ● | EyepaxIT Consulting LLC. (February 2020) | |
| ● | Dangot Computers Ltd. (July 2021) |
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.
| F-8 |
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
Our consolidated financial statements include the financial position and results of operations of OMNIQ Corp. and its wholly owned subsidiaries: HTS Image Processing, Inc., OmniQ Vision Inc., HTS Image Ltd., OmniQ Technologies Ltd., and Dangot Computers Ltd.
All significant intercompany accounts and transactions have been eliminated in these consolidated financial statements. Business combinations are included in the consolidated financial statements from their respective dates of acquisition.
Use of Estimates
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, which requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. These assumptions and estimates could have a material effect on our consolidated financial statements. Actual results may differ materially from those estimates. We review our estimates on an ongoing basis based on information currently available, and changes in facts and circumstances may cause us to revise these estimates.
Cash
Cash consists of petty cash, checking, savings, and money market accounts. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits.
Accounts Receivable
We manage credit risk associated with our accounts receivables at the customer level. Because the same customers typically generate the revenues that are accounted for under both Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606) and Accounting Standards Codification Topic 326, Credit Losses (Topic 326), the discussions below on credit risk and our allowances for doubtful accounts address our total revenues from Topic 606 and Topic 326.
Pursuant to Topic 326 for our accounts receivables, we maintain an allowance for doubtful accounts that reflects our estimate of our expected credit losses. Our allowance is estimated using a loss-rate model based on delinquency. The estimated loss rate is based on our historical experience with specific customers, our understanding of our current economic circumstances, reasonable and supportable forecasts, and our own judgment as to the likelihood of ultimate payment based upon available data. We perform credit evaluations of customers and establish credit limits based on reviews of our customers’ current credit information and payment histories. We believe our credit risk is somewhat mitigated by our geographically diverse customer base and our credit evaluation procedures. The actual rate of future credit losses, however, may not be similar to past experience. Our estimate of doubtful accounts could change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowance for doubtful accounts.
Inventory
Substantially all inventory consists of raw materials and finished goods and are valued at the lower of historic cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. Historic inventory costs are calculated on a first-in, first-out basis or specific cost.
Property and Equipment
Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives. Ordinary repair and maintenance costs are included in sales, general and administrative (“SG&A”) expenses on our consolidated statements of operations. However, expenditures for additions or improvements that significantly extend the useful life of the asset are capitalized in the period incurred. At the time assets are sold or disposed of, the cost and accumulated depreciation are removed from their respective accounts and the related gains or losses are reflected in the statements of operations in gains from sales of property and equipment, net.
| F-9 |
We periodically evaluate the appropriateness of remaining depreciable lives assigned to property and equipment. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining term of the lease, whichever is shorter. Generally, we assign the following estimated useful lives to these categories:
| Category | Estimated Useful Life | |
| Furniture and fixtures | ||
| Computer equipment | ||
| Office equipment | ||
| Software | ||
| Leasehold improvements | ||
| Vehicles |
Definite-lived Intangible Assets
The Company periodically evaluates the carrying value of definite-lived intangibles when events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of its use of acquired assets or its overall business strategy, and significant industry or economic trends. The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded no impairment loss for definite-lived intangible assets during the years ended December 31, 2025 and 2024.
When the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset.
If the Company’s revenues or other estimated operating results are not achieved at or above our forecasted level, and the Company is unable to recover such costs through price increases, the carrying value of certain of the Company’s intangible assets may prove to be unrecoverable and we may incur impairment charges of definitive-live intangible assets.
Definite-lived
intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over
useful lives ranging from
Indefinite-lived Intangible Assets, Including Goodwill
Indefinite-lived intangible assets, including goodwill, are not amortized but are required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company is permitted the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the fair value of the Company’s reporting unit is less than its corresponding carrying value. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its corresponding carrying value then the Company is not required to take further action. However, if the Company concludes otherwise, then the Company must calculate the fair value of the reporting unit and compare it with its carrying amount, including Indefinite-lived intangible assets and recognize impairment equal to the difference between the carrying amount of the reporting unit and its fair value, considering the related income tax effect from any tax-deductible goodwill.
Accounts Payable
Accounts payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2025 and 2024.
Accounts payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2025 and 2024. Two vendors made up 25% and one vendor made up 12% of our payables for the year ended December 31, 2025 and 2024, respectively.
Leases
We determine whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset, and we have the right to control the asset for a period of time in exchange for consideration. Lease arrangements can take several forms. Some arrangements are clearly within the scope of lease accounting, such as a real estate contract that provides an explicit contractual right to use a building for a specified period of time in exchange for consideration. However, the right to use an asset can also be conveyed through arrangements that are not leases in form, such as leases embedded within service and supply contracts. We analyze all arrangements with potential embedded leases to determine if an identified asset is present, if substantive substitution rights are present, and if the arrangement provides the customer control of the asset.
| F-10 |
Our lease portfolio is substantially comprised of operating leases related to leases of real estate. From time to time, we may also lease various types of small equipment and vehicles.
Operating lease right-of-use (“ROU”) assets represent our right to use an individual asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide the lessor’s implicit rate, we use our incremental borrowing rate (“IBR”) at the commencement date in determining the present value of lease payments by utilizing a fully collateralized rate for a fully amortizing loan with the same term as the lease.
Lease terms include options to extend the lease when it is reasonably certain those options will be exercised. Our leases can include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when such renewal options and/or termination options are reasonably certain of exercise.
An ROU asset is subject to the same impairment guidance as assets categorized as property and equipment. As such, any impairment loss on ROU assets is presented in the same manner as an impairment loss recognized on other long-lived assets.
A lease modification is a change to the terms and conditions of a contract that change the scope or consideration of a lease. For example, a change to the terms and conditions to the contract that adds or terminates the right to use one or more underlying assets, or extends or shortens the contractual lease term, is a modification. Depending on facts and circumstances, a lease modification may be accounted as either: (1) the original lease plus the lease of a separate asset(s) or (2) a modified lease. A lease will be remeasured if there are changes to the lease contract that do not give rise to a separate lease.
Revenue Recognition
We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied.
We combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. Our contracts are typically governed by a customer purchase order or work order. The contract generally specifies the delivery of what constitutes a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers.
As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue.
A contract liability is recognized as deferred revenue when we invoice customers, or receive customer cash payments, in advance of satisfying the related performance obligation(s) under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.
| F-11 |
We have four main revenue streams: (1) Hardware sales, (2) Hardware installation/configuration, (3) Hardware service contracts, and (4) Third-party software sales. For all these revenue streams, our performance obligations are satisfied at a point in time, and therefore, revenue is recognized at point in time when a customer takes control of the good or asset created by the service. Factors that may indicate transfer of control are when we have the right to receive payment for the good or service, when the legal title of the asset as been transferred, physical possession of the asset has been transferred, the customer obtains the significant risks and rewards of ownership of the asset, and the customer accepts the asset. For some customers, control is transferred when the customer, or the customer’s courier, picks up the hardware from our warehouse. For other customers, control is transferred upon delivery. For hardware sales which also include installation and/or configuration as a single performance obligation, control is transferred only when the hardware is delivered and installed/configured. For hardware service contracts and for third-party software sales, the Company acts as the agent in the transaction, and thus recognizes revenue on a net basis at a point in time when the transaction has been facilitated.
We leverage drop-ship shipments with many of our partners and suppliers to deliver hardware to our customers without having to physically hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-ship arrangements on a gross basis as the principal in the transaction when the product is received by the customer because we control the product prior to transfer to the customer. We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if something were to happen to the hardware during shipping, we set the price of the product charged to the customer, we assume credit risk for nonpayment by our customer, and we work closely with customers to determine their hardware specifications.
Management reviews historical returns on at least an annual basis to determine the need for an allowance for sales returns. Historically, sales returns have been extremely limited, with the effect on the financial statements immaterial. Sales returns during any particular year are so small and so infrequent that management determined that any material reserve against sales returns would likely not be appropriate.
We periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. We account for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by Financial Accounting Standards Board (the “FASB”) where the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period.
We record stock-based compensation expense according to the provisions of ASC Topic 718, Compensation – Stock Compensation (“Topic 718”). Topic 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Under the provisions of Topic 718, the Company determines the appropriate fair value model to be used for valuing share-based payments and the amortization method for compensation cost.
The fair value of each stock option grant and warrant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates the expected volatility and expected option life consistent with Topic 718. The expected volatility of the Company’s common stock at the date of grant is estimated based on a historic volatility rate and the expected option life is calculated based on historical stock options as the best estimate of future exercise patterns. The dividend yield assumption is based on historical and anticipated dividend payouts. The risk-free interest rate assumption is based on observed US treasury rates consistent with the expected life of each stock option grant. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. Compensation expense is recorded for all stock options expected to vest based on the amortization of the fair value at the date of grant on a straight-line basis primarily over the vesting period of the options.
| F-12 |
Advertising
The Company expenses marketing
and advertising costs as incurred. During 2025 and 2024, the Company spent $
Foreign Currency Translation
Our consolidated
financial statements are presented in U.S. dollars. The functional currency for the Company is U.S. dollars. Transactions in
currencies other than the functional currency are recorded using the appropriate exchange rate at the time of the transaction. All
our continuing operations are conducted in U.S. dollars except for subsidiaries located in Israel. The records of the Israeli
operations were maintained in the local currency and translated to the reporting currency as follows: assets and liabilities are
translated using the balance sheet period-end date exchange rate. Expenses and income are translated using the weighted average
exchange rates for the reporting period. Foreign translation gains and losses are reported on the consolidated statement of
operations and comprehensive loss and were included in the amount of gain or loss from comprehensive income. The aggregate foreign
currency transaction income and loss included in net income for the years ended December 31, 2025 was $
Income Taxes
We account for our income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets, liabilities, and income taxes are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Income tax expense is based on reported earnings before income taxes.
Our income is subject to taxation in both the U.S. and a foreign jurisdiction, Israel. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The Company establishes reserves for income-tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when we believe positions do not meet the more-likely-than-not recognition threshold. We adjust uncertain tax liabilities in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of uncertain tax liabilities and changes in liabilities that are considered appropriate.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as a change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Our other comprehensive income (loss) is composed of foreign currency translation adjustments.
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 years ended December 31, 2025 and December 31, 2024 were and 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.
| 2025 | 2024 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Potential shares excluded from diluted net loss per share | ||||||||
| F-13 |
Recently adopted accounting pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU is effective for the Company’s fiscal December 31, 2025 year-end.
Recent Accounting Pronouncements not yet adopted
In November 2024, the FASB issued ASU 2025-03 “Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)” to improve the disclosures about an entity’s expenses. Upon adoption, we will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for our 2027 annual period, and our interim periods beginning in 2028, with early adoption permitted. The standard can be applied either prospectively or retrospectively. We are currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The standard changes when capitalization of internal-use software costs begins and updates the related guidance for modern software development methods. The Company is evaluating the impact of this guidance on the timing of capitalization, amortization, and related disclosures. The standard is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted.
NOTE 3 – GOING CONCERN
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 | |
| ● | Year over year decrease in sales | |
| ● | Noncompliance with certain debt covenants |
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 evaluating 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. | |
| ● | The Company has implemented an aggressive debt settlement plan with its vendors and debt holders to clean up the Balance Sheet presentation and during the year was able to settle many debts for a discount. | |
| ● | Short
term liabilities for the Company decreased from $ | |
| ● | In
December 2025, management finalized an equity raise which resulted in approximately $ |
NOTE 4 – BUSINESS ACQUISITIONS
On January 30, 2024, OMNIQ Corp. (the “Company’), its wholly owned subsidiary, Dangot Computers Ltd. (“Dangot”), CodeBlocks Ltd. (CodeBlocks”). and CodeBlock’s owners, Alina Lifshits and Erez Attia entered into a Share Purchase Agreement (the “Purchase Agreement”) pursuant to which Dangot, acquired all of the capital stock of CodeBlocks in exchange for NIS (approximately US $ based on the then exchange rate). The purchase Agreement closed on January 26, 2024. Approximately % of the purchase price was allocated to Goodwill on the books of Dangot Computers Ltd. The balance was allocated between Accounts receivable and prepaid expenses and misc other assets. As part of the purchase, the Company was able to replace historical license fees as well as utilize the software solution to it’s U.S. based customers.
| F-14 |
NOTE 5 – CONTRACTS WITH CUSTOMERS
The balance of deferred revenues is included in other current liabilities on the balance sheet. The following table summarizes changes in deferred revenue as of December 31:
| 2025 | 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Less amounts recognized during the year | ( |
) | ( |
) | ||||
| Add new deferred revenue | ||||||||
| Ending Balance | $ | $ | ||||||
The short term deferred
revenue at December 31, 2025 was $
NOTE 6 – ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following as of December 31:
| In thousands | 2025 | 2024 | ||||||
| Trade accounts receivable | $ | $ | ||||||
| Less allowance for doubtful accounts | ( |
) | ( |
) | ||||
| Total accounts receivable (net) | $ | $ | ||||||
Accounts receivables are made up of trade receivables due from customers in the ordinary course of business. As of December 31, 2025 and 2024, no customer accounting for more than 10% of the outstanding receivables from continuing operations.
NOTE 7 – INVENTORY
Inventory consisted of the following as of December 31:
| In thousands | 2025 | 2024 | ||||||
| Raw materials | $ | $ | ||||||
| Inventory in transit | ||||||||
| Finished goods | ||||||||
| Less allowance for obsolescence | ( |
) | ( |
) | ||||
| Total inventories | $ | $ | ||||||
NOTE 8 – PROPERTY AND EQUIPMENT
The following is a summary of the components of property and equipment as of December 31:
| In thousands | 2025 | 2024 | ||||||
| Manufacturing and lab equipment | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Software and computer equipment | ||||||||
| Furniture and equipment | ||||||||
| Vehicle | ||||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ||||
| $ | $ | |||||||
Depreciation expense for
the years ended December 31, 2025 and 2024 was approximately $
| F-15 |
NOTE 9 – GOODWILL AND INTANGIBLE ASSETS
Identifiable
intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over
the estimated useful lives ranging from
Goodwill assets consisted of the following as of December 31:
| In thousands | 2025 | 2024 | ||||||
| Goodwill balance, beginning of year | $ | $ | ||||||
| Addition of Codeblocks | ||||||||
| Effective foreign exchange rates | ( | ) | ||||||
| Goodwill balance, end of year | $ | $ | ||||||
Intangible assets consisted of the following as of December 31:
| In thousands | 2025 | 2024 | ||||||
| Trade names | ||||||||
| Customer relationships | ||||||||
| Other intangibles | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangibles, net | $ | $ | ||||||
The future amortization expense on the trade names, customer relationships, and other intangibles are as follows:
| In thousands | ||||
| Years ending December 31, | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
| F-16 |
Goodwill is not amortized but is evaluated for impairment annually or when indicators of a potential impairment are present. The impairment testing of goodwill is performed separately from our impairment testing of intangibles. The annual evaluation for impairment of goodwill and intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. None of the goodwill is deductible for income tax purposes.
Purchased
intangible assets with finite useful lives are amortized over their respective estimated useful lives (using an accelerated method for
customer relationships and trade names) to their estimated residual values, if any. The Company’s finite-lived intangible assets
consist of customer relationships, contractor and resume databases, trade names, and internal use software and are being amortized over
periods ranging from two to
NOTE 10 – CREDIT FACILITIES AND LINE OF CREDIT
We maintain operating lines of credit, factoring, and revolving credit facilities with banks and finance companies to provide working capital.
On January 18, 2024, the Company’s wholly owned subsidiary, Quest Marketing, Inc. (“Quest”) entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Prestige Capital Finance, LLC (“Prestige”), in which Quest had sold, transferred and assigned all of its rights, title and interest to specific accounts receivable owed to Quest. This agreement was concluded concurrent with the sale of the assets of the Quest division at June 30, 2025.
NOTE 11 – RELATED PARTY ADVANCES
Concurrent with the sale
of the Quest Solution division, the company entered into a Transition Services Agreement whereas the costs for some employees would be
split during the transition. Connected to that was advances to OMNIQ from the Buyer to facilitate the transition. This entity is majority
controlled by the Company’s CEO and thus treated as related party advances. The balance as of December 31, 2025 was $
In addition and concurrent with the sale of the Quest Solution division, the Company entered into a Promissory Note which bears interest
at
| F-17 |
NOTE 12 – OTHER NOTES PAYABLE
Other notes payable consists of the following as of December 31,
| In thousands | 2025 | 2024 | ||||||
| Notes Payable - other | $ | $ | ||||||
| Less current portion | ( |
) | ( |
) | ||||
| Long Term Notes Payable | $ | $ | ||||||
| In thousands | 2025 | 2024 | ||||||
| Related Party Notes Payable - other | $ | $ | ||||||
| Less current portion of related party note payable | ( | ) | ||||||
| Long Term Notes Payable – related party | $ | $ | ||||||
Future maturities of notes payable are as follows for the years ending December 31, 2025:
| In thousands | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
2029 | ||||
2030 | ||||
| Total | $ | |||
Other Notes Payable
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
In
February 2024, NIS
In
July 2024, an additional
In
December 2025, an additional
| F-18 |
At
December 31, 2024, the Company owed Hapoalim Bank USD $
During
the year ended December 31, 2023, the Company entered into a short-term loan from Bank Leumi totaling NIS
In
March 2024, NIS
In
June 2025 the Company decreased the balance of the revolving loan by further NIS
The
short-term loan (renewed every month) at 2025 is NIS
At
December 31, 2024, the Company owed Bank Leumi USD $
On
September 21, 2023, the Company entered into a long-term loan from Tzameret Mimunim totaling
As of December 31, 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. On December 29, 2025, a new covenants agreement was signed with Bank Hapoalim, pursuant to which the Company is required to comply with the financial covenants set forth in the new agreement, commencing with the 2026 financial statements.
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
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Profit Sharing Plan
We maintain a contributory
profit-sharing plan covering substantially all full-time employees within the requirements of the Employee Retirement Income Security
Act of 1974 (“ERISA”). In 2016, the Safe Harbor element was removed from the plan, so the employer may make a discretionary
matching contribution equal to a uniform percentage or dollar amount of participants’ elective deferrals for each Plan Year. The
plan also includes a 401(k)-savings plan feature that allows substantially all employees to make voluntary contributions and provides
for discretionary matching contributions determined annually by the Board of Directors. For the years ending December 31, 2025 and 2024,
the company has elected to match; the total expense was $
Operating Leases
As of December 31, 2025, we had 5 Operating leases as follows:
| ● | Office space in Salt Lake City UT with monthly payments of $ | |
| ● | Office space in Anaheim, CA with monthly payments of $ | |
| ● | Dangot’s corporate offices are currently located at Yad Harutzim
14 Tel-Aviv, Israel. The main corporate office, Yad Harutzim 14, serves as the company’s main building on the 2nd and 3rd
floors, used by the management and most of the sales staff, technicians, etc. The corporate office annual lease expense is NIS | |
| ● | We lease office space (Gamdan- 1st floor) for our finance and service
department at Yad Harutzim 14 Tel-Aviv, Israel. The lease provides for monthly payments of NIS | |
| ● | We lease office and warehouse space for our products and technical
support staff at Rival Street, Tel-Aviv, Israel. The lease provides for monthly payments of NIS |
| F-19 |
| In thousands | ||||
| ROU asset - January 1, 2024 | $ | |||
| Increase | ||||
| Decrease | ||||
| Effect of foreign exchange rates | ( | ) | ||
| Amortization | ( | ) | ||
| ROU asset - December 31, 2024 | ||||
| Increase | ||||
| Decrease | ( | ) | ||
| Effect of foreign exchange rates | ||||
| Amortization | ( | ) | ||
| ROU asset – December 31, 2025 | $ | |||
| In thousands | ||||
| Lease liability – January 1, 2024 | $ | |||
| Increase | ||||
| Decrease | ||||
| Effect of foreign exchange rates | ( | ) | ||
| Amortization | ( | ) | ||
| Lease liability – December 31, 2024 | ||||
| Increase | ||||
| Decrease | ( | ) | ||
| Effect of foreign exchange rates | ||||
| Amortization | ( | ) | ||
| Lease liability - December 31, 2025 | $ | |||
As
of December 31, 2025, our operating leases had a weighted average remaining lease term of
The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2025:
| In thousands | ||||
| Year | Minimum lease Payments | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | ||||
| Less interest | ( | ) | ||
| Present value of future minimum lease payments | ||||
| Less current obligations | ( | ) | ||
| Long term lease obligations | $ | |||
Guarantees in Dangot Computers.
A. As security for credit received from a banking corporation, a floating charge without limitation was imposed on securities and other negotiable instruments, including the rights thereto, In addition a general floating charge on the company’s assets and property, share capital, goodwill, insurance rights, and promissory notes to which the company has or will have rights.
B. As security for credit received from a banking corporation, a first-ranking fixed charge without limitation was imposed on the unpaid share capital, goodwill, and promissory notes that the company has delivered or will deliver to the bank as security, for collection, or for safekeeping.
C. As security for credit received from the credit company, the company signed a promissory note.
D. As of the balance sheet date, there
are contingent liabilities for bank guarantees provided to customers as performance guarantees, amounting to approximately NIS
E. As of the balance sheet date, there
are liabilities for payments under documentary credit amounting to approximately NIS
NOTE 14 – 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-20 |
NOTE 15 – 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 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 $
The
sale resulted in a net gain on disposal of approximately $
The net gain (APIC) was calculated as follows (in thousands):
| Reduction of cash and cash equivalents | $ | ( | ) | |
| Reduction of accounts receivable, net | ( | ) | ||
| Reduction of inventory, net | ( | ) | ||
| Reduction of other current assets | ( | ) | ||
| Reduction in property and equipment, net of accumulated depreciation | ( | ) | ||
| Reduction in accounts payable and accrued liabilities | ||||
| Increase in other current liabilities | ( | ) | ||
| Increase in related party notes payable | ( | ) | ||
| Increase in additional paid-in capital | $ | ( | ) | |
| Income Taxes Payable on transaction | $ | |||
| Additional paid-in capital reduction | $ | |||
Details of net loss from discontinued operations, net of taxes, are as follows (in thousands):
| For the years ended | December 31, 2025 | December 31, 2024 | ||||||
| Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Selling, general and administrative | ||||||||
| Research & Development | ( | ) | ||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Interest expense | ||||||||
| Other expenses (income) | ( | ) | ( | ) | ||||
| Current tax | ||||||||
| Net Income (Loss) from Discontinued Ops (Net of Tax) | $ | $ | ( | ) | ||||
| F-21 |
Because the transaction was effective June 30, 2025, no assets or liabilities disposed in the sale were included on the balance sheet as of December 31, 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):
| Year ended December 31, 2025 | Year ended December 31, 2024 | |||||||
| Depreciation and amortization | ||||||||
| Capital expenditures | ( | ) | ||||||
| Other significant non-cash items | ||||||||
| Cancelation of lease | ||||||||
NOTE 16 – LITIGATION
The
Company was named a defendant in a case involving a former employee who claims he is owed approximately $
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
$
During 2025, several companies filed third-party and fourth-party claims against our subsidiary, Dangot Computers alleging patent infringement. In the opinion of Dangot’s legal counsel, at this preliminary stage it is not yet possible to assess the likelihood of the claims; therefore, no provision has been recorded in the Company’s financial statements in connection with this matter.
| F-22 |
The Company is not a party to any other pending material legal proceeding in which it is defending against any claims of material significance. To the knowledge of management, no federal, state or local government agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record, or beneficiary of more than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
NOTE 17 – STOCKHOLDERS’ EQUITY
PREFERRED STOCK
Series A
As of December 31, 2025
and 2024, there were Series A preferred shares authorized and Series A preferred shares outstanding.
Series B
As of December 31, 2025 and 2024, there was preferred share authorized and preferred shares outstanding.
Series C
As of December 31, 2025
and 2024, there were Series C Preferred Shares (“Series C”) authorized with and issued and outstanding,
respectively. The Series C shares have preferential rights above common shares and the Series B Preferred Shares, are 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. options were issued in the year ended December 31, 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 $
In December 2025, the Company sold approximately $
| F-23 |
Warrants and Stock Options
The
valuation assumptions used to determine the fair value of each option and warrant awarded during the year ended December 31, 2023 are
as follows: expected stock price volatility %, expected term in years , and risk-free interest rate %. The estimated fair
value of the warrants were $
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.
No warrants were exercised during the years ended December 31, 2025 or 2024.
The following table summarizes information about warrants granted during the years ended December 31:
| 2025 | 2024 | |||||||||||||||
| Number of Warrants |
Weighted Average Exercise Price |
Number of Warrants |
Weighted Average Exercise Price |
|||||||||||||
| Balance, beginning of year | $ | $ | ||||||||||||||
| Warrants granted | ||||||||||||||||
| Warrants expired | ( |
) | ( |
) | ||||||||||||
| Warrants(prefunded) sold | ||||||||||||||||
| Warrants exercised | - | - | ||||||||||||||
| Balance, end of year | ||||||||||||||||
| Exercisable warrants | $ | $ | ||||||||||||||
Outstanding warrants as of December 31, 2025 are as follows:
| Range
of Exercise Prices |
Weighted
Average Residual Life Span (in years) |
Outstanding
Warrants |
Weighted
Average Exercise Price |
Exercisable
Warrants |
Weighted
Average Exercise Price |
|||||||||||||||||
| to | $ | $ | ||||||||||||||||||||
| F-24 |
Warrants outstanding have the following expiry date and exercise prices as of the years ended December 31:
| Expiry Date | Exercise Prices | 2025 | 2024 | |||||||||
We have a stock option plan whereby the Board of Directors may grant directors, officers, employees, or consultants of the Company options to acquire common shares. The Board of Directors has the authority to determine the terms, limits, restrictions and conditions, interpret the plan, and make all decisions relating thereto. The current plan was adopted by the board of directors in December 2021 with a maximum of shares to be issued.
The option exercise price is established by the Board of Directors and may not be lower than the market price of the common shares at the time of grant. The options may be exercised during the option period determined by the Board of Directors, which may vary, but will not exceed ten years from the date of the grant.
For options exercised during the year ended December
31, 2025, the difference between the fair value of the Common Stock issued and the respective exercise price was $
For options exercised during the year ended December
31, 2024, the difference between the fair value of the Common Stock issued and the respective exercise price was $
As of December 31, 2025, the total compensation cost related to nonvested awards not yet recognized as $ as all the options and warrants have vested. As of December 31, 2024 the total compensation cost related to nonvested awards not yet recognized was $ thousand.
Stock Options - The following table summarizes information about stock options granted during the years ended December 31,
| 2025 | 2024 | |||||||||||||||
| Number of Stock Options |
Weighted Average Exercise Price |
Number of Stock Options |
Weighted Average Exercise Price |
|||||||||||||
| Balance, beginning of year | $ | $ | ||||||||||||||
| Stock options granted | ||||||||||||||||
| Stock options expired | ( |
|||||||||||||||
| Stock options cancelled, forfeited | ( |
) | ||||||||||||||
| Stock options exercised | ||||||||||||||||
| Balance, end of year | ||||||||||||||||
| Exercisable stock options | $ | $ | ||||||||||||||
| F-25 |
| Expiry Date | Exercise Prices | 2025 | 2024 | |||||||||
| 2025 | 2024 | |||||||
| In thousands | ||||||||
| Stock Compensation | $ | $ | ||||||
| Stock Option vesting | ||||||||
| Total | $ | $ | ||||||
NOTE 18 – RELATED PARTY TRANSACTIONS
In February 2020 we amended the consulting agreement with Mr. Carlos J. Nissensohn a/k/a Haim Nissensohn, a principal shareholder of the Company and a family member of a former director and former officer of the Company.
This
Agreement with Mr. Nissensohn was terminated in February 11, 2025 with effective May 11, 2025 date. As of December 31, 2025, the Company
has accrued $
As
of January 1, 2024, the Company’s subsidiary Dangot Computers, Ltd. entered into a service agreement with the Company’s CEO,
Shai Lustgarten for his role as director and Chairman of the Board of Directors of Dangot Computers. The consideration for this is NIS
Haim
Dangot, the founder of Dangot Computers, Ltd and former shareholder of Dangot Computers Ltd., previously was employed with the company
on a month to month basis for USD $
As discussed in Note 11 and 12, the CEO of the Company is a controlling owner of the entity which purchased the Quest Solution division in June 30, 2025. He is also an owner in the office building which the Company leases space from for its Headquarters in Murray, Utah.
| F-26 |
NOTE 19 – CONCENTRATION AND GEOGRAPHIC DATA
For the year ended December 31, 2025, no customer accounted for more than 10% of the Company’s revenues. For the year ended December 31, 2024, no customer accounted for more than 10% of the Company’s revenues.
Information about Geographic Areas
Revenues by geography are based on the shipping addresses of our customers. The following tables set forth revenues by geographic area for the years ended December 31,
| In thousands | 2025 | 2024 | ||||||
| Revenues: | ||||||||
| United States | $ | $ | ||||||
| Israel | ||||||||
| Russia | ||||||||
| Rest of the world | ||||||||
| Total revenues | $ | $ | ||||||
Note: The geographic revenues do not account for the business operations sold in June 2025.
The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in the countries in which the Company operates. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds, export duties, quotas and embargoes, domestic and international customs and tariffs, changing taxation policies, foreign exchange restrictions, political conditions, and governmental regulations.
We are closely monitoring developments in the war in Israel including potential impacts to the Company’s business, customers, suppliers, employees, and operations in Israel, the Middle East and elsewhere. At this time, impacts to the Company are expected to be minimal but is subject to change given the volatile nature of the situation.
NOTE 20 – INCOME TAX
For
the year ended December 31, 2025, the Company has $
Taxes based on income were as follows:
| In thousands | ||||||||
| Current | 2025 | 2024 | ||||||
| U.S. Federal Tax | $ | $ | ||||||
| State Taxes | ||||||||
| Foreign Taxes | ||||||||
| Deferred: | ||||||||
| U.S. Federal Tax | ||||||||
| State Taxes | ||||||||
| Foreign Taxes | ( | ) | ||||||
| Provision for (benefit) Income Taxes | $ | $ | ( | ) | ||||
The tax effect of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows as of December 31,
| In thousands | ||||||||
| Deferred tax assets | 2025 | 2024 | ||||||
| Reserves and deferred revenue | $ | $ | ||||||
| 163(j) Limitation | ||||||||
| Foreign deferred tax assets | ||||||||
| Net operating loss | ||||||||
| Total gross deferred tax assets | ||||||||
| Less: Valuation Allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | ||||||||
| Deferred tax liabilities | ||||||||
| Depreciation | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
| F-27 |
Components of net deferred tax assets, including a valuation allowance, are as follows as of December 31:
| 2025 | 2024 | |||||||
| Net deferred tax assets | $ | $ | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets | $ | $ | ||||||
The
valuation allowance for deferred tax assets as of December 31, 2025 and 2024 was $
The principal items accounting for the difference between taxes computed at the U.S. federal statutory rate and taxes recorded were as follows (in thousands) after the adoption of ASU 2023-09:
| Year Ended | ||||||||
| December 31, 2025 | ||||||||
| Amount | Percent | |||||||
| US Federal Statutory Tax Rate | ( | ) | % | |||||
| State and Local Income Taxes, Net of Federal Income Tax Effect | % | |||||||
| Foreign Tax Effects | ( | )% | ||||||
| Effect of Changes in Tax Laws or Rates Enacted in the Current Period | % | |||||||
| Effect of Cross-Border Tax Laws | % | |||||||
| Change in Valuation Allowance | ( | )% | ||||||
| Tax Credits | % | |||||||
| Nontaxable or Nondeductible Items | % | |||||||
| Changes in Unrecognized Tax Benefits | % | |||||||
| Other Adjustments | % | |||||||
| Income Tax Expense / Effective Tax Rate | ( | )% | ||||||
The principal items accounting for the difference between taxes computed at the U.S. federal statutory rate and taxes recorded were as follows (in thousands) for the year prior to the adoption of ASU 2023-09:
| Year Ended | ||||||||
| December 31, 2024 | ||||||||
| Amount | Percent | |||||||
| Federal statutory tax rate | ( | ) | % | |||||
| State taxes | ( | )% | ||||||
| Foreign income taxes | ( | ) | % | |||||
| Change in valuation allowance | ( | )% | ||||||
| Return to provision adjustments | % | |||||||
| Other | % | |||||||
| Income tax benefit / Effective tax rate | ( | ) | % | |||||
Income/(loss) before taxes from continuing operations were as follows:
| 2025 | 2024 | |||||||
| U.S. | $ | ( | ) | $ | ( | ) | ||
| Foreign | ( | ) | ( | ) | ||||
| Income before taxes | $ | ( | ) | $ | ( | ) | ||
The amount of income taxes paid (net of refunds received) were as follows (in thousands):
| 2025 | ||||
| Federal | $ | |||
| State and Local | ||||
| Foreign | ||||
| Total Income Taxes Paid (Net of Refunds Received) | $ | |||
The Company reported no uncertain tax liability as of December 31, 2025 and expects no significant change to the uncertain tax liability over the next twelve months. The Company’s 2022, 2023, 2024, and 2025 federal and state income tax returns are open for examination by the applicable governmental authorities.
As
of December 31, 2025, the Company had a net operating loss (NOL) carryforward of approximately $
NOTE 21 – BUSINESS SEGMENT
The Company operates in a single reportable segment, referred to as providing solutions including hardware, software, communications, and automated management service as an established distributor of barcode labels, tags, and ribbons, as well as RFID labels and tags. 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.
NOTE 22 – SUBSEQUENT EVENTS
Subsequent Event – Planned Divestiture of CodeBlocks
In connection with a transaction executed on June 30, 2025, the Company agreed to divest its CodeBlocks business, which is currently included within goodwill. As of December 31, 2025, the definitive agreements related to the divestiture of CodeBlocks had not been finalized or executed and remained subject to completion of final terms and approvals. Accordingly, the Company concluded that the criteria for classification as held for sale were not met as of year-end.
Subsequent to December 31, 2025, the Company has continued to finalize the terms of the transaction, and the definitive agreements are expected to be executed in the near term. The completion of the divestiture remains subject to final execution and customary conditions.
As of April 15, 2026, there are no other material subsequent events that have occurred.
| F-28 |
EXHIBIT INDEX
| 29 |
* Filed herewith.
ITEM 16. NONE.
| 30 |