What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 73 added, 75 removed, 113 unchanged (57% of the section changed)

37 unchanged sentences

Report on Form 10-K for the year ended December 31, 2021 and Item 1A — “Risk Factors” in this Quarterly Report on Form

10-Q for the quarterly period ended June 30, 2022, as well as other reports and registration statements filed by us with the SEC.

factors should not be construed as exhaustive and should be read with other cautionary statements in this Quarterly Report on Form 10-Q

and our other public filings.

For more information about us and the announcements we make from time to time, visit our Internet website

at www.omniq.com.

10-Q for the quarterly period ended September 30, 2022, as well as other reports and registration statements filed by us with the SEC.

These factors should not be construed as exhaustive and should be read with other cautionary statements in this Quarterly Report on Form

10-Q and our other public filings.

For more information about us and the announcements we make from time to time, visit our Internet

website at www.omniq.com.

use patented and proprietary artificial intelligence (AI) technology to deliver data collection, real time surveillance and monitoring

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and analysis should be read in conjunction with our unaudited condensed consolidated financial statements contained in this Form 10-Q.

Company’s sales from operations for the six months ended June 30, 2022, were $50.5 million, an increase of approximately $17.6

million, or 54%, over the six months ended June 30, 2021.

The loss from operations for the six months ended June 30, 2022, was $3.4

million, a decrease of $1.3 million compared with the loss in the six months ended June 30, 2021, of $4.7 million.

Basic loss per share

from continuing operations for the six months ended June 30, 2022, was ($0.79) versus ($1.24) per share for the same period in 2021.

Company’s sales from operations for the nine months ended September 30, 2022, were $77.5 million, an increase of approximately

$24 million, or 45.25%, over the nine months ended September 30, 2021.

loss from operations for the nine months ended September 30, 2022, was $6.1 million, a decrease of $2.8 million compared with the

loss in the nine months ended September 30, 2021, of $8.9 million.

Basic loss per share from continuing operations for the nine

months ended September 30, 2022, was ($1.29) versus ($1.86) per share for the same period in 2021.

AND CAPITAL RESOURCES

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and cost-effective development of products

capital deficit of $31 million as of June 30, 2022

deficit of $76 million as of June 30, 2022

years of losses from operations

capital deficit of $32 million as of September 30, 2022

deficit of $80 million as of September 30, 2022

years of net losses from operations

years of negative cash flows from operations

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finalized an $8.5M line of credit from Western Alliance Bank.

This line of credit will replaced the high interest Action Capital

line of Credit ($6M) and settle the ScanSource debt $2.5M.

This line of credit will replace the high interest Action Capital line

of Credit ($6M) and settle the ScanSource debt $2.5M.

Overall the effective interest rate of the new line of credit is approx.

compared to 12% with Action and 10% with ScanSource.

of June 30, 2022, the Company had approximately $3 million, in cash.

of September 30, 2022, the Company had approximately $3.8 million, in cash.

results - For over ten years, the Company’s audit opinion has contained an explanatory paragraph describing an uncertainty

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operations, in and of itself, demonstrates an ability to continue for a period of 12 months, post-issuance of each report.

Star - The Company’s total accounts payable due to Blue Star as of June 30, 2022 was approximately $35M.

Blue Star is an unsecured

creditor, financing a substantial amount of the Company’s supply chain demand.

Blue Star continues selling to the Company with

preferable credit terms.

Blue Star has agreed to reduce the annual interest rate on invoices that are past due to just 5%.

We anticipate,

consistent with prior periods, Blue Star will continue to extend us such preferable payments terms in the foreseeable future.

an unsecured creditor of the Company, Blue Star has no incentive to force a liquidation.

The Company has enjoyed a good mutual relationship

for the past four years.

Star - The Company’s total accounts payable due to Blue Star as of September 30, 2022 was approximately $35 M.

an unsecured creditor, financing a substantial amount of the Company’s supply chain demand.

Blue Star continues selling to

the Company with preferable credit terms.

Blue Star has agreed to reduce the annual interest rate on invoices that are past due to

We anticipate, consistent with prior periods, Blue Star will continue to extend us such preferable payments terms in the

foreseeable future.

As an unsecured creditor of the Company, Blue Star has no incentive to force a liquidation.

The Company has enjoyed

a good mutual relationship for the past four years.

believes that the aggregate impact of these plans is to mitigate the conditions raising substantial doubt about the Company’s ability

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In addition, we note that the period-to-period comparison may not be indicative of future performance.

months ended June 30,

of Goods sold

from operations

Loss per common Share from continuing operations

the three months ended June 30, 2022 and 2021, the Company generated net revenues in the amount of $24 million and $13 million, respectively.

The increase between the three-month periods was attributable to the additional sales channel’s provided by the acquisition of

of Goods Sold

the three months ended June 30, 2022 and 2021, the Company recognized a total of $18.2 million and $9.8 million, respectively, of cost

Three months ended September 30,

Cost of Goods sold

Operating Expenses

Loss from operations

Net Loss per common Share from continuing operations

the three months ended September 30, 2022 and 2021, the Company generated net revenues in the amount of $27 million and $20.5 million,

respectively.

The increase between the three-month periods was attributable to the additional sales channel’s provided by the acquisition

of Goods Sold

For the three months ended June 30, 2022 and 2021, cost of goods sold were 75% and 75% of net revenues, respectively.

operating expense for the three months ended June 30, 2022 and 2021 recognized was $8 million and $5.1 million, respectively, representing

a 56% increase.

The increases are related to the additional operations from Dangot.

and Development – Research and development expenses for the three months ended June 30, 2022 and 2021 totaled $468 thousand

and $468 thousand, respectively.

general and Administrative – Selling, general and administrative expenses for the three months ended June 30, 2022 and

2021 totaled $7 million and $4.1 million, respectively, representing a 70% increase.

The increase was due primarily to increased number

of employees and operating activities from the acquisition of Dangot.

– Depreciation expenses for the three months ended June 30, 2022 and 2021 totaled $58 thousand and $42 thousand, respectively,

the three months ended September 30, 2022 and 2021, the Company recognized a total of $21 million and $15.8 million, respectively, of

cost of goods sold.

For the three months ended September 30, 2022 and 2021, cost of goods sold were 78% and 77% of net revenues, respectively.

operating expense for the three months ended September 30, 2022 and 2021 recognized was $8.6 million and $8.9 million, respectively,

representing a 2.8% decrease.

and Development – Research and development expenses for the three months ended September 30, 2022 and 2021 totaled $445

thousand and $474 thousand, respectively.

general and Administrative – Selling, general and administrative expenses for the three months ended September 30, 2022

and 2021 totaled $7.6 million and $6.8 million, respectively.

The increase is due to non-cash stock compensation for employees and consultants.

– Depreciation expenses for the three months ended September 30, 2022 and 2021 totaled $91 thousand and $82 thousand, respectively,

representing a 11% increase.

The increase is attributable to the addition of fixed assets.

amortization – Intangible amortization expenses for the three months ended June 30, 2022 and 2021 totaled $406 thousand

and $522 thousand, respectively.

amortization – Intangible amortization expenses for the three months ended September 30, 2022 and 2021 totaled $474 thousand

and $1.5 million, respectively.

The decrease is due to diminishing life of intangibles.

income and expenses

Expense – Interest expense for the three months ended June 30, 2022 totaled $878 thousand, as compared to $714 thousand

for the three months ended June 30, 2021.

Expense – Interest expense for the three months ended September 30, 2022 totaled $880 thousand, as compared to $587 thousand

for the three months ended September 30, 2021.

The increase is primarily attributable to additional lines of credit.

months ended June 30,

of Goods sold

from operations

Loss per common Share from continuing operations

the six months ended June 30, 2022 and 2021, the Company generated net revenues in the amount of $50.5 million and $32.9 million, respectively.

The increase between the six-month periods was attributable to the additional sales channel’s provided by the acquisition of Dangot.

Nine months ended September 30,

Cost of Goods sold

Operating Expenses

Loss from operations

Net Loss per common Share from continuing operations

the nine months ended September 30, 2022 and 2021, the Company generated net revenues in the amount of $78 million and $53 million, respectively.

The increase between the nine-month periods was attributable to the additional sales channel’s provided by the acquisition of Dangot.

of Goods Sold

the six months ended June 30, 2022 and 2021, the Company recognized a total of $38.4 million and $26.9 million, respectively, of cost

the nine months ended September 30, 2022 and 2021, the Company recognized a total of $59 million and $43 million, respectively, of cost

of goods sold.

For the six months ended June 30, 2022 and 2021, cost of goods sold were 76% and 82% of net revenues, respectively.

2022 decrease in cost of goods sold as a percentage of net revenue was attributable to discounts being granted during the Covid pandemic

For the nine months ended September 30, 2022 and 2021, cost of goods sold were 77% and 80% of net revenues, respectively.

The 2022 decrease in cost of goods sold as a percentage of net revenue was attributable to discounts being granted during the Covid pandemic

which are no longer being offered.

operating expense for the six months ended June 30, 2022 and 2021 recognized was $15.5 million and $10.6 million, respectively, representing

operating expense for the nine months ended September 30, 2022 and 2021 recognized was $24 million and $20 million, respectively, representing

a 24% increase.

The increases are related to the additional operations from Dangot.

and Development – Research and development expenses for the six months ended June 30, 2022 and 2021 totaled $990 thousand

and $962 thousand, respectively, representing a 3% increase.

The increases are primarily attributed to expanding our range of solutions

offered and development of our AI proprietary products.

general and Administrative – Selling, general and administrative expenses for the six months ended June 30, 2022 and 2021

totaled $13.5 million and $8.5 million, respectively, representing a 59% increase.

The increase was due primarily to increased number

of employees and operating activities from the acquisition of Dangot.

– Depreciation expenses for the six months ended June 30, 2022 and 2021 totaled $151 thousand and $85 thousand, respectively,

representing a 78% increase.

and Development – Research and development expenses for the nine months ended September 30, 2022 and 2021 totaled $1.4

million and $1.4 million, respectively.

general and Administrative – Selling, general and administrative expenses for the nine months ended September 30, 2022

and 2021 totaled $21.2 million and $15.3 million, respectively, representing a 38% increase.

The increase was due to increased number

of employees and operating activities from the acquisition of Dangot and non-cash stock compensation for employees and consultants.

– Depreciation expenses for the nine months ended September 30, 2022 and 2021 totaled $241 thousand and $167 thousand,

respectively, representing a 44% increase.

The increase is directly increased by the acquisition of additional fixed assets.

amortization – Intangible amortization expenses for the six months ended June 30, 2022 and 2021 totaled $851 thousand and

$1,047 thousand, respectively.

amortization – Intangible amortization expenses for the nine months ended September 30, 2022 and 2021 totaled $1.3 million

and $2.6 million, respectively.

The decrease is due to diminishing life of intangibles.

income and expenses

Expense – Interest expense for the three months ended June 30, 2022 totaled $1.7 million, as compared to $1.3 million for

the six months ended June 30, 2021.

Expense – Interest expense for the nine months ended September 30, 2022 totaled $2.6 million, as compared to $1.9 million

for the nine months ended September 30, 2021.

The increase is primarily attributable to additional lines of credit.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis