What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-31 · 740 added, 1077 removed, 1048 unchanged (63% of the section changed)

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the remediation plan in order for these controls to be found effective in the test phase.

The Company plans on completing the documentation

phase in it’s other subsidiaries that are switching to our ERP system.

The Company is working on completing the documentation

phase in its other subsidiaries that recently switched to our ERP system.

the material weakness set forth above were the result of the scale of the Company’s operations and is intrinsic to its small size,

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following table presents information with respect to our officers and directors as of the date of this Report:

Shai Lustgarten

Financial Officer and Director

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Prior to that Mr.

served as the Chief Financial Officer at Singulariteam VC from January 2014 till January 2018.

He also worked as the Chief Financial

Officer at Mobli Media Inc.

Shalem served

as the Chief Financial Officer at Singulariteam VC from January 2014 till January 2018.

He also worked as the Chief Financial Officer

at Mobli Media Inc.

from January 2014 to December 2016.

Shalem’s experience also includes serving as the Chief Financial

Officer of TAT Technologies Ltd., a NASDAQ listing company, from April 2008 to December 2013.

Shalem’s experience also includes serving as the Chief Financial Officer

of TAT Technologies Ltd., a NASDAQ listing company, from April 2008 to December 2013.

Shalem is a CPA in Israel.

He received his

in Economy & Accounting from Tel Aviv University in 1999 and an MBA degree from Bar-Ilan University in 2004.

Elhanani, age 47, is a qualified CFO with experience leading financial strategies to facilitate a company’s growth plans.

has been the CFO and a partner of Singulariteam VC, a venture capital firm, since 2017.

Elhananai has been the CFO of Sirin Labs

Elhanani is a qualified CFO with experience leading financial strategies to facilitate a company’s growth plans.

been the CFO and a partner of Singulariteam VC, a venture capital firm, since 2017.

Elhananai has been the CFO of Sirin Labs since

Sirin Labs is a multinational, high-tech company specializing in secured mobile phones.

From 2015 to 2017, Mr.

the CFO of SalesTech, an online internet technology servicing company.

Elhanani was the

CFO of SalesTech, an online internet technology servicing company.

Elhanani has also served as the CFO of other companies, including:

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Business Administration, specializing in finance, from Hebrew University.

Almog, age 83, has served in various management positions and board roles over the years.

From May 2006 to March 2014, Mr.

as an independent director and the chairman of the audit committee of NTS, Inc., an advanced communication company based in the United

From 2002 to 2006, Mr.

Almog was the executive vice president of engineering of Comverge Inc., a company based in Atlanta, Georgia,

which offers solutions to electric utilities.

From 1993 to 2002, Mr.

Almog served as the president and CEO of Comverge Control Systems

Ltd., an Israel based startup company which develops innovative solutions for electric utilities.

From 1995 to 1998, Mr.

independent director of Rada Company, a high tech Israeli based company specializing in advanced systems for commercial and military

From 1990 to 1993, Mr.

Almog was the president and CEO of Tasco Electronic Services, Inc., a U.S.

based company specializing

in automatic test machines for commercial and military aviation.

Prior to that, Mr.

Almog served in the Israeli Navy for 32 years reaching

the position of Rear Admiral.

Almog received a B.A.

in Modern Middle East History, and a Master of Business Administration from the

Tel Aviv University.

Teicher is the former Chief Scientist of the Israel government.

She is a leading mathematician specializing in Algebraic Geometry and

applications to computer vision, cryptography, cyber security, neuroscience, neuro-medical devices, and complex societal systems, such

as financial markets and health systems.

She earned a PhD in Mathematics from Tel Aviv University and a postdoctoral fellowship from

the Institute for Advanced Study in Princeton.

She published 140 scientific papers, wrote 5 books, mentored 80 students (Master, PhD,

and postdocs) in Israel and the USA, organized 20 international conferences, and won prestigious invitations to deliver lectures, numerous

awards, and highly competitive research grants (in Israel, Germany, Italy, the European Union, the USA and China).

EXECUTIVE COMPENSATION

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at the end of the last completed fiscal year (whom we refer to collectively as our “named executive officers”);

Principal Position

Name and Principal Position

Option Awards

All Other Compensation

Shai Lustgarten

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the sole discretion of our Board, all officers are entitled to merit-based cash and equity bonuses.

Earned or Paid in Cash ($)

Incentive Plan Compensation

Deferred Compensation

Other Compensation

Fees Earned or Paid in Cash ($)

Option(1) Awards

Non-Equity Incentive Plan Compensation

Nonqualified Deferred Compensation

All Other Compensation

Andrew MacMillan (1)

Yaron Shalem (1)

Guy Elhanani (1)

Itzhak Almog (1)

fair value of the options awarded to Mr.

MacMillan and Mr.

Shalem in 2020 was determined to be $100 thousand, respectively

using the Black-Scholes Option Pricing Model, which uses certain assumptions related to risk-free interest rates, expected volatility,

expected life of the stock options or warrants, and future dividends

MacMillan, Mr.

Elhanani and Mr.

Almog in 2022 was determined to be $46 thousand,

respectively using the Black-Scholes Option Pricing Model, which uses certain assumptions related to risk-free interest rates, expected

volatility, expected life of the stock options or warrants, and future dividends

PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

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 pay certain separation benefits, including (i) unpaid annual salary

earned through the termination date;

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.

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.

Leadership Structure and Risk Oversight

Our Board currently consists of six members,Mr.

Board currently consists of six members.

Shai Lustgarten, Mr.

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Yaron Shalem, Mr.

Guy Elhanani and Mr.

Itzhak Almog.

Mina Teicher.

of the key functions of our Board is to provide oversight of our risk management process.

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Yaron Shalem, Mr.

Guy Elhanani and Mr.

Itzhak Almog qualify as “independent directors” pursuant to such rules.

Board of Directors met 4 times during 2021.

Each member of our Board of Directors attended 100% of the total number of meetings

of our Board and its committees on which he served during 2021 .

Guy Elhanani and Ms.

Mina Teicher qualify as “independent directors” pursuant to such rules.

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.

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

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Audit Committee consists of Mr.

Yaron Shalem and Mr.

Andy MacMillan, whereby Mr.

Yaron Shalem, Mr.

Andy MacMillan, and Ms.

Mina Teicher whereby Mr.

Shalem is the Chairperson.

Our Board has determined

has determined that Mr.

Shalem qualifies as an “audit committee financial expert,” as defined under the rules of the SEC.

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with the Company’s ethics policies and applicable legal and regulatory requirements.

Audit Committee charter is available on the “About” subpage of our website (www.omniq.com) under the link “Corporate

Audit Committee charter is available on the “Investor Lounge” subpage of our website (www.omniq.com) under the link “Corporate

Compensation Committee consists of Mr.

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Governance/Nominating Committee

The Corporate Governance/Nominating Committee consists

Corporate Governance/Nominating Committee consists of Andrew J.

MacMillan, and Yaron Shalem.

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shares of our common stock outstanding.

and Address of Beneficial Owner

of Beneficial

Lustgarten (Chairman and CEO) (1)

MacMillan (2)

Nissenson (CFO) (5)

Executive Officers and Directors as a group (4 individuals)

Nissenson (4)

Name of Beneficial Owner

Amount of Beneficial Ownership

Percentage of Shares Outstanding

Shai Lustgarten (Chairman and CEO) (1)

Andrew MacMillan (2)

Yaron Shalem (5)

Neev Nissenson (CFO) (4)

Itzhak Almog (6)

Guy Elhanani (7)

All Executive Officers and Directors as a group (6 individuals)

Carlos Nissensohn (3)

500,000 shares issuable upon the exercise of options.

Also includes (i) 746,808 shares and (ii) 33,333 shares issuable upon the exercise

of warrants held by Walefar Investments Ltd., which is beneficially owned by Mr.

Also includes (i) 1,004,631 shares and (ii) 33,333 shares issuable upon the

exercise of warrants held by Walefar Investments Ltd., which is beneficially owned by Mr.

20,000 shares issuable upon the exercise of options.

Also includes (i) 18,996 shares

127,125 shares issuable upon the conversion of preferred stock and the exercise of warrants.

The address of the shareholder is 12272

Monarch Street, Garden Grove, CA 92841.

address of the shareholder is Vasili Michailidi 9, 3206 Limassol, Cyprus.

Includes 729,308 shares held by Campbeltown Consulting

Ltd., which is beneficially owned by Mr.

739,308 shares held by Campbeltown Consulting Ltd., which is beneficially owned by Mr.

Also includes (i) 57,026

Also includes 223,333 shares underlying option and warrants

125,000 shares issuable upon exercise of options.

Also includes (i) 57,289 shares

Also includes 183,333 shares underlying

option and warrants.

42,500 shares issuable upon exercise of options.

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10,000 shares issuable upon the exercise of options.

Also includes (i) 19,025 shares

10,000 shares issuable upon the exercise of options.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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PRINCIPAL ACCOUNTING FEES AND SERVICES

Aggregate fees billed or incurred related to the following years for

professional services rendered by Haynie & Company for 2021 and 2020 were $182 thousand and $181 thousand respectively.

fees billed or incurred related to the following years for professional services rendered by Haynie & Company for 2022 and 2021 were

$205 thousand and $182 thousand respectively.

the above table, in accordance with the SEC’s definitions and rules, “audit fees” are fees for professional services

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The following documents are filed under pages F-1 through F-26 and are included as part of this Form 10-K:

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BALANCE SHEETS

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

STATEMENTS OF EQUITY (DEFICIT)

STATEMENTS OF CASH FLOWS

TO CONSOLIDATED FINANCIAL STATEMENTS

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (HAYNIE)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (BARZILY)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial statement schedules are omitted as they are not applicable.

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Chief Financial Officer

/s/ Itzhak Almog

March 31, 2022

/s/ Guy Elhananai

March 31, 2022

Guy Elhananai

TO CONSOLIDATED FINANCIAL STATEMENTS

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB:

BALANCE SHEETS

STATEMENTS OF OPERATIONS

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

STATEMENTS OF CASH FLOWS

TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB:

2015 (BARZILY)

CONSOLIDATED BALANCE SHEETS

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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on the Financial Statements

have audited the accompanying balance sheets of OMNIQ Corp.

and Subsidiaries (the Company) as of December 31, 2021 and 2020, and the

related consolidated statements of operations and comprehensive income, stockholders’ equity (deficit), and cash flows for each

of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2021, and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December

31, 2021, in conformity with accounting principles generally accepted in the United States of America.

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.

have audited the accompanying consolidated balance sheets of OMNIQ Corp.

(the Company) as of December 31, 2022 and 2021, and the related

consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years

in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the financial statements).

opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company

as of December 31, 2022 and 2021 and the results of its operations and its cash flows for each of the years in the two-year period ended

December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

did not audit portions of the December 31, 2022 consolidated financial statements for Dangot Computers, Ltd., a wholly owned subsidiary.

The portions not audited by us include assets of $27.5 million as of December 31, 2022, and total revenues of $45.5 million for the year

ended December 31, 2022.

Those portions of the December 31, 2022 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.

solely on the reports of the other auditors.

Consideration

of the Company’s Ability to Continue as a Going Concern

accompanying consolidated financial statements have been prepared assuming that Company will continue as a going concern.

in Note 3 to the financial statements, the Company has a deficit in stockholders’ equity, and has sustained recurring losses from

This raises substantial doubt about the Company’s ability to continue as a going concern.

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.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated 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.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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.

reasonable assurance about whether the consolidated 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.

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.

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matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Concern — Refer to Note 3 to the consolidated financial statements

discussed in Note 3 to the financial statements, the Company has a working capital deficit and an accumulated deficit, that are negative

indicators which raise doubt about their ability to continue as a going concern.

The Company has concluded that positive factors including

the ability of financing as indicated by the private placement during the year, the addition of a significant acquisition with positive

cash flows, and the amount of cash on hand at year end are sufficient to satisfy obligations for one year from the date of this report.

The Company’s analysis requires that they estimate whether these factors are sufficient to cover obligations and negate historical

These valuation methods require management to make significant estimates and assumptions related to projected cash flows.

identified going concern as a critical audit matter because of the significant estimates and assumptions made by management to estimate

future cash flows and the current condition that reverse negative trends.

This required a high degree of auditor judgment and an increased

extent of effort.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

financial statements.

These procedures included, among others, gaining an understanding of management’s process for assessing their

ability to continue as a going concern.

We considered the plausibility of each factor described in management’s plan.

considered the Company’s projected use of cash for the year based on funds available using historical trends and existing obligations.

We also evaluated the impact of the Company’s new acquisition on the available cash in-flows also by comparing historical trends.

Finally, we considered the improvements to their existing condition and availability of capital by confirming terms with their largest

Acquisition- Refer to Note 4 to the consolidated financial statements

discussed in Note 4 to the consolidated financial statements, the Company acquired Dangot Computers Ltd., an Israel Company, for purchase

consideration of $13,052 (in thousands).

As part of the transaction, the Company acquired tangible assets, identifiable intangible assets,

and goodwill.

The allocation of the purchase price requires management to make significant judgement regarding the assigned value to

intangible assets.

identified the business acquisition as a critical audit matter because management’s assessment of the acquisition is highly subjective.

Auditor judgment and an increased extent of effort, including the need to involve our internal valuation specialist, when performing

audit procedures to evaluate the reasonableness of management’s estimates and assumptions.

and Intangible Assets— Refer to Note 8 to the consolidated financial statements

Company has goodwill of $16.5 million and other intangible assets of $7.5 million as of December 31, 2022.

The Company evaluates its

goodwill and intangible assets at least annually or more frequently when events or changes in circumstances indicate the carrying value

may not be recoverable.

For goodwill, the Company performed an impairment analysis by considering the value of its operating segment

and comparing it to the carrying amount of its goodwill.

In consideration of its intangible assets, the Company employed an income approach

using a discounted cash flow using a forecast developed by management.

These valuation methods require management to make significant

estimates and assumptions related to projected cash flows.

No impairment was recorded by the Company for the year ended December 31,

identified potential impairment of these assets as a critical audit matter because of the significant estimates and assumptions made

by management to estimate fair value, including the impact of forecasted growth, and the difference between the fair values and the carrying

values as of December 31, 2022.

This required a high degree of auditor judgment and an increased extent of effort, including the need

to involve our fair value specialist, when performing audit procedures to evaluate the reasonableness of management’s estimates

and assumptions related to certain assumptions within the projected cash flows.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

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the fair value estimate.

We also evaluated the expertise, qualifications, and independence of management’s specialist engaged to

complete the evaluation.

We used professionals inside our firm with specialized skills and knowledge to assess the Company’s methodology.

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and to customer orders to be filled.

Finally, we considered the inputs, sources of data used, assumptions, and estimates to determine

the acquisition date fair value.

We tested the mathematical accuracy of the underlying schedules used in the valuation assessment to

ensure the completeness and accuracy of the reports.

Finally, we considered the sensitivity of their cash flow model assumptions by assessing different

Haynie & Company

have served as the Company’s auditor since 2019.

Lake City, Utah

have served as the Company’s auditor since 2019.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of

on the Financial Statements

have audited the accompanying consolidated balance sheet of Dangot Computers Ltd.

(the “Company”) as of December 31, 2022,

the related consolidated statement of operation and comprehensive loss, chang in stockholders’ equity (defecit) and cash flow for

the year then ended, and the related notes (collectively referred to as the “Financial Statement”).

In our opinion, the financial

statement present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of

its operation and its cash flow for the year then ended, in conformity with accounting principles generally accepted in the United States

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.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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.

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.

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.

Audit Matters

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.

have served as the Company’s auditor since 2020.

AND CO., CPA’s

BALANCE SHEETS

of December 31,

thousands, except share and per share data)

and cash equivalents

receivable, net

current assets

December 31, 2022

December 31, 2021

(In thousands, except share and per share data)

Current assets

and equipment, net of accumulated depreciation of $ 2,203

name, net of accumulated amortization of $ 3,863

and $ 3,362 ,

relationships, net of accumulated amortization of $ 9,660

intangibles, net of accumulated amortization of $ 1,457

of use lease assets

AND EQUITY (DEFICIT)

payable and accrued liabilities

payroll and sales tax

payable, related parties – current portion

payable – current portion

liability – current portion

current liabilities

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses

Other current assets

Total current assets

Property and equipment, net of accumulated depreciation of $ 1,030 and $ 2,203 respectively

Trade name, net of accumulated amortization of $ 4,458 and $ 3,863 , respectively

Customer relationships, net of accumulated amortization of $ 10,762 and $ 9,660 , respectively

Other intangibles, net of accumulated amortization of $ 1,541 and $ 1,457 , respectively

Right of use lease asset

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

term liabilities

payable, related party, less current portion

interest and accrued liabilities, related party

payable, less current portion

Accounts payable and accrued liabilities

Line of credit

Accrued payroll and sales tax

Notes payable, related parties – current portion

Notes payable – current portion

Lease liability – current portion

Other current liabilities

Total current liabilities

Long term liabilities

A Preferred stock;

shares designated, 0

shares issued and outstanding

B Preferred stock;

share designated, 0

shares issued and outstanding

C Preferred stock;

shares designated, 544,500

shares issued and outstanding, respectively

15,000,000 shares

and 4,684,736

shares issued and outstanding, respectively.

paid-in capital

other comprehensive loss

OmniQ stockholders’ deficit

Non-controlling

EQUITY (DEFICIT)

liabilities and equity (deficit)

accompanying unaudited notes to the financials should be read in conjunction with these condensed consolidated financial statements.

Notes payable, related party, less current portion

Accrued interest and accrued liabilities, related party

Notes payable, less current portion

Lease liability

Other long-term liabilities

Total liabilities

Stockholders’ equity deficit

Series A Preferred stock;

$ 0.001 par value;

2,000,000 shares designated, 0 shares issued and outstanding

Series B Preferred stock;

$ 0.001 par value;

1 share designated, 0 shares issued and outstanding

Series C Preferred stock;

$ 0.001 par value;

3,000,000 shares designated, 544,500 shares issued and outstanding, respectively

Common stock;

$ 0.001 par value;

15,000,000 shares authorized;

7,714,780 and 7,459,534 shares issued and outstanding, respectively.

Additional paid-in capital

Accumulated deficit

Cumulative translation adjustment

Total OmniQ stockholders’ equity (deficit)

Non-controlling interest

TOTAL EQUITY (DEFICIT)

Total liabilities and equity (deficit)

The accompanying notes are integral to these consolidated financial statements

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

the Years Ended December 31,

thousands, except share and per share data)

of goods sold

and development

general and administrative

(In thousands, except share and per share data)

Total revenues

Cost of goods sold

Operating expenses

from operations

income (expenses):

(expenses) income

other expenses

loss before income taxes

for income taxes

Current, net of deferred

Research & development

Selling, general and administrative

Total operating expenses

Loss from operations

Other income (expenses):

Interest expense

Other (expenses) income

Total other expenses

Net loss before income taxes

Provision for income taxes

income attributable to noncontrolling interest

loss attributable to OmniQ Corp

currency translation adjustment

Comprehensive

Less comprehensive loss attributable to noncontrolling

Total provision for income taxes

Net income attributable to non-controlling interest

Net loss attributable to OmniQ Corp

Foreign currency translation adjustment

Comprehensive loss

Less comprehensive loss attributable to non-controlling interests

Comprehensive loss attributable to OmniQ Corp

Reconciliation

of net loss to net loss after series C dividend attributable to common stockholders’ of OmniQ Corp

Preferred stock – Series C dividend

loss less series C dividend

income attributable to noncontrolling interest

loss after series C dividend attributable to common stockholders’ of OmniQ Corp

loss per share - basic and diluted attributable to common stockholders’ of OmniQ Corp

average number of common shares outstanding - basic

accompanying notes to the financials should be read in conjunction with these financial statements.

Reconciliation of net loss to net loss attributable to common shareholders

dividends attributable to non-common stockholders’ of OmniQ Corp

Net loss less non-common stockholder dividends

Non-common stockholder dividends attributable to non-controlling interest

Net loss attributable to common stockholders’ of OmniQ Corp

Net loss per share - basic attributable to common stockholders’ of OmniQ Corp

Weighted average number of common shares outstanding - basic

The accompanying notes are integral to these consolidated financial statements.

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

the Years Ended December 31, 2022 and 2021

Stockholders’

Income (Loss)

Accumulated Other

Total Stockholders’

(In thousands)

Preferred Stock

Comprehensive

December 31, 2019

on Class C shares

Stock Issuance

compensation – options, warrants, issuances

and warrant issued for services

Dividend declared to non controlling interest

and warrant issuances, net of issuance costs

and warrant issuances, net of issuance costs, shares

of stock options and warrants

and warrant issuance for acquisition

to purchase additional Dangot shares

Post-acquisition

translation adjustment

acquisition adjustment

December 31, 2020

on Class C shares

Dividend declared to non controlling interest

stock issuance

compensation – options, warrants, issuances

and warrant issued for services

and warrant issuances, net of issuance costs

of stock options and warrants

and warrant issuance for Acquisition

to purchase additional Dangot shares

Post-acquisition

translation adjustment

Income (Loss)

December 31, 2021

Balance, December

Dividend on class C shares

Dividend declared to non-controlling interest

ESPP stock issuance

Stock-based compensation – options, warrants,

Stock and warrant issued for services

Stock and warrant issuances, net of issuance costs

Exercise of stock options and warrants

Stock and warrant issuance for acquisition

Dangot acquisition

Exercise to purchase additional Dangot shares

Post-acquisition adjustment

Cumulative translation adjustment

Conversion of equity

Conversion of debt

Net income (loss)

Balance, December 31, 2021

ESPP stock issuance

Stock-based compensation – options, warrants,

Stock issued for services

Warrant issuances, net of issuance costs

Exercise of stock options

Non-controlling interests, distributions and other

Cumulative translation adjustment

Conversion of debt

Net income (loss)

Balance, December 31, 2022

accompanying notes to the financials should be read in conjunction with these financial statements.

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the Years Ended December 31,

flows from operations

to reconcile net loss to net cash used in operating activities:

extinguishment of debt

and warrant issued for services

and amortization

in operating assets and liabilities:

payable and accrued liabilities

interest and accrued liabilities, related party

payroll and sales taxes payable

tax assets, net

cash used in operating activities

flows from investing activities

for additional ownership in subsidiary

for acquisition, net of cash acquired

of property and equipment

from sale of other assets

cash provided by (used in) investing activities

flows from financing activities

from ESPP stock issuance

from exercise of options and warrants

paid to non-controlling interests

proceeds from issuance of common stock

on notes/loans payable

from the issuance of notes/loans payable

from draw on line of credit

cash provided by financing activities

change in cash and cash equivalents

of foreign exchange rates on cash and cash equivalents

and cash equivalents at beginning of period

and cash equivalents at end of period

issued for services

dividends payable

assets acquired in business combination

of PP&E with financing

of use asset acquired in exchange for lease liability

in terms of accounts payable

disclosure of cash flow information:

paid for interest

paid for income taxes

(In thousands)

Cash flows from operations

Adjustments to reconcile net loss to net cash provided by operating activities:

Loss on disposal of PP&E

Noncash interest expense

Stock-based compensation

Stock and warrant issued for services

Depreciation and amortization

Amortization of ROU asset

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses

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

Payment for additional ownership in subsidiary

Payment for acquisition, net of cash acquired

Purchase of property and equipment

Proceeds from sale (purchase) of other assets

Net cash used in investing activities

Cash flows from financing activities

Proceeds from ESPP stock issuance

Proceeds from exercise of options and warrants

Dividends paid to non-controlling interest

Net proceeds from issuance of common stock

Payments on notes payable

Proceeds from the issuance of notes payable

Net activity 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

Net assets acquired in business combination

Stock compensation in exchange for debt

Purchase of PP&E with financing

Debt conversion

Equity conversion

Right of use asset acquired in exchange for lease liability

Change in terms of accounts payable

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for income taxes

accompanying notes are integral to these consolidated financial statements.

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1 – NATURE OF OPERATIONS

Corp., a Delaware corporation, formerly Quest Solution, Inc., together with its majority and wholly owned subsidiaries, referred

to herein as “we,” “us,” and “our” (“OMNIQ” or the “Company”), was incorporated

Corp., a Delaware corporation, formerly Quest Solution, Inc., together with its majority and wholly owned subsidiaries, referred to herein

as “we,” “us,” and “our” (“OMNIQ” or the “Company”), was incorporated in

Since its incorporation, the Company has been involved in various lines of business.

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backed by numerous customer references.

We offer comprehensive packaged and configurable software, and we are a leading provider

of best-in-class mobile and wireless equipment.

We offer comprehensive packaged and configurable software, and we are a leading provider of best-in-class

mobile and wireless equipment.

customers include government agencies and leading Fortune 500 companies from diverse sectors, including healthcare, food and beverage,

manufacturing, retail, distribution, transportation and logistics, and oil, gas, and chemicals.

outbreak of the COVID-19 pandemic continues to affect the United States of America and the world, including in the primary regions we

Many State Governors issued temporary Executive Orders in 2020, that, among other stipulations, effectively limited in-person

work activities for most industries and businesses having the effect of suspending or severely curtailing operations.

Many of these orders

are in the process of being lifted.

To date, we have not incurred any significant interruptions to our day-to-day operations or supply

chain, except some of our employees have or are working remotely.

In response to the COVID-19 pandemic, we proactively implemented certain

measures to strengthen cash flow, manage costs, strengthen liquidity and enhance employee safety.

These measures included the reduction

of payroll costs, a reduction in capital expenditures and other discretionary spending, the elimination of most business travel and restriction

of visitors to our corporate office, enhanced cleaning and disinfection procedures at our corporate office and branch locations, promotion

of social distancing and the wearing of face coverings (masks) at our corporate office and branch locations, and requirements for employees

to work from home where possible.

the impact of COVID-19 became more widespread in March 2020, our sales volumes began to decline from previous years.

Our total revenues

for the year ended December 31, 2020, were 3.48 %

lower than those of the year ended December 31, 2019.

COVID-19 had a more significant impact on our gross margin.

Total gross margin

percentage dropped 5 %

for the year ended December 31, 2020 compared to 2019.

The timing and the extent of the continued recovery in our sales volumes cannot

be reasonably estimated at this time.

As such, the extent of the ultimate impact of the pandemic on the Company’s operational and

financial performance will depend on various developments, including the duration and spread of the outbreak, the impact on capital and

financial markets, governmental limitations on business operations generally, and its and their impact on potential customers, employees,

vendors and distribution partners, all of which cannot be reasonably predicted at this time.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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consolidated financial statements include the financial position and results of operations of OMNIQ Corp.

and its wholly owned subsidiaries

Quest Marketing, Inc., Quest Exchange Ltd., and HTS Image Processing, Inc., OmniQ Tech Ltd., and majority owned subsidiary Dangot

Computers Ltd.

collectively referred to herein as “we” or “us” or “our” or the “Company.”

and its wholly owned

subsidiaries Quest Marketing, Inc., HTS Image Processing, Inc., OmniQ Vision Inc., HTS Image Ltd., OmniQ Technologies Ltd., and Dangot Computers Ltd.

collectively referred to herein as “we” or “us” or “our”

or the “Company.”

significant intercompany accounts and transactions have been eliminated in these consolidated financial statements.

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investments with an original maturity of three months or less are considered cash equivalents.

There were no

cash equivalents as of December 31, 2021 and

There were no cash equivalents as of December

31, 2022 and 2021.

Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits.

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Based on management’s evaluation, accounts receivable has a balance in the allowance

for doubtful accounts of $ 6

thousand and $ 28

thousand for the years ended December 31, 2021

and 2020, respectively.

for doubtful accounts of $ 455 thousand and $ 6 thousand for the years ended December 31, 2022 and 2021, respectively.

Substantially

all inventory consists of raw materials and finished goods and are valued at the lower of actual cost or net realizable value;

all inventory consists of raw materials and finished goods and are valued at the lower of historic cost or net realizable value;

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.

and Equipment

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amortized using the straight-line method over their estimated useful lives or the remaining term of the lease, whichever is shorter.

Depreciation expense for the years ended December 31, 2021 and 2020 was $ 251

thousand and $ 178

thousand, respectively.

Generally, we assign

the following estimated useful lives to these categories:

OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT

Depreciation expense for the years ended December 31, 2022 and 2021 was $ 324 thousand and $ 251 thousand, respectively.

Generally, we

assign the following estimated useful lives to these categories:

SCHEDULE OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT

Value of Financial Instruments

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31, 2022 and 2021, and, therefore, no impairment has been recognized.

payable are made up of payables due to vendors in the ordinary course of business a December 31, 2022 and 2021.

One vendor made up 48 %

and 65 % of our purchases in 2022 and 2021, respectively.

determine whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract.

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fair values, which may be significant, are recorded when pending information is finalized, within one year from the acquisition date.

Recognition .

entering into contracts with our customers, we review follow the five steps outline in Accounting Standards Codification Topic 606,

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basis primarily over the vesting period of the options.

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 $ 0.001

(the “Shares”), were set aside and

reserved for issuance.

The Plan approved by our stockholders at the December 2021, shareholders’ meeting.

shares were issued in 2021 as part of the

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, 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.

shares were issued in 2021 as part of the Plan.

August 2020, the Board of Directors approved our 2020 Equity Incentive Plan and later amended it.

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is complete or the date on which it is probable that performance will occur.

fair value of the warrants is estimated on the date of issuance using the Black-Scholes option pricing model, which requires the input

of subjective assumptions, including the expected term of the warrants, expected stock price volatility, and expected dividends.

estimates involve inherent uncertainties and the application of management’s judgment.

Expected volatilities used in the valuation

model are based on the average volatility of the Company’s stock.

The risk-free rate for the expected term of the option is based

on the United States Treasury yield curve in effect at the time of grant.

The fair value of the warrants is estimated on the date of issuance using the Black-Scholes option pricing model, which requires

the input of subjective assumptions, including the expected term of the warrants, expected stock price volatility, and expected dividends.

These estimates involve inherent uncertainties and the application of management’s judgment.

Expected volatilities used in the

valuation model are based on the average volatility of the Company’s stock.

The risk-free rate for the expected term of the option

is based on the United States Treasury yield curve in effect at the time of grant.

Company expenses marketing and advertising costs as incurred.

During 2021 and 2020, the Company spent $ 213

thousand and $ 283

thousand, respectively, on marketing, trade show

and store front expense and advertising, net of co-operative rebates.

During 2022 and 2021, the Company spent $ 630 thousand and $ 213 thousand,

respectively, on marketing, trade show and store front expense and advertising, net of co-operative rebates.

Company received rebates on advertising from co-operative advertising agreements with several vendors and suppliers.

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dollars except its subsidiary located in Israel.

The records of the Israeli operation

were maintained in the local currency and re-measured to the functional currency as follows:

monetary assets and liabilities are converted

using the balance sheet period-end date exchange rate, while the non-monetary assets and liabilities are converted using the historical

exchange rate.

The records of the Israeli operations

were maintained in the local currency and translated to the reporting currency as follows:

assets and liabilities are converted

using the balance sheet period-end date exchange rate.

Expenses and income items are converted using the weighted average exchange rates for the reporting period.

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.

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.

account for our income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets

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For tax positions meeting the more likely than not threshold, the amount recognized

in the financial statements is the largest benefit that has a greater

than 50% likelihood of being realized upon ultimate

settlement with the relevant tax authority.

in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement

with the relevant tax authority.

income is subject to taxation in both the U.S.

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The weighted-average number of common shares outstanding for computing basic

EPS for the years ended December 31, 2021 and December 31, 2020 were 6,082,763

and 4,322,303 ,

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.

following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share because such

securities have an anti-dilutive impact due to losses reported:

OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNINGS PER SHARE

EPS for the years ended December 31, 2022 and December 31, 2021 were 7,576,434 and 6,082,763 , 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.

following table sets forth the potentially dilutive securities as of December 31, 2022 and 2021, excluded from the computation of

diluted net loss per share because such securities have an anti-dilutive impact due to losses reported:

SCHEDULE OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNINGS PER SHARE

Options to purchase common stock

Convertible preferred stock

Warrants to purchase

Potential shares excluded

from diluted net loss per share

of an Immaterial Error

the year ended December 31, 2021, the Company identified an error related to its calculation of net loss attributable to the common stockholders.

The Company determined that in the prior period reported, these amounts were improperly calculated.

This error did not affect net income,

assets, liabilities, stockholders’ equity, cash flows from financing activities or the net increase or decrease in cash and cash

equivalents for the period.

In accordance with the SEC Staff Accounting Bulletin (SAB) No.

99, “Materiality,” and SAB No.

108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,”

we evaluated the materiality of the error from qualitative and quantitative perspectives and concluded that the error was immaterial

to the current and prior periods mentioned above.

Consequently, the net loss per share – basic attributable to common stockholders

of OmniQ Corp contained in these financial statements have been restated for the year ended December 31, 2020.

The change resulted in

an additional net loss after series C dividend attributable to common stockholders’ of OmniQ Corp $ 382

thousand, and an increase of the net loss per

share - basic attributable to common stockholders’ of OmniQ Corp of $ 0.03

for the year ended December 31, 2020.

Accounting Pronouncements

Pronouncements

Not Yet Adopted

March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform

on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited time to ease the potential burden

in accounting for or recognizing the effects of reference rate reform, particularly, the risk of cessation of the London Interbank Offered

Rate (“LIBOR”) on financial reporting.

The guidance provides optional expedients and exceptions for applying GAAP to contracts,

hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments are elective

and are effective upon issuance for all entities through December 31, 2022.

The amendments of this ASU should be applied on a prospective

We intend to continue to monitor the developments with respect to the planned phase-out out of LIBOR after 2021 and work with

our lenders to seek to ensure any transition away from LIBOR will have minimal impact on our financial condition.

However, we can provide

no assurances regarding the impact of the discontinuation of LIBOR as there can be no assurances as to whether such replacement or alternative

base rate will be more or less favorable than LIBOR.

Our exposure related to the expected cessation of LIBOR is limited to the interest

expense we incur on balances outstanding under our Credit Facility.

The potential impact from the cessation of LIBOR as a reference rate,

as well as the applicability of ASU 2020-04, is not currently estimable.

Adopted Accounting Pronouncements

January 1, 2021, we adopted Accounting Standards Update (“ASU”) No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting

for Income Taxes (“ASU 2019-12”).

The guidance removes the following exceptions:

1) exception to the incremental approach

for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, 2) exception to

the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method

investment, 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method

investment becomes a subsidiary and 4) exception to the general methodology for calculating income taxes in an interim period when a

year-to-date loss exceeds the anticipated loss for the year.

Additionally, the guidance simplifies the accounting for income taxes by:

1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account

for any incremental amount incurred as a non-income-based tax, 2) requiring that an entity evaluate when a step up in the tax basis of

goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should

be considered a separate transaction, 3) specifying that an entity is not required to allocate the consolidated amount of current and

deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (although the entity may elect

to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority),

4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation

in the interim period that includes the enactment date and 5) making minor improvements for income tax accounting related to employee

stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.

The adoption of

ASU 2019-12 did not have a material impact on our consolidated financial statements and footnotes.

Warrants to purchase common stock

Potential shares excluded from diluted net loss per share

Accounting Pronouncements not yet adopted

Management has evaluated all recent accounting pronouncements issued by

the Financial Accounting Standards Board (FASB) and determined that none of the pronouncements will have a material impact on the financial

statements of the Company.

The Company will continue to monitor the issuance of any new accounting pronouncements and assess their potential

impact on the financial statements in future periods.

3 – GOING CONCERN

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

Timely and cost-effective development of products

Working capital deficit of $ 23 million as of December 31, 2021

Accumulated deficit of $ 71 million as of December 31, 2021

Multiple years of losses from operations

Multiple years of negative cash flows from operations

facts and others have in the past raised concerns about the Company’s ability to 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

the need for operational cash with the need to add additional products

and cost-effective development of products

capital deficit of $ 38 million as of December 31, 2022

deficit of $ 84 million as of December 31, 2022

years of losses from operations

Non compliance with certain debt covenants

facts and others have raised concerns about the Company’s ability to continue as a going concern.

The Company’s

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which we have successfully accomplished to date.

following conditions, plans and actions are currently being implemented by management to address the Company’s conditions:

Company has common stock which is now traded publicly on the NASDAQ stock exchange.

Accordingly, it is better able to successfully

raise capital when needed.

In addition, there are outstanding warrants from prior offerings that could be exercised depending upon

the performance of our stock.

Company raised gross proceeds of $ 15 million from a private placement of its common stock in July 2021.

Company’s acquisition of Dangot Computers, Ltd.

has improved the balance sheet, profitability, and cash flow, including positive

cash flows from operations of $ 570 thousand since the acquisition, and is expected to help the Company as a whole to generate positive

cash flows from operations for the foreseeable future.

Company expects to receive financing for the acquisition of the last 23% of shares of Dangot at a loan to value rate of 85%.

Company also expects that Dangot’s cashflow will be able to service the debts associated with its acquisition without the need

for cash from the rest of the group.

acquisition of Dangot has added capabilities to the Company which have already transformed into significant new orders (so far approx.

$ 1.3 M) in the Parking segment.

following conditions, plans and actions are currently being implemented to address the Company’s conditions:

Outstanding warrants exist from prior offerings that could be exercised for cash depending upon the performance of our stock.

The Company’s acquisition of Dangot Computers, Ltd.

has improved the balance sheet, profitability, and cash flow and is expected to help the Company as a whole to generate positive cash flows from operations for the foreseeable future.

The Company received financing for the acquisition of the last 23% of shares of Dangot on March 30, 2022 (The company owns 100% of Dangot).

The Company also expects that Dangot’s cashflow will be able to service the debts associated with its acquisition without the need for cash from the rest of the group.

The acquisition of Dangot has added capabilities to the Company which have already transformed into significant new orders in the Parking segment.

Management expects the collaboration and cross sales to contribute to improved revenues and margins.

is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations.

is in the final steps of receiving a $ 8.5 M line of credit from Western Alliance Bank.

This line of credit will replace the high interest

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

Overall the effective interest rate of the new line of

credit is approx.

7% compared to 12% with Action and 10% with ScanSource.

of December 31, 2021, the Company had approximately $ 7 million, in cash, which is sufficient cash to last 15 months at the current

According to our sensitivity analysis the Company would have to miss it’s projection by over 17% to be at risk at

the end of March 2023.

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

about the Company’s ability to continue as a going concern.

The fact that the Company has a ten plus year plus history of continuing

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 December 31, 2021 was approximately $ 29 M.

Management is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations.

Management has already cut staff by about 5% and will continue to do additional overhead cuts.

On March 25, 2022 management finalized an $ 8.5 M

line of credit from Western Alliance Bank.

This line of credit replaced the high interest Action Capital line of Credit ($ 6 M)

and settle the ScanSource debt $ 2.5 M.

Blue Star - The Company’s total accounts payable due to Blue Star as of December 31, 2022 was approximately $ 36 million.

Blue Star is an unsecured creditor, financing a substantial amount 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

Management believes that Blue Star will continue supplying the Company with preferable credit terms.

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

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.

in 2022 the Company expects positive cash flow from operations.

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

to continue as a going concern within one year after the date financial statement issuance.

The Company has enjoyed a good mutual relationship for the past four years.

4 – BUSINESS ACQUISITIONS

IT Consulting, LLC

February 2020, (the “Closing Date”), we entered into an Asset Purchase Agreement (the “Eyepax Agreement”), with

Eyepax IT Consulting, LLC (the “Seller”);

whereby, we acquired Seller’s accounts receivable and the license, ownership

rights and source code of the parking Enforcement and Revenue Control System.

The Company also assumed the Seller’s accounts payable

Pursuant to the terms of the Eyepax Agreement, the purchase price paid was to be paid as follows:

was paid on the Closing Date, less $ 5,000

previously paid as an advance payment, accordingly

the remaining balance paid in cash on Closing Date was $ 95,000 .

per month for three months to be paid on

or before the last business day of the month beginning with the first month after the Closing Date, and a fourth payment of $ 20,000

until a total of $ 95,000

has been made.

on the first month after Closing Date, $ 5,000

per month to be paid in ten (10) monthly

installments.

shares of the Company’s common stock in the

name of the Seller, were issued during 45 days from Closing Date at $ 5.50

per common share.

options to purchase 20,000

shares of the Company’s common stock

at an exercise price of $ 5.00

The option shares vest in equal

quarterly periods, expiring in February

purchase price was measured at fair value on the Closing Date as follows (in thousands):

OF FAIR VALUE OF PURCHASE PRICE

Cash payments to Seller

Subscribed common stock

Stock purchase options

assets acquired and liabilities assumed have been recognized at the Closing date and were measured at fair value as follows (in thousands):

OF RECOGNIZED FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

assets acquired at fair value

purchase price

estimated the fair value the stock purchase option using the Black-Scholes option valuation model which incorporates assumptions as to

stock price volatility, the expected life of the options, risk-free interest rate and dividend yield.

In valuing these options, the Company

assumed a cumulative stock volatility of 269.42 %,

months expected life, and a risk-free interest

rate of 1.160 %

and dividend yield of 0 %.

Computers Ltd

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Pursuant to the Dangot Share

Purchase Agreement, Omniq Technologies agreed to purchase 51 %,

shares, of the capital stock of Dangot Computers

Ltd., an Israel company (“Dangot”), from Dangot’s sole shareholder, Haim Dangot, for consideration equivalent to 23,740,500

NIS (New Israeli Shekel), which is equal to US$ 7.6

million (the “Closing Consideration”),

based on the then current exchange rate at the date of acquisition of NIS to dollars.

Purchase Agreement, Omniq Technologies agreed to purchase 51 %, or 5,100 shares, of the capital stock of Dangot Computers Ltd., an Israel

company (“Dangot”), from Dangot’s sole shareholder, Haim Dangot, for consideration equivalent to 23,740,500 NIS (New

Israeli Shekel), which is equal to US$ 7.6 million (the “Closing Consideration”), based on the then current exchange rate

at the date of acquisition of NIS to dollars.

Closing Consideration was paid on July 8, 2021 in the following manner:

(a) the Company issued 220,103

shares of its common stock having a share value

thousand and (b) cash in the amount of $ 5,058

thousand and $ 600

payable to owner .

Dangot also granted Omniq Technologies an irrevocable option to purchase the remaining 4,900

shares, or 49 %,

of Dangot’s capital stock (the “Dangot Option”) in the 12-month period following the closing date (the “Dangot

Option Period”) at a share purchase price of 465,500

NIS, which is equal to

thousand, per each 1 %

of Dangot’s remaining shares on a fully diluted basis which is the same valuation per share as the purchase price for the 51 %.

Effective October 1, 2021 the Company exercised a portion of its option and purchased an additional 26 % of Dangot bringing its ownership

(a) the Company issued 220,103 shares of its common stock having

a share value of $ 2,084 thousand and (b) cash in the amount of $ 5,058 thousand and $ 600 thousand payable to owner.

Dangot also granted Omniq Technologies an irrevocable option to purchase the remaining 4,900 shares, or 49 %, of Dangot’s capital

stock (the “Dangot Option”) in the 12-month period following the closing date (the “Dangot Option Period”) at

a share purchase price of 465,500 NIS, which is equal to US$ 143 thousand, per each 1 % of Dangot’s remaining shares on a fully diluted

basis which is the same valuation per share as the purchase price for the 51 %.

Effective October 1, 2021 the Company exercised a portion

of its option and purchased an additional 26 % of Dangot bringing its ownership to 77 %.

The Company paid $ 4,012,000 to purchase the additional

On April 1, 2022, the Company closed on its acquisition of Dangot and exercised

the remaining portion of its option to purchase 23.0 % of the capital stock, thereby making Dangot a fully owned subsidiary of

The Company paid $ 3,518,000 to purchase the additional shares.

OmniQ Technologies has the right to complete the purchase of the

remaining 23 % of the Dangot shares on a fully diluted basis in a single exercise until the lapse of the Dangot Option Period.

partial exercise shall be allowed.

The Company utilized its working capital and a combination

of short and long term loans.

following table summarizes the consideration given and the purchase price allocation:

OF RECOGNIZED FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

Purchase Price Consideration

(in thousands)

Consideration

SCHEDULE OF RECOGNIZED FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

Purchase Price Consideration (in thousands)

Total Consideration

Cash payments

Accrued payable to owner

Fair value of stock issued ( 220,103

Fair value of stock issued ( 220,103 shares)

Total consideration

7 unchanged sentences

Net assets acquired

following proforma unaudited revenue and earnings as if the acquisition had been included in the consolidated results of the company

for the full year ending December 31, 2021.

OF ACQUISITIONS UNAUDITED REVENUE

(in thousands/unaudited)

pro forma results for each acquisition are not disclosed, as individually these acquisitions would not have a material impact on the

Company’s financial statements.

proforma unaudited revenue and earnings as if the acquisition had been included in the consolidated results of the company for the full

year ending December 31, 2021 were $ 92.5 million in revenues and $ 10.8 million net loss.

the acquisition the amounts included in the consolidated statement of comprehensive income from Dangot Computers Ltd.

for the year ended

December 31, 2021, was $ 20.6

million in revenue and $ 566

thousand in net income.

December 31, 2021, was $ 20.6 million in revenue and $ 566 thousand in net income.

5 – ACCOUNTS RECEIVABLE

receivable consisted of the following as of December 31:

OF ACCOUNTS RECEIVABLE

SCHEDULE OF ACCOUNTS RECEIVABLE

Trade accounts receivable

Less Allowance for doubtful

Total Accounts Receivable

Less allowance for doubtful accounts

Total accounts receivable (net)

receivable as of December 31, 2022 and 2021 are made up of trade receivables due from customers in the ordinary course of business.

customer represented 17 %

of the balance of accounts receivable as of December 31, 2021, and 46 %

customer accounted for more than 10 % of the balance of accounts receivable as of December 31, 2022, and one customer accounted for 17 %

of the accounts receivable balance as of December 31, 2021.

1 unchanged sentence

consisted of the following as of December 31:

goods (less Allowance)

SCHEDULE OF INVENTORY

Raw materials

Inventory in transit

Finished goods (less allowance)

Total inventories

7 – PROPERTY AND EQUIPMENT

following is a summary of the components of property and equipment (in thousands):

OF PROPERTY AND EQUIPMENT

of December 31,

following is a summary of the components of property and equipment as of December 31,:

SCHEDULE OF PROPERTY AND EQUIPMENT

Manufacturing and lab equipment

2 unchanged sentences

Furniture and equipment

expense for the year ended December 31, 2021 was approximately $ 251

Depreciation expense for the year ended December 31, 2020 was approximately $ 178

Property and equipment, Gross

accumulated depreciation

and equipment, Net

expense for the year ended December 31, 2022 was approximately $ 324 thousand.

Depreciation expense for the year ended December 31, 2021

was approximately $ 251 thousand.

8 – GOODWILL AND INTANGIBLE ASSETS

have made acquisitions in the past that resulted in the recognition of goodwill.

Based on our analysis there have been no

impairment charges recorded against goodwill

in 2021 and 2020.

Based on our analysis there have been no impairment

charges recorded against goodwill in 2022 and 2021.

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 3

Amortization expense for the years ended

December 31, 2021 and 2020 was $ 3.2

million and $ 2.1

million, respectively.

The assets are being amortized on the straight-line method over the estimated useful lives ranging from 3 to 11 years.

Amortization expense

for the years ended December 31, 2022 and 2021 was $ 1,799 million and $ 3.2 million, respectively.

and Intangible assets consisted of the following as of December 31:

OF GOODWILL AND INTANGIBLE ASSETS

relationships

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS

Customer relationships

Other intangibles

Intangibles gross

Accumulated amortization

Intangibles, net

future amortization expense on the trade names, customer relationships, and other intangibles are as follows:

OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

Years ending December 31,

9 unchanged sentences

consist of customer relationships, contractor and resume databases, trade names, and internal use software and are being amortized over

periods ranging from two

Purchased intangible assets are reviewed

annually to determine if facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying

amount of assets may not be recoverable.

If such facts and circumstances exist, recoverability is assessed by comparing the projected

undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective

carrying amounts.

Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets.

If the useful

life is shorter than originally estimated, the rate of amortization is accelerated, and the remaining carrying value is amortized over

the new shorter useful life.

impairments were identified or changes to estimated useful

lives have been recorded as of December 31, 2021 and 2020.

9 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

payable are made up of payables due to vendors in the ordinary course of business a December 31, 2021 and 2020.

One vendor made up 65 %

of our purchases in 2021 and 2020, respectively.

periods ranging from two to nine years .

Purchased intangible assets are reviewed annually to determine if facts and circumstances indicate

that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable.

If such facts

and circumstances exist, recoverability is assessed by comparing the projected undiscounted net cash flows associated with the related

asset or group of assets over their remaining lives against their respective carrying amounts.

Impairments, if any, are based on the

excess of the carrying amount over the fair value of those assets.

If the useful life is shorter than originally estimated, the rate

of amortization is accelerated, and the remaining carrying value is amortized over the new shorter useful life.

No impairments were identified

or changes to estimated useful lives have been recorded as of December 31, 2022 and 2021.

9 – CREDIT FACILITIES AND LINE OF CREDIT

maintain operating lines of credit, factoring and revolving credit facilities with banks and finance companies to provide us working

July 2016, we entered into a Factoring and Security Agreement (the “FASA”) with Action Capital Corporation (“Action”)

to establish a sale of accounts receivable credit facility, whereby we may obtain short-term financing by selling and assigning acceptable

accounts receivable to Action.

Pursuant to the FASA, the outstanding principal amount of advances made by Action at any time shall not

Action reserves and withholds to

of the face amount of each account purchased in a reserve account.

As of December 31, 2021 and 2020, the balance outstanding was $ 5,951

thousand and $ 4,914

thousand, respectively.

annual interest rate with respect to the daily average balance of unpaid advances outstanding under the FASA (computed on a monthly basis)

March 25, 2022 we entered into a Business Finance Agreement (the “BFA”) with BridgeBank a division of Western Alliance Bank

(“BridgeBank”) to establish the sale of accounts receivable credit facility, whereby we may obtain short-term financing by

selling and assigning acceptable accounts receivables to BridgeBank.

Pursuant to the BFA, the outstanding principal amount of advances

made by BridgeBank at any time shall not exceed $ 8.5 million.

BridgeBank reserves and withholds to 15 % of the face amount of each account

purchased in a reserve account.

annual interest rate with respect to the daily average balance of unpaid advances outstanding under the BFA (computed on a monthly basis)

is equal to the “Prime Rate” of Wells Fargo Bank N.A.

plus a monthly fee equal to 0.75 %

of the average outstanding balance.

we also pay all other costs incurred by Action under the FASA, including all bank fees.

continues in full force and effect unless terminated by either party upon 30 days’ prior written notice.

The FASA credit facility

is collateralized with a security interest in certain assets of the Company.

The FASA includes customary representations and warranties

and default provisions for transactions of this type.

On March 25, 2022 we

entered into a Business Finance Agreement (the “BFA”) with BridgeBank a division of Western Alliance Bank

(“BridgeBank”) to establish the sale of of accounts receivable credit facility, whereby we may obtain short-term

financing by selling and assigning acceptable accounts receivables to BridgeBank.

Pursuant to the BFA, the outstanding principal

amount of advances made by BridgeBank at any time shall not exceed $ 8.5

BridgeBank reserves and withholds to 15 %

of the face amount of each account purchased in a reserve account.

As a result of entering into the BFA we have paid off and

terminated the Factoring and Security Agreement with Action Capital.

See notes 11 and 19.

The annual interest rate

with respect to the daily average balance of unpaid advances outstanding under the BFA (computed on a monthly basis) is equal to the

“Prime Rate” of Wells Fargo Bank N.A.

plus 1.5%, plus a monthly fee equal to 0.15% of the average outstanding balance .

BFA credit facility is collateralized with a senior security interest in certain assets of the Company.

The BFA includes customary representations

and warranties and default provisions for transactions of this type.

plus 1.5%, plus a monthly fee equal to 0.15% of the average outstanding

The BFA credit facility is collateralized with a senior security interest in certain assets of the Company.

The BFA includes

customary representations and warranties and default provisions for transactions of this type.

10 – RELATED PARTY NOTES PAYABLE

3 unchanged sentences

Note payable –Thomet

Note payable – Shareholder Convertible

Total notes payable

current portion

Less current portion

Long-term portion

the years ended December 31, 2022 and December 31, 2021, the Company recorded interest expense in connection with these notes in the

amount of $ 10 thousand

and $ 15 thousand,

respectively.

amount of $ 8 thousand and $ 10 thousand, respectively.

Payable -Marin

December 2017, we entered into a $ 660

thousand, 1.89 %

annual interest rate note payable (the “Marin Note”) with two individuals from whom we previously acquired their company

The Marin Note is payable in 60

monthly principal payments of $ 20

thousand beginning in October 2018.

Accrued interest

payable as of December 31, 2021, was $ 63

Accrued interest is payable at

December 2017, we entered into a $ 660 thousand, 1.89 % annual interest rate note payable (the “Marin Note”) with two individuals

from whom we previously acquired their company (in 2014).

The Marin Note is payable in 60 monthly principal payments of $ 20 thousand

beginning in October 2018.

Accrued interest payable as of December 31, 2022, was $ 71 thousand.

Accrued interest is payable at maturity.

Payable – Thomet

December 2017, we entered into a $ 750

thousand, zero

percent annual interest rate note payable (the

“Thomet Note”) with an individual from whom we previously acquired his company (in 2014).

The Thomet Note is payable in 60

monthly principal payments of $ 13

December 2017, we entered into a $ 750 thousand, zero percent annual interest rate note payable (the “Thomet Note”) with an

individual from whom we previously acquired his company (in 2014).

The Thomet Note is payable in 60 monthly principal payments of $ 13

thousand beginning in October 2018.

Payable – Shareholder Convertible Note

October 2018, we entered a $ 700

thousand, 6 %

annual interest rate convertible note payable (the “Shareholder Convertible Note”) with Walefar and Campbeltown (collectively

the “Holders”), in connection with the HTS Image Processing, Inc.

Mr Shai Lustgarten, our Chief executive Officer and Director

is the principal shareholder in Walefar.

Nissensohn, a consultant and significant shareholder in OMNIQ, is the principal

shareholder in Campbeltown.

The Shareholder Convertible Note was retired in 2021.

Shareholder Convertible Note provided Holders a right, at any time on or after the loan origination date, to convert all or any portion

of the then outstanding and unpaid principal amount and interest (including any Default Interest) into fully paid and non-assessable

shares of OMNIQ’s common stock.

The number of conversion shares to be issued upon each conversion of the note shall be determined

by dividing the conversion amount by the applicable conversion price then in effect on the date specified in the notice of conversion

delivered us by the Holder.

The conversion rate was set at $ 4.72

April 2019, and in accordance with the Convertible Shareholder Note, the Holders converted $ 400

thousand ($ 200

thousand each) of unpaid principal outstanding.

The Holders received 87,476

each) common stock shares and 87,476

each) in common stock warrants.

repayment of the notes payable, related parties as of December 31, 2021, is as follows for the years ending December 31, 2021:

OF FUTURE MATURITIES OF NOTES PAYABLE, RELATED PARTIES

11 – OTHER NOTES PAYABLE

1 unchanged sentence

OF OTHER NOTES PAYABLE

Note Payable - Secured Supplier

Note Payable - Secured Supplier Note

Notes Payable - other

2 unchanged sentences

maturities of notes payable are as follows for the years ending December 31, 2022:

OF FUTURE MATURITIES OF NOTE PAYABLE

SCHEDULE OF FUTURE MATURITIES OF NOTE PAYABLE

Supplier Note Payable

July 18, 2016, the Company and the Supplier entered into a certain secured promissory note, with an effective date of July 1, 2016, in

the principal amount of $ 12.5

million (the “Secured Promissory Note”).

The USD Note accrues interest at 18 %

per annum and is payable in six consecutive monthly installments of principal and accrued interest in a minimum principal amount of $ 250

thousand each, with any remaining principal and

accrued interest due and payable on December 31, 2016.

September 7, 2018, the Company entered into a Sixth Amendment to the Secured Promissory Note (the “Sixth Amendment”)

extending the maturity date to January 31, 2019.

The Sixth Amendment also increases the principal amount to $ 8.7

million, an increase of $ 6.8

million, by rolling the Company’s then

existing and outstanding accounts payable into the note by the previously mentioned amount of increase.

The Company will continue

to make monthly payments in the amount of $ 300

thousand for the first three monthly payments,

and also in the amount of $ 500

thousand for the last two monthly payments

prior to the note’s maturity.

April 30, 2019, the Company entered into a Seventh Amendment to the Secured Promissory Note (the “Seventh Amendment”)

extending the maturity date to July 31, 2019.

The Seventh Amendment also provides that the Company will continue to make monthly

installments of principal and accrued interest in a minimum principal amount of $ 350

thousand each.

The Company has made partial

payments towards the required monthly installments under the terms of the Seventh Amendment.

July 20, 2021, the Company entered into the Eighth Amendment to the Secured Promissory Note (the “Eighth Amendment”)

extending the maturity date to August 15, 2022 and reducing the interest rate from 18 %

The Eighth Amendment also provides that the Company will continue to make monthly installments of principal and accrued interest

at a minimum of $ 300

thousand each month.

As has been the case

with each previous amendment, the Company is in continual negotiations with the holder of the Secured Promissory Note to extend the

maturity date and establish a new schedule of payments.

On March 25 , 2022 the Company has paid

off the entire remaining balance owed to the supplier.

the principal amount of $ 12.5 million (the “Secured Promissory Note”).

The USD Note accrues interest at 18 % per annum and

is payable in six consecutive monthly installments of principal and accrued interest in a minimum principal amount of $ 250 thousand each,

with any remaining principal and accrued interest due and payable on December 31, 2016.

This note was extended and amended multiple times

and as of March 25, 2022, is paid in full.

Notes Payable

On July 29, 2021 the Company entered into a long-term

loan from Leumi Bank totalling NIS 7 million, which at the time was approximately $ 2.16 million.

The note accrues interest at 4.7 % per

annum and is payable in 8 instalments of principal and interest over 4 years.

July 29, 2021, the Company entered into a long-term loan from Leumi Bank totalling NIS 7 million, which at the time was approximately

$ 2.16 million.

The note accrues interest at the Israeli Prime Rate plus 4.5 % which currently equals 8.25 % per annum and is payable in

8 instalments of principal and interest over 4 years .

The note is secured by shares of Dangot Computers, Ltd.

On November 28, 2021 the Company entered into

another long-term loan from Leumi Bank totalling NIS 3.5 million, which at the time was approximately $ 1.1 million.

The note accrues

interest at 4.7 % per annum and is payable in 8 instalments of principal and interest over 4 years.

The note is secured by shares of Dangot

Computers, Ltd.

During the year ended

December 31, 2021, the Company entered into five lines of credit totalling NIS 17.5 million, as of December 31, 2021 the outstanding

balance was NIS 13.6 million, approximately $ 4.4 million.

On August 11, 2021, the Company purchased vehicles

using cash and financing of NIS 500 thousand, approximately $ 155 thousand, to be paid off in monthly interest and principal payments

over 5 years.

November 28, 2021, the Company entered into another long-term loan from Leumi Bank totalling NIS 3.5 million, which at the time was approximately

$ 1.1 million.

The note accrues interest at the Israeli Prime Rate plus 4.5 % which currently equals 8.25 % per annum and is payable in

8 instalments of principal and interest over 4 years .

The note is secured by shares of Dangot Computers, Ltd.

August 11, 2021, the Company purchased vehicles using cash and financing of NIS 500 thousand, approximately $ 155 thousand, to be paid

off in monthly interest and principal payments over 5 years .

The loan accrues interest at 7.5 % per annum and is secured by the vehicles.

As of December 31, 2021, the remaining balance

was NIS 470 thousand, which was approximately $ 151 thousand.

On March 27, 2022 the Company entered into another

long-term loan from Leumi Bank totalling NIS 3.5 million, which at the time was approximately $ 1.1 million.

The note accrues interest

at 4.7 % per annum and is payable in 8 instalments of principal and interest over 4 years.

The note is secured by shares of Dangot Computers,

As of December 31, 2022, the remaining balance was NIS 342 thousand, approximately $ 97 thousand.

March 27, 2022, the Company entered into another long-term loan from Leumi Bank totalling NIS 3.5 million, which at the time was approximately

$ 1.1 million.

The note accrues interest at the Israeli Prime Rate plus 4.5 % which currently equals 8.25 % per annum and is payable in

8 instalments of principal and interest over 4 years .

The note is secured by shares of Dangot Computers, Ltd.

September 13, 2022, the Company entered into a long-term loan from Hapoalim Bank totalling NIS 3 million, which at the time was approximately

$ 0.9 million.

The note accrues interest at 6.03 % per annum and is payable in 36 instalments of principal and interest over 3 years .

of December 31, 2022, the outstanding balance was NIS 2.8 million, approximately $ 0.8 million.

the year ended December 31, 2021, the Company entered into five lines of credit totalling NIS 17.5 million, as of December 31, 2021, the

outstanding balance was NIS 13.6 million, approximately $ 4.4 million.

These loans were replaced in 2022.

the year ended December 31, 2022, the Company entered into five short term loans totalling NIS 26.8 million, approximately $ 7.6 million.

The note accrues average interest at 6.3 % per annum.

As of December 31, 2022, the Company was not in compliance

with certain financial covenants related to the Bank Leumi and Bank Hapoalim debt.

The Company’s failure to comply with these financial

covenants could result in an event of default under its debt agreements.

Therefore, we reclassified the total balance as current debt

on the balance sheet.

The Company is actively pursuing options to address its noncompliance.

The lenders have not requested early repayment

of the loan as of the date when these financial statements were available to be issued.

12 – OTHER LIABILITIES

3 unchanged sentences

Dividend payable

Bonus payable

Total other liabilities

Less current portion

Total long term other

Total long term other liabilities

13 – COMMITMENTS AND CONTINGENCIES

6 unchanged sentences

for discretionary matching contributions determined annually by the Board of Directors.

For the year ending December 31, 2021, the company

has elected to match and 2020, the Company elected to forgo the match.

For the year ending December 31, 2022 and 2021,

the company has elected to match, the total expense was $ 122 thousand and $ 108 thousand.

of December 31, 2022, we had 5 Operating leases as follows:

space in Akron, Ohio, with monthly payments of $ 3

thousand and an incremental borrowing rate

As of December 31, 2021, we had 17

months remaining on the lease.

space in Salt Lake City UT with monthly payments of $ 22

As of December 31, 2021, the Company had 56

remaining on the lease.

space in Akron, Ohio, with monthly payments of $ 3 thousand and an incremental borrowing rate of 14.55 %.

As of December 31, 2022,

we had 5 months remaining on the lease.

space in Salt Lake City UT with monthly payments of $ 24 thousand.

As of December 31, 2022, the Company had 44 months remaining on

corporate offices are currently located at Yad harutzim 14 Tel-Aviv, Israel and serves as the company’s main operating location.

As of December 31, 2021, we had 35

months remaining on the lease.

Company lease additional office space for our finance

and service department at Yad harutzim 14 Tel-Aviv, Israel.

As of December 31, 2021, the Company had 24

months remaining on the lease.

Company also lease office and warehouse space for our products

and technical support staff in Hofman and Rival Street, Tel-Aviv, Israel.

As of December 31, 2021, the Company had 42

months remaining on the lease.

of December 31, 2021 we had two operating leases for office and assembly space and no financing leases.

We elected the practical expedient

ASU 2018-11, Leases (Topic 842):

Targeted Improvements which allows the Company to apply the transition provision for Topic 842

at the Company’s adoption date.

Therefore, we recognized and measured leases existing at January 1, 2019 (inception date).

the Company elected the optional practical expedient permitted under the transition guidance which allows the Company to carry forward

the historical accounting treatment for existing leases upon adoption.

Lastly, the Company elected a short-term lease exception policy,

permitting it to exclude the recognition requirements of this standard from leases with initial terms of 12 months or less.

was recorded to the income statement or beginning retained earnings for Topic 842.

As of December 31, 2022, we had 23 months remaining on the lease.

Company lease additional office space for our finance and service department at Yad harutzim 14 Tel-Aviv, Israel.

As of December

31, 2022, the Company had 12 months remaining on the lease.

Company also lease office and warehouse space for our products and technical support staff in Rival Street, Tel-Aviv, Israel.

of December 31, 2022, the Company had 30 months remaining on the lease.

information related to our operating leases is as follows:

OF OTHER INFORMATION RELATED TO OPERATING LEASE

SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE

ROU asset - January 1, 2021

9 unchanged sentences

Lease liability - December 31, 2022

of December 31, 2021, our operating leases had a weighted average remaining lease term of 37

months and a weighted average discount rate

of December 31, 2022, our operating leases had a weighted average remaining lease term of 29 months and a weighted average discount rate

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, 2022:

OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

lease payments

SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

Minimum lease payments

Less interest

2 unchanged sentences

Long term lease obligations

Company was named a defendant in a case involving a former employee who claims he is owed approximately $ 60

thousand in unpaid commissions.

The Company’s

intends to defend the case.

Company was named a defendant in a case involving a former employee who claims he is owed approximately $ 60 thousand in unpaid commissions.

The Company is defending the case.

This case was filed in the Superior Court of the State of California, County of San Diego on October

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 governmental agency is presently contemplating any proceeding against

To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the

To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially

2 unchanged sentences

14 – STOCKHOLDERS’ EQUITY

of December 31, 2021 and 2020, there were 2,000,000

Series A preferred shares authorized and

Series A preferred shares outstanding.

board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 13 common shares .

of December 31, 2021 and 2020, there was one ( 1 )

preferred share authorized and zero

preferred shares outstanding.

of December 31, 2021 and 2020, there were 3,000,000

Series C Preferred Shares (“Series

C”) authorized with 544,500

and 2,145,030

of December 31, 2022 and 2021, there were 2,000,000 Series A preferred shares authorized and zero Series A preferred shares outstanding.

The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 13 common shares.

of December 31, 2022 and 2021, there was one ( 1 ) preferred share authorized and zero preferred shares outstanding.

of December 31, 2022 and 2021, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 544,500 and 544,500

issued and outstanding, respectively.

C shares have preferential rights above common shares and the Series B Preferred Shares and is entitled to receive a quarterly dividend

at a rate of $ 0.06

per share per annum and have a liquidation preference

Series C shares outstanding are convertible

into common stock at the rate of 20 preferred shares to one share of common stock.

As of December 31, 2021 and 2020, the accrued dividends

on the Series C Preferred Stock was $ 126

thousand and $ 253

thousand, respectively.

2021, certain holders of Series C Shares elected to convert $ 1.6

million or 1,600,530

Series C shares and $ 194

thousand in accrued dividends in exchange for

OMNIQ common stock shares.

The Series C shares have preferential rights above common shares and the Series B Preferred Shares

and is entitled to receive a quarterly dividend at a rate of $ 0.06 per share per annum and have a liquidation preference of $ 1 per share.

Series C shares outstanding are convertible into common stock at the rate of 20 preferred shares to one share of common stock.

December 31, 2022 and 2021, the accrued dividends on the Series C Preferred Stock was $ 153 thousand and $ 126 thousand, respectively.

2021, certain holders of Series C Shares elected to convert $ 1.6 million or 1,600,530 Series C shares and $ 194 thousand in accrued dividends

in exchange for 105,551 OMNIQ common stock shares.

Series C Preferred Stock has a liquidation value and conversion price of $1.00 per share ($20.00 per 20 shares of preferred stock which

5 unchanged sentences

Pursuant to the Plan,

shares of the Company’s common stock, par

value $ 0.001

(the “Shares”), were set aside and

reserved for issuance.

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 approved by our stockholders at the December 2021, shareholders’ meeting.

shares were issued under the Plan in 2021.

841,500 shares were issued to employees and

consultants in 2022, and no shares were issued under the Plan in 2021.

August 2020, OMNIQ’ Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain in

6 unchanged sentences

The Plan approved by our stockholders at the September 2020, shareholders’ meeting.

For the year ending

December 31, 2020, we issued 336,146

shares ($ 1.6

million) to consultants and advisors for services

shares were issued under the Plan in 2021.

shares were issued under the Plan in 2021, or 2022.

December 2015, our Board of Directors approved the OMNIQ.

1 unchanged sentence

For the years ending

December 31, 2021 and 2020, employees purchased 2,186

thousand) shares and 302

thousand) shares of commons stock.

February 15, 2021 the Company issued 25,000

shares to Orion 4, LLC as part of a consulting

The shares were valued at $ 188

May 4, 2021, the Company issued 95,424

shares as part of a series of conversion agreements

with a former noteholder and preferred shareholder.

The shares were valued at $ 859

thousand including conversion penalties.

July 8, 2021, the Company issued 220,103

shares in connection with the acquisition of

Dangot Computers.

The shares were valued at approximately $ 2

July 8, 2021, the Company entered into a form of Securities Purchase Agreement (the “Securities Purchase Agreement”) with

accredited investors.

Pursuant to the Securities Purchase Agreement, on July 8, 2021 (the Closing Date”), the Company sold an aggregate

gross proceeds of $ 15

million of units (the “Units”) before

deducting placement agent fees, consultant and legal fees and other offering expenses (the “Offering”).

The per Unit purchase

price was $ 7.00 .

Unit is comprised of one share of the Company’s common stock, $ 0.001

par value per share.

As a result of the Offering,

the Company issued 2,142,857

shares of common Stock (the “Shares”)

and warrants (the “Warrants”) to purchase 171,429

shares of Common Stock (the “Warrant Shares”)

at an exercise price equal to $ 7.70

per Warrant Share, which Warrants are exercisable

for a period of five

years from the issuance date.

October 13, 2021, the Company issued 10,127

shares as part of a series of conversion agreements

with a former noteholder and preferred shareholder.

The shares were valued at less than $ 100

thousand including conversion penalties.

the years ending December 31, 2021 and 2020, 342,667

and 216,750 ,

respectively, in stock options and stock warrants were exercised in exchange for 279,096

shares of OMNIQ common stock.

April 2020 and in conjunction with the Eyepax acquisition, we issued the former owner 80,000

share of OMNIQ common stock.

September 2020 and pursuant to the 2020 Equity Incentive Plan, we granted options to purchase an aggregate of 745,000

shares of our common stock to certain of our

employees, officers and directors.

Included in the total shares granted are options to purchase 230,000

shares of its common stock to Mr.

Shai Lustgarten,

our Chief Executive Officer, options to purchase 40,000

shares of its common stock to Mr.

Neev Nissenson,

our Chief Financial Officer, options to purchase 150,000

shares of its common stock to Mr.

a consultant and principal stockholder, and options to purchase 10,000

shares of its common stock to our Directors Andy

MacMillan and Yaron Shalem, respectively.

The remaining 305,000

granted options are for other employees and consultants.

The exercise price of all of the options granted was $ 4.40

per share, which was the closing price of the

Company’s common stock on September 29, 2020, the day prior to the grant, except for the options granted to Shai Lustgarten and

Nissensohn, which have an exercise price of $ 4.84

The options granted to Shai Lustgarten

and Carlos J.

Nissensohn have a term of five ( 5 )

years and the balance of the options have a term of ten ( 10 )

December 31, 2022 and 2021, employees purchased 7,025 ($ 37 thousand) shares and 2,186 ($ 16 thousand) shares of commons stock.

and Stock Options

connection with the July 2021 Securities Purchase Agreement previously described, we issued warrants to purchase 171,429

shares of our common stock at an exercise price

equal to $ 7.70

per Warrant Share, which warrants are exercisable

for a period of five years from the issuance date.

The warrants were valued at $ 1.3

connection with the July 2021 Securities Purchase Agreement previously described, we issued warrants to purchase 171,429 shares of our

common stock at an exercise price equal to $ 7.70 per Warrant Share, which warrants are exercisable for a period of five years from the

issuance date.

The warrants were valued at $ 1.3 million.

and warrants are valued at the grant date using the Black-Scholes valuation methodology.

5 unchanged sentences

assumptions for options and warrants granted throughout the year.

valuation assumptions used to determine the fair value of each warrants awarded in 2021:

expected stock price volatility 151.0 %

expected term in years 5 ;

and risk-free interest rate 0.41 %.

valuation assumptions used to determine the fair value of each option/warrants awarded in 2020:

valuation assumptions used to determine the fair value of each option and warrant awarded in 2022:

expected stock price volatility

ranged from 104.33

expected term in years 3.25 ;

and risk-free interest rate ranged from 1.76 %

valuation assumptions used to determine the fair value of each warrant awarded in 2021:

expected stock price volatility 151.0 % expected

term in years 5 ;

and risk-free interest rate 0.41 %.

additional options were issued in 2021.

For warrants exercised during the year ended December

31, 2021, the difference between the fair value of the Common Stock issued and the respective exercise price was $ 683 thousand.

December 31, 2021, the intrinsic value for vested warrants was $ 8 million and $ 6 million, respectively.

warrants were exercised during the year ended December 31, 2022.

warrants exercised during the year ended December 31, 2021, the difference between the fair value of the Common Stock issued and the

respective exercise price was $ 683 thousand.

following table summarizes information about warrants granted during the years ended December 31:

OF WARRANTS ACTIVITY

SCHEDULE OF WARRANTS ACTIVITY

Exercise Price

3 unchanged sentences

Warrants expired

Warrants cancelled, forfeited

Warrants exercised

2 unchanged sentences

warrants as of December 31, 2022 are as follows:

OF OUTSTANDING WARRANTS

SCHEDULE OF OUTSTANDING WARRANTS

Weighted Average

Residual Life

5.91 to 10.00

outstanding have the following expiry date and exercise prices as of the years ended December 31:

OF WARRANTS OUTSTANDING, EXPIRY DATE AND EXERCISE PRICES

SCHEDULE OF WARRANTS OUTSTANDING, EXPIRY DATE AND EXERCISE PRICES

February 27, 2022

October 14, 2023

October 06, 2024

September 01, 2025

June 04, 2026

December 04, 2027

March 25, 2027

have a stock option plan whereby the Board of Directors, may grant to directors, officers, employees, or consultants of the Company options

10 unchanged sentences

exceed ten years from the date of the grant.

There are 500,000

of the Company’s common shares which may

be issued pursuant to the exercise of share options granted under the Plan.

For options exercised during the year ended December

31, 2021, the difference between the fair value of the Common Stock issued and the respective exercise price was $ 1.5 million.

December 31, 2021, the intrinsic value for vested stock options was $ 6.6 million and $ 5 million, respectively.

Options - The following table summarizes information about stock options granted during the years ended December 31, 2021 and 2020:

OF STOCK OPTIONS GRANTED

There are 500,000 of the Company’s common shares which may be issued pursuant to the

exercise of share options granted under the Plan.

options exercised during the year ended December 31, 2022, the difference between the fair value of the Common Stock issued and the respective

exercise price was $ 369 thousand.

As of December 31, 2022, the intrinsic value for vested stock options was $ 477 thousand.

options exercised during the year ended December 31, 2021, the difference between the fair value of the Common Stock issued and the respective

exercise price was $ 1.5 million.

As of December 31, 2021, the intrinsic value for vested stock options was $ 6.6 million.

Options - The following table summarizes information about stock options granted during the years ended December 31,

SCHEDULE OF STOCK OPTIONS GRANTED

Exercise Price

7 unchanged sentences

Exercisable stock options

stock options as of December 31, 2021, are as follows:

OF OUTSTANDING STOCK OPTIONS

residual life

Stock Options

Exercise Price

options outstanding at the end of the year have the following expiry date and exercise prices:

OF STOCK OPTIONS, EXPIRY DATE AND EXERCISE PRICES

options outstanding at the end of the year have the following expiry date and exercise prices as of December 31,

SCHEDULE OF STOCK OPTIONS, EXPIRY DATE AND EXERCISE PRICES

February 17, 2022

February 28, 2023

March 05, 2023

July 31, 2023

October 31, 2023

November 30, 2023

November 20, 2024

April 20, 2025

March 1, 2027

October 31, 2027

September 30, 2030

recorded stock compensation expense relating to the vesting of stock options and warrants as follows for the years ended December 31,

2021 and 2020;

OF STOCK COMPENSATION EXPENSE

SCHEDULE OF STOCK COMPENSATION EXPENSE

Stock compensation

6 unchanged sentences

term with 90-day termination notice by the Company

monthly fee of $ 30

monthly fee of $ 30 thousand.

we procure debt financing during the term of Mr.

3 unchanged sentences

Nissensohn shall be entitled to only 2% of the gross funds raised.

addition to the above, in the event of an equity financing resulting in gross proceeds of at least $ 3

million to us within 24 months of the date

the contract, Mr.

Nissensohn shall further be entitled to certain warrants to be granted by us which upon their exercise pursuant

to their terms, Mr.

Nissensohn shall be entitled to receive OMNIQ shares which represent 3 %

of the OMNIQ issued share capital immediately prior to the consummation of such investment.

The warrants will carry an exercise price

per warrant/share representing 100 %

addition to the above, in the event of an equity financing resulting in gross proceeds of at least $ 3 million to us within 24 months

of the date the contract, Mr.

Nissensohn shall further be entitled to certain warrants to be granted by us which upon their exercise

pursuant to their terms, Mr.

Nissensohn shall be entitled to receive OMNIQ shares which represent 3 % of the OMNIQ issued share capital

immediately prior to the consummation of such investment.

The warrants will carry an exercise price per warrant/share representing

100 % of the closing price per share as closed in the equity financing.

4 unchanged sentences

addition to the above, Mr.

Nissensohn will be entitled to a $ 80

thousand one-time payment which shall be

paid on the 1 st day that the OMNIQ shares become traded on the NASDAQ or NYSE Stock Market within 24 months of the date

of the contract

Nissensohn will be entitled to a $ 80 thousand one-time payment which shall be paid on the 1 st day

that the OMNIQ shares become traded on the NASDAQ or NYSE Stock Market within 24 months of the date of the contract

addition to the aforementioned, in the event that we close any M&A transaction with a third party target, Mr.

Nissensohn shall

be entitled to a success fee in the amount equal to 5 %

of the total transaction price, in any combination of cash and shares that will be determined by OMNIQ

be entitled to a success fee in the amount equal to 5 % of the total transaction price, in any combination of cash and shares that

will be determined by OMNIQ

related party transactions are discussed in Note 10.

17 – GEOGRAPHIC DATA

the years ended December 31, 2021 and 2020, two customers accounted for 23 %

and one customer accounted for 37.2 %,

respectively, of the Company’s revenues.

16 – CONCENTRATION AND GEOGRAPHIC DATA

the years ended December 31, 2022 and 2021, one customer accounted for 30 % and 23 % , respectively, of the Company’s revenues.

about Geographic Areas

by geography are based on the billing addresses of our customers.

The following tables set forth revenues by geographic area (in thousands):

Ended December 31,

The following tables set forth revenues by geographic area for the years ended December 31,

United States

11 unchanged sentences

17 – INCOME TAX

the year ended December 31, 2021, the Company has $ 321

thousand of current income tax provision

(US State & Local and Foreign) and $ 165

deferred income tax benefit.

the year ended December 31, 2022, the Company has $ 35 thousand of current income tax provision (US State & Local and Foreign) and

$ 30 thousand deferred income tax expense.

tax effect of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows as of December

3 unchanged sentences

163(j) Limitation

Stock options

Foreign deferred tax assets

4 unchanged sentences

Deferred tax liabilities

Amortization of intangible

assets and depreciation

Amortization of intangible assets and depreciation

Total deferred tax liabilities

1 unchanged sentence

of net deferred tax assets, including a valuation allowance, are as follows as of December 31:

OF DEFERRED TAX ASSETS AND VALUATION ALLOWANCES

SCHEDULE OF DEFERRED TAX ASSETS AND VALUATION ALLOWANCES

Deferred tax assets

1 unchanged sentence

Total deferred tax assets

valuation allowance for deferred tax assets as of December 31, 2021 and 2020 was $ 8.7

million and $ 8.3

million, respectively.

In assessing the recovery

of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets

will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the

periods in which those temporary differences become deductible.

Management considers the scheduled reversals of future deferred tax liabilities,

projected future taxable income, and tax planning strategies in making this assessment.

Management has recorded a 100% Valuation Allowance,

against its U.S.

Net Deferred Tax Assets, since Management believes it is more likely than not that it will not be realized at

the date of this statement.

valuation allowance for deferred tax assets as of December 31, 2022 and 2021 was $ 10.9 million and $ 8.7 million, respectively.

the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred

tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income

in the periods in which those temporary differences become deductible.

Management considers the scheduled reversals of future deferred

tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Management has recorded a 100%

Valuation Allowance, against its U.S.

Net Deferred Tax Assets, since Management believes it is more likely than not that it will not

be realized at the date of this statement.

The Company will continue to monitor the potential utilization of this asset.

Should factors and evidence

change to aid in this assessment, a potential adjustment to the valuation allowance in future periods may occur.

The Company records

any penalties and interest as a component of operating expenses.

reconciliation between statutory rate and effective rate is as follows as of December 31, 2021 and 2020:

Should factors

and evidence change to aid in this assessment, a potential adjustment to the valuation allowance in future periods may occur.

records any penalties and interest as a component of operating expenses.

reconciliation between statutory rate and effective rate is as follows as of December 31,:

OF RECONCILIATION OF STATUTORY RATE AND EFFECTIVE TAX RATE

1 unchanged sentence

Foreign income taxes

Nondeductible items

Acquisition accounting adjustments

Change in valuation allowance

3 unchanged sentences

over the next twelve months.

The Company’s 2015, 2016, 2017, 2018, 2019, and 2020 federal and state income tax returns are

open for examination by the applicable governmental authorities.

of December 31, 2021, the Company had a net operating loss (NOL) carryforward of approximately $ 34

NOL carryforward begins to expire in 2027.

Under Section 382 of the Internal Revenue Code of 1986, as amended (“IRC Section

382”), a corporation that undergoes an “ownership change” is subject to limitations on its use of pre-change NOL carryforwards

to offset future taxable income.

Within the meaning of IRC Section 382, an “ownership change” occurs when the aggregate stock

ownership of certain stockholders (generally 5% shareholders, applying certain look-through rules and aggregation rules which combine

unrelated shareholders that do not individually own 5% or more of the corporation’s stock into one or more “public groups”

that may be treated as 5-percent shareholder) increases by more than 50 percentage points over such stockholders’ lowest percentage

ownership during the testing period (generally three years) .

In general, the annual use limitation equals the aggregate value of common stock at the time of the ownership change multiplied by a

specified tax-exempt interest rate.

The Company has not completed a study as to whether there is a 382 limitation on its NOLs that will

limit or possibly eliminate the use of its NOLs in the future.

Company’s Management has recorded a 100% valuation allowance on

the entire NOL as it believes that it is more likely than not that the deferred tax asset associated with the NOLs will not be realized

regardless of whether or not an “ownership change” has occurred.

19 – SUBSEQUENT EVENTS

On March 25 , 2022 we entered into

a Business Finance Agreement (“BFA”) with BridgeBank a division of Western Alliance Bank.

In accordance with the BFA we’ve

terminated our lending relationship with Action Capital and paid of the remaining balance on a supplier note payable.

See notes 10 and 12.

On March 27, 2022 we entered into another

long-term loan from Leumi Bank totalling NIS 3.5

million, which at the time was approximately $ 1.1

The note accrues interest at 4.7 %

per annum and is payable in 8

instalments of principal and interest over 4

accordance with ASC 855, “Subsequent Events”, the Company has evaluated all subsequent events through the date of this filing.

No other significant events have occurred besides the events disclosed in the Notes to the Financial Statements.

The Company’s 2015, 2016, 2017, 2018, 2019, 2020 and 2021 federal and state income tax returns

are open for examination by the applicable governmental authorities.

of December 31, 2022, the Company had a net operating loss (NOL) carryforward of approximately $ 39.7 million.

A portion of the NOL carryforward begins

to expire in 2027.

Under Section 382 of the Internal Revenue Code of 1986, as amended (“IRC Section 382”), a corporation

that undergoes an “ownership change” is subject to limitations on its use of pre-change NOL carryforwards to offset future

taxable income.

Within the meaning of IRC Section 382, an “ownership change” occurs when the aggregate stock ownership of

certain stockholders (generally 5% shareholders, applying certain look-through rules and aggregation rules which combine unrelated shareholders

that do not individually own 5% or more of the corporation’s stock into one or more “public groups” that may be treated

as 5-percent shareholder) increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during

the testing period (generally three years).

In general, the annual use limitation equals the aggregate value of common stock at the time

of the ownership change multiplied by a specified tax-exempt interest rate.

The Company has not completed a study as to whether there

is a 382 limitation on its NOLs that will limit or possibly eliminate the use of its NOLs in the future.

Company’s Management has

recorded a 100% valuation allowance on the entire NOL as it believes that it is more likely than not that the deferred tax asset associated

with the NOLs will not be realized regardless of whether or not an “ownership change” has occurred.

INDEX—we will update the exhibit index

of Certificate of Amendment to the Certificate of Incorporation, as amended, dated November 18, 2019 incorporated by reference to

Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 18, 2019.

to Certificate of Designation of Series C Preferred Stock on June 17, 2016, incorporated by reference to Exhibit 3.1 to the Company’s

Current Report on Form 8-K, filed with the SEC on June 21, 2016.

of Certificate of Amendment to the Certificate of Incorporation, as amended, of OMNIQ Corp., dated September 30, 2020, incorporated

by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 2, 2020.

$12,492,136.51

Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada Inc.,

Quest Exchange Ltd.

and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference

to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 22, 2016.

of Securities

CAD Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada

Inc., Quest Exchange Ltd.

and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference

to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 22, 2016.

of Warrant, incorporated by referenced to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April

of Placement Agent Warrant, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with

the SEC on April 9, 2019.

Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.1 to the

Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2017.

Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.1 to the

Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2017.

Agreement by and between the Company and Carlos J Nissensohn dated August 2, 2017 incorporated by reference to Exhibit 10.1 to the

Company’s Current Report on Form 8-K, filed with the SEC on August 4, 2017.

Agreement by and between the Company and YES-IF dated September 8, 2017, incorporated by reference to Exhibit 10.1 to the Company’s

Current Report on Form 8-K filed with the SEC on September 8, 2017.

Agreement by and between the Company and Benjamin Kemper dated October 2, 2017, incorporated by reference to Exhibit 10.3 to the

Company’s Current Report on Form 8-K filed with the SEC on October 5, 2017.

Agreement by and between the Company and David Marin dated February 28, 2018.

2018 Equity Incentive Plan incorporated by reference

to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the SEC on March 12, 2018.

Nissenson Employment Agreement, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed

with the SEC on September 9, 2019.

Purchase Agreement, dated February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form

8-K filed with the SEC on March 4, 2020.

Lustgarten Employment Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.2 to the Company’s

Current Report on Form 8-K filed with the SEC on March 4, 2020.

Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form

8-K filed with the SEC on March 4, 2020.

Purchase Agreement on February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form

8-K filed with the SEC on March 4, 2020.

Agreement with Shai Lustgarten on September, 2019, incorporated by reference to Exhibit 10.1 to the Company’s Current Report

on Form 8-K filed with the SEC on September 9, 2019.

Agreement with Carlos J.

Nissensohn on September, 2019, incorporated by reference to Exhibit 10.2 to the Company’s Current

Report on Form 8-K filed with the SEC on September 9, 2019.

Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the

SEC on September 4, 2020.

of the Registrant

of Independent Registered Public Accounting Firm

Certification

of our Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification

of our Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification

of our Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.

Form of Certificate of Amendment to the Certificate of Incorporation, as amended, dated November 18, 2019 incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 18, 2019.

Amendment to Certificate of Designation of Series C Preferred Stock on June 17, 2016, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 21, 2016.

Form of Certificate of Amendment to the Certificate of Incorporation, as amended, of OMNIQ Corp., dated September 30, 2020, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 2, 2020.

$12,492,136.51 Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada Inc., Quest Exchange Ltd.

and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 22, 2016.

Description of Securities

$483,173.60 CAD Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada Inc., Quest Exchange Ltd.

and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 22, 2016.

Form of Warrant, incorporated by referenced to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2019.

Form of Placement Agent Warrant, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2019.

Employment Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2017.

Modification Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2017.

Consulting Agreement by and between the Company and Carlos J Nissensohn dated August 2, 2017 incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 4, 2017.

Consulting Agreement by and between the Company and YES-IF dated September 8, 2017, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 8, 2017.

Employment Agreement by and between the Company and Benjamin Kemper dated October 2, 2017, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on October 5, 2017.

Employment Agreement by and between the Company and David Marin dated February 28, 2018.

2018 Equity Incentive Plan incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the SEC on March 12, 2018.

Neev Nissenson Employment Agreement, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2019.

Asset Purchase Agreement, dated February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020.

Shai Lustgarten Employment Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020.

Consulting Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020.

Asset Purchase Agreement on February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020.

Employment Agreement with Shai Lustgarten on September, 2019, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2019.

Consulting Agreement with Carlos J.

Nissensohn on September, 2019, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2019.

2020 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 4, 2020.

Subsidiaries of the Registrant

Consent of Independent Registered Public Accounting Firm

Certification of our Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of our Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of our Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.

Section 1350)

XBRL Instance Document

7 unchanged sentences

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-K

Item 9A. Controls and Procedures