What changed in this filing

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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 169 added, 217 removed, 240 unchanged (62% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

( UNAUDITED )

March 31, 2023

December 31, 2022

(In thousands, except share and per share data)

September 30, 2022

March 31, 2023

December 31, 2022

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Right of use lease asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities

8 unchanged sentences

Long term liabilities

Notes payable, related party, less current portion

Accrued interest and accrued liabilities, related party

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Total liabilities

Stockholders’ equity (deficit)

Stockholders’ deficit

Series A Preferred stock;

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3,000,000 shares designated, 502,000 shares issued and outstanding, respectively

Preferred stock value

Common stock;

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Total OmniQ stockholders’ deficit

Non controlling interest

TOTAL EQUITY (DEFICIT)

Total liabilities and equity (deficit)

accompanying unaudited notes should be read on conjunction with these unaudited condensed consolidated financial statements.

Total liabilities and deficit

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the three months

For the nine months

ending September 30,

(In thousands, except share and per share data)

For the Three months ended

(In thousands, except share and per share data)

Total Revenues

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Dividends attributable to non-common stockholders’ of OmniQ Corp

Net loss less non-common stockholder dividends

Net income after non-common stockholder dividends attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Net loss attributable to common stockholders’ of OmniQ Corp

Net (loss) per share - basic attributable to common stockerholders’ of OmniQ Corp

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

Weighted average number of common shares outstanding - basic

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands)

Other Comprehensive

Total Stockholders’

Preferred Stock

Comprehensive

(In thousands)

Income (Loss)

Balance, December 31, 2021

1 unchanged sentence

ESPP stock issuance

ESPP stock issuance, shares

Stock and warrants issued for services

Stock-based compensation – options, warrants, issuances

Stock and warrant issued for services

Exercise of stock options and warrants

2 unchanged sentences

Balance, March 31, 2022

Dividend on class C shares

ESPP stock issuance

Stock-based compensation – options, warrants, issuances

Exercise of stock options and warrants

Cumulative translation adjustment

Conversion of equity

Conversion of debt

Net (loss) income

Balance, June 30, 2021

Dividend on class C shares

ESPP stock issuance

Stock-based compensation – options, warrants, issuances

Exercise of stock options and warrants

Stock and warrant issuances, net of issuance costs

Stock and warrant issuance for acquisition

Cumulative translation adjustment

Dangot acquisition

Post acquisition adjustment

Net (loss) income

Balance, September 30, 2021

Balance, December 31, 2022

Dividend on Class C shares

ESPP stock issuance

Stock and warrant issued for services

Stock and warrants issued for services

Stock-based compensation – options, warrants, issuances

Exercise of stock options and warrants

Conversion of shares

Cumulative translation adjustment

Net (loss) income

Balance, March 31, 2023

ESPP stock issuance

Noncontrolling interests - distributions and other

Exercise of stock options and warrants

Stock-based compensation – options, warrants, issuances

Cumulative translation adjustment

Net (loss) income

Balance, June 30, 2022

ESPP stock issuance

Exercise of stock options and warrants

Stock-based compensation – options, warrants, issuances

Stock and warrants issued for services

Cumulative translation adjustment

Net (loss) income

Balance, September 30, 2022

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

STATEMENTS OF CASH FLOWS

the nine months ended September 30,

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

(In thousands)

Cash flows from operations

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

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

Loss on disposal of PP&E

Stock-based compensation

Stock and warrants issued for services

Depreciation and amortization

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Cash flows from investing activities

Payment for additional ownership in subsidiary

Payment for acquisition, net of cash acquired

Purchase of property and equipment

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Proceeds from exercise of options and warrants

Dividends paid

Payments on notes/loans payable

Proceeds from the issuance of notes/loans payable

Dividends paid to non-controlling interest

Proceeds (payments) on notes/loans payable

Proceeds from draw on line of credit

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Non-cash activities:

Stock issued for services

Declared dividends payable

Net assets acquired in business combination

Stock options and warrants issued

Right of use asset acquired in exchange for lease liability

Warrants/stock issued for service

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for income taxes

accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.

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condensed consolidated financial statements include the accounts of OMNIQ Corp, and its wholly owned subsidiaries, referred to herein

as “we,” “us,” “OMNIQ,” or the “Company”.

Intercompany accounts and transactions have

as “we,” “us,” “OMNIQ,” or the “Company.” Intercompany accounts and transactions have

been eliminated.

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Actual results could differ materially from those estimates.

Certain prior

period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current

period’s presentation.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with

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10-K for the year ended December 31, 2022.

During nine-month period ended September 30, 2022, there were no significant changes to those

During three-month period ended March 31, 2023, there were no significant changes to those

accounting policies.

Recent Accounting Pronouncements

2020, the Financial Statement Accounting Board (the “FASB”) issued ASU 2020-06 which simplifies the accounting for convertible

instruments and its application of the derivatives scope exception for contracts in an entity’s own equity.

For contracts in an

entity’s own equity, the new guidance eliminates some of the current requirements for equity classification such as the requirement

that settlement in unregistered shares is permitted.

In addition, the new guidance reduces the number of accounting models that require

separating embedded conversion features from convertible instruments, including eliminating the requirement to recognize a beneficial

conversion feature if the conversion feature is in the money and does not require bifurcation as a derivative liability.

only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately.

The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires

enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity.

The Company adopted the

new standards January 1, 2023.

The adoption of this standard may allow the Company, in the future and in certain circumstances, to avoid

derivative treatment of warrants and avoid beneficial conversion treatment of certain convertible preferred shares.

Adoption of this

standard had no effect on the Company’s financial statements.

Loss Per Common Share

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

EPS for the nine-months ended September 30, 2022, and 2021 were 7,558,311 and 5,971,440 , 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 anti-dilutive.

EPS for the three-months ended March 31, 2023, and 2022 were 7,749,870 and 7,511,376 , 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 as of:

SCHEDULE OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION

OF EARNINGS PER SHARE

September 30,

OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNING PER SHARE

March 31, 2023

Options to purchase common stock

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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 $ 32 million as of September 30, 2022

deficit of $ 80 million as of September 30, 2022

years of net losses from operations

years of negative cash flows from operations

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

The Company’s

continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis,

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 received financing for the acquisition of the last 23% of shares of Dangot on March 30, 2022.

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 .

Balancing the need for

operational cash with the need to add additional products

Timely and cost-effective

development of products

Working capital deficit

of $ 39.6 million as of March 31, 2023

Accumulated deficit of

$ 88 million as of March 31, 2023

Multiple periods of losses

from operations

Noncompliance with certain

debt covenants

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

The Company’s continuation

as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, which we

have successfully accomplished to date.

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

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

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.

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

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

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.

Overall the effective interest rate of the new line of

credit is approx.

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

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

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

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 September 30, 2022 was approximately $ 35 M.

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 just

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

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

Star - The Company’s total accounts payable due to Blue Star as of March 31, 2023 was approximately $ 37 million.

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

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.

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.

3 – CONCENTRATIONS

the nine-months ended September 30, 2022 there were no customers concentrations to disclose, and for the year ended December 31,

2021, there were two customer accounted for 23 %

of the Company’s consolidated revenues.

receivable at September 30, 2022 and December 31, 2021 are made up of trade receivables due from customers in the ordinary course of

Two customers made up 44.3 % of the accounts receivable balance at September 30, 2022 and one customer represented 17 % of the

balance of accounts receivable at December 31, 2021.

the nine months ended September 30, 2022 and the year ended December 31, 2021 one vendor made up 65 % and 65 %, respectively, of our purchases.

the three-months ended March 31, 2023, and the year ended December 31, 2022, two customers accounted for 30 %, respectively, of the Company’s

consolidated revenues.

receivable at March 31, 2023 and December 31, 2022 are made up of trade receivables due from customers in the ordinary course of business.

No customer accounted for more than 10 % of the outstanding receivables as of March 31, 2023, or December 31, 2022.

the three months ended March 31, 2023, and the year ended December 31, 2022 two vendors made up 49 % and one vendor made up 48 %, respectively,

of our purchases.

4 – BUSINESS ACQUISITION

Computers Ltd

May 3, 2021, the Company and Omniq Technologies Ltd., a wholly owned subsidiary of the Company (“Omniq Technologies”) entered

into a share purchase agreement (the “Dangot Share Purchase Agreement”) with Mr.

The 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 of $ 2,084

thousand and (b) cash in the amount of $ 5,058 thousand and $ 600 thousand payable to owner.

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 shares.

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.

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.

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

The Company utilized its working capital and a combination of short- and long-term loans.

5 – INVENTORY

consisted of the following as of:

SCHEDULE OF INVENTORY

December 31, 2022

Raw materials

Inventory in transit

Finished goods (less allowance)

Total inventories

6 – 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

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

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

5 unchanged sentences

purchased in a reserve account.

During the nine months ended September 30, 2022 we had a net borrowing of an additional $ 1.8 million

on the line and incurred $ 645 thousand in origination fees.

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 2021 Form 10-K.

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

6 unchanged sentences

party notes payable, consisted of the following as of:

SCHEDULE OF NOTES PAYABLE, RELATED PARTIES

September 30, 2022

OF NOTES PAYABLE, RELATED PARTIES

March 31, 2023

December 31, 2022

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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 (in 2014).

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

beginning in October 2018.

Accrued interest payable as of September 30, 2022, was $ 71 thousand.

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 March 31, 2023, was $ 72

Accrued interest is payable at maturity.

4 unchanged sentences

thousand beginning in October 2018.

maturities of related party notes payable as of September 30, 2022, are as follows:

SCHEDULE OF FUTURE MATURITIES OF NOTES PAYABLE, RELATED PARTIES

7 – NOTES PAYABLE

SCHEDULE OF OTHER NOTES PAYABLE

8 – OTHER NOTES PAYABLE

OF OTHER NOTES PAYABLE

(In thousands)

September 30,

Note Payable- Supplier

March 31, 2023

December 31, 2022

Note payable other

1 unchanged sentence

Long term notes payable

Payable - Supplier

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.

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 % to 10 %.

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

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.

March 25, 2022 the Company has paid off the entire remaining balance owed to the supplier.

Payable Other

July 29, 2021 the Company entered into a long-term loan from Leumi Bank totaling NIS 7 million, which at the time was approximately $ 2.16

The note accrues interest at 4.7 % per annum and is payable in 8 installments of principal and interest over 4 years .

is secured by shares of Dangot Computers, Ltd.

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

$ 1.1 million.

The note accrues interest at 7 % per annum and is payable in 8 installments of principal and interest over 4 years .

note is secured by shares of Dangot Computers, Ltd.

the year ended December 31, 2021, the Company entered into five lines of credit totaling NIS 17.5 million, as of September 30, 2022 the

outstanding balance was NIS 17.5 million, approximately $ 4.9 million.

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

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

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

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

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

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

1 unchanged sentence

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

As of September 30, 2022, the remaining balance was NIS 231 thousand, which was approximately $ 65 thousand.

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

$ 1.1 million.

The note accrues interest at 7 % per annum and is payable in 8 installments of principal and interest over 4 years .

note is secured by shares of Dangot Computers, Ltd.

As of March 31, 2023, the remaining balance was NIS 292 thousand, approximately $ 81 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

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

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

On 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 .

During 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

As of March 31, 2023, 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.

9 – OTHER LIABILITIES

1 unchanged sentence

(In thousands)

September 30,

March 31, 2023

December 31, 2022

Other vendor payable

4 unchanged sentences

10 – STOCKHOLDERS’ EQUITY

of September 30, 2022, there were 2,000,000 Series A preferred shares designated and no Series A preferred shares outstanding.

of March 31, 2023, there were 2,000,000 Series A preferred shares designated and no Series A preferred shares outstanding.

of directors of the Company (the “Board”) had previously set the voting rights for the Series A preferred stock at 1 share

of preferred to 250 common shares.

of September 30, 2022, there was 1 preferred share designated and no preferred shares outstanding.

of September 30, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 544,500 issued and outstanding.

of March 31, 2023, there was 1 preferred share designated and no preferred shares outstanding.

of March 31, 2023, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 502,000 issued and outstanding.

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

2 unchanged sentences

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

As of September 30, 2022, the accrued dividends on

the Series C Preferred Stock was $ 71 thousand.

As of March 31, 2023, the accrued dividends on the

Series C Preferred Stock was $ 159 thousand.

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

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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.

No shares were issued under the Plan in 2021.

On February 25, 2022, the Company granted 792,500 stock options.

These options were granted to employees as part of the Company’s

Equity Incentive Plan.

the nine months ending September 30, 2022, $ 147 thousand in stock options and stock warrants were exercised in exchange for 128,221 shares

of OMNIQ common stock.

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

On February 25, 2022, the Company granted

792,500 stock options.

These options were granted to employees as part of the Company’s Equity Incentive Plan.

No options were

issued in the three months ended March 31, 2023.

the three months ending March 31, 2023, 210,000 in stock options were exercised in exchange for 155,508 shares of OMNIQ common stock.

No warrants were exercised.

December 2015, our Board of Directors approved the OMNIQ.

Employee Stock Purchase Plan (the “ESPP”).

For the nine months

ending September 30, 2022 employees purchased 4,989 shares or $ 27 thousand of common stock.

June 15, 2022 our Board of Directors approved issuing 20,000 shares as part of a consulting agreement.

The shares were valued at $ 109

June 15, 2022 our Board of Directors granted 30,000 warrants as part of a consulting agreement.

The shares were valued at $ 176 thousand.

June 15, 2022 our Board of Directors granted 30,000 stock options as part of a consulting agreement.

The shares were valued at $ 173 thousand.

August 8, 2022 our Board of Directors approved issuing 80,000 shares as compensation for executives valued at $ 670 thousand.

As of September

30, 2022 the shares have not been issued.

August 8, 2022 our Board of Directors approved issuing 40,000 warrants as part of a consulting agreement valued at $ 209 thousand.

For the three months

ending March 31, 2023, employees purchased 2,340 shares or $ 10 thousand of common stock.

August 10, 2022, our Board of Directors approved issuing 10,000 shares as part of an employment agreement.

Shares were issued January

3, 2023, and valued at $ 45 thousand.

11 – LITIGATION

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.

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

on October 21, 2020.

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.

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12 – SUBSEQUENT EVENTS

October 23, 2022, the Company granted 19,000 stock options valued at $ 91 thousand to certain employees under the Company’s 2021

Equity Incentive Plan.

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

What changed 10-Q

Item 1. Financial Statements