What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-15 · 144 added, 127 removed, 282 unchanged (49% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

March 31, 2023

June 30, 2023

December 31, 2022

(In thousands, except share and per share data)

March 31, 2023

(In thousands)

June 30, 2023

December 31, 2022

35 unchanged sentences

Series C Preferred stock;

$ 0.001 par value;

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

shares designated, 502,000

and 544,500 shares issued and outstanding, respectively

Preferred stock value

8 unchanged sentences

Total liabilities and deficit

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

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

For the Three months ended

For the three months

For the Six months

ending June 30,

ended June 30,

(In thousands, except share and per share data)

22 unchanged sentences

Net loss attributable to common stockholders’ of OmniQ Corp

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

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

Stock and warrants issued for services

Stock and Warrant issued for services

Stock-based compensation – options, warrants, issuances

3 unchanged sentences

Balance, March 31, 2022

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

Balance, December 31, 2022

1 unchanged sentence

ESPP Stock Issuance

Stock and warrants issued for services

Stock and Warrant issued for services

Stock-based compensation – options, warrants, issuances

2 unchanged sentences

Cumulative Translation Adjustment

Net (loss) income

Balance, March 31, 2023

Dividend on Class C Shares

ESPP Stock Issuance

Exercise of stock options and warrants

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, June 30, 2023

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

CONSOLIDATED STATEMENTS OF CASH FLOW

the six months ended June 30,

(In thousands)

Cash flows from operations

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

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

Loss on disposal of PP&E

Stock-based compensation

Stock and warrants issued for services

Stock and warrant issued for services

Depreciation and amortization

9 unchanged sentences

Other liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

Payment for additional ownership in subsidiary

Purchase of property and equipment

Proceeds from sale of other assets

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from private placement

Proceeds from ESPP stock issuance

1 unchanged sentence

Dividends paid to non-controlling interest

Proceeds (payments) on notes/loans payable

Payments on notes/loans payable

Proceeds from the issuance of notes/loans payable

Proceeds from draw on line of credit

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net change in cash and cash equivalents

3 unchanged sentences

Non-cash activities:

Stock issued for services

Declared dividends payable

Warrants/stock issued for service

Supplemental disclosure of cash flow information:

4 unchanged sentences

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.

6 unchanged sentences

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

3 unchanged sentences

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

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.

During six-month period ended June 30, 2023, there were no significant changes to those accounting

Loss Per Common Share

5 unchanged sentences

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

EPS for the three-months ended March 31, 2023, and 2022 were 7,749,870 and 7,511,376 , respectively.

EPS for the six-months ended June 30, 2023, and 2022 were 7,777,665 and 7,545,190 , respectively.

Diluted net loss per share of common

3 unchanged sentences

OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNING PER SHARE

March 31, 2023

June 30, 2023

June 30, 2022

Options to purchase common stock

5 unchanged sentences

the principal conditions or events which potentially raise substantial doubt about the company’s ability to continue as a going

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

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

and cost-effective development of products

capital deficit of $ 40 million as of June 30, 2023

deficit of $ 92 million as of June 30, 2023

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.

11 unchanged sentences

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.

Star - The Company’s total accounts payable due to Blue Star as of June 30, 2023 was approximately $ 37 million.

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

Management believes that Blue Star

6 unchanged sentences

3 – CONCENTRATIONS

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.

the six-months ended June 30, 2023 and the year ended December 31, 2022, two customers accounted for 19 %

and one customer accounted for 30 %,

respectively, of the Company’s consolidated revenues.

receivable at June 30, 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 June 30, 2023, or December 31, 2022.

the six months ended June 30, 2023 and the year ended December 31, 2022 one vendor made up 42 % and 48 %, respectively, of our purchases.

4 – BUSINESS ACQUISITION

Computers Ltd

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.

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

26 unchanged sentences

OF NOTES PAYABLE, RELATED PARTIES

March 31, 2023

June 30, 2023

December 31, 2022

5 unchanged sentences

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 March 31, 2023, was $ 72

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 June 30, 2023, was $ 70 thousand.

Accrued interest is payable at maturity.

4 unchanged sentences

thousand beginning in October 2018.

8 – OTHER NOTES PAYABLE

OF OTHER NOTES PAYABLE

8 – NOTES PAYABLE

OF NOTES PAYABLE

(In thousands)

March 31, 2023

June 30, 2023

December 31, 2022

3 unchanged sentences

Payable Other

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

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.

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.

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

1 unchanged sentence

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

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

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.

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.

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.

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.

of June 30, 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.

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.

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)

March 31, 2023

June 30, 2023

December 31, 2022

5 unchanged sentences

10 – STOCKHOLDERS’ EQUITY

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 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.

of June 30, 2023, there were 2,000,000 Series A preferred shares designated and no Series A preferred shares outstanding.

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 June 30, 2023, there was 1 preferred share designated and no preferred shares outstanding.

of June 30, 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 March 31, 2023, the accrued dividends on the

Series C Preferred Stock was $ 159 thousand.

As of June 30, 2023, the accrued dividends on the

Series C Preferred Stock were $ 166 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

11 unchanged sentences

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.

issued in the six months ended June 30, 2023.

the six months ending June 30, 2023, 235,426 in stock options were exercised in exchange for 158,934 shares of OMNIQ common stock.

warrants were exercised.

December 2015, our Board of Directors approved the OMNIQ.

Employee Stock Purchase Plan (the “ESPP”).

For the three months

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

For the six months ending

June 30, 2023, employees purchased 4,234 shares or $ 18 thousand of common stock.

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

3 unchanged sentences

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

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.

company is not a party to any other pending material legal proceeding in which it is defending against any claims of material significance.

4 unchanged sentences

12 – SUBSEQUENT EVENTS

July 6, 2023, OmniQ Corp.

(the “Company”) entered into a Share and Rights Purchase Agreement (the Agreement”) with

Afcon Holdings Ltd., (“Afcon”), a company organized under the laws of the State of Israel, and Ateka Ltd.

a company organized under the laws of the State of Israel (Afcon and Ateka, jointly and severally, shall be referred to together as the

“Sellers”) (OminQ and its newly formed wholly owned subsidiary which shall be alternatively referred to together as the “Company”

or the “Purchaser”), and Tadiran Telecom Communication Services in Israel Ltd.

(“TBSI”), a company organized

under the laws of the State of Israel, Tadiran Telecom Communication Services in Israel L.P.

(“TBSI LP”), a limited partnership

organized under the laws of the State of Israel, Tadiran Telecom Technologies (2011) Ltd.

(“TTT”), a company organized under

the laws of the State of Israel, Tadiran Telecom (TTL) L.P.

(“TTL LP”) a limited partnership organized under the laws of

the State of Israel (TBSI, TBSI LP, TTT and TTL LP shall be referred together as “TT”).

owns 100 % of the shares of TBSI and 99 % of the partnership equity rights in TBSI LP (the remaining 1 % being held by TBSI), and Ateka

owns 100 % of the shares of TTT, and 99 % of the partnership equity rights in TTL LP (the remaining 1 % being held by TTT) (collectively

the “Purchased Equity”).

The Agreement provides that the Purchaser will acquire from the Sellers, the Purchased Equity in

exchange for total consideration of $ 15.25 million (the “Purchase Price”) to be paid as follows:

(i) $ 12,500,000 in cash

and (ii) shares of the Company’s common stock having a value of $ 2.75 million based on market prices at closing.

It is expected

that, as part of the consideration, OmniQ will arrange a loan to TT in the approximate amount of $ 6.1 million that will repay all debts

of TT to the Sellers.

This $ 6.1 million debt repayment is part of the $ 12,500,00 cash portion of the Purchase Price.

The Sellers are

also eligible to earn an additional $ 750,000 of shares of OmniQ common stock if TT’s EBITA is positive in 24 months from closing.

closing of the Agreement is subject to certain closing conditions including but not limited to obtaining approval from the Israeli Competition

(Antitrust) Commission, all necessary union approvals, certain third-party consents, and the compliance with certain cash and working

capital requirements.

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