What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-31 · 1154 added, 1146 removed, 642 unchanged (78% of the section changed)

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the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,

including our Chief Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required

The Company acknowledges that any controls and procedures can provide only reasonable assurances of achieving the desired

control objectives.

including our Chief Executive Officer (“CEO”) and Principal Accounting Officer, as appropriate, to allow timely decisions

regarding required disclosures.

The Company acknowledges that any controls and procedures can provide only reasonable assurances of achieving

the desired control objectives.

have carried out an evaluation as required by Rule 13a-15(d) under the supervision of and with the participation of our management, including

our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls

and procedure as of December 31, 2022.

our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls

and procedures as of December 31, 2023.

Based upon their evaluation, the Chief Executive Officer and Principal Accounting Officer concluded

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Internal control over financial reporting refers to the process designed

by, or under the supervision of, our principal executive officer and principal financial officer, and effected by our Board, management

by, or under the supervision of, our Chief Executive Officer and Principal Accounting Officer, and affected by our Board, management

and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

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Reporting as necessary on an on-going basis.

at the end of 2021, the Company engaged a professional consulting firm to help with implementing an internal process in accordance with

section 404a of the Sarbanes-Oxley Act 2000 (SOX).

The Company is in the process of implementing the SOX process and is currently performing

the documentation phase.

The controls in the main business processes that refer to the preparation of financial statement reporting of

the main Company were documented, gaps were noted, and a remediation plan was prepared.

The Company is in the process of implementing

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

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,

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

the Company believes the risk of material misstatements relative to financial reporting are minimal.

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OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISTICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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

Shai Lustgarten

Financial Officer and Director

of our officers and directors

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such occupation and employment were carried out.

Lustgarten, was appointed the Company’s CEO in April 2017 and served as the Company’s interim CFO from December 2018

through September 4, 2019.

Lustgarten, was appointed the Company’s CEO in April 2017 and served as the Company’s interim Chief Financial Officer

(“CFO”) from December 2018 through September 2019 and again from November 2023 and is still the interim CFO as of the date

of this report.

Lustgarten had been the Chief Executive Officer of Teamtronics, Inc.

beginning June 2016.

manufactures rugged computers and electronic equipment mainly used in the Gas and oil industry.

Teamtronics manufactures

rugged computers and electronic equipment mainly used in the Gas and oil industry.

From 2014 to 2017, Mr.

Lustgarten was

the Chief Executive Officer at Micronet Limited Inc., a developer and manufacturer of mobile computing platforms for integration into

fleet management and mobile workforce solutions listed on the Tel Aviv Stock Exchange.

Lustgarten was the Chief Executive

Officer at Micronet Limited Inc., a developer and manufacturer of mobile computing platforms for integration into fleet management and

mobile workforce solutions listed on the Tel Aviv Stock Exchange.

From 2013 to 2014, Mr.

Lustgarten served as EVP

Business Development and Head of the Aerospace and defense Division of Micronet EnertecTechnologies, a technology company listed on the

NASDAQ Capital Market.

Lustgarten served as EVP Business Development

and Head of the Aerospace and defense Division of Micronet EnertecTechnologies, a technology company listed on the NASDAQ Capital Market.

From 2009 to 2013 Mr.

Lustgarten was VP of Sales, Marketing and CMO of TAT Technologies, a world leading supplier

of electronic systems to the commercial and defense markets, from.

Lustgarten was VP of Sales, Marketing and CMO of TAT Technologies, a world leading supplier of electronic systems

to the commercial and defense markets.

His prior experience also includes serving as CEO of T.C.E.

in Belgium and serving from 1993 to 1997 as the assistant to the Military Attaché at the Embassy of Israel in Washington,

He received his Bachelor of Science degree in Business Management & Computer Science from the University of Maryland.

Nissenson became a director of the Company in April 2017 and was appointed as our CFO on September 5, 2019, effective October 10,

Aviation Ltd.

in Belgium and serving

from 1993 to 1997 as the assistant to the Military Attaché at the Embassy of Israel in Washington, DC.

He received his Bachelor

of Science degree in Business Management & Computer Science from the University of Maryland.

Nissenson became a director of the Company in April 2017 and was appointed as our CFO in September 2019 and resigned as CFO November

Nissenson continues to serve as a director on the board.

He is an experienced entrepreneur and financial officer.

Nissenson founded Hotwine, Inc., a California based wine

startup company.

Nissenson founded Hotwine, Inc., a California based wine startup company.

Since August 2016 and until October 2019, Mr.

Nissenson served as the Chief Financial Officer of Hypnocore, Ltd.,

an Israeli based startup company that develops mobile applications for sleep monitoring and therapy.

served as the CFO of Hypnocore, Ltd., an Israeli-based startup company that develops mobile applications for sleep monitoring and therapy.

From 2011 to 2015, Mr.

was the Chief Financial Officer of GMW, Inc., a high-end wine retailer from Napa, California.

Nissenson was the CFO of GMW, Inc., a high-end wine retailer from Napa, California.

Before that, Mr.

Nissenson served as the

Vice President from 2006 to 2011 and the Chief Financial Officer from 2009 to 2011 at Phoenix International Ventures, Inc., an aerospace

defense company.

Nissenson was also a member of the Municipal Committee for Business from 2004 to 2007 and a member of Municipal

Committee for Street Naming from 2005 to 2007 in the City of Herzliya, Israel.

He is also an armored platoon commander in the Israeli

Defense Forces (Reserve) Armored Corps with a rank of Captain.

served as the Vice President from 2006 to 2011 and the CFO from 2009 to 2011 at Phoenix International Ventures, Inc., an aerospace defense

Nissenson was also a member of the Municipal Committee for Business from 2004 to 2007 and a member of Municipal Committee

for Street Naming from 2005 to 2007 in the City of Herzliya, Israel.

He was also an armored-platoon commander in the Israeli Defense

Forces (Reserve) Armored Corps with a rank of Captain.

Nissenson graduated from Tel Aviv University in 2005 with a B.A.

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Business Administration specializing in Integrative Management.

MacMillan became a director of the Company in April 2017.

He is a corporate communications professional with 20 years of corporate

communications experience in the global securities industry, plus 18 years of direct investment banking and related experience.

a director of NTS, Inc.

since December 20, 2012 and since December 27, 2012 served as the Chairman of its Nominating and Corporate Governance

Committee until NTS’ sale to a private equity firm in June 2014.

Since 2010, Mr.

MacMillan has served as an independent management

consultant providing marketing and communications advisory to clients.

Prior to that from 2007 until 2010, Mr.

MacMillan served as Director,

Global Communications & Marketing of AXA Rosenberg, a leading equity asset management firm.

Prior to that, Mr.

MacMillan served in

a variety of corporate communication roles including Senior Vice President of Corporate Communications & Government Affairs at Ameriprise

Financial, Head of Corporate Communications (Americas) at Barclays Capital, Senior Vice President of Corporate Communications of The

NASDAQ Stock Market and Director of Corporate Communications at Credit Suisse First Boston.

MacMillan previously served as an investment

banker, acquisition officer, and consultant directly involved with capital raising, acquisitions, and financial feasibility studies.

MacMillan holds a BS in Industrial Engineering from the University of Iowa and a Masters in Business Administration from Harvard.

Shalem became a director of the Company in April 2017.

He has extensive experience in financial and business management.

has served as the Chief Financial Officer at Saga Monetary Technologies Limited (UK) since January 2018.

has served as the CFO at Saga Monetary Technologies Limited (UK) since January 2018.

Prior to that Mr.

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.

Shalem served as the CFO at Singulariteam

VC from January 2014 till January 2018.

He also worked as the CFO 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.

experience also includes serving as the CFO of TAT Technologies Ltd., a NASDAQ-listed 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 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.

He received his B.A.

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

University in 2004.

Elhanani became a director of the Company in August 2021.

Elhanani is a qualified CFO with experience leading financial strategies

to facilitate company growth.

Elhanani is serving as the CFO of Tarya Ltd.

, a public Fintech company which its shares are traded

in the Tel Aviv Stock Exchange.

Elhanani and has been the CFO and a partner of Singulariteam VC, a venture capital firm, since 2018.

Elhanani has been the CFO of Sirin Labs since 2017.

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

From 2015 to 2017, Mr.

Elhanani was the

CFO of SalesTech, an online internet technology servicing company.

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

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

Elhanani has also

served as the CFO of other companies, including:

Micronet Ltd.

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From 2003 to 2006, Mr.

Elhanani was the corporate

controller of On Track Innovations Ltd.

Elhanani was the corporate controller of On Track Innovations Ltd.

From 1999 to 2003, Mr.

Elhanani was a senior auditor at Kesselman and Kesselman (PWC Israel).

Elhanani was a lecturer at IVC College in Israel from 2014 to 2018 and at Hebrew University in Jerusalem from 2001 to 2003.

has also served as a board member for various companies, including:

General Robotics (2017-Present);

Effective Space Solutions (2017-Present);

Octopus Systems (2017-Present);

Elhanani was a senior

auditor at Kesselman and Kesselman (PWC Israel).

Elhanani was a lecturer at IVC College in Israel from 2014 to 2018 and at Hebrew

University in Jerusalem from 2001 to 2003.

Elhanani has also served as a board member for various companies, including:

General Robotics

Effective Space Solutions (2017-2021);

Octopus Systems (2017-2021);

and Infinity AR (2017-2019).

Elhanani received a B.A.

in Accounting and Economics, and a Master of

Business Administration, specializing in finance, from Hebrew University.

Elhanani received a

in Accounting and Economics, and a Master of Business Administration, specializing in finance, from Hebrew University.

Teicher became a director of the Company in December 2022.

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).

is a leading mathematician specializing in Algebraic Geometry with 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 has 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).

table below provides certain information regarding the diversity of our board of directors as the date of this annual report.

Diversity Matrix

of Principal Executive Offices:

Private Issuer

Prohibited under Home Country Law

Number of Directors

Not Disclose Gender

Gender Identity

Demographic Background

Underrepresented

Individual in Home Country Jurisdiction

Not Disclose Demographic Background

Board seeks members from diverse professional backgrounds who combine a solid professional reputation and knowledge of our business and

industry with a reputation for integrity.

Our Board does not have a formal policy concerning diversity and inclusion but is in the process

of establishing a policy on diversity.

Diversity of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate

Governance Committee considers when recommending director nominees to our Board.

Our Board also seeks members that have experience in

positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or

were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our Company.

the Board has continued its efforts to identify candidates that have such experience, they have currently been unable to identify any

such candidates which fulfill the diversity requirement with the requisite professional experience.

Family Relationships

are no family relationships among and between the issuer’s directors, officers, persons nominated or chosen by the issuer to become

directors or officers, or beneficial owners of more than ten percent of any class of the issuer’s equity securities.

EXECUTIVE COMPENSATION

table below shows the compensation for services in all capacities we paid during the year ended December 31, 2022 to the individuals

serving as our principal executive officers during the last completed fiscal year and our other two most highly paid executive officers

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

Name and Principal Position

table below shows the compensation for services in all capacities we paid during the year ended December 31, 2023 and 2022 to the individuals

serving as our principal executive officers (whom we refer to collectively as our “named executive officers”);

and Principal Position

Option Awards

All Other Compensation

Shai Lustgarten

Chief Executive Officer

Chief Executive Officer and Interim CFO

Neev Nissenson

Chief Financial Officer (1)

November 17, 2023, Neev Nissenson resigned from his position as CFO.

bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the named

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February 2020, we entered into an employment agreement with Mr.

Lustgarten, the Company’s Chief Executive Officer, (the “Lustgarten

Agreement”) pursuant to which Mr.

Lustgarten shall continue to serve as the Company’s Chief Executive Officer.

The Lustgarten

Agreement has a four (4) year term and automatically renews for additional one (1) year periods unless either party elects to terminate

the Lustgarten Agreement.

Pursuant to the Lustgarten Agreement, the Company shall pay Mr.

Lustgarten, the Company’s CEO, (the “Lustgarten Agreement”)

pursuant to which Mr.

Lustgarten shall continue to serve as the Company’s CEO.

The Lustgarten Agreement has a four-year term and

automatically renews for additional one-year periods unless either-party elects to terminate the Lustgarten Agreement.

Pursuant to the

Lustgarten Agreement, the Company shall pay Mr.

Lustgarten an annual base salary of $560,000.

Lustgarten shall also be eligible to receive i) equity awards pursuant to the Company’s 2018 Equity Incentive Plan and the

2020 Equity Incentive Plan and ii) certain milestone bonuses as set forth in the Lustgarten Agreement.

Lustgarten shall also be eligible to

receive i) equity awards pursuant to the Company’s Equity Incentive Plans and ii) certain milestone bonuses as set forth in the

Lustgarten Agreement.

In the event Mr.

employment is terminated by Mr.

Lustgarten for good reason, or terminated by the Company without cause, Mr.

Lustgarten shall be entitled

to the greater of (i) the unpaid base salary or (ii) one (1) year’s base salary.

Lustgarten’s employment is terminated by Mr.

Lustgarten for good reason, or terminated by

the Company without cause, Mr.

Lustgarten shall be entitled to the greater of (i) the unpaid base salary or (ii) one year’s base

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

Fees Earned or Paid in Cash ($)

Option 1 Awards

Non-Equity Incentive Plan Compensation

Nonqualified Deferred Compensation

All Other Compensation

Andrew MacMillan (1)

Incentive Plan Compensation

Yaron Shalem (1)

Guy Elhanani (1)

Itzhak Almog (1)

fair value of the options awarded to Mr.

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

Shalem, and Mr.

Elhanani in 2022 was determined to be $46 thousand 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 to 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.

of Directors, Senior Officers, Executive Officers and Other Management

of our directors, executive officers or any associate or affiliate of our Company during the last two fiscal years is or has been indebted

to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

Leadership Structure and Risk Oversight

Board currently consists of six members.

Board currently consists of 5 members:

Shai Lustgarten, Mr.

Neev Nissenson, Mr.

MacMillan and Mr.

Yaron Shalem, Mr.

Guy Elhanani, and Ms.

Mina Teicher.

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directly, with support from its three standing committees—the Audit Committee, the Compensation Committee, and the Corporate Governance/Nominating

The information set forth in Item

1C is also incorporated herein by reference.

to Item 407(a)(1)(ii) of Regulation S-K promulgated under the Securities Act, we have adopted the definition of “independent director”

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The Board determined that Mr.

Yaron Shalem, Mr.

Yaron Shalem,

Guy Elhanani, and Ms.

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Yaron Shalem, Mr.

Andy MacMillan, and Ms.

Guy Elhanani, and Ms.

Mina Teicher whereby Mr.

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of their activities to the Board.

The Audit Committee’s responsibilities include providing assistance to the Board in fulfilling

the Board’s oversight responsibility relating to:

The Audit Committee’s responsibilities include providing assistance to the Board relating to:

integrity of the Company’s financial statements and the related public reports;

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

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

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

Compensation Committee consists of Mr.

MacMillan, and Mr.

Yaron Shalem.

MacMillan serves as Chairperson.

Yaron Shalem, Mr.

Guy Elhanani, and Ms.

Mina Teicher.

Shalem serves as Chairperson.

Compensation Committee’s responsibilities include, among others:

annually the corporate goals and objectives applicable to the compensation of the Chief Executive Officer and/or President, evaluate

at least annually the Chief Executive Officer’s and/or President’s performance in light of those goals and objectives,

and determine and approve the Chief Executive Officer’s and/or President’s compensation level based on this evaluation;

annually the corporate goals and objectives applicable to the compensation of the CEO and/or President, evaluate at least annually

the CEO’s and/or President’s performance in light of those goals and objectives, and determine and approve the CEO’s

and/or President’s compensation level based on this evaluation;

matters relating to executive succession and management development;

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evaluate, and approve cash incentives and deferred compensation plans for executives;

approve, and administer and, when appropriate, recommend to the Board for approval, incentive compensation plans and equity-based

administer, and—when appropriate—recommend to the Board for approval, incentive compensation plans and equity-based plans;

employment contracts, severance agreements, change in control provisions, and other compensatory arrangements with Company executives.

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as necessary to assist with the execution of its duties and responsibilities.

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

Compensation Committee charter is available on the “About Us” subpage of our website (www.omniq.com).

Governance/Nominating Committee

Corporate Governance/Nominating Committee consists of Andrew J.

MacMillan, and Yaron Shalem.

MacMillan is the Chairman.

Corporate Governance/Nominating Committee consists of Mr.

Yaron Shalem, Mr.

Guy Elhanani, and Ms.

Mina Teicher.

Shalem serves as

Corporate Governance/Nominating Committee’s responsibilities include, among others:

and oversee the Company’s corporate governance practices and procedures, including identifying best practices, reviewing, and

recommending to the Board for approval any changes to the documents, policies, and procedures in the Company’s corporate governance

and oversee the Company’s corporate governance practices and procedures.

Which includes identifying best practices, reviewing,

and recommending to the Board for approval any changes to the documents, policies, and procedures in the Company’s corporate

governance framework;

procedures for the director nomination and to determine the qualifications, qualities, skills, and other expertise required to be

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recommended by the Company’s stockholders;

a process for an annual evaluation of the Company’s Chief Executive Officer and/or President;

a process for an annual evaluation of the Company’s CFO and/or President;

and oversee a process for an annual evaluation of the Board and its committees, including a formal assessment of each individual

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

the link “Corporate Governance”.

Corporate Governance/Nominating Committee charter is available on the “About Us” subpage of our website (www.omniq.com).

December 1, 2023 the Board adopted the OMNIQ Corp.

Clawback Policy (the “Clawback Policy”), providing for the recovery of

certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to

restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the

previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period

or left uncorrected in the current period.

Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant

to Exchange Act Rule 10D-1.

The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC

to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and

chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of

misconduct, and the reimbursement of those funds to the issuer.

A copy of the Clawback Policy has been filed herewith and can also be

found at www.omniq.com/investor-lounge.

in Certain Legal Proceedings

directors and executive officers have not been involved in any of the following events during the past ten years:

bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer

either at the time of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,

permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking

activities or to be associated with any person practicing in banking or securities activities;

found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated

a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed,

suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law

or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or

fraud in connection with any business entity;

subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,

any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members

or persons associated with a member.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information regarding beneficial ownership of our Common Stock as of December 31, 2023:

of our directors;

(ii) by each of our executive officers;

(iii) by our executive officers and directors as a group, and (iv) by each

of our directors, (ii) by each of our executive officers, (iii) by our executive officers and directors as a group, and (iv) by each

person or entity known by us to beneficially own 5% or more of any class of our common stock.

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shares of our common stock outstanding.

Name of Beneficial Owner

Amount of Beneficial Ownership

Percentage of Shares Outstanding

Shai Lustgarten (Chairman and CEO) (1)

Andrew MacMillan (2)

of Beneficial Owner

of Beneficial Ownership

Shai Lustgarten

(Chairman and CEO) 1

Neev Nissenson 2

Yaron Shalem 4

Neev Nissenson (CFO) (4)

Itzhak Almog (6)

Guy Elhanani 5

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

Mina Teicher 6

All Executive Officers and

Directors as a group (5 individuals)

Carlos Nissensohn 3

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50,000 shares issuable upon the exercise of options.

Also includes (i) 18,996 shares

Also includes 10,000 shares.

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

shares and (ii) 223,333 shares issuable upon exercise of options and warrants.

20,000 shares issuable upon exercise of options.

Also includes (i) 57,289 shares

Also includes 29,464 shares.

10,000 shares issuable upon exercise of options.

Also includes (i) 19,025 shares

10,000 shares issuable upon the exercise of options.

10,000 shares issuable upon exercise of options.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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to the Company and principal stockholder, (the “Nissensohn Agreement”) pursuant to Mr.

Nissensohn and/or an entity

under his control will provide certain consulting services to the Company.

Nissensohn and/or an entity under

his control will provide certain consulting services to the Company.

The Nissensohn Agreement has a four-year term and automatically

renews for additional one-year periods unless either party elects to terminate the Nissensohn Agreement.

Pursuant to the Nissensohn

Agreement, we will pay Mr.

Pursuant to the Nissensohn Agreement,

we will pay Mr.

Nissensohn a monthly fee of $30,000.

Nissensohn shall also be eligible to receive certain milestone bonuses

as set forth in the Nissensohn Agreement.

Nissensohn shall also be eligible to receive certain milestone bonuses as set

forth in the Nissensohn Agreement.

Nissensohn is a principal stockholder of the Company.

Nissensohn is the father

of Neev Nissenson, our CFO and board member.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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

for the audit of a company’s financial statements included in the annual report on Form 10-K, for the review of a company’s

financial statements included in the quarterly reports on Form 10-Q, and for services that are normally provided by the accountant in

connection with statutory and regulatory filings or engagements;

“audit-related fees” are fees for assurance and related

services that are reasonably related to the performance of the audit or review of a company’s financial statements;

fees” are fees for tax compliance, tax advice, and tax planning;

and “all other fees” are fees for any services not

included in the first three categories.

policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants.

These services may include

audit services, audit-related services, tax services and other services.

Under our Audit Committee’s policy, pre-approval is generally

provided for particular services or categories of services, including planned services, project-based services and routine consultations.

In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis.

Our Audit Committee approved all services

that our independent accountants provided to us in the past two fiscal years.

Nissensohn is the father of Neev Nissenson,

board member and former CFO.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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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

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (BARZILY)

BALANCE SHEETS

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

STATEMENTS OF EQUITY (DEFICIT)

STATEMENTS OF CASH FLOWS

TO CONSOLIDATED FINANCIAL STATEMENTS

Financial statement schedules are omitted as they are not applicable.

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begins immediately following the financial statements of this Annual Report on Form 10-K.

FORM 10-K SUMMARY.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

March 30, 2023

April 1, 2024

Shai Lustgarten

Executive Officer and Chairman of the Board

Executive Officer, Interim Chief Financial Officer and Chairman of the Board

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

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Shai Lustgarten

of the Board, Chief Executive Officer

Neev Nissenson

Chief Financial Officer

Guy Elhananai

of the Board, Chief Executive Officer and Interim Chief Financial Officer

TO CONSOLIDATED FINANCIAL STATEMENTS

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB:

2015 (BARZILY)

CONSOLIDATED BALANCE SHEETS

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB:

BALANCE SHEETS

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

STATEMENTS OF CASH FLOWS

TO CONSOLIDATED FINANCIAL STATEMENTS

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

of OMNIQ Corp.

the Board of Directors and Stockholders of OMNIQ Corp.

on the Financial Statements

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in the two-year period ended December 31, 2023, 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.

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

of the Company as of December 31, 2023, and 2022 and the results of its operations and its cash flows for each of the years in the two-year

period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

did not audit portions of the December 31, 2023, and 2022, consolidated financial statements for Dangot Computers, Ltd., a wholly owned

The portions not audited by us include assets of $20.2 million and $27.5 million as of December 31, 2023, and 2022, respectively,

and total revenues of $44.8 million and $45.5 million for the years ended December 31, 2023, and 2022, respectively.

Those portions of

the December 31, 2023, and 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.

is based 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.

accompanying consolidated financial statements have been prepared assuming the 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

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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.

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.

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 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.

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.

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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,

described in Note 9 to the financial statements, the Company has $5.7 million of intangible assets and $1.8 million of goodwill

after recording an impairment loss of $14.7 million.

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.

In consideration of

impairment, the Company employed a third-party specialist to prepare a valuation based on management’s estimates and market

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

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financial statements.

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

the fair value estimate.

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

In evaluating the Company’s assumptions, we compared them to historical results, financial information subsequent to year end,

and to customer orders to be filled.

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

We followed professional standards relating to the use of specialists employed by management.

These procedures

included, among others, evaluating the expertise and independence of third-party specialists, gaining an understanding of management’s

process for developing the fair value estimate, and assessing the inputs and key assumptions used to develop the models.

We used professionals

inside our firm with specialized skills and knowledge to assess the methodology.

Haynie & Company

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OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of

the Board of Directors and Stockholders of OMNIQ CORP.

on the Financial Statements

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(the “Company”) as of December 31, 2023,

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

and 2022, and the related consolidated statements of operations and comprehensive loss, change in stockholders’ equity (deficit).

cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the

“Financial Statement”).

In our opinion, the consolidated financial statement present fairly, in all material respects, the

financial position of the Company as of December 31, 2023, and 2022 and the results of its operation and its cash flows for each of the

years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States

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

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of December 31,

December 31, 2022

December 31, 2021

(In thousands, except share and per share data)

thousands, except share and per share data)

and cash equivalents

receivable, net

current assets

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

Accounts payable and accrued liabilities

current assets

and equipment, net of accumulated depreciation of $ 1,166

Goodwill, net of accumulated

impairment of $ 14,868

name, net of accumulated amortization of $ 4,850

and $ 4,458 ,

relationships, net of accumulated amortization of $ 11,814

and $ 10,762 ,

intangibles, net of accumulated amortization of $ 1,669

and $ 1,541 ,

of use lease asset

AND STOCKHOLDERS’ EQUITY

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

payroll and sales tax

payable, related parties

payable – current portion

liability – current portion

current liabilities

interest and accrued liabilities, related party

payable, less current portion

long-term liabilities

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

Stockholders’

equity (deficit)

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, 502,000

shares issued and outstanding, respectively

15,000,000 shares

10,675,802 and

7,714,780 shares

issued and outstanding, respectively

paid-in capital

other comprehensive income

OmniQ stockholders’ equity (deficit)

liabilities and equity (deficit)

accompanying notes are integral to these consolidated financial statements.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

the Years Ended December 31,

(In thousands, except share and per share data)

Total revenues

Cost of goods sold

thousands, except share and per share data)

of goods sold

& Development

general and administrative

impairment expense

operating expenses

Research & development

Selling, general and administrative

Total operating expenses

Loss from operations

from operations

Other income (expenses):

Interest expense

Other (expenses) income

Total other expenses

(expenses) income

other expenses

Net Loss Before Income Taxes

Provision for Income Taxes

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 attributable to common shareholders

Provision for Income Taxes

income attributable to noncontrolling interest

Loss attributable to OmniQ Corp

currency translation adjustment

Comprehensive

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)

loss attributable to common stockholders’ of OmniQ Corp

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

Weighted average number

of common shares outstanding - basic

accompanying notes are integral to these consolidated financial statements.

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

the Years Ended December 31, 2023 and 2022

Income (Loss)

Accumulated Other

Total Stockholders’

(In thousands)

Preferred Stock

Stockholders’

Comprehensive

Income (Loss)

Balance, December

December 31, 2021

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

Stock and Warrant issued for

Stock-based compensation –

options, warrants, issuances

Warrant issuances, net of

issuance costs

Exercise of stock options

Non-controlling interests,

distributions and other

Cumulative Translation Adjustment

Conversion of equity

Conversion of debt

Net income (loss)

Balance, December 31, 2021

(loss) income

December 31, 2022

Dividend on Class C Shares

ESPP Stock Issuance

Stock-based compensation – options, warrants,

Stock issued for services

Warrant issuances, net of issuance costs

Stock-based compensation –

options, warrants, issuances

Stock and Warrant issued for

Exercise of stock options

Non-controlling interests, distributions and other

Stock and warrant issuances,

net of issuance costs

Conversion of equity

Cumulative Translation Adjustment

Conversion of debt

Net income (loss)

Balance, December 31, 2022

(loss) income

December 31, 2023

$ ( 113,923 )

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

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the Years Ended December 31,

(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

flows from operations

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

on disposal of PP&E

interest expense

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 provided by (used in) operating activities

flows from investing activities

for additional ownership in subsidiary

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 interest

proceeds from issuance of common stock

on notes/loans payable

from the issuance of notes/loans payable

on line of credit

cash (used in) 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

of use asset acquired in exchange for lease liability

disclosure of cash flow information:

paid for interest

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 in

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

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

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

2008 and to 2013, we were in the business of developing oil and gas reserves.

2008 to 2013, we were in the business of developing oil and gas reserves.

In January 2014, we determined it was in the best interest

of our stockholders to focus on operating companies with a track record of positive cash flows and larger existing revenue bases.

strategy developed into leveraging management’s relationships in the business world for investments for the Company.

strategy developed into leveraging management’s relationships in the business world for investments for us.

2014, we have made the following acquisitions resulting in us becoming a leading provider of computerized and machine-vision image-processing

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(November 2014)

ViascanQdata,

Inc (October 2015 – later sold in September 2016)

Image Processing, Inc.

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for supply chain management, homeland security, public safety, traffic & parking management, and access control applications.

technology and services we provide helps our clients move people, assets and data safely and securely through airports, warehouses, schools,

national borders, and many other applications and environments.

offer end-to-end solutions that include hardware, software, communications, and full lifecycle management services.

We are an established

manufacturer and distributor of barcode labels, tags, and ribbons, as well as RFID labels and tags.

Our highly tenured team of professionals

has the knowledge and expertise to simplify the integration process for our customers, and our team delivers proven problem-solving solutions

backed by numerous customer references.

technology and services we provide helps our clients move people, assets, and data safely and securely through airports, warehouses,

schools, national borders, and many other applications and environments.

principal solutions include hardware, software, communications, and automated management services.

We are an established distributor

of barcode labels, tags, and ribbons, as well as RFID labels and tags.

We provide printing solutions, credit card terminals, automatic

kiosks and point-of-care units.

We also offer technical service and support.

Our highly tenured team of professionals has the knowledge

and expertise to simplify the integration process for our customers, and our team delivers proven problem-solving solutions backed by

numerous customer references.

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

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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.

manufacturing, retail, distribution, and transportation and logistics.

Since 2014, our annual consolidated revenues have grown to more

than $80 million with clients in more than 40 countries.

We currently engage with several billion-dollar markets with double-digit growth,

including the Global Safe City market and the Ticketless Safe Parking market.

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., 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.”

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.

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

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changes in facts and circumstances may cause us to revise these estimates.

and Cash Equivalents

consists of petty cash, checking, savings, and money market accounts.

For the purpose of the statements of cash flows, all highly liquid

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

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.

The Company maintains its cash in bank deposit accounts which,

at times, may exceed federally insured limits.

manage credit risk associated with our accounts receivables at the customer level.

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our allowances for doubtful accounts address our total revenues from Topic 606 and Topic 326.

believe concentration of credit risk, with respect to our receivables, is limited because our customer base is comprised of a number

of geographically diverse customers.

We manage credit risk through credit approvals, credit limits and other monitoring procedures.

to Topic 326 for our accounts receivables, we maintain an allowance for doubtful accounts that reflects our estimate of our expected

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or decrease our allowance for doubtful accounts.

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

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

Substantially

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and Equipment

and equipment are recorded at cost and depreciated using straight-line over the estimated useful lives.

and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives.

Ordinary repair and maintenance

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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, 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

value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date.

The FASB fair value measurement guidance established a fair value hierarchy that

prioritizes the inputs used to measure fair value.

The three broad levels of the fair value hierarchy are as follows:

1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities

2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability,

either directly or indirectly

3 – Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions

and liabilities are classified based on the lowest level of input that is significant to the fair value measurements.

We review the fair

value hierarchy classification on a quarterly basis.

Changes in the observable inputs may result in a reclassification of assets and

liabilities within the three levels of the hierarchy outlined above.

carrying amounts of certain financial instruments, such as cash equivalents, short term investments, accounts receivable, accounts payable

and accrued liabilities, approximate fair value due to their relatively short maturities.

Generally, we assign the following estimated useful lives to these categories:

OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT

Definite-lived

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amortizes definite-lived intangible assets on a straight-line basis over their useful lives.

The Company recorded no impairment loss

for definite-lived intangible assets during the years ended December 31, 2022 and 2021.

The Company recorded no

impairment loss for definite-lived intangible

assets during the years ended December 31, 2023 and 2022.

the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of

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The assets are being amortized on the straight-line method over

useful lives ranging from 3 to 11 years with a remaining weighted average lifespan of 7.5 years.

useful lives ranging from 3

years with a remaining weighted average lifespan

Indefinite-lived

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tax effect from any tax-deductible goodwill.

The estimated fair value of the reporting unit exceeded the carrying value as of December

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.

payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2023 and 2022.

Two vendors made

and one vendor made up 48 %

of our purchases during the year ended December 31, 2023 and 2022, 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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asset is present, if substantive substitution rights are present, and if the arrangement provides the customer control of the asset.

lease portfolio is substantially comprised of operating leases related to leases of real estate and improvements.

From time to time,

we may also lease various types of small equipment and vehicles.

lease portfolio is substantially comprised of operating leases related to leases of real estate.

From time to time, we may also lease

various types of small equipment and vehicles.

lease right-of-use (“ROU”) assets represent our right to use an individual asset for the lease term and lease liabilities

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terms include options to extend the lease when it is reasonably certain those options will be exercised.

For leases with terms greater

than 12 months, we record the related asset and obligation at the present value of lease payments over the term.

Our leases can include

rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when

such renewal options and/or termination options are reasonably certain of exercise.

ROU asset is subject to the same impairment guidance as assets categorized as plant, property, and equipment.

As such, any impairment

loss on ROU assets is presented in the same manner as an impairment loss recognized on other long-lived assets.

Our leases can include rental

escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when such renewal

options and/or termination options are reasonably certain of exercise.

ROU asset is subject to the same impairment guidance as assets categorized as property and equipment.

As such, any impairment loss on

ROU assets is presented in the same manner as an impairment loss recognized on other long-lived assets.

lease modification is a change to the terms and conditions of a contract that change the scope or consideration of a lease.

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are changes to the lease contract that do not give rise to a separate lease.

Accounting and Business Combinations

account for our business combinations using the purchase method of accounting which requires that intangible assets be recognized apart

from goodwill if they are contractual in nature or separately identifiable.

Acquisitions are measured on the fair value of consideration

exchanged and, if the consideration given is not cash, measurement is based on the fair value of the consideration given or the fair

value of the assets acquired, whichever is more reliably measurable.

The excess of cost of an acquired entity over the fair value of

identifiable acquired assets and liabilities assumed is allocated to goodwill.

valuation and allocation processes rely on significant assumptions made by management.

In certain situations, the allocations of excess

purchase price are based upon preliminary estimates and assumptions.

Accordingly, the allocations are subject to revision when we receive

updated information, including appraisals and other analyses, which are completed within one year of the acquisition.

Revisions to the

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

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

Revenue from Contracts with Customers (Topic 606) :

the contract with our customer.

determine revenue recognition through the following steps:

(1) identification of the contract with a customer;

(2) identification of

the performance obligations in the contract;

the transaction price.

the transaction price to the performance obligations.

the satisfaction of the performance obligations,

account for contracts, with our customers, when we have approval and commitment from both parties, the rights of the parties are identified,

payment terms are established, the contract has commercial substance and collectability of consideration is probable.

evaluate, in accordance with Topic 606, whether we meet the criteria to be a principal or an agent and record the revenue on a gross

or net basis.

We are considered a principal if we obtain control of any one of the following:

good or another asset from another party that we then transfer to our customer.

right to a service to be performed by another party, which gives the us the ability to direct that party to provide the service to

the customer on our behalf, and

good or service from another party that we then combine with other goods or services in providing the specified good or service to

our customer.

have certain relationships with manufacturers and suppliers to sell us products or provide services.

Our contracts may transfer to our

customer a right to a future service or product to be provided by our manufacturer or supplier.

When a specified good or service is a

right to a good or service is provided by a manufacturer or supplier, we evaluate whether we control the right to the goods or services

before that right is transferred to the customer rather than whether we control the underlying goods or services.

that we control the specified good or service before it is transferred to the customer (and we are therefore a principal) include, but

are not limited to, the following:

are responsible for fulfilling the promise to provide the specified good or service.

This typically includes responsibility for the

acceptability of the specified good or service.

If we are primarily responsible for fulfilling the promise to provide the specified

good or service, this may indicate that the other party involved in providing the specified good or service is acting on our behalf.

Often, we provide value added services (combining hardware, integrating hardware to software, etc.) to the products and services

purchased from our manufacturers and suppliers.

have inventory risk before the specified good or service has been transferred to a customer.

Our purchases of products or services

from our manufactures and suppliers is evidenced by our issuing a binding purchase order contract with the negotiated terms including

specifications, pricing, delivery among other things.

Our obligation for purchased products and services is mutually exclusive of

our customers’ performance (failure to take acceptance, make payment, etc.)

have sole discretion in establishing our price for the specified good or service.

Establishing the price our customer pays for a

specified good or service may indicate we have the ability to direct the use of that good or service and obtain substantially all

of the remaining benefits.

We control and set the pricing for the product or services to be provided to our customers.

the terms of a transaction do not indicate we are acting as a principal in the transaction, we are then considered acting as an agent

and the associated revenues would be recognized on a net basis.

principal, when (or as) we satisfy a performance obligation, we recognize revenue in the gross amount of consideration which we expect

to be entitled in exchange for the specified good or service transferred.

We are an agent if our performance obligation is to arrange

for the provision of the specified good or service by another party.

As an agent, we do not control the specified good or service provided

by another party before that good or service is transferred to our customer.

As an agent, when (or as) we satisfy a performance obligation,

we recognize revenue in the amount of any fee or commission which we expect to be entitled in exchange for arranging for the specified

goods or services to be provided by another party to our customer.

Topic 606, we recognize revenue (on either a gross or net basis previously discussed) only when we satisfy a performance obligation by

transferring a promised good or service to our customer.

A good or service is considered transferred when the customer obtains control.

The standard defines control as an entity’s ability to direct the use of, and obtain substantially all of the remaining benefits

from, an asset.

We recognize revenue (either gross or net) once control has passed to the customer.

The following indicators are evaluated

in determining when control has passed to the customer:

have a right to payment for the product or service,

customer has legal title to the product,

have transferred physical possession of the product to the customer,

customer has the risk and rewards of ownership of the product, and

customer has accepted the product.

Recognition for Hardware.

Revenues from sales of hardware products are recognized on a gross basis as we are acting as a principal

in these transactions, with the selling price to the customer recorded as sales and the acquisition cost of the product recorded as cost

We recognize revenue from these transactions when control has passed to the customer.

Manufacturers

and suppliers, from whom we purchase hardware, often provide their warranties only providing assurance the products and services will

conform to their specifications.

These assurance type warranties are not sold separately and are not considered separate performance

In some transactions, a third-party will provide the customer with an extended warranty.

These extended warranties are sold

separately and provide the customer with a service in addition to assurance that the product will function as expected.

We consider these

warranties to be separate performance obligations from the underlying product.

For warranties, where we are arranging those services

be provided by a third-party, we are acting as an agent in the transaction and records revenue on a net basis at the point of sale.

Recognition for Software.

Sales of software licenses are generally considered a single performance obligation.

When we are considered

the principal, we recognize revenues on a gross basis at the point the software is delivered to and accepted by our customer.

software licenses are sold with accompanying third-party delivered software assurance, which is a product that allows customers to upgrade,

at no additional cost, to the latest technology if new capabilities are introduced during the period that the software assurance is in

explained above, we evaluate whether the software assurance is a separate performance obligation by assessing if the third-party delivered

software assurance is critical or essential to the core functionality of the software itself.

This involves considering:

the software provides its original intended functionality to the customer without the updates,

the customer would ascribe a higher value to the upgrades versus the up-front deliverable,

the customer would expect frequent intelligence updates to the software (such as updates that maintain the original functionality),

the customer chooses to not delay or always install upgrades.

we determine the accompanying third-party delivered software assurance is critical or essential to the core functionality of the software

license, the software license and the accompanying third-party delivered software assurance are recognized as a single performance obligation.

some transactions, a third-party will provide the customer with an extended warranty.

These extended warranties are sold separately and

provide the customer with a service in addition to assurance that the product will function as expected.

We consider these warranties

to be separate performance obligations from the underlying product.

For warranties, where we are arranging those services be provided

by a third-party, we are acting as an agent in the transaction and records revenue on a net basis at the point of sale.

Recognition for Services.

We provide professional services, which include project managers and consultants recommending, designing

and implementing IT solutions.

Revenue from professional services is recognized either on a time and materials basis or proportionally,

as costs are incurred for fixed fee project work.

Revenue is recognized on a gross basis each month as work is performed and we transfer

those services.

from the sale of professional and support services, provided by us, are recognized over the period the service is provided.

As the customer

receives the benefit of the service each month, we recognize the respective revenue on a gross basis as we are acting as a principal

in the transaction.

Additionally, we manage services team provides project support to customers that are billed on a fixed fee basis.

We are acting as the principal in the transaction and recognize revenue on a gross basis based on the total number of hours incurred

for the period over the total expected hours for the project.

Total expected hours to complete the project is updated for each period

and best represents the transfer of control of the service to the customer.

We record both the freight billed to its customers and the related freight costs as cost of sales when the underlying product

revenue is recognized.

For freight not billed to its customers, we record the freight costs as cost of sales.

The Company considers shipping

to be a fulfillment activity and not a separate performance obligation.

(3) determination of the transaction price;

(4) allocation of the transaction price to the

performance obligations in the contract;

and (5) recognition of revenue when, or as, a performance obligation is satisfied.

combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near

the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract,

or the services are considered a single performance obligation.

Our contracts are typically governed by a customer purchase order or

The contract generally specifies the delivery of what constitutes a single performance obligation.

If an arrangement involves

multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value

on a standalone basis and whether there is objective and reliable evidence of their standalone selling price.

The total contract transaction

price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations.

The standalone selling price is based on an observable price for services sold to other comparable customers.

discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of

a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.

We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale.

Sales, value-added and

other taxes collected concurrently with revenue producing activities are excluded from revenue.

contract liability is recognized as deferred revenue when we invoice customers, or receive customer cash payments, in advance of satisfying

the related performance obligation(s) under the terms of a contract.

Deferred revenue is recognized as revenue when we have satisfied

the related performance obligation.

have four main revenue streams:

(1) Hardware sales, (2) Hardware installation/configuration, (3) Hardware service contracts, and (4)

Third-party software sales.

For all these revenue streams, our performance obligations are satisfied at a point in time, and therefore,

revenue is recognized at point in time when a customer takes control of the good or asset created by the service.

Factors that may indicate

transfer of control are when we have the right to receive payment for the good or service, when the legal title of the asset as been

transferred, physical possession of the asset has been transferred, the customer obtains the significant risks and rewards of ownership

of the asset, and the customer accepts the asset.

For some customers, control is transferred when the customer, or the customer’s

courier, picks up the hardware from our warehouse.

For other customers, control is transferred upon delivery.

For hardware sales which

also include installation and/or configuration as a single performance obligation, control is transferred only when the hardware is delivered

and installed/configured.

For hardware service contracts and for third-party software sales, the Company acts as the agent in the transaction,

and thus recognizes revenue on a net basis at a point in time when the transaction has been facilitated.

leverage drop-ship shipments with many of our partners and suppliers to deliver hardware to our customers without having to physically

hold the inventory at our warehouses, thereby increasing efficiency and reducing costs.

We recognize revenue for drop-ship arrangements

on a gross basis as the principal in the transaction when the product is received by the customer because we control the product prior

to transfer to the customer.

We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if

something were to happen to the hardware during shipping, we set the price of the product charged to the customer, we assume credit risk

for nonpayment by our customer, and we work closely with customers to determine their hardware specifications.

reviews historical returns on at least an annual basis to determine the need for an allowance for sales returns.

Historically, sales

returns have been extremely limited, with the effect on the financial statements immaterial.

Sales returns during any particular year

are so small and so infrequent that management determined that any material reserve against sales returns would likely not be appropriate.

periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for

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as compensation expense on the straight-line basis over the vesting period.

record stock-based compensation expense according to the provisions of ASC Topic 718, Compensation – Stock Compensation.

718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements

based on their fair values.

Under the provisions of ASC Topic 718, the Company determines the appropriate fair value model to be used

for valuing share-based payments and the amortization method for compensation cost.

fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

The Company estimates

the expected volatility and expected option life assumption consistent with ASC Topic 718, Compensation – Stock Compensation.

expected volatility of the Company’s common stock at the date of grant is estimated based on a historic volatility rate and the

expected option life is calculated based on historical stock option experience as the best estimate of future exercise patterns.

dividend yield assumption is based on historical and anticipated dividend payouts.

The risk-free interest rate assumption is based on

observed interest rates consistent with the expected life of each stock option grant.

The Company uses historical data to estimate pre-vesting

option forfeitures and records stock-based compensation expense only for those awards that are expected to vest.

Compensation expense

is recorded for all stock options expected to vest based on the amortization of the fair value at the date of grant on a straight-line

basis primarily over the vesting period of the options.

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.

In September 2020, our shareholders

adopted and ratified the 2020 Equity Incentive Plan.

The total number of shares of Common Stock authorized for issuance under the 2020

Plan is 1,000,000 .

instruments issued to parties other than employees for acquiring goods or services.

Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of section

505-50-30 of the FASB Accounting Standards Codification (“FASB ASC Section 505-50-30”).

Pursuant to FASB ASC Section 505-50-30,

all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based

on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance

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

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.

record stock-based compensation expense according to the provisions of ASC Topic 718, Compensation – Stock Compensation (“Topic

Topic 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in

the financial statements based on their fair values.

Under the provisions of Topic 718, the Company determines the appropriate fair value

model to be used for valuing share-based payments and the amortization method for compensation cost.

fair value of each stock option grant and warrant is estimated on the date of grant using the Black-Scholes option-pricing model.

Company estimates the expected volatility and expected option life consistent with Topic 718.

The expected volatility of the Company’s

common stock at the date of grant is estimated based on a historic volatility rate and the expected option life is calculated based on

historical stock options as the best estimate of future exercise patterns.

The dividend yield assumption is based on historical and anticipated

dividend payouts.

The risk-free interest rate assumption is based on observed US treasury rates consistent with the expected life of

each stock option grant.

The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation

expense only for those awards that are expected to vest.

Compensation expense is recorded for all stock options expected to vest based

on the amortization of the fair value at the date of grant on a straight-line basis primarily over the vesting period of the options.

Company expenses marketing and advertising costs as incurred.

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.

These rebates have

been recorded as a reduction to the related advertising and marketing expense.

During 2023 and 2022, the Company spent $ 379

thousand and $ 630

thousand, respectively, on marketing, trade show,

and advertising.

Currency Translation

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our continuing operations are conducted in U.S.

dollars except its subsidiary located in Israel.

dollars except for subsidiaries located in Israel.

The records of the Israeli operations

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

assets and liabilities are 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.

assets and liabilities are translated using

the balance sheet period-end date exchange rate.

Expenses and income are translated using the weighted average exchange rates for the

reporting period.

Foreign translation gains and losses are reported on the consolidated statement of operations and comprehensive loss

and were included in the amount of loss from comprehensive income.

The aggregate foreign currency transaction loss included in net income

for the years ended December 31, 2023 and 2022 was $ 1

million, respectively.

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

1 unchanged sentence

assets and liabilities and their respective tax bases and tax credit carry forwards.

Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that

includes the enactment date.

tax expense is based on reported earnings before income taxes.

Deferred income taxes reflect the impact of temporary differences between

assets and liabilities recognized for consolidated financial reporting purposes and such amounts recognized for tax purposes and are

measured by applying enacted tax rates in effect in years in which the differences are expected to reverse.

also follow the guidance related to accounting for income tax uncertainties.

In accounting for uncertainty in income taxes, the Company

recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely

than not sustain the position following an audit.

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.

Deferred tax assets, liabilities, and income taxes

are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected

to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in

the period that includes the enactment date.

Income tax expense is based on reported earnings before income taxes.

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

23 unchanged sentences

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

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

Warrants to purchase common stock

Potential shares excluded from diluted net loss per share

EPS for the years ended December 31, 2023 and December 31, 2022 were 8,412,494

and 7,576,434 ,

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, 2023 and 2022, 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

Options to purchase

to purchase common stock

shares excluded from diluted net loss per share

Reclassifications

and Comparability

Certain revenue and cost of goods sold amounts in the financial statements

of the prior year have been reclassified to be presented on a net basis rather than a gross to conform to the current year’s presentation

for comparative purposes.

The total amount reclassified from cost of goods sold to revenue, as a reduction, was $1.8 million.

no effect on total assets or net income.

adopted accounting pronouncements

June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) 2016-13,

Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which changes how entities will

measure credit losses for financial assets and certain other instruments that are not measured at fair value through net income.

new expected credit loss impairment model requires immediate recognition of estimated credit losses expected to occur.

Additional disclosures

are required regarding assumptions, models, and methods for estimating the credit losses.

ASU 2019-10, Financial Instruments-Credit Losses

(Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates, deferred the effective date for non-public

The standard is effective for non-public companies for fiscal years beginning after December 15, 2022.

We adopted these requirements

as of January 1, 2023 with no material impact on our consolidated financial statements.

August 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.

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.

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires retrospective disclosure of significant

segment expenses and other segment items on an annual and interim basis.

Additionally, it requires disclosure of the title and position

of the Chief Operating Decision Maker (“CODM”).

This ASU will be effective for the Company’s fiscal December 31, 2024

year-end and interim periods beginning in fiscal 2025, with early adoption permitted.

We are assessing the impact of this guidance on

our disclosures;

it will not have an impact on our results of operations, cash flows, or financial condition.

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires an annual

tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well

as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction.

This ASU will be effective for the Company’s fiscal December 31, 2025 year-end, with early adoption permitted.

We are assessing

the impact of this guidance on our disclosures;

it will not have an impact on our results of operations, cash flows, or financial condition.

3 – GOING CONCERN

4 unchanged sentences

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

capital deficit of $ 45 million

as of December 31, 2023

deficit of $ 113.9

million as of December 31, 2023

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

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:

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.

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.

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.

over year decrease in sales

Noncompliance

with certain debt covenants

considers the conditions outlined above as the most significant factors in raising substantial doubt about the Company’s ability

to continue as a going concern within one year after the date the financial statements are issued.

Plans to Mitigate and Alleviate Conditions or Events

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

has placed a strategic focus on increasing sales with prime customers.

efforts are focused on the most profitable product lines.

Star - The Company’s total accounts payable due to Blue Star as of December 31, 2023, was approximately $ 42

Blue Star 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.

has enjoyed a good mutual relationship for the past five years.

finalized a new line of credit with an additional financial institution.

October 2023 management finalized an equity raise which resulted in $ 2.5

million in net cash received from investors.

4 – BUSINESS ACQUISITIONS

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Pursuant to the Dangot Share

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.

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 equaled US $ 7.6

million (the “Closing Consideration”),

based on the exchange rate at the date of acquisition.

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.

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.

The Company utilized its working capital and a combination

of short and long term loans.

(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 (c) $ 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 equaled 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

thousand 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.

The Company paid $ 3,518

thousand to purchase the additional shares.

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:

SCHEDULE OF RECOGNIZED FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

Purchase Price Consideration (in thousands)

Total Consideration

OF RECOGNIZED FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

Price Consideration (in thousands)

Consideration

Cash payments

1 unchanged sentence

Fair value of stock issued (220,103 shares)

Total consideration

consideration

Accounts receivable

1 unchanged sentence

Customer relationship

Other intangible assets

intangible assets

Assets acquired

Current liabilities assumed

Non-controlling interest

Net assets acquired

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.

Non-controlling

assets acquired

5 – CONTRACTS WITH CUSTOMERS

balance of deferred revenues is included in other current and long-term liabilities on the balance sheet.

The following table summarizes

changes in deferred revenue as of December 31:

OF DEFERRED REVENUE

Beginning balance

Less amounts recognized during

new deferred revenue

6 – ACCOUNTS RECEIVABLE

receivable consisted of the following as of December 31:

SCHEDULE OF ACCOUNTS RECEIVABLE

Trade accounts receivable

Less allowance for doubtful accounts

Total accounts receivable (net)

OF ACCOUNTS RECEIVABLE

Trade accounts

allowance for doubtful accounts

accounts receivable (net)

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

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.

customer accounted for more than 10 %

of the balance of accounts receivable for either period.

7 – INVENTORY

consisted of the following as of December 31:

SCHEDULE OF INVENTORY

Raw materials

Inventory in transit

Finished goods (less allowance)

Total inventories

Finished goods

allowance for obsolescence

8 – PROPERTY AND EQUIPMENT

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

SCHEDULE OF PROPERTY AND EQUIPMENT

Manufacturing and lab equipment

OF PROPERTY AND EQUIPMENT

Manufacturing

and lab equipment

Leasehold improvements

3 unchanged sentences

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.

Property and equipment,

expense for the years ended December 31, 2023 and 2022 was approximately $ 464

thousand and $ 324

thousand, respectively.

9 – 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 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 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:

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS

of Goodwill – During the year ended December 31, 2023 the Company experienced significant decline in our stock price and sustained

losses from operations.

Therefore, we completed a quantitative goodwill impairment analysis as of December 31, 2023.

The results of the

analysis during the fourth quarter indicated an impairment loss for goodwill related to acquisitions prior to 2021, and we recorded a

non-cash impairment of $ 14.7

Accumulated impairment of goodwill for the years ended

December 31, 2023 and 2022 was $ 14.7

million and $ 0 ,

respectively.

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, 2023 and 2022 was $ 1.6

million and $ 1.8

million, respectively

assets consisted of the following as of December 31:

OF GOODWILL ASSETS CONSISTED

balance, beginning of year

foreign exchange rates

balance, end of year

assets consisted of the following as of December 31:

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:

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

Years ending December 31,

OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

ending December 31,

is not amortized but is evaluated for impairment annually or when indicators of a potential impairment are present.

8 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 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.

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, 2023 and 2022.

10 – 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 working capital.

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.

(“BridgeBank”) to establish a credit facility, whereby we could obtain short-term financing by selling and assigning acceptable

accounts receivables to BridgeBank.

Gross proceeds received during the years ended December 31, 2023 and 2022 were $ 35

million and $ 50

million, respectively.

This agreement was terminated

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.

was 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

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.

The BFA credit facility was collateralized

with a senior security interest in certain assets of the Company.

The BFA included customary representations and warranties and default

provisions for transactions of this type.

11 – RELATED PARTY NOTES PAYABLE

1 unchanged sentence

OF NOTES PAYABLE, RELATED PARTIES

Note payable –Marin

Note payable –Thomet

Total notes payable

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 $ 8 thousand and $ 10 thousand, respectively.

Note payable –

payable – Thomet

notes payable, related parties

remaining balances were paid in full during the year ended December 31, 2023.

For the years ended December 31, 2023 and 2022, the Company

recorded interest expense in connection with these notes in the amount of $ 1

thousand and $ 8

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 (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.

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 was payable in 60

monthly principal payments of $ 20

thousand beginning in October 2018.

Accrued interest

payable as of December 31, 2023 and 2022, was $ 73

thousand and $ 72

thousand, respectively.

Accrued interest was

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 was payable in

monthly principal payments of $ 13

thousand beginning in October 2018.

2 unchanged sentences

OF OTHER NOTES PAYABLE

Note Payable - Secured Supplier Note

Notes Payable - other

Less current portion

Long Term Notes Payable

Notes Payable

current portion

Term Notes Payable

maturities of notes payable are as follows for the years ending December 31, 2023:

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.

This note was extended and amended multiple times

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

OF FUTURE MATURITIES OF NOTE PAYABLE

Notes Payable

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

$ 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, 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

of December 31, 2022 and 2021, other liabilities consisted of the following:

OF OTHER LIABILITIES

Other vendor payable

Dividend payable

Total other liabilities

Less current portion

Total long term other liabilities

July 29, 2021, the Company entered into a long-term loan from Leumi Bank totaling NIS 7

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 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.

September 13, 2022, the Company entered into a long-term loan from Hapoalim Bank totaling NIS 3

million, approximately US $ 0.9

The note accrues interest at 7.5 %

per annum and is payable in 36

instalments of principal and interest over 3

the year ended December 31, 2023, the Company entered into a short-term loan Hapoalim Bank totaling NIS 5.5

million, approximately US $ 1.5

The note accrues interest at 7.3 %

the year ended December 31, 2023, the Company entered into a short-term loan from Bank Leumi totaling NIS 21.5

million, approximately US $ 5.9

The note accrues interest at 7.6 %

September 21, 2023, the Company entered into a long-term loan from Tzameret Mimunim totaling 1.5 M

NIS, approximately US $ 393

The note accrues interest at the Israeli

Prime Rate plus 3.5 %

which currently equals 9.75 %

per annum and is payable in 36

monthly installments.

of December 31, 2023, the Company was not in compliance with certain financial covenants related to the Bank Leumi and Bank Hapoalim

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.

13 – COMMITMENTS AND CONTINGENCIES

maintain a contributory profit-sharing plan covering substantially all fulltime employees within the requirements of the Employee Retirement

maintain a contributory profit-sharing plan covering substantially all full-time employees within the requirements of the Employee Retirement

Income Security Act of 1974 (“ERISA”).

In 2016, the Safe Harbor element was removed from the plan and the employer may make

In 2016, the Safe Harbor element was removed from the plan, so the employer may make

a discretionary matching contribution equal to a uniform percentage or dollar amount of participants’ elective deferrals for each

In 2015, we were required to make a safe harbor non-elective contribution equal to 3 percent of a participant’s compensation.

The plan also includes a 401(k) savings plan feature that allows substantially all employees to make voluntary contributions and provides

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

For the year ending December 31, 2022 and 2021,

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

The plan also includes a 401(k)-savings plan feature that allows substantially all employees to make voluntary contributions

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

For the years ending December 31,

2023 and 2022, the company has elected to match;

the total expense was $ 109

thousand and $ 122

thousand, respectively.

of December 31, 2023, we had 5 Operating leases as follows:

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, 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.

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

As of December 31, 2023, the Company had 32

remaining on the lease.

space in Anaheim, CA with monthly payments of $ 4

As of December 31, 2023, the Company had 27

remaining on the lease.

corporate offices are currently located at Yad Harutzim 14 Tel-Aviv, Israel.

The main corporate office, Yad Harutzim 14, serves as

the company’s main building on the 2nd and 3rd floors, used by the management and most of the sales staff, technicians, etc.

The corporate office annual lease expense is NIS 784,380 .

As of December 31, 2023, the Company had 11

months remaining on the lease.

lease office space (Gamdan- 1st floor) for our finance and service department at Yad Harutzim 14 Tel-Aviv, Israel.

The lease provides

for monthly payments of NIS 18,814 .

As of December 31, 2023, the Company had 12

months remaining on the lease.

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

The lease provides

for monthly payments of NIS 41,200 .

AS of December 31, 2023, the Company had 18

months remaining on the lease.

information related to our operating leases is as follows:

SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE

OF OTHER INFORMATION RELATED TO OPERATING LEASE

ROU asset - January 1, 2022

Effective foreign exchange rates

ROU asset - December 31, 2021

Effective foreign exchange rates

Effective foreign exchange

ROU asset - December 31,

Effective foreign exchange

asset – December 31, 2023

Lease liability – January

Effective foreign exchange rates

Lease liability - December 31, 2021

Increase (Decrease)

Effective foreign exchange rates

Effective foreign exchange

Lease liability – December

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

Effective foreign exchange

liability - December 31, 2023

of December 31, 2023, our operating leases had a weighted average remaining lease term of 19.81

months and a weighted average discount rate of

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, 2023:

SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

Minimum lease payments

Less interest

Present value of future minimum lease payments

Less current obligations

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 is defending the case.

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

OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

Minimum lease

value of future minimum lease payments

current obligations

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.

This case was

settled in February 2024.

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 the

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

of more than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to

the Company in any proceeding.

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

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

than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to the Company

in any proceeding.

14 – STOCKHOLDERS’ EQUITY

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

of December 31, 2023 and 2022, there were 2,000,000

Series A preferred shares authorized and zero

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, 2023 and 2022, there was one

preferred share authorized and zero

preferred shares outstanding.

of December 31, 2023 and 2022, there were 3,000,000

Series C Preferred Shares (“Series C”)

authorized with 502,000

issued and outstanding, respectively.

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.

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

at a rate of $ 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, 2023 and 2022, the accrued dividends

on the Series C Preferred Stock was $ 181

thousand and $ 153

thousand, respectively.

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

2 unchanged sentences

for 20 consecutive trading days .

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

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

the employ of and attract new employees, directors, officers, consultants, advisors and employees to the Company.

October 2021, OMNIQ’s Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain and

attract new employees, directors, officers, consultants, advisors and employees to the Company.

Pursuant to the Plan, 1,118,856

one million ( 1,000,000 )

shares of the Company’s common stock, par value $ 0.001

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 September 2020, shareholders’ meeting.

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

December 2015, our Board of Directors approved the OMNIQ.

Employee Stock Purchase Plan (the “ESPP”).

For the years ending

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

On October 23, 2022 19,000

stock options were granted to employees as part

shares were issued under the Plan in 2023.

December 2015, our Board of Directors approved the OMNIQ’s Employee Stock Purchase Plan (the “ESPP”).

For the years

ending December 31, 2023 and 2022, employees purchased 14,838

thousand) shares and 7,025

thousand) shares of commons stock.

October 5, 2023, OmniQ Corp.

(the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”)

with ThinkEquity LLC, as representatives (the “Representatives”) of the several underwriters named therein (collectively,

the “Underwriters”), relating to the issuance and sale (the “Offering”) of 2,775,000

shares of the Company’s common stock, par

value $ 0.001

per share, at a price to the public of $ 1.00

per share (the “Underwritten Shares”)

and pre-funded warrants (the “Pre-Funded Warrants”) to purchase 225,000

shares of the Company’s common stock at

a price to the public of $ 0.999

per Pre-Funded Warrant.

Under the terms of the

Underwriting Agreement, the Underwriters have agreed to purchase the Underwritten Shares from the Company at a price of $ 1.00

per share and the Pre-Funded Warrants at a price

per Pre-Funded Warrant.

The Company also granted

the Underwriters an option exercisable for 45 days from the date of the Underwriting Agreement to purchase up to an additional 450,000

shares of common stock solely for the purpose

of covering over-allotments (together with the Underwritten Shares, the “Shares”).

All of the Shares and Pre-Funded Warrants

in the Offering are being sold by the Company.

The Company also issued warrants to the Representative (the “Representative’s

Warrants”), exercisable to purchase 140,000

shares of common stock, at an exercise price

gross proceeds from the Offering were approximately $ 3.0

million before deducting underwriting discounts

and commissions and other offering expenses payable by the Company and assuming no exercise of the Underwriters’ option to purchase

additional shares.

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 million.

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

The Company determines the assumptions used

in the valuation of warrants and option awards as of the date of grant.

Differences in the expected stock price volatility, expected

term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates.

As such, the Company may use different

assumptions for options and warrants granted throughout the year.

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

valuation assumptions used to determine the fair value of each option and warrant awarded during the year ended December 31, 2023 are

expected stock price volatility 126.44 %,

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 4.73 %.

additional options were issued in 2021.

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.

The estimated fair value of the warrants were $ .55 .

valuation assumptions used to determine the fair value of each option and warrant awarded during the year ended December 31, 2022 are

expected stock price volatility ranged from 104.33 %

expected term in years 3.25 ,

and risk-free interest rate ranged from 1.76 %

warrants were exercised during the years ended December 31, 2023 or 2022.

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

SCHEDULE OF WARRANTS ACTIVITY

OF WARRANTS ACTIVITY

Weighted Average

Exercise Price

Weighted Average

Exercise Price

Balance, beginning of year

Balance, beginning

Warrants granted

Warrants expired

Warrants exercised

Balance, end of year

Exercisable warrants

warrants as of December 31, 2023 are as follows:

SCHEDULE OF OUTSTANDING WARRANTS

OF OUTSTANDING WARRANTS

Exercise Prices

Weighted Average

Residual Life

5.91 to 10.00

Weighted Average

Exercise Price

Weighted Average

Exercise Price

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

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

OF WARRANTS OUTSTANDING, EXPIRY DATE AND EXERCISE PRICES

Exercise Prices

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

to acquire common shares.

The Board of Directors of the Company has the authority to determine the terms, limits, restrictions and conditions

of the grant of options, to interpret the plan, and make all decisions relating thereto.

The plan was adopted by the Company’s

Board of Directors on November 17, 2014 in order to provide an inducement and serve as a long-term incentive program.

The maximum number

of common shares that may be reserved for issuance was set at 500,000 .

The Board of Directors has the authority to determine the terms, limits, restrictions and conditions, interpret

the plan, and make all decisions relating thereto.

The current plan was adopted by the board of directors in December 2021 with a maximum

shares to be issued.

option exercise price is established by the Board of Directors and may not be lower than the market price of the common shares at the

2 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.

options exercised during the year ended December 31, 2023, 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.

exercise price was $ 373

As of December 31, 2023, the intrinsic

value for vested stock options was $ 0 .

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 $ 1.5 million.

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

exercise price was $ 369

As of December 31, 2022, the intrinsic

value for vested stock options was $ 477

of December 31, 2023 the total compensation cost related to nonvested awards not yet recognized was $ 355

The weighted average period over which

it is expected to be recognized is 2

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

SCHEDULE OF STOCK OPTIONS GRANTED

OF STOCK OPTIONS GRANTED

Stock Options

Weighted Average

Exercise Price

Stock Options

Weighted Average

Exercise Price

Balance, beginning of year

Balance, beginning

Stock options granted

1 unchanged sentence

Stock options cancelled, forfeited

Stock options exercised

Balance, end of year

Exercisable stock options

options exercised

stock options

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

OF STOCK OPTIONS, EXPIRY DATE AND EXERCISE PRICES

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

SCHEDULE OF STOCK COMPENSATION EXPENSE

OF STOCK COMPENSATION EXPENSE

Stock Compensation

Stock Option vesting

Option vesting

15 – RELATED PARTY TRANSACTIONS

1 unchanged sentence

Nissensohn, a principal shareholder of the Company and a family

member of a Director and Officer of the Company.

member of a director and former officer of the Company.

The terms and condition of the contract are as follows:

term with 90-day termination notice by the Company

monthly fee of $ 30 thousand.

we procure debt financing during the term of Mr.

Nissensohn’s agreement, without any equity component, Mr.

Nissensohn shall

be entitled to 3% of the gross funds raised, however if we are required to pay a success fee to another external entity, then Mr.

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

This section and the issue of the warrant by OMNIQ are subject

to the approval of the Board of Directors of OMNIQ.

However, if the Board does not approve the issuance of warrants;

will be entitled to a fee with the equivalent value based on a Black Scholes valuation

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

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

related party transactions are discussed in Note 10.

a monthly fee of $ 30,000 .

Financing Fee:

the Company procures debt financing during the term of this Agreement and without any equity component, then the Consultant, who

shall have coordinated the transaction through which the Company procured the debt financing, shall be entitled to 5% of the gross

funds raised;

however if the Company is required to pay a success fee to another external entity, the Consultant shall be entitled

to only 3% of the gross funds raised.

Consultant’s right to receive such fee shall remain in force for a period of 24 months

immediately following the termination of this Agreement.

Financing Fee:

the Company procures equity financing in an amount equal to or greater than $2,000,000 during the term of this Agreement, then the

Consultant shall be entitled to a success fee of $60,000 upon the Company’s receipt of at least $2,000,000.

right to receive such fee shall remain in force for a period of 24 months immediately following the termination of this Agreement.

If the Company procures equity financing in an amount equal to or greater than $4,000,000 during the term of this Agreement, then

the Consultant shall be entitled to a success fee of $180,000 upon the Company’s receipt of at least $4,000,000.

right to receive such fee shall remain in force for a period of 24 months immediately following the termination of this Agreement.

If the Company procures equity financing in an amount equal to or greater than $6,000,000 during the term of this Agreement, then

the Consultant shall be entitled to a success fee to be determined by the Board of Directors but not less than $250,000 upon the

Company’s receipt of at least $6,000,000.

Consultant’s right to receive such fee shall remain in force for a period of

24 months immediately following the termination of this Agreement.

to National Exchange.

If the Consultant assists in the planning and monitoring of a successful listing or offering of securities

by the Company, or any subsidiary thereof, on the NASDAQ or New York Stock Exchange markets and such a listing or offering shall

be consummated within 24 months as of the date hereof, then the Consultant shall be entitled to a $ 80,000

onetime payment which shall be paid on the

1st day that the OMNIQ shares become traded on such national exchange.

the Company closes any M&A transaction with a third party target during the term of this Agreement, then the Consultant shall

be entitled to a success fee in the amount equal to five percent ( 5 %)

of the total transaction price, in any combination of cash and shares to be determined by OMNIQ, to be paid to the Consultant within

two (2) weeks of the closing of such transaction.

In the event an external entity is entitled to a success fee from the same M&A

transaction, the Consultant’s fee shall be reduced to no less than two and one-half percent ( 2.5 %)

and such amount reduced from Consultant’s fee shall be reallocated to the fee due to such external entity.

the Company closes any M&A transaction in which it is the acquired company, then the Consultant shall be entitled to a success

fee in the amount equal to two percent ( 2 %)

of the total transaction price, in any combination of cash and shares to be determined by the Company, to be paid to the Consultant

within two (2) weeks of the closing of such transaction.

fees described in this Section 2(e) shall also apply to any M&A transaction that closes after the term of this Agreement but

which the Consultant substantially contributed to prior to the termination of this Agreement.

Consultant shall be entitled to a fee equal to five percent ( 5 %)

of the year-to-year growth in the Company’s foreign sales of its products and services during the term of the Agreement.

fee shall be paid within a reasonable time after the end of each fiscal year.

If this Agreement is terminated prior to the end of

a fiscal year, then the Consultant shall be entitled to receive a pro-rated amount of the sales growth realized by the Company that

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.

the year ended December 31, 2023, no customer accounted for more than 10 %

of the Company’s revenues.

For the year ended December 31, 2022, one customer accounted for 30 %

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 for the years ended December 31,

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

The following tables set forth revenues by geographic area for the

years ended December 31,

OF REVENUES BY GEOGRAPHIC AREA

United States

Rest of the world

Total revenues

Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in the countries in

1 unchanged sentence

Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of

export duties, quotas and embargoes;

domestic and international customs and tariffs;

changing taxation policies;

foreign exchange

restrictions;

and political conditions and governmental regulations.

funds, export duties, quotas and embargoes, domestic and international customs and tariffs, changing taxation policies, foreign exchange

restrictions, political conditions, and governmental regulations.

are closely monitoring developments in the war between Israel and Hamas that began on October 7, 2023 including potential impacts to

The Companies business, customers, suppliers, employees, and operations in Israel, the Middle East and elsewhere.

At this time, impacts

to The Company are expected to be minimal but is subject to change given the volatile nature of the situation.

17 – INCOME TAX

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.

the year ended December 31, 2023, the Company has $ 741

thousand of current income tax expense (US State

& Local and Foreign) and $ 221

thousand deferred income tax benefit.

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

OF DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets

Reserves and deferred revenue

Reserves and deferred

163(j) Limitation

Foreign deferred tax assets

Net operating loss

operating loss

Total gross deferred tax assets

2 unchanged sentences

Deferred tax liabilities

Amortization of intangible assets and depreciation

Total deferred tax liabilities

Net deferred tax assets

deferred tax liabilities

deferred tax assets

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

SCHEDULE OF DEFERRED TAX ASSETS AND VALUATION ALLOWANCES

OF DEFERRED TAX ASSETS AND VALUATION ALLOWANCES

Net deferred tax

deferred tax assets

Valuation allowance

Total deferred tax assets

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.

valuation allowance for deferred tax assets as of December 31, 2023 and 2022 was $ 14.9

million and $ 10.9

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.

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.

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

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,:

OF RECONCILIATION OF STATUTORY RATE AND EFFECTIVE TAX RATE

Federal statutory tax rate

Federal statutory

Foreign income taxes

1 unchanged sentence

Return to provision adjustments

Effective tax rate

Company reported no uncertain tax liability as of December 31, 2023 and expects no significant change to the uncertain tax liability

over the next twelve months.

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.

The Company’s 2020, 2021, 2022, and 2023 federal and state income tax returns are open for examination

by the applicable governmental authorities.

of December 31, 2023, the Company had a net operating loss (NOL) carryforward of approximately $ 43.8

A portion of the NOL carryforward begins

15 unchanged sentences

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

INDEX—we will update the exhibit index

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.

18 – SUBSEQUENT EVENTS

January 18, 2024, the Company’s wholly owned subsidiary, Quest Marketing, Inc.

(“Quest”) entered into a Purchase and

Sale Agreement (the “Purchase and Sale Agreement”) with Prestige Capital Finance, LLC (“Prestige”), in which

Quest has sold, transferred and assigned all of its rights, title and interest to specific accounts receivable owed to Quest.

outstanding balance of Quest to Prestige shall be $ 7.5

addition, Prestige’s purchase from Quest shall be at a discount.

The discount shall be based on the number of days an account is

The discount fee shall be as follows:

paid within 30 days a discount fee of 1.50% plus an additional .50% for each 10-day period thereafter up to a maximum of 90 days.

January 30, 2024, OMNIQ Corp.

(the “Company’), its wholly owned subsidiary, Dangot Computers Ltd.

CodeBlocks Ltd.

(CodeBlocks”).

and CodeBlock’s owners, Alina Lifshits and Erez Attia entered into a Share Purchase Agreement

(the “Purchase Agreement”) pursuant to which Dangot, acquired all of the capital stock of CodeBlocks in exchange for NIS

(approximately US $ 1,275,044

based on today’s exchange rate).

The consideration

is payable in seven equal installments with the final payment due on January 11, 2025.

The purchase Agreement closed on February 1, 2024.

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 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.

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 Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A

Purchase Agreement dated January 18, 2024, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form

8-K filed with the SEC on January 24, 2024

Purchase Agreement dated January 30, 2024, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form

8-K filed with the SEC on February 5, 2024

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 Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification

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

Section 1350)

Certification

of our Principal Accounting 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