What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-15 compared with 2023-11-13 · 80 added, 102 removed, 54 unchanged (77% of the section changed)

27 unchanged sentences

of results or developments in subsequent periods.

as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and

Exchange Commission (“SEC”), we are under no obligation to publicly update or revise any forward-looking statements after

we file this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

Investors, potential

investors and other readers are urged to consider the above-mentioned factors carefully in evaluating the forward-looking statements

and are cautioned not to place undue reliance on such forward-looking statements.

Although we believe that the expectations reflected

in the forward-looking statements are reasonable, we cannot guarantee future results or performance.

a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our Annual

Report on Form 10-K for the year ended December 31, 2022 and Item 1A — “Risk Factors” in this Quarterly Report on Form

10-Q for the quarterly period ended September 30, 2023, as well as other reports and registration statements filed by us with the SEC.

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

10-Q and our other public filings.

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

website at www.omniq.com.

Many of these factors are beyond our ability to control or predict.

Such factors include,

but are not limited to, the following:

ability to raise capital when needed and on acceptable terms and conditions;

ability to manage credit and debt structures from vendors, debt holders, and secured lenders.

ability to manage the growth of our business through internal growth and acquisitions;

ability to attract and retain management, and to integrate and maintain technical information and management information systems.

with laws and regulations, including those relating to environmental matters, corporate governance matters and tax matters, as well

as any future changes to such laws and regulations;

a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our 2023

Form 10-K and Item 1A — “Risk Factors” in this Quarterly Report on Form 10-Q for the quarterly period ended March 31,

2024, as well as other reports and registration statements filed by us with the SEC.

These factors should not be construed as exhaustive

and should be read with other cautionary statements in this Quarterly Report on Form 10-Q and our other public filings.

For more information

about us and the announcements we make from time to time, visit our website at www.omniq.com.

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

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,

technology and services we provide help 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.

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.

following is a discussion of our financial condition, results of operations, financial resources, and working capital.

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

Company’s sales from operations for the nine months ended September 30, 2023, were $66 million, a decrease of approximately $12

million, or 15%, over the nine months ended September 30, 2022.

loss from operations for the nine months ended September 30, 2023, was $7 million, an increase of $1 million compared with the loss in

the nine months ended September 30, 2022, of $6 million.

Basic loss per share from continuing operations for the nine months ended September

30, 2023, was ($1.50) versus ($1.29) per share for the same period in 2022.

Company’s sales from operations for the three months ended March 31, 2024, were $18.3 million, a decrease of approximately $9.5

million, or 34%, over the three months ended March 31, 2023.

loss from operations for the three months ended March 31, 2024, was $1.3 million, a decrease of $752 thousand compared with the loss

in the three months ended March 31, 2023, of $2 million.

Basic loss per share from continuing operations for the three months ended

March 31, 2024, was ($0.20) versus ($0.45) per share for the same period in 2023.

Comprehensive loss for the three months ended March

31, 2024 and 2023 was $1.9 million and $3.1 million respectively, the only component to comprehensive loss besides net loss is foreign

currency translation.

AND CAPITAL RESOURCES

of September 30, 2023, the Company had cash in the amount of $408 thousand and a working capital deficit of $43 million, compared to

cash in the amount of $1.3 million, and a working capital deficit of $38 million as of December 31, 2022.

of March 31, 2024, the Company had cash in the amount of $881 thousand and a working capital deficit of $46.4 million, compared

to cash in the amount of $1.7 million, and a working capital deficit of $45.4 million as of December 31, 2023.

The Company had stockholders’

deficit attributable to OmniQ stockholders of $19.2 million and $10.5 million as of September 30, 2023, and December 31, 2022, respectively.

deficit attributable to OmniQ stockholders of $36.5 million and $35 million as of March 31, 2024, and December 31, 2023, respectively.

This increase in our stockholders’ deficit was primarily attributable to net losses.

Company’s accumulated deficit was $96.2 million and $84.4 million as of September 30, 2023, and December 31, 2022.

Company’s operations used net cash of $2.7 and $2 million in the nine months ended September 30, 2023, and 2022, respectively.

The increase in cash used by operations of $650 thousand is due to the decrease in revenue and paying down accounts payable.

Company’s cash provided from investing activities was $598 thousand for the nine months ended September 30, 2023, compared to cash

used in investing activities of $3.9 million for the nine months ended September 30, 2022.

Company’s financing activities provided $323 thousand of cash during the nine months ended September 30, 2023, and used $2.3

million during the nine months ended September 30, 2022.

During the nine months ended September 30, 2023, the Company made payments

of $1 million on its notes payable, including its related party notes payable, compared to the payments of $3 million for the nine

months ended September 30, 2022.

Additionally, the Company borrowed $796 thousand on the Company’s line of credit during the

nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, when $1.8 million was borrowed on the

Company’s line of credit.

Management is in the process of finalizing a new line of credit with an additional financial

In October 2023 management finalized an equity raise which resulted in $2.5 million in net cash received from investors.

See note 12 of the financial statements.

Company’s accumulated deficit was $115.9 million and $113.9 million as of March 31, 2024, and December 31, 2023.

Company’s operations used net cash of $623 thousand and $1.3 million in the three months ended March 31, 2024, and 2023, respectively.

The decrease in cash used in operations of $666 thousand is due to the decrease in revenue.

Company’s cash used in investing activities was $48 thousand for the three months ended March 31, 2024, compared to cash used

in investing activities of $341 thousand for the three months ended March 31, 2023.

Company’s financing activities used $971 thousand of cash during the three months ended March 31, 2024, and provided $3 million

during the three months ended March 31, 2023.

During the three months ended March 31, 2024, the Company made payments of $1.1 million

on its notes payable, and during the three months ended March 31, 2023, made payments of $544 thousand on its notes payable.

Additionally,

the Company borrowed $156 thousand on the Company’s line of credit during the three months ended March 31, 2024, compared to the

three months ended March 31, 2023, when $3.4 million was borrowed on the Company’s line of credit.

of Operations

following tables set forth certain selected unaudited condensed consolidated statement of operations data for the periods indicated in

following tables set forth certain selected unaudited condensed consolidated statements of operations data for the periods indicated

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

Three months ended

September 30,

For the three months ended

Cost of Goods sold

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Net Loss per common Share from continuing operations

the three months ended September 30, 2023 and 2022, the Company generated net revenues in the amount of $17 million and $27 million,

the three months ended March 31, 2024, and 2023, the Company generated net revenues in the amount of $18.3 million and $27.8 million,

respectively.

The decrease between the three-month periods was attributable to the decrease in demand and limitations in the supply chain.

of Goods Sold

the three months ended September 30, 2023 and 2022, the Company recognized a total of $13.4 million and $21 million, respectively, of

cost of goods sold.

For the three months ended September 30, 2023 and 2022, cost of goods sold were 77% and 78% of net revenues, respectively.

operating expense for the three months ended September 30, 2023 and 2022 recognized was $6.6 million and $8.6 million, respectively,

representing a 23% decrease.

The decreases are related to the decrease in revenue.

and Development – Research and development expenses for the three months ended September 30, 2023 and 2022 totaled $482

thousand and $445 thousand, respectively.

general and Administrative – Selling, general and administrative expenses for the three months ended September 30, 2023

and 2022 totaled $5.6 million and $7.6 million, respectively, representing a 27% decrease.

The decreases are related to decrease in revenue

and the cost reduction plan put in place by management.

– Depreciation expenses for the three months ended September 30, 2023 and 2022 totaled $146 thousand and $91 thousand,

respectively, representing a 60% increase.

The increase is attributable to the addition of fixed assets.

amortization – Intangible amortization expenses for the three months ended September 30, 2023 and 2022 totaled $418 thousand

and $474 thousand, respectively.

income and expenses

Expense – Interest expense for the three months ended September 30, 2023 totaled $898 thousand, as compared to $880 thousand

for the three months ended September 30, 2022.

The increase is primarily attributable to a additional in debt.

Nine months ended

September 30,

Cost of Goods sold

Operating Expenses

Loss from operations

Net Loss per common Share from continuing operations

the nine months ended September 30, 2023 and 2022, the Company generated net revenues in the amount of $66 million and $78 million, respectively.

The decrease between the nine-month periods was attributable to the decrease in demand and limitations in the supply chain

The decrease between the three-month periods was attributable to delays in projects and a slower demand.

of Goods Sold

the nine months ended September 30, 2023 and 2022, the Company recognized a total of $52 million and $59 million, respectively, of cost

the three months ended March 31, 2024, and 2023, the Company recognized a total of $13.3 million and $22 million, respectively, of cost

of goods sold.

For the nine months ended September 30, 2023 and 2022, cost of goods sold were 79% and 77% of net revenues, respectively.

operating expense for the nine months ended September 30, 2023 and 2022 recognized was $21 million and $24 million, respectively, representing

For the three months ended March 31, 2024, and 2023, cost of goods sold were 72% and 79% of net revenues, respectively.

operating expenses for the three months ended March 31, 2024, and 2023 recognized was $6.3 million and $7.7 million, respectively, representing

a 18% decrease.

The decreases are related to the cost reduction plan put in place by management.

and Development – Research and development expenses for the nine months ended September 30, 2023 and 2022 totaled $1.5

million and $1.4 million, respectively.

general and Administrative – Selling, general and administrative expenses for the nine months ended September 30, 2023

and 2022 totaled $18 million and $21 million, respectively, representing a 17% decrease.

The decreases are related to the cost reduction

plan put in place by management.

– Depreciation expenses for the nine months ended September 30, 2023, and 2022 totaled $349 thousand and $241 thousand,

respectively, representing a 45% increase.

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

amortization – Intangible amortization expenses for the nine months ended September 30, 2023, and 2022 totaled $1.3 million

and $1.3 million, respectively.

The decrease in operating expenses was due primarily to management’s cost savings plan.

and Development – Research and development expenses for the three months ended March 31, 2024, and 2023 totaled $405 thousand

and $423 thousand, respectively.

general and Administrative – Selling, general and administrative expenses for the three months ended March 31, 2024, and

2023 totaled $5.6 million and $6.8 million, respectively, representing a 18% decrease.

The decrease was due primarily to management’s

cost savings plan.

– Depreciation expenses for the three months ended March 31, 2024, and 2023 totaled $116 thousand and $108 thousand, respectively,

representing a 7% increase.

The increase is directly related to the acquisition of additional fixed assets.

amortization – Intangible amortization expenses for the three months ended March 31, 2024, and 2023 totaled $231 thousand

and $436 thousand, respectively.

The decrease is due to diminishing life of intangibles.

income and expenses

Expense – Interest expense for the nine months ended September 30, 2023 totaled $2.6 million, as compared to $2.6 million

for the nine months ended September 30, 2022.

Company’s results of operations have not been affected by inflation and management does not expect inflation to have a material

impact on its operations in the future.

Expense – Interest expense for the three months ended March 31, 2024, totaled $917 thousand, as compared to $938 thousand

for the three months ended March 31, 2023.

The decrease is primarily attributable to the reduced line of credit.

Company’s results of operations have not been materially affected by inflation and management does not expect inflation to have

a material impact on its operations in the future.

Balance Sheet Arrangements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis