What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-15 · 102 added, 47 removed, 87 unchanged (63% of the section changed)

37 unchanged sentences

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,

Form 10-K and Item 1A — “Risk Factors” in this Quarterly Report on Form 10-Q for the quarterly period ended June 30,

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

27 unchanged sentences

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 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.

Company’s sales from operations for the six months ended June 30, 2024, were $37 million, a decrease of approximately $11 million,

or 22.8%, over the six months ended June 30, 2023.

loss from operations for the six months ended June 30, 2024, was $2.2 million, a decrease of $2 million compared with the loss in the

six months ended June 30, 2023, of $4.5 million.

Basic loss per share from continuing operations for the six months ended June 30, 2024,

was ($.48) versus ($.95) per share for the same period in 2023.

OF THE CHANGES IN TRADING VENUE

May 3, 2024, The Nasdaq Stock Market LLC (“Nasdaq”) notified OMNIQ Corp.

(the “Company”) that the Nasdaq Hearings

Panel (the “Panel”) has determined to delist the Company’s common stock and that trading of the Company’s securities

will be suspended at the open of trading on May 7, 2024.

As previously reported, on August 9, 2023, Nasdaq Listing Qualifications Staff

(the “Staff”) notified the Company that it no longer complied with the minimum $35 million market value of listed securities

(“MVLS”) required for continued listing as set forth in Listing Rule 5550(b)(2).

In accordance with Listing Rule 5810(c)(3)(A),

the Company was provided 180 calendar days, or until February 5, 2024, to regain compliance.

On February 8, 2024, Staff notified the

Company that it had determined to delist the Company as it did not comply with the MVLS requirement for listing on the Exchange.

15, 2024, the Company requested a hearing, which was held on April 11, 2024.

May 7, 2024, OMNIQ Corp.

stock transitioned from NASDAQ to the OTC Markets, and OMNIQ’s stock continues to trade on the OTCQB under the ticker symbol

“OMQS”, ensuring uninterrupted market activity for its shareholders.

AND CAPITAL RESOURCES

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.

of June 30, 2024, the Company had cash in the amount of $1.4 million and a working capital deficit of $48 million, compared to cash in

the amount of $1.7 million, and a working capital deficit of $45 million as of December 31, 2023.

The Company had stockholders’

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 $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.

deficit attributable to OmniQ stockholders of $38 million and $35 million as of June 30, 2024, and December 31, 2023, respectively.

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

Company’s accumulated deficit was $119 million and $114 million as of June 30, 2024, and December 31, 2023.

Company’s operations used net cash of $3.7 million and 767 thousand in the six months ended June 30, 2024, and 2023, respectively.

The decrease in cash used by operations of $2.9 million is due to an increase in accounts receivable.

Company’s cash used in investing activities was $103 thousand for the six months ended June 30, 2024, compared to cash provided

by investing activities of $572 thousand for the six months ended June 30, 2023.

Company’s financing activities provided $1.4 million of cash during the six months ended June 30, 2024, and $683 thousand

during the six months ended June 30, 2023.

During the six months ended June 30, 2024, the Company made payments of $1.8 million on its

notes payable, compared to the payments of $673 thousand for the six months ended June 30, 2023.

Additionally, the Company borrowed $3.2

million on the Company’s line of credit during the six months ended June 30, 2024, compared to the six months ended June 30, 2023,

when $1.1 million was borrowed on the Company’s line of credit.

of Operations

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

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

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

For the three months ended

Three months ended June 30,

Cost of Goods sold

2 unchanged sentences

Net Loss per common Share from continuing operations

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 delays in projects and a slower demand.

the three months ended June 30, 2024 and 2023, the Company generated net revenues in the amount of $19 million and $20 million, respectively.

The decrease between the three-month periods was attributable to the decrease in demand.

of Goods Sold

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

the three months ended June 30, 2024 and 2023, the Company recognized a total of $14.1 million and $16.4 million, respectively, of cost of

For the three months ended June 30, 2024 and 2023, cost of goods sold were 74% and 81% of net revenues, respectively.

operating expenses for the three months ended June 30, 2024 and 2023 recognized was $5.8 million and $6.4 million, respectively, representing

an 9% decrease.

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

and Development – Research and development expenses for the three months ended June 30, 2024 and 2023 totaled $462 thousand

and $559 thousand, respectively.

general and Administrative – Selling, general and administrative expenses for the three months ended June 30, 2024 and

2023 totaled $5 million and $5.3 million, respectively, representing a 5% decrease.

The decreases are related to the cost reduction plan

put in place by management.

– Depreciation expenses for the three months ended June 30, 2024 and 2023 totaled $92 thousand and $96 thousand, respectively,

representing a 4% decrease.

amortization – Intangible amortization expenses for the three months ended June 30, 2024 and 2023 totaled $227 thousand

and $422 thousand, respectively.

income and expenses

Expense – Interest expense for the three months ended June 30, 2024 totaled $794 thousand, as compared to $740 thousand

for the three months ended June 30, 2023.

For the six months ended June 30,

Cost of Goods sold

Operating Expenses

Loss from operations

Net Loss per common Share from continuing operations

the six months ended June 30, 2024 and 2023, the Company generated net revenues in the amount of $37 million and $48 million, respectively.

The decrease between the six-month periods was attributable to the decrease in demand.

of Goods Sold

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

the six months ended June 30, 2024 and 2023, the Company recognized a total of $27.4 million and $38.3 million, respectively, of cost

of goods sold.

For the six months ended June 30, 2024 and 2023, cost of goods sold were 73% and 80% of net revenues, respectively.

operating expenses for the six months ended June 30, 2024 and 2023 recognized was $12.1 million and $14.1 million, respectively, representing

a 14% decrease.

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

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

and Development – Research and development expenses for the six months ended June 30, 2024 and 2023 totaled $867 thousand

and $982 thousand, respectively.

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

general and Administrative – Selling, general and administrative expenses for the six months ended June 30, 2024 and 2023

totaled $10.6 million and $12.1 million, respectively, representing a 12% 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

The decreases are related to the cost reduction plan

put in place by management.

– Depreciation expenses for the six months ended June 30, 2024, and 2023 totaled $208 thousand and $204 thousand, respectively.

amortization – Intangible amortization expenses for the six months ended June 30, 2024, and 2023 totaled $458 thousand

and $858 thousand, respectively.

The decrease is due to diminishing life of intangibles.

income and expenses

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.

Expense – Interest expense for the six months ended June 30, 2024 totaled $1.7 million, as compared to $1.7 million for

the six months ended June 30, 2023.

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

2 unchanged sentences

Company currently does not have any off-balance sheet arrangements.

Cybersecurity

Management and Strategy

recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information

systems and protect the confidentiality, integrity, and availability of our data.

Material Risks & Integrated Overall Risk Management

have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture

of cybersecurity risk management.

This integration ensures that cybersecurity considerations are an integral part of our decision-making

processes at every level.

Our management team continuously evaluates and addresses cybersecurity risks in alignment with our business

objectives and operational needs.

Third-party Risk

we are aware of the risks associated with third-party service providers, we have implemented stringent processes to oversee and manage

We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring

to ensure compliance with our cybersecurity standards.

The monitoring includes annual assessments of the SOC reports of our providers

and implementing complementary controls.

This approach is designed to mitigate risks related to data breaches or other security incidents

originating from third-parties.

from Cybersecurity Threats

have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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