What changed in this filing

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Item 1. Financial Statements

2025-11-14 compared with 2025-08-19 · 338 added, 326 removed, 194 unchanged (77% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

thousands, except share and per share data)

(In thousands, except share and per share data)

September 30, 2025

December 31, 2024

( UNAUDITED )

and cash equivalents

receivable, net

Inventory, net

Prepaid expenses, related party

Prepaid expenses

Current assets

current assets

and equipment, net of accumulated depreciation

name, net of accumulated amortization

relationships, net of accumulated amortization

intangibles, net of accumulated amortization

of use lease asset

AND STOCKHOLDERS’ EQUITY (DEFICIT)

payable and accrued liabilities

payroll and sales tax

payable – current portion

liability – current portion

current liabilities

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses

Other current assets

Total current assets

Property and equipment, net of accumulated depreciation

Trade name, net of accumulated amortization

Customer relationships, net of accumulated amortization

Other intangibles, net of accumulated amortization

Right of use lease asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

interest and accrued liabilities, related party

payable, less current portion

party notes payable

Notes payable

Accounts payable and accrued liabilities

Line of credit

Accrued payroll and sales tax

Notes payable – current portion

Lease liability – current portion

Related party advances

Other current liabilities

Total current liabilities

Long-term liabilities

Stockholders’

equity (deficit)

A Preferred stock;

Accrued interest and accrued liabilities, related party

Notes payable, less current portion

Related party notes payable

Notes payable

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

B Preferred stock;

Series B Preferred stock;

$ 0.001 par value;

1 share designated, 0 shares issued and outstanding

C Preferred stock;

Series C Preferred stock;

$ 0.001 par value;

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Preferred stock, value

Common stock;

$ 0.001 par value;

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11,602,930 and 10,712,930 shares issued and outstanding, respectively.

paid-in capital

other comprehensive income (loss)

OmniQ stockholders’ equity (deficit)

liabilities and equity (deficit)

Additional paid-in capital

Accumulated (deficit)

Accumulated other comprehensive income

Total OmniQ stockholders’ equity (deficit)

Total liabilities and equity (deficit)

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

the three months ending

the six months ended

thousands, except share and per share data)

of goods sold

& Development

general and administrative

For the Three months ended

For the Nine months ended

September 30,

(In thousands, except share and per share data)

Cost of goods sold

Operating expenses

from operations

income (expenses):

(expenses) income

on debt settlement

Research & Development

Selling, general and administrative

Total operating expenses

Loss from operations

Other income (expenses):

Income (Loss) Before Income Taxes

for Income Taxes

Interest expense

Other (expenses) income

Gain on debt settlement

Total other expenses

Net Loss Before Income Taxes

Provision for Income Taxes

(loss) from continuing operations

from discontinued operations (net of tax)

Income (Loss)

currency translation adjustment

Comprehensive

income (loss)

Reconciliation

of net loss to net loss attributable to common shareholders

Income (Loss)

Total Provision for Income Taxes

Income (loss) from continuing operations

Loss from discontinued operations (net of tax)

Net Income (Loss)

Foreign currency translation adjustment

Comprehensive loss

Reconciliation of net loss to net loss attributable to common shareholders

Net Income (Loss)

Dividends attributable to non-common stockholders’ of OmniQ Corp

income (loss) attributable to common stockholders’ of OmniQ Corp

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

Net income (loss) per share – diluted

from discontinued operations (net of tax)

loss per share from discontinued operations

Weighted average

number of common shares outstanding - basic

Weighted average number of common shares outstanding – diluted

Net loss attributable to common stockholders’ of OmniQ Corp

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

Weighted average number of common shares outstanding – basic and diluted

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

the three and six months ended June 30, 2024 and 2025

Stockholders’

Accumulated Other

Total Stockholders’

Preferred Stock

Comprehensive

December 31, 2023

(In thousands)

Income (Loss)

Balance, December 31, 2023

$ ( 113,923 )

on Class C Shares

Dividend on Class C Shares

ESPP Stock Issuance

Stock-based compensation – options, warrants, issuances

Stock and Warrant issued for services

Acquisition of Codeblocks

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Balance, March 31, 2024

Dividend on Class C Shares

ESPP Stock Issuance

Stock and Warrant issued for services

Cumulative Translation Adjustment

Net (loss) income

Balance, June 30, 2024

Dividend on Class C Shares

ESPP Stock Issuance

Stock and Warrant issued for services

Cumulative Translation Adjustment

Net (loss) income

Balance, September 30, 2024

Balance, December 31, 2024

$ ( 123,899 )

Dividend on Class C Shares

Stock Issuance

compensation – options, warrants, issuances

Translation Adjustment

(loss) income

June 30, 2024

December 31, 2024

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, March 31, 2025

$ ( 125,995 )

on Class C Shares

compensation – options, warrants, issuances

Translation Adjustment

(loss) income

March 31, 2025

Dividend on Class C Shares

Sale of assets from division

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, June 30, 2025

$ ( 123,947 )

on Class C Shares

of assets from division

compensation – options, warrants, issuances

Translation Adjustment

(loss) income

June 30, 2025

Dividend on Class C Shares

Shares returned and canceled

Adjustment of goodwill portion of divestiture

Conversion of debt to equity

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, September 30, 2025

$ ( 124,698 )

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

the six months ended June 30,

flows from operations

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

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

of property and equipment

paid for divestiture

from sale of property and equipment

cash provided by (used in) investing activities

flows from financing activities

from ESPP stock issuance

on notes/loans payable

from draw 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

dividends payable

assets acquired in business combination

of use asset acquired in exchange for lease liability

disclosure of cash flow information:

paid for interest

paid for income taxes

CONSOLIDATED STATEMENTS OF CASH FLOW

the nine months ended September 30,

(In thousands)

Cash flows from operations

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

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

Purchase of property and equipment

Cash paid for divestiture

Purchase of intangible assets

Proceeds from sale of property and equipment

Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from ESPP stock issuance

Payments on notes/loans payable

Proceeds from draw 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:

Stock issued for services

Declared dividends payable

Cancelation of lease

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for income taxes

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

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statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form

Interim disclosures generally do not repeat those in the annual statements.

describe our significant accounting policies in Note 2 of the notes to consolidated financial statements in the 2024 Form 10-K.

the six-month period ended June 30, 2025, there were no significant changes to those accounting policies other than below.

Standards Updates

2023-09, “Income Taxes (Topic 740), Improvement to Income Tax Disclosures.” The amendments in ASU 2023-09 require an entity

to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative

threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory

rate, on an annual basis.

Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net

of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received)

disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received).

Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense

(or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated

by federal, state, and foreign.

This ASU is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied on a prospective basis;

however, retrospective application is permitted.

The adoption of ASU 2023-09

is not expected to have a material impact on the Company’s financial statements.

the nine-month period ended September 30, 2025, there were no significant changes to those accounting policies.

Loss Per Common Share

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

EPS for the three-months ended June 30, 2025, and 2024 were 10,712,930 and 10,688,340 , respectively.

Diluted net loss per share of common

stock is the same as basic net loss per share of common stock because the effects of potentially dilutive securities are antidilutive.

following table sets forth the potentially dilutive securities excluded from the computation of diluted net income or loss per share because such

securities have an anti-dilutive impact and are out of the money:

EPS for the nine-months ended September 30, 2025, and 2024 were 10,984,254 and 10,696,435 , respectively.

Diluted net loss per share of

common stock is the same as basic net loss per share of common stock because the effects of potentially dilutive securities are antidilutive.

following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share because such

securities have an anti-dilutive impact due to losses reported as of:

SCHEDULE OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNING PER SHARE

June 30, 2025

June 30, 2024

to purchase common stock

shares excluded from diluted net loss per share

2 – GOING CONCERN

accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern.

The following

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

September 30, 2025

Options to purchase common stock

Warrants to purchase common stock

Potential shares excluded from diluted net loss per share

2 – LIQUIDITY AND CAPITAL RESOURCES

accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern.

The following are

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

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

and cost-effective development of products

capital deficit of $ 10.9 million as of June 30, 2025

deficit of $ 124 million as of June 30, 2025

capital deficit of $ 11.8 million as of September 30, 2025

deficit of $ 124.7 million as of September 30, 2025

years of losses from operations

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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.

is continuing to evaluate 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.

Company completed the sale of one of it’s divisions as of June 30, 2025, which included the removal of a net $ 45 million worth

of debt on the Company’s books..

3 – CONCENTRATIONS

the six-months ended June 30, 2025, and the year ended December 31, 2024, no customer accounted for more than 3 % for the six months ended June 30, 2025 and one customer made up 23.7 % for December 31, 2024, of the Company’s

consolidated revenues.

receivable at June 30, 2025 and December 31, 2024 are made up of trade receivables due from customers in the ordinary course of business.

One customer accounted for 6 % of the outstanding receivables as of June 30, 2025, and 26 % as of December 31, 2024.

the six months ended June 30, 2025, and the year ended December 31, 2024 no vendor made up more than 3 % as of June 30, 2025 and 47 % as of December 31, 2024 of our trade payables.

4 – BUSINESS COMBINATIONS

For the nine-months ended September 30, 2025 and the year ended December

31, 2024, one customer accounted for 3.5 % and one customer accounted for 3 %, respectively, of the Company’s consolidated revenues.

Accounts receivable at September 30, 2025 and December 31, 2024 are made

up of trade receivables due from customers in the ordinary course of business.

One customer accounted for 6.5 % of the outstanding receivables

as of September 30, 2024, and no customers accounted for more than 10% as of December 31, 2024.

For the nine months ended September 30, 2025 one vendor made up 13.9 % of

our purchases, and for the year ended December 31, 2024 one vendor made up 15 %, of our purchases.

The concentrations are based on the continuing operations and do not

include operations from subsidiaries sold.

4 – BUSINESS ACQUISITION

On January 30, 2024, OMNIQ’s wholly owned subsidiary, Dangot Computers Ltd.

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US $ 1,275,044 ).

The consideration is payable in seven equal installments with the final payment due on November 1, 2025.

no explicit interest rate so the Company used an implicit interest rate of 8 %;

therefore the present value for the acquisition was NIS

4,356,720 , approximately $ 1,190,360 .

The purchase Agreement closed on February 1, 2024.

As of June 30, 2025, this entity was sold as

part of the sale discussed in Note 11.

As noted in Note 12, this entity was sold on

June 30, 2025.

5 – INVENTORY

consisted of the following as of:

goods (less allowance)

allowance for obsolescence

inventories (continuing operations)

relate to discontinued operations

September 30,

Raw materials

Inventory in transit

Finished goods

Less allowance for obsolescence

Total inventories (continuing operations)

Inventories related to discontinued operations

Total inventories

6 – CREDIT FACILITIES AND LINE OF CREDIT

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The discount fee starts at 1.5 % and increases based on the age of the outstanding receivables.

The balance as of June

30, 2025, was $ 0 and this credit facility was terminated concurrent with the sale of the assets from Quest Marketing, Inc.

7 – RELATED PARTY NOTES PAYABLE

Payable – Marin

December 2017, we entered into a $ 660 thousand note payable at 1.89 % annual interest rate (the “Marin Note”) with two individuals

from whom we previously acquired their company (in 2014).

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

beginning in October 2018.

Accrued interest payable as of March 31, 2025 and December 31, 2024, was $ 73 thousand and $ 73 , respectively.

Accrued interest was payable at maturity.

This accrued interest balance was $ 0 as of June 30, 2025.

Payable – Summit

June 30, 2025, concurrent with the sale of the business unit, the Company entered into a promissory note for $ 10

million at 5 %

annual interest rate (the “Summit Note”), the note is amortized over 10

years , but a balloon payment in 3

years for the then balance.

The Company is required to make 13

payments every year , with annual payments totaling $ 1,378,852 .

Accrued interest as of June 30, 2025 was $ 0

and the balance as of June 30, 2025 was $ 10,000,000 .

At June 30, 2025, the company had put up a $ 200,000 prepaid expense towards transaction costs with Summit Junction

and this amount appears on the Balance Sheet as a prepaid expenses, related party.

This agreement was concluded concurrent with the sale of the assets of the

Quest division at June 30, 2025.

7 – OTHER NOTES PAYABLE

SCHEDULE OF OTHER NOTES PAYABLE

June 30, 2025

payable other

current portion

notes payable

(In thousands)

September 30, 2025

Note payable other

Related party note payable

Less current portion

Long-term notes payable

Payable Other

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The note is secured by shares of Dangot Computers, Ltd At December 31, 2024, the

balance owed is $ 1,815,840 and at June 30, 2025, the balance owed is $ 1,886,466 NIS (approx.

balance owed is $ 1,815,840 and at September 30, 2025, the balance owed is $ 1.8 million NIS (approx.

$ 500,000 USD).

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

The loan accrues interest at 7.5 %

per annum and is secured by the vehicles.

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.

This was completed in January 2025.

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over 3 years.

The balance at June 30, 2025 was approximately $ 0.14 million.

The balance at September 30, 2025 was approximately $ 0.14 million.

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

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At December 31, 2024, the Company owed Hapoalim Bank USD $ 1.39 million.

At June 30, 2025, the balance was approximately $ 1.5 million.

At September 30, 2025, the balance was approximately $ 1.5 million.

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

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USD $ 5.4 million.

At June 30, 2025, the Company owed Bank Leumi approximately USD $ 5.4 million.

At September 30, 2025, the Company owed Bank Leumi approximately USD $ 5 million.

September 21, 2023, the Company entered into a long-term loan from Tzameret Mimunim totaling 1.5 M NIS, approximately US $ 393 thousand.

The note accrues interest at the Israeli Prime Rate plus 3.5 % which currently equals 9.5 % per annum and is payable in 36 monthly installments.

The balance at December 31, 2024 is $ 251 thousand and at June 30, 2025 was $ 212 thousand.

of June 30, 2025, the Company was not in compliance with certain financial covenants related to the Bank Leumi and Bank Hapoalim debt.

The balance at December 31, 2024 is $ 251 thousand and at September 30, 2025 was $ 200 thousand.

of September 30, 2025, 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.

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.

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.

part of the sale of the Quest division and it’s assets, and as discussed in Note 11, the Company entered into a Promissory Note

which bears interest at 5 % per annum, is amortized over a 10 ten-year period, and provides for a balloon payment after the third year.

In addition, the Company is entitled to a contingent payment of up to $ 10.0 million in the event that, within 18 months following

the closing, Buyer either (i) consummates a sale of all or substantially all of its assets or equity for consideration in excess of $ 100.0 million

or (ii) completes an initial public offering at a valuation exceeding $ 100.0 million.

Due to the related party nature of the CEO of omniQ relationship with the Note Holder, this note is deemed related

In addition to this, the Company entered into a Transition Services Agreement whereby the employees doing work for

the Company would charge back at a portion of the actual payroll cost, for the time working on the Company.

This has been recorded as

a short-term related party payable as of September 30, 2025.

8 – OTHER INCOME

the six months ended June 30, 2025, the Company received government relief funds in the amount of approximately NIS 1.7 million or US

$ 609 thousand.

the six months ended June 30, 2025, the Company received Employee Retention Credit refunds in the amount of approximately $ 1.05 million

for returns filed for prior years.

the nine months ended September 30, 2024, the Company received government relief funds in the amount of approximately NIS 1.8 million

or US $ 482 thousand.

9 – STOCKHOLDERS’ EQUITY

of June 30, 2025, there were 2,000,000 Series A preferred shares designated and no Series A preferred shares outstanding.

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

preferred to 13 common shares.

of June 30, 2025, there was 1 preferred share designated and no preferred shares outstanding.

of June 30, 2025, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 502,000 issued and outstanding.

of September 30, 2025, there were 2,000,000 Series A preferred shares designated and no Series A preferred shares outstanding.

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

of preferred to 250 common shares.

of September 30, 2025, there was 1 preferred share designated and no preferred shares outstanding.

of September 30, 2025, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 502,000 issued and outstanding.

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

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

As of June 30, 2025, the accrued dividends on the

Series C Preferred Stock was $ 226 thousand.

As of September 30, 2025, the accrued dividends on

the Series C Preferred Stock was $ 219 thousand.

Series C Preferred Stock has a liquidation value and conversion price of $1.00 per share ($20.00 per 20 shares of preferred stock which

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for 20 consecutive trading days.

INCENTIVE PLAN

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, advisors, and employees to the Company.

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.

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

shares were issued in the six months ended June 30, 2025 and 17,089 shares were issued during the six months ended June 30, 2024.

the quarter, the Company issued stock options or warrants to 47 employees and consultants for the purchase of an aggregate 1,035,000

shares of stock at between $ 0.06

The Company’s CEO was issued options for 50,000

shares at $ 0.07

and warrants were issued to a company he is affiliated with

shares at exercise price of $ 0.07

per share, which was above the market price at the time of

The options have a 5

year expiration period and vested immediately.

Approximately $ 63,000

was booked as a compensation expense related to these options

and warrants.

11 – LITIGATION

Company was named a defendant in a case involving a former employee who claims he is owed approximately $ 60 thousand in unpaid commissions.

This case was settled in February 2024.

November 3, 2024 a commercial real estate company filed a lawsuit against Dangot Computers, OmniQ Technologies and some of Dangot’s

officers alleging breach of a letter of intent for a lease arrangement.

The claims were brought in an Israeli court.

The initial claim

against Dangot Computers is NIS 21 million approximately US $ 5.6 million.

The Company believes that it has meritorious defenses to such

action and intends to vigorously defend itself;

however, at this stage it is too early to assess the chances of the lawsuit with certainty.

March 2025, the Company was named a defendant in a case involving a consultant who was terminated and who claims he is owed approximately

$ 389 thousand in unpaid fees and commissions.

The Company believes it has multiple defenses and cross claims against the former consultant

and is evaluating its response to the lawsuit, but plans to vigorously defend the suit.

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

No options were issued in the nine months

ended September 30, 2025, except those mentioned below.

December 2015, our Board of Directors approved the OMNIQ.

Employee Stock Purchase Plan (the “ESPP”).

For the nine months

ending September 30, 2024, employees purchased 37,128 shares or $ 12 thousand of common stock.

8, 2024, Stockholders approved the amendment of the Company’s Certificate of Incorporation to increase the amount of authorized

common stock to 35,000,000 shares.

June of 2025, the Company issued stock options or warrants to 47 employees and consultants for the purchase of an aggregate 1,035,000

shares of stock at between $ 0.06 and $ 0.07 per share.

The Company’s CEO was issued options for 50,000 shares at $ 0.07 and warrants

were issued to a company he is affiliated with for 100,000 shares at exercise price of $ 0.07 per share, which was above the market price

at the time of issuance.

The options have a 5 year expiration period and vested immediately.

The Black Scholes calculation used approximately 109.7 % volatility

for the stock and approximately $ 63,000 was booked as a compensation

expense related to these options and warrants.

July 2025, the Company settled approximately $ 62,500 of debt owed on the books for 900,000 shares.

As noted in the Company’s 8-K

filing, 450,000 of those shares were issued to the Company CEO, Shai Lustgarten to settle $ 31,500 owed to him.

10 – BUSINESS SEGMENT

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11 – DISCONTINUED OPERATIONS

On July 11, 2025, OmniQ Corp., a Delaware corporation

(the “Company”), together with its subsidiaries, Quest Marketing, Inc., HTS Image Processing, Inc., OmniQ Vision Inc., HTS

Image Ltd., OmniQ Technologies Ltd., and Dangot Computers, Ltd.

(collectively, the “Sellers”), entered into an Asset Purchase

Agreement (the “Purchase Agreement”) with Summit Junction Holdings LLC, a Delaware limited liability company (the “Buyer”).

Pursuant to the Purchase Agreement, the Sellers

agreed to sell, and Buyer agreed to purchase, substantially all of the assets and assume certain liabilities mainly associated with the

Company’s legacy business line, including its integrated hardware, software, and automation solutions business, (the “Transferred

discussed in the prior Form 10Q and the relevant Form 8-K, on July 11, 2025, OmniQ Corp., a Delaware corporation (the “Company”),

together with its subsidiaries, Quest Marketing, Inc., HTS Image Processing, Inc., OmniQ Vision Inc., HTS Image Ltd., OmniQ Technologies

Ltd., and Dangot Computers, Ltd.

(collectively, the “Sellers”), entered into an Asset Purchase Agreement (the “Purchase

Agreement”) with Summit Junction Holdings LLC, a Delaware limited liability company (the “Buyer”).

to the Purchase Agreement, the Sellers agreed to sell, and Buyer agreed to purchase, substantially all of the assets and assume certain

liabilities mainly associated with the Company’s legacy business line, including its integrated hardware, software, and automation

solutions business, (the “Transferred Business”).

The Transaction was consummated on July 11, 2025.

Although the Purchase Agreement is dated as of June 30, 2025, the

parties executed the agreement and consummated the Transaction on July 11, 2025.

The aggregate consideration for the Transaction

is approximately $ 45.0 million, consisting of the assumption by Buyer of up to $ 55.0 million in specified liabilities of the Transferred

Business and the issuance by the Company of a Promissory Note in the principal amount of $ 10.0 million in favor of the Buyer.

The Promissory

Note bears interest at 5 % per annum, is amortized over a ten-year period, and provides for a balloon payment after the third year.

addition, the Company is entitled to a contingent payment of up to $ 10.0 million in the event that, within 18 months following the closing,

Buyer either (i) consummates a sale of all or substantially all of its assets or equity for consideration in excess of $ 100.0 million

or (ii) completes an initial public offering at a valuation exceeding $ 100.0 million.

The sale resulted in a net gain on disposal of

approximately $ 34.7 m, which reflects the difference between the carrying amount of the net assets disposed of and the consideration transferred/assumed,

including the promissory note and transaction costs.

However, due to the related-party nature of the transaction, management determined

it would be more conservative to record the gain to Additional Paid-in Capital instead of in Other Income.

The net gain (APIC) was calculated as follows (in thousands):

Although the Purchase

Agreement is dated as of June 30, 2025, the parties executed the agreement and consummated the Transaction on July 11, 2025.

aggregate consideration for the Transaction is approximately $ 45.0 million, consisting of the assumption by Buyer of up to $ 55.0 million

in specified liabilities of the Transferred Business and the issuance by the Company of a Promissory Note in the principal amount of

$ 10.0 million in favor of the Buyer.

The Promissory Note bears interest at 5 % per annum, is amortized over a ten-year period, and provides

for a balloon payment after the third year.

In addition, the Company is entitled to a contingent payment of up to $ 10.0 million in the

event that, within 18 months following the closing, Buyer either (i) consummates a sale of all or substantially all of its assets or

equity for consideration in excess of $ 100.0 million or (ii) completes an initial public offering at a valuation exceeding $ 100.0 million.

sale resulted in a net gain on disposal of approximately $ 34.7 m, which reflects the difference between the carrying amount of the net

assets disposed of and the consideration transferred/assumed, including the promissory note and transaction costs.

However, due to the

related-party nature of the transaction, management determined record the gain to Additional Paid-in

net gain (APIC) was calculated as follows (in thousands):

SCHEDULE OF NET GAIN ON ADDITIONAL PAID IN CAPITAL

9 unchanged sentences

Additional paid-in capital

Details of net loss from discontinued operations , net of taxes,

are as follows (in thousands):

of net loss from discontinued operations , net of taxes, are as follows (in thousands):

SCHEDULE OF DISCONTINUED OPERATIONS

Six months ended

June 30, 2025

June 30, 2024

Nine months ended

September 30, 2025

September 30, 2024

Cost of goods sold

5 unchanged sentences

Three months ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

Cost of goods sold

4 unchanged sentences

Net Loss from Discontinued Ops (Net of Tax)

Because the transaction was effective June 30,2025, no assets or liabilities

disposed in the sale were included on the balance sheet as of June 30, 2025.

The balances of the disposed assets and liabilities as of

December 31, 2024 were as follows:

the transaction was effective June 30,2025, no assets or liabilities disposed in the sale were included on the balance sheet as of September

The balances of the disposed assets and liabilities as of December 31, 2024 were as follows:

Current Assets

12 unchanged sentences

Other current liabilities

Total Current Liabilities

Deferred revenue

Lease liability

Total liabilities

Cash flows related to the discontinued business have not been segregated

and are included in the condensed consolidated statements of cash flows.

The following table provides supplemental cash-flow information

for the discontinued operations (in thousands):

flows related to the discontinued business have not been segregated and are included in the condensed consolidated statements of cash

The following table provides supplemental cash-flow information for the discontinued operations (in thousands):

SCHEDULE OF SUPPLEMENTAL CASH-FLOW INFORMATION FOR DISCONTINUED OPERATIONS

Six months ended June 30, 2025

Six months ended June 30, 2024

Nine months ended September 30, 2025

Nine months ended September 30, 2024

Depreciation and amortization

2 unchanged sentences

Cancelation of lease

The assets sold include, among other things, accounts

receivable, inventory, tangible personal property, intellectual property, contract rights, books and records, and other assets used or

held for use in connection with the Transferred Business.

Certain assets were excluded from the Transaction, including the Company’s

cash and cash equivalents and all assets not related to the Transferred Business.

Buyer assumed only those liabilities specified in the

Purchase Agreement, and the Company retained all other liabilities, including those unrelated to the Transferred Business or expressly

The Purchase Agreement contains customary representations,

warranties, and covenants, including pre-closing operating covenants, post-closing indemnification provisions, and certain limitations

on liability.

The Transaction and Purchase Agreement were approved by the Company’s Board of Directors effective June 30, 2025 following

completion of a fairness opinion, dated June 27, 2025, from an independent financial advisor.

In connection with the closing, the Company and Buyer

entered into and delivered various ancillary agreements, including a Bill of Sale, Assignment and Assumption Agreement, Trademark Assignment

Agreement, Promissory Note, Intellectual Property License Agreement, and Transition Services Agreement.

The Company also entered into

a consent agreement with its largest vendor Bluestar to consent to the transfer of the liabilities owed to it from the Company to the

Due to an entity affiliated with Shai Lustgarten, the Company’s CEO as a principal member of the Buyer, the transaction is

deemed related party.

Pursuant to his employment contract, the CEO, Shai

Lustgarten is entitled to a bonus equal to 4 % of a total transaction price and pursuant to that, the Board of Directors awarded a bonus

of $ 1.72 million to Mr.

The bonus has been accrued but as of this filing nothing has been paid on the bonus.

Based on ASC 850-10, ASC 845-10, ASC 820, and SEC

Staff Accounting Bulletin Topics 5.G, 5.T, and 1.B.1, the transaction represents a capital contribution from the CEO to the Company.

a fairness opinion was obtained, it does not fully satisfy ASC 820 fair value measurement requirements for full recognition.

the $34 million gain is recorded directly to equity as a capital contribution.

This conclusion aligns with both the letter and the spirit

of applicable GAAP and SEC guidance.

assets sold include, among other things, accounts receivable, inventory, tangible personal property, intellectual property, contract

rights, books and records, and other assets used or held for use in connection with the Transferred Business.

Certain assets were excluded

from the Transaction, including the Company’s cash and cash equivalents and all assets not related to the Transferred Business.

Buyer assumed only those liabilities specified in the Purchase Agreement, and the Company retained all other liabilities, including those

unrelated to the Transferred Business or expressly excluded.

Purchase Agreement contains customary representations, warranties, and covenants, including pre-closing operating covenants, post-closing

indemnification provisions, and certain limitations on liability.

The Transaction and Purchase Agreement were approved by the Company’s

Board of Directors effective June 30, 2025 following completion of a fairness opinion, dated June 27, 2025, from an independent financial

connection with the closing, the Company and Buyer entered into and delivered various ancillary agreements, including a Bill of Sale,

Assignment and Assumption Agreement, Trademark Assignment Agreement, Promissory Note, Intellectual Property License Agreement, and Transition

Services Agreement.

The Company also entered into a consent agreement with its largest vendor Bluestar to consent to the transfer of

the liabilities owed to it from the Company to the Buyer.

Due to an entity affiliated with Shai Lustgarten, the Company’s CEO as

a principal member of the Buyer, the transaction is deemed related party.

to his employment contract, the CEO, Shai Lustgarten is entitled to a bonus equal to 4 % of a total transaction price and pursuant to

that, the Board of Directors awarded a bonus of $ 1.72 million to Mr.

on ASC 850-10, ASC 845-10, ASC 820, and SEC Staff Accounting Bulletin Topics 5.G, 5.T, and 1.B.1, the transaction represents a capital

contribution from the CEO to the Company.

While a fairness opinion was obtained, it does not fully satisfy ASC 820 fair value measurement

requirements for full recognition.

Accordingly, the $ 34 million gain is recorded directly to equity as a capital contribution.

This conclusion

aligns with both the letter and the spirit of applicable GAAP and SEC guidance.

12 – LITIGATION

November 3, 2024 a commercial real estate company filed a lawsuit against Dangot Computers, OmniQ Technologies and some of Dangot’s

officers alleging breach of a letter of intent for a lease arrangement.

The claims were brought in an Israeli court.

The initial claim

against Dangot Computers is NIS 21 million approximately US $ 5.6 million.

The Company believes that it has meritorious defenses to such

action and intends to vigorously defend itself.

March 2025, the Company was named a defendant in a case involving a consultant who was terminated and who claims he is owed approximately

$ 389 thousand in unpaid fees and commissions.

The Company believes it has multiple defense and cross claims against the former consultant

and is evaluating its response to the lawsuit, but plans to vigorously defend the suit.

On June 30, 2025, the Company’s subsidiary Dangot Computers reached

at settlement with one of its vendors in Israel related to past due rebates and price protection payments entitled under prior agreements.

The vendor agreed to pay Dangot Computers, approximately USD$ 1.2 million over a 12 month period, based on certain milestones related to

additional purchases.

These payments are being treated as reduction in Cost of Goods sold upon receipt from the Vendor.

13 – SUBSEQUENT EVENTS

July 2025, the Company settled approximately $ 62,500 of debt owed on the books for 900,000 shares.

As noted in the Company’s 8-K

filing, 450,000 of those shares were issued to the Company CEO, Shai Lustgarten to settled $ 31,500 owed to him.

July 2025, the Company relocated its corporate headquarters to a new address.

The new office / warehouse lease is at $ 15,000 per month

in rent for 7 years .

On November 10, 2025, with effective date of November 1, 2025, the Board

of Directors agreed to extend the employment contract of Shai Lustgarten, which previously was set to expire in 2027, is now set to expire

November 1, 2029.

In addition, Mr.

Lustgarten’s base salary was revised to increase 5% per year for cost of living increases.

the revised employment agreement the Executive is eligible for performance-based bonuses tied to market capitalization, including a $ 100,000

bonus when the Company’s market capitalization exceeds $ 10 million for 30 consecutive trading days and additional one-time bonuses

equal to 1% of market capitalization for each subsequent $ 10 million increase maintained for 30 consecutive trading days, payable in cash

or stock at the Executive’s option.

The full employment agreement is attached as an Exhibit to this Form 10Q.

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

What changed 10-Q

Item 1. Financial Statements