What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-04-15 compared with 2025-03-31 · 95 added, 116 removed, 193 unchanged (52% of the section changed)

9 unchanged sentences

in these forward-looking statements as a result of certain factors.

The Company’s consolidated revenue for the year ended December 31, 2024 were $73.6 million, representing a decrease of $7.6 million

from the year ended December 31, 2023 of $81.2 million.

Revenues in 2024 and 2023 are presented in accordance with Accounting Standards

Codification Topic 606, Revenue from Contracts with Customers (“Topic 606”).

Net loss attributable to common stockholders’ of OMNIQ Corp was $10 million in 2024, a decrease of $19.5 million from the 2023 loss

Pursuant to the asset sale described

in the Notes to the Financial Statements, the assets of one division were sold during the second quarter of 2025.

Accordingly, the financial

statements have reclassified the related revenues and expenses from both prior periods and the current period into a single line item

for “Discontinued Operations” on the face of the financial statements, with further detail provided in the accompanying Notes.

The Company’s consolidated revenue for the year ended December 31,

2025 were $33 million, representing a decrease of $1.9 million from the year ended December 31, 2024 of $34.9 million.

Revenues in 2025

and 2024 are presented in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“Topic

loss attributable to common stockholders’ of OMNIQ Corp was $169 thousand in 2025, a decrease of $9.9 million from the 2024 loss

of $10 million.

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for the year 2024.

April 1, 2022, the Company closed on its acquisition of Dangot and exercised the remaining portion of its option to purchase 23.0% of

the capital stock, thereby making Dangot a fully owned subsidiary of the Company.

The Company paid $3,518,000 to purchase the additional

The Company utilized its working capital and a combination of short- and long-term loans.

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

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efforts are focused on the most profitable product lines.

Star - The Company’s total accounts payable due to Blue Star as of December 31, 2024, was approximately $53.6 million.

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.

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.

Company has implemented an aggressive debt settlement plan with its vendors and debt holders to clean up the Balance Sheet

presentation and during the year was able to settle many debts for a discount.

Short term liabilities for the Company decreased from

$86.3 million to roughly $27.7 million, showing the efforts of management are working.

December 2025 management finalized an equity raise which resulted in approximately $941,000 net cash received from investors.

– Results of Operations

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

the year ended

For the year ended

Cost of Goods sold

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Loss from operations

Net Loss per common Share

from continuing operations

for the years ended December 31, 2024 and 2023 were generated from the

sales of hardware, service contracts, software, labels and ribbons, and related services provided by the Company to its customers.

the years ended December 31, 2024 and 2023, the Company recognized $73.6 million and $81.2 million in net revenues, respectively.

represents a decrease of 9%.

Net Loss per common Share from continuing operations

Revenue for the years ended December 31, 2025 and 2024 were generated from

the sales of AI service contracts, software, and related services provided by the Company to its customers.

For the years ended December

31, 2025 and 2024, the Company recognized $33 million and $34.9 million in net revenues, respectively.

This represents a decrease of 5.5%.

The decrease was due to two main factors:

(1) The decrease in deliverables, and (2) a delay in the timing

of a significant customer project.

(1) The decrease in deliverables, and (2) a delay in the timing of a significant customer project.

of Goods Sold

the years ended December 31, 2024 and 2023, the Company recognized a total

of $58 million and $65 million, respectively, of cost of goods sold.

Cost of goods sold was 79% of revenues for 2024 and 81% of revenue

Our gross margin percentage has remained relatively stable in an industry that is experiencing gross-margin pressure.

the years ended December 31, 2024 and 2023, operating expenses were $22.3

million and $41.9 million, respectively.

This represents a decrease of $19.6 million, or 47%, which is due to impairment expense of $14.7

million in 2023.

the years ended December 31, 2025 and 2024, the Company recognized a total of $23.9 million and $29.3 million, respectively, of cost of goods

Cost of goods sold was 72.6% of revenues for 2025 and 83.9% of revenue for 2024.

Our gross margin percentage has remained relatively

stable in an industry that is experiencing gross-margin pressure.

the years ended December 31, 2025 and 2024, operating expenses were $12.9 million and $12.3 million, respectively.

This represents

an increase of $696 thousand, or 6%, which is due to increase in our selling general and administrative expenses in 2025.

The following explains in detail the change in operating expenses.

& Development – Research and development for the years ended December 31, 2024 and 2023 totaled

$1.5 million and $2.2 million, respectively.

This represents an decrease of $657 thousand or 31%, which is due to reduction in costs for developing software.

General and Administrative – Selling, General and Administrative expenses were $19.5 million for the year ended

December 31, 2024, compared to $23 million for the year ended December 31, 2023, representing a decrease of $3.5 million, or 15%.

change was due to management’s efforts to cut costs.

– Depreciation for the year ended December 31, 2024 was $364 thousand compared to $464

& Development – Research and development for the years ended December 31, 2025 and 2024 totaled $2 million and

$1.9 million, respectively.

This represents an increase of $164 thousand or 9%, which is due to increase in costs for developing

General and Administrative – Selling, General and Administrative expenses were $9.8 million for the year ended December

31, 2025, compared to $9.1 million for the year ended December 31, 2024, representing an increase of $685 thousand, or 7%.

The change was

due to increased focus on sales efforts.

– Depreciation for the year ended December 31, 2025 was $80 thousand compared to $347 thousand for the year ended December

This represents a decrease of $267 thousand, or 77%, attributable to a reduction in fixed assets.

Amortization – Intangible amortization expense for the year ended December 31, 2025 was $965 thousand, compared to $915

thousand for the year ended December 31, 2024.

This represents a decrease of $100 thousand, or 22%, attributable to reduction in fixed

Amortization – Intangible amortization expense for the year ended December 31, 2024 was $915 thousand,

compared to $1.6 million for the year ended December 31, 2023.

of Goodwill – During the year ended December 31, 2024, the Company performed and quantitative goodwill impairment

analysis and it was determined no impairment was needed during the year.

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 indicated an impairment loss for goodwill related

to acquisitions prior to 2021, and we recorded a non-cash impairment of $14.7 million.

Income and Expenses

Company incurred $3.5 million in interest expense for the year ended December 31, 2024,

compared to $3.3 million for the year ended December 31, 2023.

The interest expense is comprised of interest incurred on promissory notes

payable, the company’s line of credit, and vendor payables.

Company incurred $1.2 million in interest expense for the year ended December 31, 2025, compared to $1.1 million for the year ended December

The interest expense is comprised of interest incurred on promissory notes payable, the company’s line of credit, and

vendor payables.

Currency Transactions

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for Income Taxes

For the year ended December 31, 2024, the Company has $12 thousand of current

income tax expense (US State & Local and Foreign) and $882 thousand deferred income tax benefit.

the year ended December 31, 2023, the Company has $741 thousand of current income tax provision (US State & Local and Foreign) and

$221 thousand deferred income tax expense.

Company realized a net loss of $10 million for the year ended December

31, 2024, compared to a net loss of $29.4 million for the year ended December 31, 2023.

The decreased loss in 2024 is due primarily to

impairment of goodwill from prior year not in 2024 and the decrease in revenue.

the year ended December 31, 2025, the Company has $495 thousand of current income tax expense (US State & Local and Foreign).

the year ended December 31, 2024, the Company has $698 thousand of current income tax benefit (US State & Local and Foreign).

Company realized a net loss of $137 thousand for the year ended December 31, 2025, compared to a net loss of $10 million for the year

ended December 31, 2024.

The decreased loss in 2025 is due primarily to drastic improvements by management to increase gross margins

while at the same time trimming overhead.

and Capital Resources

of December 31, 2024, the Company had cash in the amount of $2.3 million

and a working capital deficit of $54 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 $43.9 million and $35 million

as of December 31, 2024 and 2023, respectively.

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

Company’s accumulated deficit was $123.9 million and $113.9 million

as of December 31, 2024 and 2023, respectively.

Company’s operations provided net cash of $2.4 million and $170 thousand for the years ended December 31, 2024 and 2023, respectively.

The increase of cash from operations of $2.2 million is primarily a result of increase in payables and other liabilities.

Company’s cash used in investing activities was $32 thousand for

the year ended December 31, 2024 compared to cash used by investing activities of $331thousand for the year ended December 31, 2023.

Company’s financing activities used $2.87 million of cash during

the year ended December 31, 2024, and used $50 thousand during the year ended December 31, 2023.

During the year ended December 31, 20243,

the Company made payments of $3.2 million on its notes payable, compared to the year ended December 31, 2023, when the Company made payments

of $1.4 million on its notes payable, including its Supplier Secured Promissory note and related party notes payable.

of December 31, 2025, the Company had cash in the amount of $679 thousand and a working capital deficit of $13.2 million, compared to

cash in the amount of $2.3 million, and a working capital deficit of $54 million as of December 31, 2024.

The Company had stockholders’

deficit attributable to OMNIQ stockholders of $12.7 million and $43.9 million as of December 31, 2025 and 2024, respectively.

This reduction

in our stockholders’ deficit was primarily due to the sale of the Quest division in June 2025.

Company’s accumulated deficit was $124.1 million and $123.9 million as of December 31, 2025 and 2024, respectively.

Company’s operations provided net cash of $7.5 million and $2.4 million for the years ended December 31, 2025 and 2024, respectively.

The increase of cash from operations of $5.1 million is primarily a result of increase in receivables and other liabilities.

Company’s cash used in investing activities was $3 million for the year ended December 31, 2025 compared to cash used by investing

activities of $32 thousand for the year ended December 31, 2024.

Company’s financing activities used $1.7 million of cash during the year ended December 31, 2025, and used $2.9 million during

the year ended December 31, 2024.

During the year ended December 31, 2025, the Company made payments of $3.4 million on its notes payable,

compared to the year ended December 31, 2024, when the Company made payments of $3.2 million on its notes payable.

Additionally, the

Company received $292 thousand in the year ended December 31, 2024 on its line of credit and had paid $1.6 million on the Company’s

Company received $685 thousand in the year ended December 31, 2025 on its line of credit and had $292 thousand on the Company’s

line of credit during the year ended December 31, 2024.

The Company raised no funds in the year ended December 31, 2024 and raised net

proceeds of $2.4 million for the year ended December 31, 2024.

The Company raised net proceeds of $941 thousand in the year ended December 31,

2025 and no funds for the year ended December 31, 2024.

Sheet Arrangements

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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.

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.

are closely monitoring developments in the war in Israel including potential impacts to the Company’s 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.

accounting policies can be found in Note 2 to our Audited Consolidated Financial Statements.

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

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.

Our CODM is Shai Lustgarten, our CEO.

See Note 18 – Operating Segments for required disclosures.

Recent Accounting Pronouncements not yet adopted

adopted accounting pronouncements

In December 2023, the FASB issued ASU No.

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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;

have an impact on our results of operations, cash flows, or financial condition.

In November 2024, the FASB issued ASU 2024-03 “Income

Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)” to improve the disclosures about

an entity’s expenses.

Upon adoption, we will be required to disclose in the notes to the financial statements a disaggregation of

certain expense categories included within the expense captions on the face of the income statement.

The standard is effective for our

2027 annual period, and our interim periods beginning in 2028, with early adoption permitted.

The standard can be applied either prospectively

or retrospectively.

We are currently assessing adoption timing and the effect that the updated standard will have on our financial statement

This ASU is effective for the Company’s fiscal

December 31, 2025 year-end.

Accounting Pronouncements not yet adopted

November 2024, the FASB issued ASU 2024-03 “Income Statement:

Reporting Comprehensive Income-Expense Disaggregation Disclosures

(Subtopic 220-40)” to improve the disclosures about an entity’s expenses.

Upon adoption, we will be required to disclose

in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face

of the income statement.

The standard is effective for our 2027 annual period, and our interim periods beginning in 2028, with early

adoption permitted.

The standard can be applied either prospectively or retrospectively.

We are currently assessing adoption timing and

the effect that the updated standard will have on our financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software

(Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software .

The standard changes when capitalization of

internal-use software costs begins and updates the related guidance for modern software development methods.

The Company is evaluating

the impact of this guidance on the timing of capitalization, amortization, and related disclosures.

The standard is effective for annual

periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-K

Item 7. Management’s Discussion and Analysis