OMNIQ Corp. 10-K

ITEM 9A. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure and Control Procedures We maintain “disclosure controls and procedures”, as such terms are defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosures. The Company acknowledges that any controls and procedures can provide only reasonable assurances of achieving the desired control objectives. We have carried out an evaluation as required by Rule 13a-15(d) under the supervision of and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025. Based upon their evaluation, the Chief Executive Officer and Principal Accounting Officer concluded that, as of December 31, 2025, the Company’s disclosure controls and procedures were not effective. Although we have determined that the existing controls and procedures are not effective, the deficiencies identified have not been deemed material to our reporting disclosures. (b) Management’s Report on Internal Controls over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Principal Accounting Officer, and affected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting cannot provide absolute assurance of achieving their objectives. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgement and breakdowns resulting from human failures. Due to their inherent limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. It is possible to design safeguards to reduce, but not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Management has used the framework set forth in the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on such evaluation, our CEO concluded that, as of December 31, 2025, our internal controls over financial reporting were not effective. As a result of our evaluation, we identified a material weakness in our controls related to segregation of duties and other immaterial weaknesses in several areas of data management and documentation. 19 Our management is composed of a small number of professionals resulting in a situation where limitations on segregation of duties exist. Accordingly, and as a result of the material weakness identified above, we have concluded that the control deficiencies result in a reasonable possibility that a material misstatement of the annual or interim financial statements may not be prevented on a timely basis by the Company’s internal controls. We continue to employ and refine a structure in which critical accounting policies, issues and estimates are identified, and together with other complex areas, are subject to multiple reviews by executives. In addition, we evaluate and assess our internal controls and procedures regarding our financial reporting, utilizing standards incorporating applicable portions of the Public Company Accounting Oversight Board’s 2009 Guidance for Smaller Public Companies in Auditing Internal Controls Over Financial Reporting as necessary on an on-going basis. While the material weakness set forth above was the result of the scale of the Company’s operations and is intrinsic to its small size, the Company believes the risk of material misstatements relative to financial reporting are mitigated through management review. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by its registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permits the Company to provide only management’s report in this annual report. (c) Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION NONE ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISTICTIONS THAT PREVENT INSPECTIONS NONE 20 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table presents information with respect to our officers and directors as of the date of this Report: Name Age Positions Shai Lustgarten 55 CEO and Chairman Guy Elhanani 52 Director Background of our officers and directors The following is a brief account of the education and business experience during at least the past five years of our officers and directors, indicating each person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out. Shai S. Lustgarten, was appointed the Company’s CEO in April 2017 and served as the Company’s interim Chief Financial Officer (“CFO”) from December 2018 through September 2019 and again from November 2023 and is still the interim CFO as of the date of this report. Mr. Lustgarten had been the Chief Executive Officer of Teamtronics, Inc. beginning June 2016. Teamtronics manufactures rugged computers and electronic equipment mainly used in the Gas and oil industry. From 2014 to 2017, Mr. Lustgarten was the Chief Executive Officer at Micronet Limited Inc., a developer and manufacturer of mobile computing platforms for integration into fleet management and mobile workforce solutions listed on the Tel Aviv Stock Exchange. From 2013 to 2014, Mr. Lustgarten served as EVP Business Development and Head of the Aerospace and defense Division of Micronet EnertecTechnologies, a technology company listed on the NASDAQ Capital Market. From 2009 to 2013 Mr. Lustgarten was VP of Sales, Marketing and CMO of TAT Technologies, a world leading supplier of electronic systems to the commercial and defense markets. His prior experience also includes serving as CEO of T.C.E. Aviation Ltd. in Belgium and serving from 1993 to 1997 as the assistant to the Military Attaché at the Embassy of Israel in Washington, DC. He received his Bachelor of Science degree in Business Management & Computer Science from the University of Maryland. Guy Elhanani became a director of the Company in August 2021. Mr. Elhanani is a qualified CFO with experience leading financial strategies to facilitate company growth. Mr. Elhanani is serving since 2023 as the CFO of Tarya Ltd. , a public Fintech company which its shares are traded in the Tel Aviv Stock Exchange. . Mr. Elhanani has been the CFO of Sirin Labs since 2017 till 2021. Sirin Labs is a multinational, high-tech company specializing in secured mobile phones. From 2015 to 2017, Mr. Elhanani was the CFO of SalesTech, an online internet technology servicing company. Mr. Elhanani has also served as the CFO of other companies, including: Micronet Ltd. (2012-2015); InterLogic Ltd. (2007-2012); and Finotec Group Inc. (2006-2007). From 2003 to 2006, Mr. Elhanani was the corporate controller of On Track Innovations Ltd. From 1999 to 2003, Mr. Elhanani was a senior auditor at Kesselman and Kesselman (PWC Israel). Mr. Elhanani was a lecturer at IVC College in Israel from 2014 to 2018 and at Hebrew University in Jerusalem from 2001 to 2003. Mr. Elhanani has also served as a board member for various companies, including: General Robotics (2017-2021); Effective Space Solutions (2017-2021); Octopus Systems (2017-2021); and Infinity AR (2017-2019). Mr. Elhanani received a B.A. in Accounting and Economics, and a Master of Business Administration, specializing in finance, from Hebrew University. Our Board seeks members from diverse professional backgrounds who combine a solid professional reputation and knowledge of our business and industry with a reputation for integrity. Our Board does not have a formal policy concerning diversity and inclusion but is in the process of establishing a policy on diversity. Diversity of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate Governance Committee considers when recommending director nominees to our Board. Our Board also seeks members that have experience in positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our Company. While the Board has continued its efforts to identify candidates that have such experience, they have currently been unable to identify any such candidates which fulfill the diversity requirement with the requisite professional experience. Family Relationships There are no family relationships among and between the issuer’s directors, officers, persons nominated or chosen by the issuer to become directors or officers, or beneficial owners of more than ten percent of any class of the issuer’s equity securities. ITEM 11. EXECUTIVE COMPENSATION The table below shows the compensation for services in all capacities we paid during the year ended December 31, 2025 and 2024 to the individuals serving as our principal executive officers (whom we refer to collectively as our “named executive officers”); Name and Principal Position Year Salary ($) Bonus ($) Stock Awards Option Awards All Other Compensation Total In thousands Shai Lustgarten 2025 700 1,942 - 10 28 $ 2,680 Chief Executive Officer and Interim CFO 2024 637 25 - - 28 $ 690 21 Bonuses Any bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the named executive’s responsibilities with the Company. As we continue to grow, more defined bonus programs may be established to attract and retain our employees at all levels. Employment Contracts In February 2020, we entered into an employment agreement with Mr. Lustgarten, the Company’s CEO, (the “Lustgarten Agreement”) pursuant to which Mr. Lustgarten shall continue to serve as the Company’s CEO. Pursuant to the Lustgarten Agreement, the Company shall pay Mr. Lustgarten an annual base salary of $560,000. Mr. Lustgarten shall also be eligible to receive i) equity awards pursuant to the Company’s Equity Incentive Plans and ii) certain milestone bonuses as set forth in the Lustgarten Agreement. In the event Mr. Lustgarten’s employment is terminated by Mr. Lustgarten for good reason, or terminated by the Company without cause, Mr. Lustgarten shall be entitled to the greater of (i) the unpaid base salary or (ii) one year’s base salary. 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. In 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. In alignment with the terms of his employment contract, Mr. Lustgarten earned a bonus of $1.7 million on the sale of the Quest Solution business at June 30, 2025. This amount has been accrued on the books of the company, but has not been paid as of December 31, 2025 or as of the date of this filing. At the sole discretion of our Board, all officers are entitled to merit-based cash and equity bonuses. Director Compensation Name Year Fees Earned or Paid in Cash ($) Stock Awards Option Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation All Other Compensation Total In thousands Yaron Shalem (1) 2025 4 - - - - - 4 2024 24 - - - - - 24 Mina Teicher (1) 2025 - - - - - - - 2024 24 - - - - - 24 Guy Elhanani 2025 78 - 3 - - - 81 2024 24 - - - - - 24 1 – Resigned from the Board on January 31, 2025. 22 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The employment agreements for our named executive officers generally provide that in the event of termination of such executive’s employment for any reason, or if the executive resigns, the Company is required to pay certain separation benefits, including (i) unpaid annual salary earned through the termination date; (ii) unused vacation; (iii) accrued and unpaid expenses; and (iv) other vested and accrued benefits to which he is entitled under the Company’s employee benefit plan. In the event the executive voluntarily resigns for “good reason” (as defined in each executive’s respective Employment Agreement) or the Company terminates their employment for any reason other than for cause (as defined in each executive’s respective Employment Agreement), the Company will be required to pay certain termination benefits, including (i) a lump sum payment equal to the greater of (A) unpaid annual salary through the end of the Initial Term or Renewal Term (as those terms are defined in each executive’s respective Employment Agreement) or (B) two years of annual salary, and (ii) COBRA reimbursement. Indebtedness of Directors, Senior Officers, Executive Officers and Other Management None of our directors, executive officers or any associate or affiliate of our Company during the last two fiscal years is or has been indebted to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding. CORPORATE GOVERNANCE Board Leadership Structure and Risk Oversight Our Board currently consists of 2 members: Mr. Shai Lustgarten and Mr. Guy Elhanani. One of the key functions of our Board is to provide oversight of our risk management process. Our Board administers this oversight function directly, with support from its three standing committees—the Audit Committee, the Compensation Committee, and the Corporate Governance/Nominating Committee. The information set forth in Item 1C is also incorporated herein by reference. Director Independence Pursuant to Item 407(a)(1)(ii) of Regulation S-K promulgated under the Securities Act, we have adopted the definition of “independent director” as set forth in Rules 5000(a)(19) and 5605(a)(2) of the rules of the Nasdaq Stock Market. The Board determined that Mr. Guy Elhanani qualifies as “independent directors” pursuant to such rules. Board Committees We have three standing committees: the Audit Committee, the Compensation Committee, and the Corporate Governance/Nominating Committee. We believe that the members of the Audit Committee, Compensation Committee and Corporate Governance/Nominating Committee are deemed to be “independent” pursuant to the NASDAQ listing standards and applicable SEC rules. We believe that all members of our Board have been and remain qualified to serve on the committees of our Board and have the experience and knowledge to perform the duties required of the committees. 23 Audit Committee The Audit Committee consists of Mr. Guy Elhanani, whereby Mr. Elhanani is the Chairperson. Our Board has determined that Mr. Elhanani qualifies as an “audit committee financial expert,” as defined under the rules of the SEC. The primary responsibility of the Audit Committee is to oversee our financial reporting process on behalf of the Board and report the results of their activities to the Board. The Audit Committee’s responsibilities include providing assistance to the Board relating to: ● the integrity of the Company’s financial statements and the related public reports; ● disclosures and regulatory filings in which they appear; ● the systems of internal control over financial reporting, operations, and legal/regulatory compliance; ● the performance, qualifications, and independence of the Company’s independent accountants; ● the performance, qualifications, and independence of the Company’s internal audit function, and ● compliance with the Company’s ethics policies and applicable legal and regulatory requirements. Our Audit Committee charter is available on the “About Us” subpage of our website (www.omniq.com). Compensation Committee The Compensation Committee consists of Mr. Guy Elhanani,. Mr. Elhanani serves as Chairperson. The Compensation Committee’s responsibilities include, among others: ● approve annually the corporate goals and objectives applicable to the compensation of the CEO and/or President, evaluate at least annually the CEO’s and/or President’s performance in light of those goals and objectives, and determine and approve the CEO’s and/or President’s compensation level based on this evaluation; ● review matters relating to executive succession and management development; ● formulate, evaluate, and approve compensation for the Company’s officers; ● formulate, evaluate, and approve cash incentives and deferred compensation plans for executives; ● formulate, administer, and—when appropriate—recommend to the Board for approval, incentive compensation plans and equity-based plans; and ● approve employment contracts, severance agreements, change in control provisions, and other compensatory arrangements with Company executives. The Compensation Committee has the authority, in its sole discretion, to select, retain, and obtain the advice of a compensation consultant as necessary to assist with the execution of its duties and responsibilities. Our Compensation Committee charter is available on the “About Us” subpage of our website (www.omniq.com). 24 Corporate Governance/Nominating Committee The Corporate Governance/Nominating Committee consists of Mr. Guy Elhanani. Mr. Elhanani serves as Chairperson. The Corporate Governance/Nominating Committee’s responsibilities include, among others: ● develop and oversee the Company’s corporate governance practices and procedures. Which includes identifying best practices, reviewing, and recommending to the Board for approval any changes to the documents, policies, and procedures in the Company’s corporate governance framework; ● establish procedures for the director nomination and to determine the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director; ● identify and screen individuals qualified to become members of the Board, consistent with the above criteria, considering any director candidates recommended by the Company’s stockholders; ● oversee a process for an annual evaluation of the Company’s CFO and/or President; and ● develop and oversee a process for an annual evaluation of the Board and its committees, including a formal assessment of each individual director. Our Corporate Governance/Nominating Committee charter is available on the “About Us” subpage of our website (www.omniq.com). Clawback Policy On December 1, 2023 the Board adopted the OMNIQ Corp. Clawback Policy (the “Clawback Policy”), providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Clawback Policy has been filed herewith and can also be found at www.omniq.com/investor-lounge. Involvement in Certain Legal Proceedings Our directors and executive officers have not been involved in any of the following events during the past ten years: 1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; 4. being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 5. being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 25 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information regarding beneficial ownership of our Common Stock as of December 31, 2025: (i) by each of our directors, (ii) by each of our executive officers, (iii) by our executive officers and directors as a group, and (iv) by each person or entity known by us to beneficially own 5% or more of any class of our common stock. As of December 31, 2025, there were 15,102,930 shares of our common stock outstanding. Name of Beneficial Owner Amount of Beneficial Ownership Percentage of Shares Outstanding Shai Lustgarten (Chairman and CEO & Interim CFO) 1 3,426,822 22 % Yaron Shalem 2 49,464 0.3 % Guy Elhanani 4 60,000 0.4 % Mina Teicher 5 10,000 0.1 % All Executive Officers and Directors as a group (4 individuals) 3,546,286 22.60 % Carlos Nissensohn 3 1,019,667 6.55 % 1. Includes 420,000 shares issuable upon the exercise of options. Also includes (i) 1,056,822 shares and shares issuable upon the exercise of warrants held by beneficially owned by Mr. Lustgarten. 2. Includes 20,000 shares issuable upon exercise of options. Also includes 29,464 shares. Yaron Shalem resigned from the Board of Directors on January 31, 2025. 3. Includes 739,308 shares held by Campbeltown Consulting Ltd., which is beneficially owned by Mr. Carlos J. Nissensohn. Also includes (i) 57,026 shares and (ii) 223,333 shares issuable upon exercise of options and warrants. 4. Includes 60,000 shares issuable upon exercise of options. 5. Includes 10,000 shares issuable upon exercise of options. Mina Teicher resigned from the Board of Directors on January 31, 2025. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE In February 2020, OMNIQ entered into a consulting agreement with Mr. Carlos J. Nissensohn and/or an entity under his control, a consultant to the Company and principal stockholder, (the “Nissensohn Agreement”) pursuant to Mr. Nissensohn and/or an entity under his control will provide certain consulting services to the Company. The Nissensohn Agreement has a four-year term and automatically renews for additional one-year periods unless either party elects to terminate the Nissensohn Agreement. Pursuant to the Nissensohn Agreement, we will pay Mr. Nissensohn a monthly fee of $30,000. Mr. Nissensohn shall also be eligible to receive certain milestone bonuses as set forth in the Nissensohn Agreement. Mr. Nissensohn is a principal stockholder of the Company. Mr. Nissensohn is the father of Neev Nissenson, former board member and former CFO. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item will be included in the Proxy Statement and is incorporated herein by reference. 26 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a)(1) The following documents are filed under pages F-1 through F-29 and are included as part of this Form 10-K: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (HAYNIE) F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (BARZILY) F-3 CONSOLIDATED BALANCE SHEETS F-4 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS F-5 CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8 (a)(2) Financial statement schedules are omitted as they are not applicable. (a)(3) Exhibits required by Item 601 of Regulation S-K are incorporated herein by reference and are listed on the attached Exhibit Index, which begins immediately following the financial statements of this Annual Report on Form 10-K. ITEM 16. FORM 10-K SUMMARY. NONE. 27 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: April 15, 2026 OMNIQ CORP. By: /s/ Shai Lustgarten Shai Lustgarten Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Shai Lustgarten Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer April 15, 2026 Shai Lustgarten /s/ Guy Elhanani Director April 15, 2026 Guy Elhanani 28 OMNIQ CORP. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB: 457 (HAYNIE) F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB: 2015 (BARZILY) F-3 CONSOLIDATED BALANCE SHEETS F-4 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME F-5 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of OMNIQ CORP. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of OMNIQ CORP. (the Company) as of December 31, 2025, and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We did not audit portions of December 31, 2025, and 2024, consolidated financial statements for Dangot Computers, Ltd., a wholly owned subsidiary. The portions not audited by us include assets of $13.1 million and $17.4 million as of December 31, 2025, and 2024, respectively, and total revenues of $29.9 million and $30.5 million for the years ended December 31, 2025, and 2024, respectively. Those portions of December 31, 2025, and 2024, consolidated financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as they relate to the amounts included for Dangot Computers, Ltd. is based solely on the reports of the other auditors. Consideration of the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a deficit in stockholders’ equity and has sustained recurring losses from operations. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. Management’s plans with regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill and Intangible Assets— Refer to Note 9 to the financial statements As described in Note 9, the Company has $4.2 million of intangible assets and $3.3 million of goodwill. Management performs impairment evaluations at least annually and engaged a third-party specialist to assist in valuing these assets using management’s projected cash flows and market inputs. We identified the valuation of goodwill and intangible assets as a critical audit matter because the impairment analyses involved significant judgment in developing projected cash flows and key assumptions, including revenue growth, profitability, working capital and capital expenditure assumptions, and terminal value inputs, and because the resulting fair values were compared to the related carrying amounts as of December 31, 2025. Our audit procedures included evaluating the competence and objectivity of the Company’s specialist; reconciling the projections used in the valuation analyses to management’s forecasts; independently recalculating elements of the undiscounted cash flow analyses; evaluating the reasonableness of significant assumptions and terminal value inputs; and involving our valuation specialist to assess the valuation methodology and key assumptions. Discontinued Operations – Refer to Note 15 to the financial statements As described in Note 15, the Company entered into an Asset Purchase Agreement to sell substantially all of the assets and certain liabilities associated with its legacy Quest business line on June 30, 2025, for aggregate non-cash consideration primarily consisting of debt assumed by the buyer. We identified the accounting and presentation for the disposal transaction as a critical audit matter because significant auditor judgment was required to evaluate whether the transaction was a sale to a third party or a transfer under common control and to assess the resulting financial statement presentation and disclosures. Judgment was also required to evaluate the identification and carrying values of the assets and liabilities derecognized and the appropriate cutoff of revenues and expenses associated with the disposed operations. Our audit procedures included evaluating management’s conclusions regarding the nature of the transaction and the absence of common control; examining the terms of the sale agreement and related-party disclosures; testing the identification and carrying values of the assets and liabilities included in the disposal group; recalculated the gain or loss recognized, as applicable; performing procedures to evaluate whether revenues and expenses were recorded in the appropriate period relative to the sale date; and evaluating whether the presentation of the gain, discontinued operations results, and related disclosures were consistent with applicable U.S. GAAP and SEC requirements. /s/ Haynie Haynie Salt Lake City, Utah April 15, 2026 We have served as the Company’s auditor since 2019. F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of OMNIQ CORP. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Dangot Computers Ltd. (the "Company") as of December 31, 2025, and 2024, and the related consolidated statements of operations and comprehensive loss, change in stockholders' equity (deficit). and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the "Financial Statement"). In our opinion, the consolidated financial statement present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024 and the results of its operation and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the board of directors and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters. We have served as the Company's auditor since 2021. BARZILY AND CO., CPA’s Jerusalem, Israel April 15 ,2026 F- 3 OMNIQ CORP. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) As of December 31, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents $ 679 $ 2,349 Accounts receivable, net 9,536 20,945 Inventory 3,409 7,405 Prepaid expenses 786 1,085 Other current assets 52 96 Total current assets 14,462 31,880 Property and equipment, net of accumulated depreciation 528 721 Goodwill 3,336 2,918 Trade name, net of accumulated amortization 1,154 1,187 Customer relationships, net of accumulated amortization 2,757 3,115 Other intangibles, net of accumulated amortization 335 410 Right of use lease asset 1,656 1,076 Other assets 1,948 2,282 Total Assets $ 26,176 $ 43,589 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities $ 11,232 $ 66,097 Line of credit 1,342 535 Accrued payroll and sales tax 1,649 2,903 Related party advances 3,767 - Note payable – related party, short term 919 - Notes payable – current portion 5,486 8,512 Notes payable 5,486 8,512 Lease liability – current portion 373 701 Other current liabilities 2,933 7,575 Total current liabilities 27,701 86,323 Long-term liabilities Accrued interest and accrued liabilities, related party - 73 Related party notes payable 8,690 - Notes payable, less current portion 530 234 Notes payable 530 234 Lease liability 1,237 353 Other long term liabilities 715 494 Total liabilities 38,873 87,477 Commitments and Contingencies (See Note 13) - Stockholders’ equity (deficit) Series A Preferred stock; $ 0.001 par value; 2,000,000 shares designated, 0 shares issued and outstanding - - Series B Preferred stock; $ 0.001 par value; 1 share designated, 0 shares issued and outstanding - - Series C Preferred stock; $ 0.001 par value; 3,000,000 shares designated, 502,000 shares issued and outstanding, respectively 1 1 Preferred stock, value 1 1 Common stock; $ 0.001 par value; 35,000,000 shares authorized; 15,102,930 and 10,712,930 shares issued and outstanding, respectively. 15 11 Additional paid-in capital 113,592 78,713 Accumulated (deficit) ( 124,050 ) ( 123,899 ) Accumulated other comprehensive (loss) income ( 2,255 ) 1,286 Total OMNIQ stockholders’ equity (deficit) ( 12,697 ) ( 43,888 ) Total liabilities and equity (deficit) $ 26,176 $ 43,589 The accompanying notes are integral to these consolidated financial statements. F- 4 OMNIQ CORP. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the year ended December 31, (In thousands, except share and per share data) 2025 2024 Revenues $ 32,950 $ 34,881 Cost of goods sold 23,912 29,251 Gross profit 9,038 5,630 Operating expenses Research & Development 2,018 1,854 Selling, general and administrative 9,821 9,136 Depreciation 80 347 Goodwill impairment - - Amortization 965 915 Total operating expenses 12,884 12,252 Loss from operations ( 3,846 ) ( 6,622 ) Other income (expenses): Interest expense ( 1,178 ) ( 1,056 ) Other (expenses) income 4,491 ( 491 ) Total other (expenses) income 3,313 ( 1,547 ) Net (Loss) Income Before Income Taxes ( 533 ) ( 8,169 ) Provision for Income Taxes Current ( 495 ) 698 Total (Provision) Benefit for Income Taxes ( 495 ) 698 Net Income (Loss) before discontinued Operations $ ( 1,028 ) $ ( 7,471 ) Income (Loss) from Discontinued Operations, net of taxes 891 ( 2,531 ) Net Loss $ ( 137 ) $ ( 10,002 ) Net Loss $ ( 137 ) $ ( 10,002 ) Foreign currency translation adjustment ( 3,541 ) 735 Comprehensive loss $ ( 3,678 ) $ ( 9,267 ) Reconciliation of net loss to net loss attributable to common shareholders: Net Loss $ ( 137 ) $ ( 10,002 ) Less: Dividends attributable to non-common stockholders’ of OMNIQ Corp ( 32 ) ( 32 ) Net loss attributable to common stockholders’ of OMNIQ Corp $ ( 169 ) $ ( 10,034 ) Net (loss) per share - basic & diluted attributable to common stockholders’ of OMNIQ Corp $ ( 0.01 ) $ ( 0.94 ) Net (loss) per share for continuing operations $ ( 0.11 ) $ ( 0.70 ) Net income (loss) per share for discontinued operations $ 0.10 $ ( 0.24 ) Weighted average number of common shares outstanding – basic & diluted 11,205,408 10,696,435 The accompanying notes are integral to these consolidated financial statements. F- 5 OMNIQ CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) For the Years Ended December 31, 2025 and 2024 Series C Additional Accumulated Other Total Stockholders’ Preferred Stock Common Stock Paid-in Accumulated Comprehensive Equity (In thousands) Shares Amount Shares Amount Capital Deficit Income (Loss) (Deficit) Balance, December 31, 2023 502 $ 1 10,675 $ 11 $ 78,340 $ ( 113,923 ) $ 551 $ ( 35,020 ) Dividend on Class C Shares - - - - - ( 32 ) - ( 32 ) CodeBlocks Acquisition 58 58 ESPP Stock Issuance - - 37 - 11 - - 11 Stock-based compensation – options, warrants, issuances - - - - 362 - - 362 Cumulative Translation Adjustment - - - - - - 735 735 Net (loss) income - - - - - ( 10,002 ) - ( 10,002 ) Balance, December 31, 2024 502 $ 1 10,712 $ 11 $ 78,713 $ ( 123,899 ) $ 1,286 $ ( 43,888 ) Balance 502 $ 1 10,712 $ 11 $ 78,713 $ ( 123,899 ) $ 1,286 $ ( 43,888 ) Dividend on Class C Shares - - - - - ( 14 ) - ( 14 ) Shares returned and canceled ( 10 ) - 1 1 ESPP Stock Issuance - - - - 11 - - 11 Stock-based compensation – options, warrants, issuances - - - - 68 - - 68 Sale of assets from division, net of tax - - - - 33,788 - - 33,788 Conversion of debt to equity - - 900 1 73 - - 74 Sale of prefunded warrants - - - - 600 - - 600 Sale of stock - - 3,500 3 337 - - 340 Cumulative Translation Adjustment - - - - - - ( 3,541 ) ( 3,541 ) Net loss before discontinued operations - - - - - ( 137 ) - ( 17 ) Balance, December 31, 2025 502 $ 1 15,102 $ 15 $ 113,592 $ ( 124,050 ) $ ( 2,255 ) $ ( 12,697 ) Balance 502 $ 1 15,102 $ 15 $ 113,592 $ ( 124,050 ) $ ( 2,255 ) $ ( 12,697 ) The accompanying notes to the financials should be read in conjunction with these financial statements. F- 6 OMNIQ CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, (In thousands) 2025 2024 Cash flows from operations Net loss $ ( 137 ) $ ( 10,002 ) Adjustments to reconcile net loss to net cash provided by operating activities: Stock-based compensation 82 362 Depreciation and amortization 1,160 1,291 Amortization of ROU asset 183 773 Changes in operating assets and liabilities: Accounts receivable 7,909 ( 2,675 ) Prepaid expenses 119 ( 94 ) Inventory 3,501 ( 1,426 ) Other assets 142 879 Accounts payable and accrued liabilities ( 2,838 ) 9,461 Accrued interest and accrued liabilities, related party ( 73 ) - Accrued payroll and sales taxes payable ( 1,370 ) 1,370 Lease liability ( 200 ) ( 827 ) Deferred tax assets, net 450 ( 1,432 ) Other liabilities ( 1,428 ) 4,688 Net cash provided by (used in) operating activities 7,500 2,368 Cash flows from investing activities Purchase of property and equipment 26 ( 42 ) Payment for acquisition ( 690 ) - Cash paid for divestiture ( 2,388 ) - Proceeds from sale of property and equipment - 10 Net cash provided by (used in) investing activities ( 3,052 ) ( 32 ) Cash flows from financing activities Proceeds from ESPP stock issuance - 12 Net proceeds from issuance of common stock 941 - Payments on notes/loans payable ( 3,353 ) ( 3,175 ) Proceeds from draw on line of credit 685 292 Net cash (used in) provided by financing activities ( 1,727 ) ( 2,871 ) Net change in cash and cash equivalents 2,720 ( 535 ) Effect of foreign exchange rates on cash and cash equivalents ( 4,391 ) 1,206 Cash and cash equivalents at beginning of period 2,349 1,678 Cash and cash equivalents at end of period $ 679 $ 2,349 Non-cash activities: Declared dividends payable $ 7 $ 23 Debt conversion $ 62 $ - Right of use asset acquired in exchange for lease liability $ - $ 1,143 New lease entered $ 1,632 $ - Supplemental disclosure of cash flow information: $ Cash paid for interest $ 1,954 $ 3,464 Cash paid for income taxes $ - $ - The accompanying notes are integral to these consolidated financial statements. F- 7 OMNIQ CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2025 and 2024 NOTE 1 – NATURE OF OPERATIONS OMNIQ Corp., a Delaware corporation, formerly Quest Solution, Inc., together with its wholly owned and majority owned subsidiaries, referred to herein as “we”, “us”, “our,” “OMNIQ,” or the “Company,” was incorporated in 1973. Since its incorporation, the Company has been involved in various lines of business. From 2008 to 2013, we were in the business of developing oil and gas reserves. In January 2014, we determined it was in the best interest of our stockholders to focus on operating companies with a track record of positive cash flows and larger existing revenue bases. Our strategy developed into leveraging management’s relationships in the business world for investments for us. Since 2014, we have made the following acquisitions resulting in us becoming a leading provider of computerized and machine-vision image-processing solutions: ● Quest Solution, Inc. (January 2014) ● Bar Code Specialties, Inc. (November 2014) ● HTS Image Processing, Inc. (October 2018) ● EyepaxIT Consulting LLC. (February 2020) ● Dangot Computers Ltd. (July 2021) We use patented and proprietary artificial intelligence (AI) technology to deliver machine vision image processing solutions including data collection, real-time surveillance and monitoring for supply chain management, homeland security, public safety, traffic & parking management, and access control applications. The 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. Our principal solutions include hardware, software, communications, and automated management services, technical service and support. Our highly tenured team of professionals has the knowledge and expertise to simplify the integration process for our customers. We deliver practical problem-solving solutions backed by numerous customer references. Our customers include government agencies, healthcare, universities, airports, municipalities and more. We currently engage with several billion-dollar markets with double-digit growth, including the Global Safe City market and the Ticketless Safe Parking market. F- 8 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation Our consolidated financial statements include the financial position and results of operations of OMNIQ Corp. and its wholly owned subsidiaries: HTS Image Processing, Inc., OmniQ Vision Inc., HTS Image Ltd., OmniQ Technologies Ltd., and Dangot Computers Ltd. All significant intercompany accounts and transactions have been eliminated in these consolidated financial statements. Business combinations are included in the consolidated financial statements from their respective dates of acquisition. Use of Estimates We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, which requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. These assumptions and estimates could have a material effect on our consolidated financial statements. Actual results may differ materially from those estimates. We review our estimates on an ongoing basis based on information currently available, and changes in facts and circumstances may cause us to revise these estimates. Cash Cash consists of petty cash, checking, savings, and money market accounts. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts Receivable We manage credit risk associated with our accounts receivables at the customer level. Because the same customers typically generate the revenues that are accounted for under both Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606) and Accounting Standards Codification Topic 326, Credit Losses (Topic 326 ), the discussions below on credit risk and our allowances for doubtful accounts address our total revenues from Topic 606 and Topic 326. Pursuant to Topic 326 for our accounts receivables, we maintain an allowance for doubtful accounts that reflects our estimate of our expected credit losses. Our allowance is estimated using a loss-rate model based on delinquency. The estimated loss rate is based on our historical experience with specific customers, our understanding of our current economic circumstances, reasonable and supportable forecasts, and our own judgment as to the likelihood of ultimate payment based upon available data. We perform credit evaluations of customers and establish credit limits based on reviews of our customers’ current credit information and payment histories. We believe our credit risk is somewhat mitigated by our geographically diverse customer base and our credit evaluation procedures. The actual rate of future credit losses, however, may not be similar to past experience. Our estimate of doubtful accounts could change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowance for doubtful accounts. Inventory Substantially all inventory consists of raw materials and finished goods and are valued at the lower of historic cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. Historic inventory costs are calculated on a first-in, first-out basis or specific cost. Property and Equipment Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives. Ordinary repair and maintenance costs are included in sales, general and administrative (“SG&A”) expenses on our consolidated statements of operations. However, expenditures for additions or improvements that significantly extend the useful life of the asset are capitalized in the period incurred. At the time assets are sold or disposed of, the cost and accumulated depreciation are removed from their respective accounts and the related gains or losses are reflected in the statements of operations in gains from sales of property and equipment, net. F- 9 We periodically evaluate the appropriateness of remaining depreciable lives assigned to property and equipment. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining term of the lease, whichever is shorter. Generally, we assign the following estimated useful lives to these categories: SCHEDULE OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT Category Estimated Useful Life Furniture and fixtures 5 to 7 years Computer equipment 3 to 5 years Office equipment 3 to 10 years Software 3 years Leasehold improvements 15 years (in Dangot subsidiary, 10 years) Vehicles 5 years Definite-lived Intangible Assets The Company periodically evaluates the carrying value of definite-lived intangibles when events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of its use of acquired assets or its overall business strategy, and significant industry or economic trends. The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded no impairment loss for definite-lived intangible assets during the years ended December 31, 2025 and 2024. When the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset. If the Company’s revenues or other estimated operating results are not achieved at or above our forecasted level, and the Company is unable to recover such costs through price increases, the carrying value of certain of the Company’s intangible assets may prove to be unrecoverable and we may incur impairment charges of definitive-live intangible assets. Definite-lived intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over useful lives ranging from 3 to 11 years with a remaining weighted average lifespan of 6.1 years. Indefinite-lived Intangible Assets, Including Goodwill Indefinite-lived intangible assets, including goodwill, are not amortized but are required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company is permitted the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the fair value of the Company’s reporting unit is less than its corresponding carrying value. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its corresponding carrying value then the Company is not required to take further action. However, if the Company concludes otherwise, then the Company must calculate the fair value of the reporting unit and compare it with its carrying amount, including Indefinite-lived intangible assets and recognize impairment equal to the difference between the carrying amount of the reporting unit and its fair value, considering the related income tax effect from any tax-deductible goodwill. Accounts Payable Accounts payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2025 and 2024. Accounts payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2025 and 2024. Two vendors made up 25% and one vendor made up 12% of our payables for the year ended December 31, 2025 and 2024, respectively. Leases We determine whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset, and we have the right to control the asset for a period of time in exchange for consideration. Lease arrangements can take several forms. Some arrangements are clearly within the scope of lease accounting, such as a real estate contract that provides an explicit contractual right to use a building for a specified period of time in exchange for consideration. However, the right to use an asset can also be conveyed through arrangements that are not leases in form, such as leases embedded within service and supply contracts. We analyze all arrangements with potential embedded leases to determine if an identified asset is present, if substantive substitution rights are present, and if the arrangement provides the customer control of the asset. F- 10 Our lease portfolio is substantially comprised of operating leases related to leases of real estate. From time to time, we may also lease various types of small equipment and vehicles. Operating lease right-of-use (“ROU”) assets represent our right to use an individual asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide the lessor’s implicit rate, we use our incremental borrowing rate (“IBR”) at the commencement date in determining the present value of lease payments by utilizing a fully collateralized rate for a fully amortizing loan with the same term as the lease. Lease terms include options to extend the lease when it is reasonably certain those options will be exercised. Our leases can include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when such renewal options and/or termination options are reasonably certain of exercise. An ROU asset is subject to the same impairment guidance as assets categorized as property and equipment. As such, any impairment loss on ROU assets is presented in the same manner as an impairment loss recognized on other long-lived assets. A lease modification is a change to the terms and conditions of a contract that change the scope or consideration of a lease. For example, a change to the terms and conditions to the contract that adds or terminates the right to use one or more underlying assets, or extends or shortens the contractual lease term, is a modification. Depending on facts and circumstances, a lease modification may be accounted as either: (1) the original lease plus the lease of a separate asset(s) or (2) a modified lease. A lease will be remeasured if there are changes to the lease contract that do not give rise to a separate lease. Revenue Recognition We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied. We combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract, or the services are considered a single performance obligation. Our contracts are typically governed by a customer purchase order or work order. The contract generally specifies the delivery of what constitutes a single performance obligation. If an arrangement involves multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers. As discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue. A contract liability is recognized as deferred revenue when we invoice customers, or receive customer cash payments, in advance of satisfying the related performance obligation(s) under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation. F- 11 We have four main revenue streams: (1) Hardware sales, (2) Hardware installation/configuration, (3) Hardware service contracts, and (4) Third-party software sales. For all these revenue streams, our performance obligations are satisfied at a point in time, and therefore, revenue is recognized at point in time when a customer takes control of the good or asset created by the service. Factors that may indicate transfer of control are when we have the right to receive payment for the good or service, when the legal title of the asset as been transferred, physical possession of the asset has been transferred, the customer obtains the significant risks and rewards of ownership of the asset, and the customer accepts the asset. For some customers, control is transferred when the customer, or the customer’s courier, picks up the hardware from our warehouse. For other customers, control is transferred upon delivery. For hardware sales which also include installation and/or configuration as a single performance obligation, control is transferred only when the hardware is delivered and installed/configured. For hardware service contracts and for third-party software sales, the Company acts as the agent in the transaction, and thus recognizes revenue on a net basis at a point in time when the transaction has been facilitated. We leverage drop-ship shipments with many of our partners and suppliers to deliver hardware to our customers without having to physically hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-ship arrangements on a gross basis as the principal in the transaction when the product is received by the customer because we control the product prior to transfer to the customer. We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if something were to happen to the hardware during shipping, we set the price of the product charged to the customer, we assume credit risk for nonpayment by our customer, and we work closely with customers to determine their hardware specifications. Management reviews historical returns on at least an annual basis to determine the need for an allowance for sales returns. Historically, sales returns have been extremely limited, with the effect on the financial statements immaterial. Sales returns during any particular year are so small and so infrequent that management determined that any material reserve against sales returns would likely not be appropriate. Stock-Based Compensation We periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. We account for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by Financial Accounting Standards Board (the “FASB”) where the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. We record stock-based compensation expense according to the provisions of ASC Topic 718, Compensation – Stock Compensation (“Topic 718”). Topic 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Under the provisions of Topic 718, the Company determines the appropriate fair value model to be used for valuing share-based payments and the amortization method for compensation cost. The fair value of each stock option grant and warrant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates the expected volatility and expected option life consistent with Topic 718. The expected volatility of the Company’s common stock at the date of grant is estimated based on a historic volatility rate and the expected option life is calculated based on historical stock options as the best estimate of future exercise patterns. The dividend yield assumption is based on historical and anticipated dividend payouts. The risk-free interest rate assumption is based on observed US treasury rates consistent with the expected life of each stock option grant. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. Compensation expense is recorded for all stock options expected to vest based on the amortization of the fair value at the date of grant on a straight-line basis primarily over the vesting period of the options. F- 12 Advertising The Company expenses marketing and advertising costs as incurred. During 2025 and 2024, the Company spent $ 125 thousand and $ 216 thousand, respectively, on marketing, trade show, and advertising. Foreign Currency Translation Our consolidated financial statements are presented in U.S. dollars. The functional currency for the Company is U.S. dollars. Transactions in currencies other than the functional currency are recorded using the appropriate exchange rate at the time of the transaction. All our continuing operations are conducted in U.S. dollars except for subsidiaries located in Israel. The records of the Israeli operations were maintained in the local currency and translated to the reporting currency as follows: assets and liabilities are translated using the balance sheet period-end date exchange rate. Expenses and income are translated using the weighted average exchange rates for the reporting period. Foreign translation gains and losses are reported on the consolidated statement of operations and comprehensive loss and were included in the amount of gain or loss from comprehensive income. The aggregate foreign currency transaction income and loss included in net income for the years ended December 31, 2025 was $ 3.5 million of income and in 2024 was loss of $ 735 thousand. Income Taxes We account for our income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets, liabilities, and income taxes are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Income tax expense is based on reported earnings before income taxes. Our income is subject to taxation in both the U.S. and a foreign jurisdiction, Israel. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The Company establishes reserves for income-tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when we believe positions do not meet the more-likely-than-not recognition threshold. We adjust uncertain tax liabilities in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of uncertain tax liabilities and changes in liabilities that are considered appropriate. Comprehensive Income (Loss) Comprehensive income (loss) is defined as a change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Our other comprehensive income (loss) is composed of foreign currency translation adjustments. Net Loss Per Common Share Net loss per share is provided in accordance with FASB ASC 260-10, Earnings per Share. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic EPS for the years ended December 31, 2025 and December 31, 2024 were 11,205,408 and 10,696,435 and, 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. The following table sets forth the potentially dilutive securities as of December 31, 2025 and 2024, excluded from the computation of diluted net loss per share because such securities have an anti-dilutive impact due to losses reported: SCHEDULE OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNINGS PER SHARE 2025 2024 Options to purchase common stock 2,077,833 1,344,833 Warrants to purchase common stock 6,875,901 759,235 Potential shares excluded from diluted net loss per share 8,953,734 2,104,068 F- 13 Recently adopted accounting pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU is effective for the Company’s fiscal December 31, 2025 year-end. Recent Accounting Pronouncements not yet adopted In November 2024, the FASB issued ASU 2025-03 “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. NOTE 3 – GOING CONCERN The 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 concern: ● Balancing the need for operational cash with the need to add additional products. ● Timely and cost-effective development of products ● Working capital deficit of $ 13.2 million as of December 31, 2025 ● Accumulated deficit of $ 124 million as of December 31, 2025 ● Multiple years of losses from operations ● Year over year decrease in sales ● Noncompliance with certain debt covenants Management Evaluation Management considers the conditions outlined above as the most significant factors in raising substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Management’s Plans to Mitigate and Alleviate Conditions or Events ● Management is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations. ● Management has placed a strategic focus on increasing sales with prime customers. ● Sales efforts are focused on the most profitable product lines. ● The 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. ● In December 2025, management finalized an equity raise which resulted in approximately $ 941,000 net cash received from investors. NOTE 4 – BUSINESS ACQUISITIONS On January 30, 2024, OMNIQ Corp. (the “Company’), its wholly owned subsidiary, Dangot Computers Ltd. (“Dangot”), CodeBlocks Ltd. (CodeBlocks”). and CodeBlock’s owners, Alina Lifshits and Erez Attia entered into a Share Purchase Agreement (the “Purchase Agreement”) pursuant to which Dangot, acquired all of the capital stock of CodeBlocks in exchange for NIS 4,666,664 (approximately US $ 1,275,044 based on the then exchange rate). The purchase Agreement closed on January 26, 2024. Approximately 89 % of the purchase price was allocated to Goodwill on the books of Dangot Computers Ltd. The balance was allocated between Accounts receivable and prepaid expenses and misc other assets. As part of the purchase, the Company was able to replace historical license fees as well as utilize the software solution to it’s U.S. based customers. F- 14 NOTE 5 – CONTRACTS WITH CUSTOMERS The balance of deferred revenues is included in other current liabilities on the balance sheet. The following table summarizes changes in deferred revenue as of December 31: SCHEDULE OF DEFERRED REVENUE 2025 2024 Beginning balance $ 6,174 $ 2,275 Less amounts recognized during the year ( 6,174 ) ( 1,012 ) Add new deferred revenue 970 4,911 Ending Balance $ 970 $ 6,174 The short term deferred revenue at December 31, 2025 was $ 886 thousand and the long term deferred revenue was $ 84 thousand. The Company had deposits from customers of $ 94 thousand at December 31, 2025. NOTE 6 – ACCOUNTS RECEIVABLE Accounts receivable consisted of the following as of December 31: SCHEDULE OF ACCOUNTS RECEIVABLE In thousands 2025 2024 Trade accounts receivable $ 9,788 $ 21,455 Less allowance for doubtful accounts ( 252 ) ( 510 ) Total accounts receivable (net) $ 9,536 $ 20,945 Accounts receivables are made up of trade receivables due from customers in the ordinary course of business. As of December 31, 2025 and 2024, no customer accounting for more than 10% of the outstanding receivables from continuing operations. NOTE 7 – INVENTORY Inventory consisted of the following as of December 31: SCHEDULE OF INVENTORY In thousands 2025 2024 Raw materials $ 283 $ 287 Inventory in transit 440 4,471 Finished goods 3,409 3,978 Less allowance for obsolescence ( 723 ) ( 1,331 ) Total inventories $ 3,409 $ 7,405 NOTE 8 – PROPERTY AND EQUIPMENT The following is a summary of the components of property and equipment as of December 31: SCHEDULE OF PROPERTY AND EQUIPMENT In thousands 2025 2024 Manufacturing and lab equipment $ 882 $ 882 Leasehold improvements 645 645 Software and computer equipment 133 133 Furniture and equipment 239 239 Vehicle 42 187 Property and equipment, Gross 42 187 Less: accumulated depreciation ( 1,413 ) ( 1,365 ) Property and equipment, Net $ 528 $ 721 Depreciation expense for the years ended December 31, 2025 and 2024 was approximately $ 80 thousand and $ 347 thousand, respectively. F- 15 NOTE 9 – GOODWILL AND INTANGIBLE ASSETS Identifiable intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over the estimated useful lives ranging from 3 to 11 years. Amortization expense for the years ended December 31, 2025 and 2024 was $ 965 thousand and $ 915 thousand, respectively Goodwill assets consisted of the following as of December 31: SCHEDULE OF GOODWILL ASSETS CONSISTED In thousands 2025 2024 Goodwill balance, beginning of year $ 2,918 $ 1,788 Addition of Codeblocks - 1,204 Effective foreign exchange rates 418 ( 74 ) Goodwill balance, end of year $ 3,336 $ 2,918 Intangible assets consisted of the following as of December 31: SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS In thousands 2025 2024 Trade names 6,488 6,217 Customer relationships 16,231 15,567 Other intangibles 2,373 2,165 Accumulated amortization ( 20,846 ) ( 19,237 ) Intangibles, net $ 4,246 $ 4,712 The future amortization expense on the trade names, customer relationships, and other intangibles are as follows: SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE In thousands Years ending December 31, 2026 $ 776 2027 776 2028 659 2029 659 2030 659 Thereafter 717 Total $ 4,246 F- 16 Goodwill is not amortized but is evaluated for impairment annually or when indicators of a potential impairment are present. The impairment testing of goodwill is performed separately from our impairment testing of intangibles. The annual evaluation for impairment of goodwill and intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. None of the goodwill is deductible for income tax purposes. Purchased intangible assets with finite useful lives are amortized over their respective estimated useful lives (using an accelerated method for customer relationships and trade names) to their estimated residual values, if any. The Company’s finite-lived intangible assets consist of customer relationships, contractor and resume databases, trade names, and internal use software and are being amortized over periods ranging from two 2 to nine years . Purchased intangible assets are reviewed annually to determine if facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, recoverability is assessed by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the rate of amortization is accelerated, and the remaining carrying value is amortized over the new shorter useful life. No impairments were identified or changes to estimated useful lives have been recorded as of December 31, 2025 and 2024. NOTE 10 – CREDIT FACILITIES AND LINE OF CREDIT We maintain operating lines of credit, factoring, and revolving credit facilities with banks and finance companies to provide working capital. On January 18, 2024, the Company’s wholly owned subsidiary, Quest Marketing, Inc. (“Quest”) entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Prestige Capital Finance, LLC (“Prestige”), in which Quest had sold, transferred and assigned all of its rights, title and interest to specific accounts receivable owed to Quest. This agreement was concluded concurrent with the sale of the assets of the Quest division at June 30, 2025. NOTE 11 – RELATED PARTY ADVANCES Concurrent with the sale of the Quest Solution division, the company entered into a Transition Services Agreement whereas the costs for some employees would be split during the transition. Connected to that was advances to OMNIQ from the Buyer to facilitate the transition. This entity is majority controlled by the Company’s CEO and thus treated as related party advances. The balance as of December 31, 2025 was $ 3,767,032 . This is non interest bearing with no predefined or agreed upon repayment term. In addition and concurrent with the sale of the Quest Solution division, the Company entered into a Promissory Note which bears interest at 5 % per annum, is amortized over a ten-year period, and provides for a balloon payment after the third year. The balance at December 31, 2025 was $ 9.6 million. F- 17 NOTE 12 – OTHER NOTES PAYABLE Other notes payable consists of the following as of December 31, SCHEDULE OF OTHER NOTES PAYABLE In thousands 2025 2024 Notes Payable - other $ 6,016 $ 8,746 Less current portion ( 5,486 ) ( 8,512 ) Long Term Notes Payable $ 530 $ 234 In thousands 2025 2024 Related Party Notes Payable - other $ 9,609 $ - Less current portion of related party note payable ( 919 ) - Long Term Notes Payable – related party $ 8,690 $ - Future maturities of notes payable are as follows for the years ending December 31, 2025: SCHEDULE OF FUTURE MATURITIES OF NOTE PAYABLE In thousands 2026 $ 6570 2027 1,147 2028 7,839 2029 69 2030 - Total $ 15,625 Other Notes Payable On July 29, 2021, the Company entered into a long-term loan from Leumi Bank totaling NIS 7 million, which at the time was approximately $ 2.16 million. The note accrues interest at the Israeli Prime Rate plus 4.5 % which currently equals 10 % per annum and is payable in 8 instalments of principal and interest over 4 years. The note is secured by shares of Dangot Computers, Ltd, at December 31, 2024, the balance owed is $ 1,815,840 and at December 31, 2025, the balance owed is $ 437,500 NIS (approx. $ 136,059 USD). On 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. On September 13, 2022, the Company entered into a long-term loan from Hapoalim Bank totaling NIS 3 million, approximately US $ 0.9 million. The note accrues interest at 7.28 % per annum (Israeli Prime Rate plus 1.28 %) and is payable in 36 installments of principal and interest over 3 years. The balance at December 31, 2025 was approximately $ 0 . This note ended in September 2025. During the year ended December 31, 2023, the Company entered into a short-term loan Hapoalim Bank totaling NIS 5.5 million, approximately US $ 1.5 million. The note accrues interest at 7.3 % per annum. The loan is renewed every month at Israeli Prime Rate plus + 1.3 %, which at December 31, 2025 was 7.05 % and 2024 was 7.3 %. In February 2024, NIS 1.5 million of the loan was converted into a short-term loan to be repaid in 12 installments, bearing interest at Prime + 1.5 %. In July 2024, an additional 1.5 million was converted into a long-term loan to be repaid in 18 installments, bearing interest at a rate of Prime + 1.5 %. In December 2025, an additional 0.8 million was converted into a long-term loan to be repaid in 12 installments, bearing interest at a rate of Prime + 2.2 %, the balance at December 31, 2025 was still $ 0.8 million. F- 18 At December 31, 2024, the Company owed Hapoalim Bank USD $ 1.39 million. At December 31, 2025, the balance was approximately $ 1.12 million. During the year ended December 31, 2023, the Company entered into a short-term loan from Bank Leumi totaling NIS 21.5 million, approximately US $ 5.9 million. The note accrues interest at 7.6 % per annum. The loan is renewed every month at Israeli Prime Rate plus 1.89 %, which at December 31, 2024 was 7.89 % at December 31, 2025 was 7.64 %. In March 2024, NIS 7.5 million of the loan was converted into a long-term loan to be repaid in 36 installments, bearing interest at a rate of Prime + 3.25 %, which at December 31, 2024 was 9.25 % which at December 31, 2025 was 9 %. In June 2025 the Company decreased the balance of the revolving loan by further NIS 4 million. The short-term loan (renewed every month) at 2025 is NIS 10 million, approximately US $ 3.138 million. At December 31, 2024, the Company owed Bank Leumi USD $ 5.4 million. At December 31, 2025, the Company owed Bank Leumi approximately USD $ 4.138 million. On 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 9.25 % per annum and is payable in 36 monthly installments. The balance at December 31, 2024 is $ 251 thousand and at December 31, 2025 was $ 130 thousand. As of December 31, 2025, the Company was not in compliance with certain financial covenants related to the Bank Leumi and Bank Hapoalim debt. The Company’s failure to comply with these financial covenants could result in an event of default under its debt agreements. Therefore, we reclassified the total balance as current debt on the balance sheet. On December 29, 2025, a new covenants agreement was signed with Bank Hapoalim, pursuant to which the Company is required to comply with the financial covenants set forth in the new agreement, commencing with the 2026 financial statements. As 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. The balance at December 31, 2025 was $ 9.6 million. Due to the related party nature of the CEO of OMNIQ relationship with the Note Holder, this note is deemed related party. NOTE 13 – COMMITMENTS AND CONTINGENCIES Profit Sharing Plan We maintain a contributory profit-sharing plan covering substantially all full-time employees within the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”). In 2016, the Safe Harbor element was removed from the plan, so the employer may make a discretionary matching contribution equal to a uniform percentage or dollar amount of participants’ elective deferrals for each Plan Year. The plan also includes a 401(k)-savings plan feature that allows substantially all employees to make voluntary contributions and provides for discretionary matching contributions determined annually by the Board of Directors. For the years ending December 31, 2025 and 2024, the company has elected to match; the total expense was $ 127 thousand and $ 99 thousand, respectively. Operating Leases As of December 31, 2025, we had 5 Operating leases as follows: ● Office space in Salt Lake City UT with monthly payments of $ 15 thousand. As of December 31, 2025, the Company had 78 months remaining on the lease. ● Office space in Anaheim, CA with monthly payments of $ 4 thousand. As of December 31, 2025, the Company had 12 months remaining on the lease. ● Dangot’s corporate offices are currently located at Yad Harutzim 14 Tel-Aviv, Israel. The main corporate office, Yad Harutzim 14, serves as the company’s main building on the 2nd and 3rd floors, used by the management and most of the sales staff, technicians, etc. The corporate office annual lease expense is NIS 720,000 (approximately USD$ 197,712 ). As of December 31, 2025, the Company’s lease has expired and is operating on a month to month basis. These offices are owned by Haim Dangot (a former shareholder). ● We lease office space (Gamdan- 1st floor) for our finance and service department at Yad Harutzim 14 Tel-Aviv, Israel. The lease provides for monthly payments of NIS 18,840 (approximately USD$ 5,173 ). The lease expired as of December 31, 2025 . As of December 31, 2025, the Company’s lease has expired and is operating on a month to month basis. ● We lease office and warehouse space for our products and technical support staff at Rival Street, Tel-Aviv, Israel. The lease provides for monthly payments of NIS 58,000 (approximately USD$ 15,927 ). The lease expired as of December 31, 2025. As of December 31, 2025, the Company’s lease has expired and is operating on a month to month basis. F- 19 SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE In thousands ROU asset - January 1, 2024 $ 1,862 Increase - Decrease - Effect of foreign exchange rates ( 13 ) Amortization ( 773 ) ROU asset - December 31, 2024 1,076 Increase 1,161 Decrease ( 268 ) Effect of foreign exchange rates - Amortization ( 313 ) ROU asset – December 31, 2025 $ 1,656 In thousands Lease liability – January 1, 2024 $ 1,896 Increase - Decrease - Effect of foreign exchange rates ( 69 ) Amortization ( 773 ) Lease liability – December 31, 2024 1,054 Increase 1,161 Decrease ( 285 ) Effect of foreign exchange rates - Amortization ( 320 ) Lease liability - December 31, 2025 $ 1,610 As of December 31, 2025, our operating leases had a weighted average remaining lease term of 77.78 months and a weighted average discount rate of 6.38 %. The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2025: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES In thousands Year Minimum lease Payments 2026 $ 273 2027 275 2028 288 2029 303 2030 318 Thereafter 534 Total 1,991 Less interest ( 381 ) Present value of future minimum lease payments 1,610 Less current obligations ( 373 ) Long term lease obligations $ 1,237 Guarantees in Dangot Computers. A. As security for credit received from a banking corporation, a floating charge without limitation was imposed on securities and other negotiable instruments, including the rights thereto, In addition a general floating charge on the company’s assets and property, share capital, goodwill, insurance rights, and promissory notes to which the company has or will have rights. B. As security for credit received from a banking corporation, a first-ranking fixed charge without limitation was imposed on the unpaid share capital, goodwill, and promissory notes that the company has delivered or will deliver to the bank as security, for collection, or for safekeeping. C. As security for credit received from the credit company, the company signed a promissory note. D. As of the balance sheet date, there are contingent liabilities for bank guarantees provided to customers as performance guarantees, amounting to approximately NIS 1.64 million. E. As of the balance sheet date, there are liabilities for payments under documentary credit amounting to approximately NIS 993 thousand. NOTE 14 – BUSINESS SEGMENT The Company operates in a single reportable segment, referred to as providing solutions including software, communications, and automated management service. The business is managed by the chief executive officer who is the Chief Operating Decision Maker (CODM). The CODM evaluates segment performance based on operating income (loss) for purposes of allocating resources and evaluating financial performance. The accounting policies of our single reportable segment are the same as those for the Company as a whole. F- 20 NOTE 15 – DISCONTINUED OPERATIONS As 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”). 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 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. 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. 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 excluded. 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 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. 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. Lustgarten. 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. 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. The sale resulted in a net gain on disposal of approximately $ 33.8 million, net of tax, 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 to record the gain to Additional Paid-in Capital. The net gain (APIC) was calculated as follows (in thousands): SCHEDULE OF NET GAIN ON ADDITIONAL PAID IN CAPITAL Reduction of cash and cash equivalents $ ( 2,388 ) Reduction of accounts receivable, net ( 4,730 ) Reduction of inventory, net ( 282 ) Reduction of other current assets ( 996 ) Reduction in property and equipment, net of accumulated depreciation ( 48 ) Reduction in accounts payable and accrued liabilities 55,000 Increase in other current liabilities ( 1,808 ) Increase in related party notes payable ( 10,000 ) Increase in additional paid-in capital $ ( 34,748 ) Income Taxes Payable on transaction $ 960 Additional paid-in capital reduction $ 960 Details of net loss from discontinued operations , net of taxes, are as follows (in thousands): SCHEDULE OF DISCONTINUED OPERATIONS For the years ended December 31, 2025 December 31, 2024 Revenues $ 24,599 $ 38,692 Cost of goods sold 18,836 28,967 Selling, general and administrative 4,951 10,355 Research & Development 40 ( 357 ) Depreciation 3 18 Amortization - - Interest expense 1,049 2,399 Other expenses (income) ( 1,171 ) ( 158 ) Current tax - - Net Income (Loss) from Discontinued Ops (Net of Tax) $ 891 $ ( 2,531 ) F- 21 Because the transaction was effective June 30, 2025, no assets or liabilities disposed in the sale were included on the balance sheet as of December 31, 2025. The balances of the disposed assets and liabilities as of December 31, 2024 were as follows: Assets Current Assets Accounts receivable, net $ 10,608 Inventory, net 4,197 Prepaid expenses 482 Other current assets 61 Total current assets 15,348 Property and equipment, net of accumulated depreciation 8 Right of use lease asset 471 Total Assets $ 15,827 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities $ 56,863 Accrued payroll and sales tax 1,490 Lease liability – current portion 103 Other current liabilities 206 Total Current Liabilities 58,662 Deferred revenue 5,891 Lease liability 178 Total liabilities $ 64,731 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): SCHEDULE OF SUPPLEMENTAL CASH-FLOW INFORMATION FOR DISCONTINUED OPERATIONS Year ended December 31, 2025 Year ended December 31, 2024 Depreciation and amortization 2,304 18 Capital expenditures ( 771 ) 128 Other significant non-cash items Cancelation of lease 471 - NOTE 16 – LITIGATION The 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. On 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. At this early stage, it is not possible to fully assess the chances of a lawsuit. The judge has referred the matter to mediation and the company believes that its exposure is significantly lower than the original claim. The Company has recorded a low level accrual representing the amount it currently estimates will be required for payment. In March 2025, the Company was named a defendant in a case involving a consultant who was terminated and who claims he is owed approximately $ 389,000 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, 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. As of December 31, 2025, the full amount has been received from the vendor. During 2025, several companies filed third-party and fourth-party claims against our subsidiary, Dangot Computers alleging patent infringement. In the opinion of Dangot’s legal counsel, at this preliminary stage it is not yet possible to assess the likelihood of the claims; therefore, no provision has been recorded in the Company’s financial statements in connection with this matter. F- 22 The Company is not a party to any other pending material legal proceeding in which it is defending against any claims of material significance. To the knowledge of management, no federal, state or local government agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record, or beneficiary of more than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding. NOTE 17 – STOCKHOLDERS’ EQUITY PREFERRED STOCK Series A As of December 31, 2025 and 2024, there were 2,000,000 Series A preferred shares authorized and zero Series A preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 13 common shares. Series B As of December 31, 2025 and 2024, there was one preferred share authorized and zero preferred shares outstanding. Series C As of December 31, 2025 and 2024, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 502,000 and 502,000 issued and outstanding, respectively. The Series C shares have preferential rights above common shares and the Series B Preferred Shares, are entitled to receive a quarterly dividend at a rate of $ 0.06 per share per annum, and have a liquidation preference of $ 1 per share. Series C shares outstanding are convertible into common stock at the rate of 20 preferred shares to one share of common stock. As of December 31, 2025 and 2024, the accrued dividends on the Series C Preferred Stock was $ 226 thousand and $ 211 thousand, respectively. The 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 convert to one share of common stock) and automatically converts into Common Stock at $1.00 per share ($20.00 per 20 shares of preferred stock which convert to one share of common stock) in the event that the Company’s common stock has a closing price of $30 per share for 20 consecutive trading days. COMMON STOCK In October 2021, OMNIQ’ Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain in the employ of and attract new employees, directors, officers, consultants, advisors, and employees to the Company. Pursuant to the Plan, 1,118,856 shares of the Company’s common stock, par value $ 0.001 (the “Shares”), were set aside and reserved for issuance. The Plan was approved by our stockholders at the December 2021, shareholders’ meeting. No options were issued in the year ended December 31, 2025, except those mentioned below. In 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. This plan was cancelled in 2024. April 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. During 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. In 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. In December 2025, the Company sold approximately $ 600,000 of prefunded warrants $ 0.10 per share and $ 337,500 of common stock at $ 0.10 per share (for a total of 3,375,000 common shares), along with settling debts of $ 12,500 in the same offering. The Company’s CEO participated in this capital raise for the purchase of 1.5 million shares purchased. F- 23 Warrants and Stock Options The valuation assumptions used to determine the fair value of each option and warrant awarded during the year ended December 31, 2023 are as follows: expected stock price volatility 126.44 %, expected term in years 3.25 , and risk-free interest rate 4.73 %. The estimated fair value of the warrants were $ .55 . During 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. No warrants were exercised during the years ended December 31, 2025 or 2024. The following table summarizes information about warrants granted during the years ended December 31: SCHEDULE OF WARRANTS ACTIVITY 2025 2024 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Balance, beginning of year 759,234 $ 5.46 1,606,734 $ 6.28 Warrants granted 200,000 0.07 - - Warrants expired ( 83,333 ) 7.50 ( 847,500 ) 7.00 Warrants(prefunded) sold 6,000,000 0.10 Warrants exercised - - - - Balance, end of year 6,875,901 0.60 759,234 7.85 Exercisable warrants 6,875,901 $ 0.60 759,234 $ 5.46 Outstanding warrants as of December 31, 2025 are as follows: SCHEDULE OF OUTSTANDING WARRANTS Range of Exercise Prices Weighted Average Residual Life Span (in years) Outstanding Warrants Weighted Average Exercise Price Exercisable Warrants Weighted Average Exercise Price 0.07 4.46 200,000 0.07 200,000 0.07 0.10 9.94 6,000,000 0.10 6,000,000 0.10 1.00 3.78 225,000 1.00 225,000 1.00 5.91 2.33 40,000 5.91 40,000 5.91 6.95 2.23 42,805 6.95 42,805 6.95 7.00 0.62 30,000 7.00 30,000 7.00 7.50 1.68 166,667 7.50 166,666 7.50 7.70 1.52 171,429 7.70 171,429 7.70 0.07 to 10.00 8.98 6,875,901 $ 1.39 6,875,901 $ 1.39 F- 24 Warrants outstanding have the following expiry date and exercise prices as of the years ended December 31: SCHEDULE OF WARRANTS OUTSTANDING, EXPIRY DATE AND EXERCISE PRICES Expiry Date Exercise Prices 2025 2024 September 01, 2025 7.50 - 83,334 June 04, 2026 7.50 83,333 83,333 July 7, 2026 7.70 171,429 171,429 December 04, 2027 7.50 83,333 83,333 March 25, 2027 6.95 42,805 42,805 May 1, 2027 7.00 30,000 30,000 May 1, 2027 5.91 40,000 40,000 October 11, 2028 1.00 166,667 225,000 June 17, 2030 0.07 200,000 - December 8, 2035 0.10 6,000,000 - 6,875,901 759,234 We have a stock option plan whereby the Board of Directors may grant directors, officers, employees, or consultants of the Company options to acquire common shares. The Board of Directors has the authority to determine the terms, limits, restrictions and conditions, interpret the plan, and make all decisions relating thereto. The current plan was adopted by the board of directors in December 2021 with a maximum of 1,118,856 shares to be issued. The option exercise price is established by the Board of Directors and may not be lower than the market price of the common shares at the time of grant. The options may be exercised during the option period determined by the Board of Directors, which may vary, but will not exceed ten years from the date of the grant. For options exercised during the year ended December 31, 2025, the difference between the fair value of the Common Stock issued and the respective exercise price was $ 63 thousand. As of December 31, 2025, the intrinsic value for vested stock options was $ 0 . For options exercised during the year ended December 31, 2024, the difference between the fair value of the Common Stock issued and the respective exercise price was $ 622 thousand. As of December 31, 2024, the intrinsic value for vested stock options was $ 0 . As of December 31, 2025, the total compensation cost related to nonvested awards not yet recognized as $ 0 as all the options and warrants have vested. As of December 31, 2024 the total compensation cost related to nonvested awards not yet recognized was $ 142 thousand. Stock Options - The following table summarizes information about stock options granted during the years ended December 31, SCHEDULE OF STOCK OPTIONS GRANTED 2025 2024 Number of Stock Options Weighted Average Exercise Price Number of Stock Options Weighted Average Exercise Price Balance, beginning of year 1,293,833 $ 4.81 1,508,833 $ 4.97 Stock options granted 835,000 0.10 - - Stock options expired ( 51,000 ) - - - Stock options cancelled, forfeited - - ( 215,000 ) - Stock options exercised - - - - Balance, end of year 2,077,833 2.99 1,293,833 4.81 Exercisable stock options 2,077,833 $ 2.99 1,260,500 $ 4.83 F- 25 Stock options outstanding at the end of the year have the following expiry date and exercise prices as of December 31, SCHEDULE OF STOCK OPTIONS, EXPIRY DATE AND EXERCISE PRICES Expiry Date Exercise Prices 2025 2024 April 20, 2025 4.20 - 10,000 March 1, 2027 5.14 367,500 388,500 March 1, 2027 5.65 140,000 140,000 May 1, 2027 5.90 30,000 30,000 October 31, 2027 5.98 17,000 17,000 December 31, 2028 0.62 50,000 50,000 June 17, 2030 0.10 835,000 - September 30, 2030 4.40 258,333 278,333 September 30, 2030 4.84 380,000 380,000 2,077,833 1,293,833 We recorded stock compensation expense relating to the vesting of stock options and warrants as follows for the years ended December 31, SCHEDULE OF STOCK COMPENSATION EXPENSE 2025 2024 In thousands Stock Compensation $ 68 $ 291 Stock Option vesting - 71 Total $ 68 $ 362 NOTE 18 – RELATED PARTY TRANSACTIONS In February 2020 we amended the consulting agreement with Mr. Carlos J. Nissensohn a/k/a Haim Nissensohn, a principal shareholder of the Company and a family member of a former director and former officer of the Company. This Agreement with Mr. Nissensohn was terminated in February 11, 2025 with effective May 11, 2025 date. As of December 31, 2025, the Company has accrued $ 60,000 towards amounts owed under this contract. As of January 1, 2024, the Company’s subsidiary Dangot Computers, Ltd. entered into a service agreement with the Company’s CEO, Shai Lustgarten for his role as director and Chairman of the Board of Directors of Dangot Computers. The consideration for this is NIS 25,000 per month (approx. $ 6,800 USD). The Agreement allows for termination by either party without cause with 90 days written notice. Haim Dangot, the founder of Dangot Computers, Ltd and former shareholder of Dangot Computers Ltd., previously was employed with the company on a month to month basis for USD $ 5,000 per month. He has been working with the Company throughout 2025. There is an interim arrangement under which he is being paid USD 5,000 per month. As discussed in Note 11 and 12, the CEO of the Company is a controlling owner of the enti ty which purchased the Quest Solution division in June 30, 2025. He is also an owner in the office building which the Company leases space from for its Headquarters in Murray, Utah. F- 26 NOTE 19 – CONCENTRATION AND GEOGRAPHIC DATA For the year ended December 31, 2025, no customer accounted for more than 10% of the Company’s revenues. For the year ended December 31, 2024, no customer accounted for more than 10% of the Company’s revenues. Information about Geographic Areas Revenues by geography are based on the shipping addresses of our customers. The following tables set forth revenues by geographic area for the years ended December 31, SCHEDULE OF REVENUES BY GEOGRAPHIC AREA In thousands 2025 2024 Revenues: United States $ 1,359 $ 1,565 Israel 31,361 31,568 Russia - - Rest of the world - 1,748 Total revenues $ 32,720 $ 34,881 Note: The geographic revenues do not account for the business operations sold in June 2025. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in the countries in which the Company operates. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds, export duties, quotas and embargoes, domestic and international customs and tariffs, changing taxation policies, foreign exchange restrictions, political conditions, and governmental regulations. We 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. NOTE 20 – INCOME TAX For the year ended December 31, 2025, the Company has $ 495 thousand of current income tax expense (US State & Local and Foreign) and no deferred income tax benefit. Taxes based on income were as follows: SCHEDULE OF TAX BASED ON INCOME In thousands Current 2025 2024 U.S. Federal Tax $ - $ - State Taxes - 12 Foreign Taxes 495 - 495 12 Deferred: U.S. Federal Tax - - State Taxes - - Foreign Taxes - ( 710 ) Provision for (benefit) Income Taxes $ 495 $ ( 698 ) The tax effect of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows as of December 31, SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES In thousands Deferred tax assets 2025 2024 Reserves and deferred revenue $ 923 $ 1,395 163(j) Limitation 616 3,752 Foreign deferred tax assets 1,508 1,238 Net operating loss 4,081 11,174 Total gross deferred tax assets 7,128 17,559 Less: Valuation Allowance ( 5,583 ) ( 16,316 ) Net deferred tax assets 1,545 1,243 Deferred tax liabilities Depreciation ( 37 ) ( 4 ) Total deferred tax liabilities ( 37 ) ( 4 ) Net deferred tax assets $ 1,508 $ 1,239 F- 27 Components of net deferred tax assets, including a valuation allowance, are as follows as of December 31: SCHEDULE OF DEFERRED TAX ASSETS AND VALUATION ALLOWANCES 2025 2024 Net deferred tax assets $ 7,091 $ 17,555 Valuation allowance ( 5,583 ) ( 16,316 ) Total deferred tax assets $ 1,508 $ 1,239 The valuation allowance for deferred tax assets as of December 31, 2025 and 2024 was $ 5.6 million and $ 16.3 million, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Management has recorded a 100% valuation allowance, against its U.S. net deferred tax assets, since Management believes it is more likely than not that it will not be realized at the date of this statement. The Company will continue to monitor the potential utilization of this asset. Should factors and evidence change to aid in this assessment, a potential adjustment to the valuation allowance in future periods may occur. The Company records any penalties and interest as a component of operating expenses. The principal items accounting for the difference between taxes computed at the U.S. federal statutory rate and taxes recorded were as follows (in thousands) after the adoption of ASU 2023-09: SCHEDULE OF RECONCILIATION OF STATUTORY FEDERAL INCOME TAX RATE Amount Percent Year Ended December 31, 2025 Amount Percent US Federal Statutory Tax Rate ( 174 ) 21.00 % State and Local Income Taxes, Net of Federal Income Tax Effect - 0.00 % Foreign Tax Effects 495 ( 59.86 )% Effect of Changes in Tax Laws or Rates Enacted in the Current Period - 0.00 % Effect of Cross-Border Tax Laws - 0.00 % Change in Valuation Allowance 174 ( 21.00 )% Tax Credits - 0.00 % Nontaxable or Nondeductible Items - 0.00 % Changes in Unrecognized Tax Benefits - 0.00 % Other Adjustments - 0.00 % Income Tax Expense / Effective Tax Rate 495 ( 59.86 )% The principal items accounting for the difference between taxes computed at the U.S. federal statutory rate and taxes recorded were as follows (in thousands) for the year prior to the adoption of ASU 2023-09: Amount Percent Year Ended December 31, 2024 Amount Percent Federal statutory tax rate ( 2,026 ) 21.00 % State taxes 9 ( 0.10 )% Foreign income taxes ( 27 ) 0.28 % Change in valuation allowance 1,355 ( 12.17 )% Return to provision adjustments - 0.00 % Other - 0.00 % Income tax benefit / Effective tax rate ( 698 ) 9.01 % Our 2025 provision for income taxes included i) $495 thousand foreign tax expense; and ii) $174 thousand of tax benefit from changes in valuation allowances . Income/(loss) before taxes from continuing operations were as follows: SCHEDULE OF DISAGGREGATION OF INCOME (LOSS) BEFORE TAXES FROM CONTINUING OPERATIONS 2025 2024 U.S. $ ( 500 ) $ ( 3,110 ) Foreign ( 327 ) ( 5,059 ) Income before taxes $ ( 827 ) $ ( 8,169 ) The amount of income taxes paid (net of refunds received) were as follows (in thousands): SCHEDULE OF INCOME TAXES PAID (NET OF REFUNDS RECEIVED) 2025 Federal $ - State and Local - Foreign 495 Total Income Taxes Paid (Net of Refunds Received) $ 495 The Company reported no uncertain tax liability as of December 31, 2025 and expects no significant change to the uncertain tax liability over the next twelve months. The Company’s 2022, 2023, 2024, and 2025 federal and state income tax returns are open for examination by the applicable governmental authorities. As of December 31, 2025, the Company had a net operating loss (NOL) carryforward of approximately $ 14.5 million. Under Section 382 of the Internal Revenue Code of 1986, as amended (“IRC Section 382”), a corporation that undergoes an “ownership change” is subject to limitations on its use of pre-change NOL carryforwards to offset future taxable income. Within the meaning of IRC Section 382, an “ownership change” occurs when the aggregate stock ownership of certain stockholders (generally 5% shareholders, applying certain look-through rules and aggregation rules which combine unrelated shareholders that do not individually own 5% or more of the corporation’s stock into one or more “public groups” that may be treated as 5-percent shareholder) increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period (generally three years). In general, the annual use limitation equals the aggregate value of common stock at the time of the ownership change multiplied by a specified tax-exempt interest rate. The Company has not completed a study as to whether there is a 382 limitation on its NOLs that will limit or possibly eliminate the use of its NOLs in the future. Company’s Management has recorded a 100% valuation allowance on the entire NOL as it believes that it is more likely than not that the deferred tax asset associated with the NOLs will not be realized regardless of whether or not an “ownership change” has occurred. NOTE 21 – BUSINESS SEGMENT The Company operates in a single reportable segment, referred to as providing solutions including hardware, software, communications, and automated management service as an established distributor of barcode labels, tags, and ribbons, as well as RFID labels and tags. The business is managed by the chief executive officer who is the Chief Operating Decision Maker (CODM). The CODM evaluates segment performance based on operating income (loss) for purposes of allocating resources and evaluating financial performance. The accounting policies of our single reportable segment are the same as those for the Company as a whole. NOTE 22 – SUBSEQUENT EVENTS Subsequent Event – Planned Divestiture of CodeBlocks In connection with a transaction executed on June 30, 2025, the Company agreed to divest its CodeBlocks business, which is currently included within goodwill. As of December 31, 2025, the definitive agreements related to the divestiture of CodeBlocks had not been finalized or executed and remained subject to completion of final terms and approvals. Accordingly, the Company concluded that the criteria for classification as held for sale were not met as of year-end. Subsequent to December 31, 2025, the Company has continued to finalize the terms of the transaction, and the definitive agreements are expected to be executed in the near term. The completion of the divestiture remains subject to final execution and customary conditions. As of April 15, 2026, there are no other material subsequent events that have occurred. F- 28 EXHIBIT INDEX Exhibit No. Description (a) Exhibits. 3.1 Form of Certificate of Amendment to the Certificate of Incorporation, as amended, dated November 18, 2019 incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 18, 2019. 3.2 Amendment to Certificate of Designation of Series C Preferred Stock on June 17, 2016, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 21, 2016. 3.3 Form of Certificate of Amendment to the Certificate of Incorporation, as amended, of OMNIQ Corp., dated September 30, 2020, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 2, 2020. 4.1 $12,492,136.51 Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada Inc., Quest Exchange Ltd. and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 22, 2016. 4.2* Description of Securities 4.3 $483,173.60 CAD Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada Inc., Quest Exchange Ltd. and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 22, 2016. 4.4 Form of Warrant, incorporated by referenced to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2019. 4.5 Form of Placement Agent Warrant, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2019. 10.1 Employment Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2017. 10.2 Modification Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 6, 2017. 10.14 Consulting Agreement by and between the Company and Carlos J Nissensohn dated August 2, 2017 incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 4, 2017. 10.15 Consulting Agreement by and between the Company and YES-IF dated September 8, 2017, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 8, 2017. 10.17 Employment Agreement by and between the Company and Benjamin Kemper dated October 2, 2017, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 5, 2017. 10.24 Employment Agreement by and between the Company and David Marin dated February 28, 2018. 2018 Equity Incentive Plan incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the SEC on March 12, 2018. 10.36 Neev Nissenson Employment Agreement, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2019. 10.37 Asset Purchase Agreement, dated February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020. 10.38 Shai Lustgarten Employment Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020. 29 10.39 Consulting Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020. 10.40 Asset Purchase Agreement dated February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 4, 2020. 10.41 Employment Agreement with Shai Lustgarten on September, 2019, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2019. 10.42 Consulting Agreement with Carlos J. Nissensohn on September, 2019, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 9, 2019. 10.43 2023 Equity Incentive Plan, incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A 10.44 Asset Purchase Agreement dated January 18, 2024, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 24, 2024 10.45 Share Purchase Agreement dated January 30, 2024, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 5, 2024 21.1* Subsidiaries of the Registrant 23.1* Consent of Independent Registered Public Accounting Firm 31.1* Certification of our Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of our Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of our Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) 32.2* Certification of our Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) 99.4* Clawback Policy 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. ITEM 16. NONE. 30