What changed in this filing

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Item 1. Financial Statements

2026-05-20 compared with 2025-11-14 · 262 added, 290 removed, 242 unchanged (70% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

March 31, 2026

December 31, 2025

(In thousands, except share and per share data)

September 30, 2025

March 31, 2026

December 31, 2025

3 unchanged sentences

Accounts receivable, net

Inventory, net

Prepaid expenses

1 unchanged sentence

Total current assets

Property and equipment, net of accumulated depreciation

Trade name, net of accumulated amortization

Customer relationships, net of accumulated amortization

Other intangibles, net of accumulated amortization

Property and equipment, net of accumulated depreciation $ 1,408 and $ 1,413 , respectively

Trade name, net of accumulated amortization of $ 5,371 and _$ 5,334 , respectively

Customer relationships, net of accumulated amortization of $ 13,587 and $ 13,474 , respectively

Other intangibles, net of accumulated amortization of $ 2,032 and $ 2,038 , respectively

Right of use lease asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

2 unchanged sentences

Accrued payroll and sales tax

Related party advances

Note payable – related party, short term

Notes payable – current portion

Notes payable

Lease liability – current portion

Related party advances

Other current liabilities

1 unchanged sentence

Long-term liabilities

Accrued interest and accrued liabilities, related party

Notes payable, less current portion

Related party notes payable

Notes payable, less current portion

Notes payable

2 unchanged sentences

Total liabilities

Commitments and Contingencies (See Note 8)

Stockholders’ equity (deficit)

15 unchanged sentences

Accumulated (deficit)

Accumulated other comprehensive income

Accumulated other comprehensive (loss)

Total OmniQ stockholders’ equity (deficit)

Total liabilities and equity (deficit)

Total liabilities and stockholders’ equity (deficit)

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

For the Three months ended

For the Nine months ended

September 30,

(In thousands, except share and per share data)

8 unchanged sentences

Other (expenses) income

Gain on debt settlement

Total other expenses

Net Loss Before Income Taxes

Provision for Income Taxes

Current Provision for Income Taxes

Total Provision for Income Taxes

Income (loss) from continuing operations

Loss from discontinued operations (net of tax)

Net Income (Loss)

Net Income (Loss) before discontinued operations

Loss from Discontinued Operations, net

Foreign currency translation adjustment

1 unchanged sentence

Reconciliation of net loss to net loss attributable to common shareholders

Net Income (Loss)

Dividends attributable to non-common stockholders’ of OmniQ Corp

Net loss attributable to common stockholders’ of OmniQ Corp

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

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

Net (loss) per share - diluted attributable to common stockholders’

of OmniQ Corp

Weighted average number of common shares outstanding – basic and diluted

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

the Three Months ended March 31, 2025 and 2026

(In thousands)

Income (Loss)

Accumulated Other

7 unchanged sentences

Dividend on Class C Shares

ESPP Stock Issuance

Stock and Warrant issued for services

Acquisition of Codeblocks

Cumulative Translation Adjustment

Net (loss) income

Balance, March 31, 2024

Dividend on Class C Shares

ESPP Stock Issuance

Stock and Warrant issued for services

Cumulative Translation Adjustment

Net (loss) income

Balance, June 30, 2024

Dividend on Class C Shares

ESPP Stock Issuance

Stock and Warrant issued for services

Cumulative Translation Adjustment

Net (loss) income

Balance, September 30, 2024

Balance, December 31, 2024

$ ( 123,899 )

Dividend on Class C Shares

Stock-based compensation – options, warrants, issuances

3 unchanged sentences

$ ( 125,995 )

Dividend on Class C Shares

Sale of assets from division

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, June 30, 2025

Balance, December 31, 2025

$ ( 124,050 )

1 unchanged sentence

Dividend on Class C Shares

Shares returned and canceled

Adjustment of goodwill portion of divestiture

Conversion of debt to equity

Stock-based compensation – options, warrants, issuances

Exercise of stock option

Stock Based Compensation

Cumulative Translation Adjustment

Net (loss) income

Balance, September 30, 2025

$ ( 124,698 )

Balance, March 31, 2026

$ ( 125,708 )

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

CONSOLIDATED STATEMENTS OF CASH FLOW

the nine months ended September 30,

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

the Three Months Ended March 31,

(In thousands)

Cash flows from operations

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

Loss from discontinued operations

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Stock-based compensation

Stock and warrant issued for services

Depreciation and amortization

Amortization of ROU asset

Loss from sale of other assets

Changes in operating assets and liabilities:

2 unchanged sentences

Accounts payable and accrued liabilities

Accrued interest and accrued liabilities, related party

Accrued payroll and sales taxes payable

2 unchanged sentences

Other liabilities

Net cash provided by (used in) operating activities - continuing

Net cash provided by (used in) operating activities - discontinuing

Net cash provided by (used in) operating activities

1 unchanged sentence

Purchase of property and equipment

Cash paid for divestiture

Purchase of intangible assets

Proceeds from sale of property and equipment

Net cash provided by (used in) investing activities

Net cash (used in) investing activities – continuing operations

Net cash (used in) investing activities – discontinuing operations

Net cash (used in) investing activities

Cash flows from financing activities

Proceeds from ESPP stock issuance

Net proceeds on exercise of options

Payments on notes/loans payable

Proceeds from draw on line of credit

Net cash (used in) provided by financing activities – continuing operations

Net cash (used in) provided by financing activities – discontinuing

Net cash (used in) provided by financing activities

4 unchanged sentences

Non-cash activities:

Stock issued for services

Declared dividends payable

Cancelation of lease

Right of use asset acquired in exchange for lease liability

Supplemental disclosure of cash flow information:

17 unchanged sentences

statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form

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

describe our significant accounting policies in Note 2 of the notes to consolidated financial statements in the 2025 Form 10-K.

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

the three-month period ended March 31, 2026, there were no significant changes to those accounting policies other than below.

Accounting Pronouncements not yet adopted

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.

September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

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.

Loss Per Common Share

5 unchanged sentences

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

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

Diluted net loss per share of

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

EPS for the three-months ended March 31, 2026, and 2025 were 15,140,705 and 10,712,930 , respectively.

Diluted net loss per share of common

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

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

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

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

September 30, 2025

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

March 31, 2026

March 31, 2025

Options to purchase common stock

1 unchanged sentence

Potential shares excluded from diluted net loss per share

2 – LIQUIDITY AND CAPITAL RESOURCES

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

The following are

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

2 – GOING CONCERN

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

The following

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

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

and cost-effective development of products

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

deficit of $ 124.7 million as of September 30, 2025

capital deficit of $ 14.6 million as of March 31, 2026

deficit of $ 125.7 million as of March 31, 2026

years of losses from operations

2 unchanged sentences

Plans to Mitigate and Alleviate Conditions or Events

is continuing to evaluate operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations.

is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations.

has placed a strategic focus on increasing sales with prime customers.

efforts are focused on the most profitable product lines.

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

and during 2025, the Company was able to settle many debts for a discount.

term liabilities for the Company decreased from $ 86.3 million to roughly $ 27.7 million, showing the efforts of management are working.

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

3 – CONCENTRATIONS

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

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

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

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

One customer accounted for 6.5 % of the outstanding receivables

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

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

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

The concentrations are based on the continuing operations and do not

include operations from subsidiaries sold.

4 – BUSINESS ACQUISITION

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

(“Dangot”), entered into a Share Purchase

Agreement (the “Purchase Agreement”) with CodeBlocks Ltd.

(CodeBlocks”) and CodeBlocks’ owners, Alina Lifshits

and Erez Attia pursuant to which Dangot, acquired all of the capital stock of CodeBlocks in exchange for NIS 4,666,664 (approximately

US $ 1,275,044 ).

The purchase Agreement closed on February 1, 2024.

As noted in Note 12, this entity was sold on

June 30, 2025.

the three-months ended March 31, 2026, and the year ended December 31, 2025, no customer accounted for more than 10 % of the Company’s

consolidated revenues from continuing operations.

receivable at March 31, 2026 and December 31, 2025 are made up of trade receivables due from customers in the ordinary course of business.

No customer accounted for more than 10 % of the outstanding receivables as of March 31, 2026, and 11.2 % as of December 31, 2025.

the three months ended March 31, 2026, and the year ended December 31, 2025 one vendor made up 45% and 45 %, respectively, of our purchases.

4 – INVENTORY

consisted of the following as of:

September 30,

SCHEDULE OF INVENTORY

March 31, 2026

December 31, 2025

Raw materials

Inventory in transit

Finished goods

Finished goods (less allowance)

Less allowance for obsolescence

Total inventories (continuing operations)

Inventories related to discontinued operations

Total inventories

6 – CREDIT FACILITIES AND LINE OF CREDIT

maintain operating lines of credit, factoring and revolving credit facilities with banks and finance companies to provide us with working

January 18, 2024, the Company’s wholly owned subsidiary, Quest Marketing, Inc.

(“Quest”) entered into a Purchase and

Sale Agreement with Prestige Capital Finance, LLC (“Prestige”), in which Quest has sold, transferred and assigned all of

its rights, title, and interest to specific accounts receivable owed to Quest.

The maximum outstanding balance of Quest to Prestige shall

be $ 7.5 million.

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

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

Quest division at June 30, 2025.

5 – RELATED PARTY NOTES PAYABLE

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.

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 and at March 31, 2026 was $ 5,624,040 .

This is non interest bearing with no predefined or agreed upon repayment term.

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 and at March 31, 2026 was $ 9.4 million.

6 – OTHER NOTES PAYABLE

1 unchanged sentence

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

Note payable other

Related party note payable

Less current portion

Long-term notes payable

March 31, 2026

December 31, 2025

Related Party Notes Payable - other

Less current portion of related party note payable

Long Term Notes Payable – related party

Payable Other

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 8.25 % 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 September 30, 2025, the balance owed is $ 1.8 million NIS (approx.

$ 500,000 USD).

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

The note accrues interest at the Israeli Prime Rate

which currently equals 8.25 %

per annum and is payable in 8

instalments of principal and interest over 4

The note is secured by shares of Dangot Computers, Ltd

At December 31, 2025, the balance owed is $ 437,500

USD and at March 31, 2026, the balance owed is $ 385,000

August 11, 2021, the Company purchased vehicles using cash and financing of NIS 500 thousand, approximately $ 155 thousand, to be paid

2 unchanged sentences

This was completed in January 2025.

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 September 30, 2025 was approximately $ 0.14 million.

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

1 unchanged sentence

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, 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 %.

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

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

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

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 %.

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 %.

At December 31, 2024, the Company owed Bank Leumi

USD $ 5.4 million.

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

The loan is renewed every month at Israeli Prime Rate plus + 1.3 %, which at

March 31, 2026 was 7.3 % and at December 31, 2025 was 7.05 %.

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 %.

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 %.

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 and at March 31, 2026 was $ 0.6 million.

December 31, 2025, the Company owed Hapoalim Bank USD $ 1.39 million.

At March 31, 2026, the balance was approximately $ 1.12 million.

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

The note accrues interest at 7.6 %

The loan is renewed every month at Israeli Prime Rate plus 1.89 %,

which at December 31, 2025 was 7.64 %

and at March 31, 2026 was 7.64 %.

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, 2025 was 9.0 % which at March 31, 2026 was 9.0 %.

June 2025 the Company decreased the balance of the revolving loan by further NIS 4 million.

short-term loan (renewed every month) at 2025 is NIS 10 million, approximately US $ 3.138 million.

December 31, 2025, the Company owed Bank Leumi USD $ 4.138 million.

At March 31, 2026, the Company owed Bank Leumi approximately USD $ 4

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 September 30, 2025 was $ 200 thousand.

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

The balance at December 31, 2025 is $ 130 thousand and at March 31, 2026 was $ 100 thousand.

of March 31, 2026, the Company was not in compliance with certain financial covenants related to the Bank Leumi and Bank Hapoalim

The Company’s failure to comply with these financial covenants could result in an event of default under its debt agreements.

Therefore, we reclassified the total balance as current debt on the balance sheet.

The Company is actively pursuing options to address

its noncompliance.

The lenders have not requested early repayment of the loan as of the date when these financial statements were available

to be issued.

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

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

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

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

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

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

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

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

This has been recorded as

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

8 – OTHER INCOME

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

or US $ 482 thousand.

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.

part of the sale of the Quest division and its assets, 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 March 31, 2026 was $ 9.4

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

7 – STOCKHOLDERS’ EQUITY

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

of March 31, 2026, there were 2,000,000 Series A preferred shares designated and no Series A preferred shares outstanding.

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

of preferred to 13 common shares.

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

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

of March 31, 2026, there was 1 preferred share designated and no preferred shares outstanding.

of March 31, 2026, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 502,000 issued and outstanding.

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

2 unchanged sentences

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

As of September 30, 2025, the accrued dividends on

the Series C Preferred Stock was $ 219 thousand.

As of March 31, 2026, the accrued dividends on the

Series C Preferred Stock was $ 233 thousand.

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

2 unchanged sentences

for 20 consecutive trading days.

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 nine months

ended September 30, 2025, except those mentioned below.

December 2015, our Board of Directors approved the OMNIQ.

Employee Stock Purchase Plan (the “ESPP”).

For the nine months

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

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

common stock to 35,000,000 shares.

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

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

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

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

at the time of issuance.

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

The Black Scholes calculation used approximately 109.7 % volatility

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

expense related to these options and warrants.

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

As noted in the Company’s 8-K

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

During the quarter ended March 31, 2026, the Company issued 50,000 shares upon exercise and receipt of funds for stock options.

received were $ 3,000 .

8 – LITIGATION

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

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

The claims were brought in an Israeli court.

The initial claim

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

The Company believes that it has meritorious defenses to such

action and intends to vigorously defend itself.

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.

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.

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 had been received from the vendor.

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.

9 – BUSINESS SEGMENT

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).

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.

11 – DISCONTINUED OPERATIONS

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”).

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.

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 10 – DISCONTINUED OPERATIONS

discussed in the Form 10K filed April 15, 2026, and the relevant Form 8-K, on July 11, 2025, OMNIQ Corp., a Delaware corporation (the

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

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

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

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

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

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

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

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

However, due to the

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

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

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

Certain assets were excluded

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

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

unrelated to the Transferred Business or expressly excluded.

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

indemnification provisions, and certain limitations on liability.

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

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

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

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

Services Agreement.

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

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

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

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

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.

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.

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.

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

SCHEDULE OF NET GAIN ON ADDITIONAL PAID IN CAPITAL

Change in Value

Cash and cash equivalents

Accounts receivable, net

Inventory, net

Other current assets

Property and equipment, net of accumulated depreciation

Accounts payable and accrued liabilities

Other current liabilities

Related party notes payable

Additional paid-in capital

Reduction of cash and cash equivalents

Reduction of accounts receivable, net

Reduction of inventory, net

Reduction of other current assets

Reduction in property and equipment, net of accumulated depreciation

Reduction in accounts payable and accrued liabilities

Increase in other current liabilities

Increase in related party notes payable

Increase in additional paid-in capital

Income Taxes Payable on transaction

Additional paid-in capital reduction

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

SCHEDULE OF DISCONTINUED OPERATIONS

Nine months ended

September 30, 2025

September 30, 2024

Cost of goods sold

Selling, general and administrative

Research & Development

Interest expense

Other (expenses) income

Net Loss from Discontinued Ops (Net of Tax)

Three months ended

September 30, 2025

September 30, 2024

For the three months ended

March 31, 2026

March 31, 2025

Cost of goods sold

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Other expenses (income)

Net Loss from Discontinued Ops (Net of Tax)

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

Net Income (Loss) from Discontinued Ops (Net of Tax)

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

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

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SCHEDULE OF SUPPLEMENTAL CASH-FLOW INFORMATION FOR DISCONTINUED OPERATIONS

Nine months ended September 30, 2025

Nine months ended September 30, 2024