Item 1. Business
ITEM
1. BUSINESS
General
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.
Our
Company
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
Solutions, 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 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 helps 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. We are an established distributor
of barcode labels, tags, and ribbons, as well as RFID labels and tags. We provide printing solutions, credit card terminals, automatic
kiosks and point-of-care units. We also offer technical service and support. Our highly tenured team of professionals has the knowledge
and expertise to simplify the integration process for our customers, and our team delivers proven problem-solving solutions backed by
numerous customer references. We offer comprehensive packaged and configurable software, and we are a leading provider of best-in-class
mobile and wireless equipment.
Our
customers include government agencies and leading Fortune 500 companies from diverse sectors, including healthcare, food and beverage,
manufacturing, retail, distribution, and transportation and logistics. Since 2014, our annual consolidated revenues have grown to more
than $80 million with clients in more than 40 countries. We currently engage with several billion-dollar markets with double-digit growth,
including the Global Safe City market and the Ticketless Safe Parking market.
Recent
Developments
On
November 21, 2023, we received a notice (the “Notice”) from the staff of the Listing Qualifications Department (the “Staff”)
of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we were not in compliance with Nasdaq Listing Rule 5550(a)(2)
because we failed to maintain a minimum bid price of $1.00 over the previous 32 consecutive business days dated October 6, 2023 to November
20, 2023. The Nasdaq rules provide us with a compliance period of 180 calendar days in which to regain compliance. If at any time during
this 180-day period the closing bid price of our security is at least $1 for a minimum of ten consecutive business days, the Staff will
provide written confirmation of compliance and this matter will be closed. If we choose to implement a reverse stock split, it must be
completed no later than ten business days prior to the expiration of 180 calendar day compliance period, which is May 10, 2024, to regain
compliance.
In
the event we do not regain compliance, we may be eligible for additional time. To qualify, we will be required to meet the continued
listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, apart from the bid price
requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, by
effecting a reverse stock split, if necessary. If the Company meets these requirements, the Staff will inform the Company that it has
been granted an additional 180 calendar days. However, if it appears to Staff that the Company will not be able to cure the deficiency,
or if the Company is otherwise not eligible, the Staff will provide notice that its securities will be subject to delisting.
On
January 5, 2024, we received another notice from the Nasdaq Staff notifying us that we were not in compliance with Nasdaq Listing Rule
5620(a) because we failed to hold an annual meeting within one year following the last fiscal year. The Nasdaq rules provide us with
a compliance period of 45 calendar days to submit a plan to regain compliance. If Nasdaq accepts the plan, Nasdaq can grant an extension
until June 28, 2024, to regain compliance. We scheduled the annual stockholders’ meeting, to be held on April 8, 2024. The
Company intends to submit a plan of compliance with the 45-day period.
On
August 9, 2023, we had received a notice from the Nasdaq Staff notifying us that in accordance with Nasdaq Listing Rule 5550(b)(2), the
Company had a market value of listed securities below the minimum $35,000,000 required for continued listing for the previous 30 consecutive
trading days. Therefore, in accordance with Listing Rule 5810(c)(3)(C), we were provided 180 calendar days, or until February 5, 2024
to regain compliance.
On
February 8, 2024, we received a new notice from the Nasdaq Staff that we had not regained compliance with Nasdaq Listing Rule 5550(b)(2),
and thus, unless we request an appeal of this determination from the Staff, our common stock will be suspended at the opening of business
on February 20, 2024, removing our securities from listing and registration on Nasdaq. In accordance with the Nasdaq Listing Rule 5800
Series, we could appeal the Staff’s determination to the hearings panel (the “Hearings Panel”), which may stay the
suspension of the Company’s securities pending the Hearings Panels decision. We filed an appeal with the Hearings Panel on February
14, 2024, and paid the $20,000 fee for a hearing in accordance with Nasdaq Rules.
4
Our
Strategy
Our
plan is to focus on operational excellence and cost reduction, addressing the balance sheet debt and putting together a business plan
that is based on revenue growth and technological leadership. We intend to continue to identify synergies within the Company to offer
a more complete line of products, services, and technological solutions to customers throughout the world. Furthermore, the markets in
which OMNIQ operates are undergoing consolidation, and OMNIQ continues to identify strategic companies in data collection, mobile systems,
integrations, and other complementary technologies for potential future acquisition in order to become the leading specialty integrator
within our served markets.
We
are a provider of products and solutions to two main markets: supply chain management and safe city. We have expanded our product solutions,
which are based on artificial intelligence and machine-learning algorithms, offering computer-vision applications. Our product offerings
have established us as an innovative and technological company. We are a pioneer in providing cutting-edge technology solutions to the
markets we serve.
We
simplify the integration process because of our experienced team of professionals. We deliver problem-solving solutions backed by numerous
customer references. We offer comprehensive packaged and configurable software. Our software offering is a mix of internally developed
and third-party software.
Our
ground-breaking AI-based vision solutions are currently in use for sensitive Homeland Security anti-terror projects and automated parking
solutions. Inspired by time-critical “friend or foe” decision-making processes, our patented algorithms are based on a combination
of cognitive science and machine-learning-based pattern-recognition technology which is arbitrated through a multi-layered decision-making
process that offers both speed and accuracy.
Our
experienced team of consulting and integration professionals guide companies through the entire development and deployment process, from
selecting technology, to the successful company-wide rollout of a customized solution that fits their unique requirements. After performing
a thorough technical evaluation of the customer’s current operations and specific operational problems, our team determines the
best hardware and software solutions to optimize the customer’s operational workflow. We deliver ongoing services provided throughout
the deployment process and the entire product life cycle. We also deliver full installation services for all mobile data-collection computers,
automatic kiosks, point of care, and printing equipment including full staging and kitting of the equipment.
We
have been successful in delivering mission-critical mobile-computing and data-collection solutions to customers from small businesses
to Fortune 500 companies. The requirements and needs of our customers continue to evolve as they require new mobile and wireless technologies
and services to make their business more competitive and profitable. The result is a continuous flow of opportunities for us to assist
customers to evaluate, choose, implement, and support the right mobile and data collection solutions. As we focus on what we do best,
we believe that there is more than adequate market size, growth, and opportunity available to the Company to succeed.
The
Company offers a full suite of configurable packaged software solutions that provide customers with unique solutions with significant
business Return on Investment (“ROI”), including:
Order
Entry: Increases productivity in the field. Remote workers increasingly demand rapid access to real-time information and up-to-date
data to facilitate and streamline their job functions in the field—our Order Entry Software is the answer.
5
Intelligent
Order Entry: Adds intelligence to legacy order entry system to maximize profits. The hand-held industry is a vital link in
getting remote orders from the field to corporate. Our Intelligent Order Entry Software adds this capability to legacy order entry systems.
Warehouse:
Enhances efficiency in distribution and manufacturing environments. The warehouse is a collection of applications for portable
devices that extend the power of the existing system out to the warehouse floor and dock doors.
Proof
of Delivery: Enhances document delivery performance. We offer proof-of-delivery capabilities as part of our Mobility Suite
that gives companies an edge over competitors by improving customer service.
QTSaaS
(Quest Total Solutions as a Service ) : Provides mobility solutions. QTSaaS is a complete mobile-services offering that
includes hardware, software, and wireless data in a bundled subscription payment offering over a period of time. Our partnership with
wireless carriers allows us to offer mobility solutions to our customers on platforms that extend the market into new mobile applications
that previously were not being automated.
Media
and Label Business: Provides recurring revenue from consumable products. The largest segment of data collection opportunity
for us is the barcode label market providing ongoing and repeatable purchasing business. We intend to continue in the label business
to drive business growth and increased margins.
Our
Target Markets
The
two markets we target are Safe City and Supply Chain Management. Within the Safe City market, our groundbreaking AI-based vision solutions
are currently in use for sensitive Homeland Security anti-terror projects and discerning customers within the access control, airport,
border crossing, municipality safety, and parking industries. We seek to utilize our expertise and software solutions in markets which
provide the greatest opportunity to increase margins. Within the Supply Chain Management market, we believe we can further develop our
existing customer base who need to replace their legacy systems with a new go-to-market strategy.
We
have been successful in integrating mission-critical mobile-computing and data-collection solutions for small businesses up to Fortune
500 companies. The needs of our customers continue to evolve as they require new mobile and wireless technologies and services to make
their business more competitive and profitable. The result is a continuous flow of opportunities to assist customers in evaluating, choosing,
implementing, and supporting the right mobile and data-collection solutions.
We
believe integrating our patented and proprietary AI technology into our existing Supply Chain offerings will allow for automated logistics
monitoring and optimization, creating operational efficiencies at higher margins for us and our customers.
Our
Sales Strategy
Our
direct sales teams are supported by systems engineers with tenured experience in the mobile industry. The sales organization’s
growth mirrors the addition of new products and services. Sales team members are organized by industry, areas of opportunity, areas of
expertise, and territory. Our sales teams address national accounts offering a broad array of unique solutions for key lines of business
applications, which provide opportunities for upselling and cross selling to our customers. For the Israeli market we have direct sales
teams that are organized by industry and product line. In Israel we also offer comprehensive technical service and support which increases
customer confidence and supports the sales process.
Salespeople
are supported internally by support personnel—who coordinate quotes and logistics—and by members of the systems engineering
group and software teams—who provide technical expertise.
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Competition
The
mobile-system-integration market is characterized by a limited number of large competitors and numerous smaller niche players. We typically
pursue larger accounts and national customers, competing most often with larger channel partners. For specific solutions, we also compete
with niche players who are often focused on a single industry. Hardware sales are competitive because of online retailers. We believe
our consultative, integrated-solutions approach is a clear differentiator for most prospective customers.
Human
Capital
OMNIQ’s
operating philosophy is growth and continued success, which requires management and employees to work together in a spirit of cooperation
and teamwork. Our core values emphasize an environment where safety, diversity, inclusion, talent development, training, and retention
are top priorities. This has enabled us to meet various challenges over the years. Our progress reflects this strong, mutual commitment
between the Company and its employees. We believe our employees are our greatest asset. We remain focused on providing friendly and safe
working conditions, providing competitive pay, offering quality benefits, producing revenue for the continued growth of the Company,
and supporting the communities in which we operate. We realize our success is a direct result of the hard work and dedication of our
employees. Each employee at OMNIQ is a contributing partner in our future growth and we strive to maintain a mutually beneficial culture
that also fosters the professional development of each employee.
As
of December 31, 2024, we had approximately 166 employees. Of these employees, 144 are salaried personnel (including commissioned employees)
and 22 are hourly personnel. Our employees perform the following functions: sales, assembly and warehouse, technical services, and office
and administrative support. We believe we have good relationship with our employees. Generally, the total number of employees does not
significantly fluctuate throughout the year.
Concentrations
For the year ended December 31, 2024, one customer accounted for 24% of
the Company’s revenues. For
the year ended December 31, 2023, no customer accounted for more than 10% of the Company’s revenues.
Accounts
receivables are made up of trade receivables due from customers in the ordinary course of business. As of December 31, 2024, 1
customer accounted for 26% of the outstanding receivables. As. of December 31, 2023, no customer accounted for more than 10% of the
outstanding receivables.
Accounts
payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2024 and 2023. One vendor made up 47% and two vendors made
up 38% of our purchases during the year ended December 31, 2024 and 2023, respectively.
Available
Information
OMNIQ’s
website, www.omniq.com , and the information contained on that site, or connected to that site, are not part of or incorporated
by reference into this filing.
We
file electronically with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The SEC maintains an Internet
site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC. Copies of these reports, proxy and information statements and other information may be obtained by electronic request at
the following e-mail address: publicinfo@sec.gov. We use the Investor section of our website as a means of disclosing material non-public
information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor
section of our website, in addition to following press releases, SEC filings, and public conference calls and webcasts.
7
ITEM
1A. RISK FACTORS
This
section is not required for smaller reporting companies.