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Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 272 added, 247 removed, 145 unchanged (78% of the section changed)

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

September 30, 2024

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025

December 31, 2024

(In thousands, except share and per share data)

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Accounts receivable, net

Inventory, net

Prepaid expenses

1 unchanged sentence

Total current assets

Property and equipment, net of accumulated depreciation of $ 1,851 and $ 1,166 respectively

Goodwill, net of accumulated impairment of $ 0 and $ 14,868 , respectively

Trade name, net of accumulated amortization of $ 4,974 and $ 4,850 , respectively

Customer relationships, net of accumulated amortization of $ 12,256 and $ 11,814 , respectively

Other intangibles, net of accumulated amortization of $ 1,711 and $ 1,669 , respectively

Property and equipment, net of accumulated depreciation

Trade name, net of accumulated amortization

Customer relationships, net of accumulated amortization

Other intangibles, net of accumulated amortization

Right of use lease asset

14 unchanged sentences

Total liabilities

Stockholders’ deficit

Commitments and Contingencies

Stockholders’ equity (deficit)

Series A Preferred stock;

15 unchanged sentences

Accumulated other comprehensive income

Total OmniQ stockholders’ deficit

Total liabilities and deficit

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Total OmniQ stockholders’ equity (deficit)

Total liabilities and stockholders’ equity

The accompanying unaudited notes should be read in

conjunction with these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

For the three months

For the nine months ended

ending September 30,

September 30,

For the Three months ended

(In thousands, except share and per share data)

10 unchanged sentences

Net Loss Before Income Taxes

Provision for Income Taxes

Current Provision for Income Taxes

Total Provision for Income Taxes

6 unchanged sentences

Weighted average number of common shares outstanding - basic

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

The accompanying unaudited notes should be read in

conjunction with these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

EQUITY (DEFICIT)

For the Three Months ended

March 31, 2024 and 2025

(In thousands)

7 unchanged sentences

Balance, December 31, 2023

Dividend on Class C Shares

ESPP Stock Issuance

Stock and Warrant issued for services

Stock-based compensation – options, warrants, issuances

Exercise of stock options and warrants

Conversion of shares

Cumulative Translation Adjustment

Net (loss) income

Balance, March 31, 2023

Dividend on Class C Shares

ESPP Stock Issuance

Stock and Warrant issued for services

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, June 30, 2023

Dividend on Class C Shares

ESPP Stock Issuance

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, September 30, 2023

Balance, December 31, 2023

$ ( 113,923 )

Dividend on Class C Shares

CodeBlocks Acquisition

ESPP Stock Issuance

Stock-based compensation – options, warrants, issuances

Acquisition of Codeblocks

Cumulative Translation Adjustment

2 unchanged sentences

$ ( 115,972 )

Dividend on Class C Shares

ESPP Stock Issuance

Stock-based compensation – options, warrants, issuances

Cumulative Translation Adjustment

Net (loss) income

Balance, June 30, 2024

Balance, December 31, 2024

$ ( 123,899 )

1 unchanged sentence

Dividend on Class C Shares

ESPP Stock Issuance

Stock-based compensation – options, warrants, issuances

1 unchanged sentence

Net (loss) income

Balance, September 30, 2024

Balance, March 31, 2025

$ ( 125,995 )

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,

The accompanying unaudited notes

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

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS (UNAUDITED)

For the Three Months Ended

(In thousands)

2 unchanged sentences

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

5 unchanged sentences

Purchase of property and equipment

Proceeds/loss from sale of other assets

Net cash provided by (used in) investing activities

Net cash (used in) investing activities

Cash flows from financing activities

Proceeds from ESPP stock issuance

Proceeds from exercise of options and warrants

Payments on notes/loans payable

Proceeds from issuance of notes/loans payable

Proceeds from draw on line of credit

6 unchanged sentences

Declared dividends payable

Net assets acquired in business combination

Right of use asset acquired in exchange for lease liabilities

Right of use asset acquired in exchange for lease liability

Supplemental disclosure of cash flow information:

Cash paid for interest

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

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

condensed consolidated financial statements include the accounts of OMNIQ Corp, and its wholly owned subsidiaries, referred to herein

as “we,” “us,” “OMNIQ,” or the “Company.” Intercompany accounts and transactions have

been eliminated.

In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments,

which are normal and recurring in nature, necessary for fair financial statement presentation.

The preparation of these condensed consolidated

financial statements and accompanying notes in conformity with U.S.

generally accepted accounting principles requires management to make

estimates and assumptions that affect the amounts reported.

Cash paid for income taxes

The accompanying unaudited notes

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

The condensed consolidated financial statements include

the accounts of OMNIQ Corp, and its wholly owned subsidiaries, referred to herein as “we,” “us,” “OMNIQ,”

or the “Company.” Intercompany accounts and transactions have been eliminated.

In the opinion of the Company’s management,

the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair

financial statement presentation.

The preparation of these condensed consolidated financial statements and accompanying notes in conformity

generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported.

Actual results could differ materially from those estimates.

These condensed

consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial

statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 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 2023 Form 10-K.

the nine-month period ended September 30, 2024, there were no significant changes to those accounting policies.

Loss Per Common Share

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 nine-months ended September 30, 2024, and 2023 were 10,696,435 and 7,788,262 , 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:

OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNING PER SHARE

September 30, 2024

September 30, 2023

These condensed consolidated financial statements and accompanying notes

should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its

Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

We describe our significant accounting policies in

Note 2 of the notes to consolidated financial statements in the 2024 Form 10-K.

During the three-month period ended March 31, 2025, there

were no significant changes to those accounting policies other than below.

Accounting Standards Updates

ASU 2023-09, “Income Taxes (Topic 740), Improvement

to Income Tax Disclosures.” The amendments in ASU 2023-09 require an entity to disclose specific categories in the rate reconciliation

and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the

amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis.

Additionally, the amendments

in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and

foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to

or greater than five percent of total income taxes paid (net of refunds received).

Lastly, the amendments in this ASU require an entity

to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign

and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign.

This ASU is effective for

annual periods beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied on a prospective basis;

however, retrospective application is permitted.

The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s

financial statements.

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 three-months

ended March 31, 2025, and 2024 were 10,712,930 and 10,688,340 , respectively.

Diluted net loss per share of common stock is the same as

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

The 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

March 31, 2025

March 31, 2024

Options to purchase common stock

1 unchanged sentence

Potential shares excluded from diluted net loss per share

Reclassifications

and Comparability

revenue and cost of goods sold amounts in the financial statements of the prior period have been reclassified to be presented on a net

basis rather than a gross to conform to the current period’s presentation for comparative purposes.

The total amount reclassified

from cost of goods sold to revenue, as a reduction, was $ 637 thousand.

This had no effect on total assets or net income.

2 – LIQUIDITY AND CAPITAL RESOURCES

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

The following are

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

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

and cost-effective development of products

capital deficit of $ 50 million as of September 30, 2024

deficit of $ 121 million as of September 30, 2024

years of losses from operations

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.

Plans to Mitigate and Alleviate Conditions or Events

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

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

efforts are focused on the most profitable product lines.

Star - The Company’s total accounts payable due to Blue Star as of September 30, 2024, was approximately $ 48 million.

Star is an unsecured creditor, financing a substantial amount the Company’s supply chain demand.

Management believes that Blue

Star will continue supplying the Company with preferable credit terms.

Blue Star has agreed to the annual interest rate of 5 % on

invoices that are past due.

NOTE 2 – GOING CONCERN

The 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 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 $ 55.1 million as of March 31, 2025

Accumulated deficit of $ 126 million as of March 31, 2025

Multiple years of losses from operations

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.

Blue Star - The Company’s total accounts payable due to Blue Star as of March 31, 2025, was approximately $ 56.6 million.

Blue Star is an unsecured creditor, financing a substantial amount the Company’s supply chain demand.

Management believes that Blue Star will continue supplying the Company with preferable credit terms.

Blue Star has agreed to the annual interest rate of 5 % on invoices that are past due.

As an unsecured creditor of the Company, Blue Star has no incentive to force a liquidation.

has enjoyed a good mutual relationship for the past five years.

finalized a new line of credit with an additional financial institution.

3 – CONCENTRATIONS

the nine-months ended September 30, 2024 and the year ended December 31, 2023, one customer accounted for 20.7 % and one customer accounted

for 30 %, respectively, of the Company’s consolidated revenues.

receivable at September 30, 2024 and December 31, 2023 are made up of trade receivables due from customers in the ordinary course of

One customer accounted for 10.2 % of the outstanding receivables as of September 30, 2024, and no customers accounted for more

than 10 % as of December 31, 2023.

the nine months ended September 30, 2024 one vendor made up 38 %

of our purchases, and for the year ended December 31, 2023 two vendors made up 49 %, of our purchases.

4 – BUSINESS ACQUISITION

The Company has enjoyed a good mutual relationship for the past six years.

NOTE 3 – CONCENTRATIONS

For the three-months ended March 31, 2025, and the

year ended December 31, 2024, no customer accounted for more than 10 % and one customer accounted for 23.7 %, respectively, of the Company’s

consolidated revenues.

Accounts receivable at March

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

accounted for 11.2 % of the outstanding receivables as of March 31, 2025, and 26 % as of December 31, 2024.

For the three months ended March 31, 2025, and the

year ended December 31, 2024 one vendor made up 45 % and 47 %, respectively, of our purchases.

NOTE 4 – BUSINESS COMBINATIONS

CodeBlocks LTD

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

4 unchanged sentences

US $ 1,275,044 ).

The consideration is payable in seven equal installments with the final payment due on January 11, 2025.

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

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

2 unchanged sentences

The purchase Agreement closed on February 1, 2024.

Distribution LTD

On February 15, 2024, Dangot divested its 50 % equity interest in Neway Distribution LTD for consideration of approximately NIS 1 million—which

was the carrying amount of the equity investment on Dangot’s balance sheet as of the date of the sale.

5 – INVENTORY

consisted of the following as of:

September 30, 2024

As of March 31, 2025, the total amount outstanding

is NIS 4.4 million, approximately $ 1 million USD, and is presented on the balance sheet in short- and long-term notes payable.

NOTE 5 – INVENTORY

Inventory consisted of the following as of:

March 31, 2025

December 31, 2024

2 unchanged sentences

Finished goods (less allowance)

Less allowance for obsolescence

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

March 25, 2022, we entered into a Business Finance Agreement (the “BFA”) with BridgeBank a division of Western Alliance Bank

(“BridgeBank”) to establish the sale of accounts receivable credit facility, whereby we may obtain short-term financing by

selling and assigning acceptable accounts receivables to BridgeBank.

Pursuant to the BFA, the outstanding principal amount of advances

made by BridgeBank at any time shall not exceed $ 8.5 million.

BridgeBank reserves and withholds 15 % of the face amount of each account

purchased in a reserve account.

This agreement was terminated in November 2023.

annual interest rate with respect to the daily average balance of unpaid advances outstanding under the BFA (computed on a monthly basis)

is equal to the “Prime Rate” of Wells Fargo Bank N.A.

plus 1.5%, plus a monthly fee equal to 0.15% of the average outstanding

The BFA credit facility is collateralized with a senior security interest in certain assets of the Company.

The BFA includes

customary representations and warranties and default provisions for transactions of this type.

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.

The balance as of September

30, 2024, was $ 0 .

7 – OTHER NOTES PAYABLE

NOTE 6 – CREDIT FACILITIES AND LINE OF CREDIT

We maintain operating lines of credit, factoring and

revolving credit facilities with banks and finance companies to provide us with working capital.

On 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.

The balance as of March 31, 2025, was $ 0 .

NOTE 7 – RELATED PARTY NOTES PAYABLE

Note Payable – Marin

In December 2017, we entered

into a $ 660 thousand note payable at 1.89 % annual interest rate (the “Marin Note”) with two individuals from whom

we previously acquired their company (in 2014).

The Marin Note was payable in 60 monthly principal payments of

$ 20 thousand beginning in October 2018.

Accrued interest payable as of March 31, 2025 and December 31, 2024, was

$ 73 thousand and $ 73 , respectively.

Accrued interest was payable at maturity.

This accrued interest was outstanding as of March

NOTE 8 – OTHER NOTES PAYABLE

SCHEDULE OF OTHER NOTES PAYABLE

payable other

current portion

notes payable

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

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.

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 7.5 % per annum and is payable in 36 instalments of principal and interest over 3 years.

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 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.

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 9.75 % per annum and is payable in 36 monthly installments.

8 – OTHER LIABILITIES

SCHEDULE OF OTHER LIABILITIES

(In thousands)

September 30, 2024

March 31, 2025

December 31, 2024

Other vendor payable

Dividend payable

Total other liabilities

Note payable other

Less current portion

Total long-term other liabilities

balance of deferred revenues is included in other current and long-term liabilities on the balance sheet.

The following table summarizes

changes in deferred revenue as of:

SCHEDULE OF DEFERRED REVENUE

September 30, 2024

December 31, 2023

Beginning balance

Less amounts recognized during the year

Add new deferred revenue

Ending Balance

9 – 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.

10 – STOCKHOLDERS’ EQUITY

of September 30, 2024, there were 2,000,000 Series A preferred shares designated and no Series A preferred shares outstanding.

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

of preferred to 250 common shares .

of September 30, 2024, there was 1 preferred share designated and no preferred shares outstanding.

of September 30, 2024, 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

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 September 30, 2024, the accrued dividends on

the Series C Preferred Stock was $ 204 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

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 .

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, 2024 or 2023.

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.

11 – 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.

Long-term notes payable

Notes Payable Other

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 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 March 31, 2025, the balance owed is $ 1,886,466 NIS (approx.

$ 528,211 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.

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 March 31, 2025 was approximately $ 0.14 million.

During the year ended December 31, 2023, the Company

entered into a short-term loan Hapoalim Bank totaling NIS 2.5 million, approximately US $ 0.67 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, 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 March 31, 2025, the balance was approximately $ 1.5 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 %.

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 March 31, 2025, the Company owed Bank Leumi approximately USD $ 5.4 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 9.5 % per annum and is payable in 36 monthly installments.

at December 31, 2024 is $ 251 thousand and at March 31, 2025 was $ 212 thousand.

As of March 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.

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.

NOTE 9 – OTHER INCOME

For the three months ended March 31, 2025, the Company

received government relief funds in the amount of approximately NIS 1.7 million or US $ 609 thousand.

NOTE 10 – STOCKHOLDERS’ EQUITY

PREFERRED STOCK

As of March 31, 2025, there were 2,000,000 Series

A preferred shares designated and no Series A preferred shares outstanding.

The board 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 .

As of March 31, 2025, there was 1 preferred share

designated and no preferred shares outstanding.

As of March 31, 2025, there were 3,000,000 Series

C Preferred Shares (“Series C”) authorized with 502,000 issued and outstanding.

The Series C shares have preferential rights

above common shares and the Series B Preferred Shares and is entitled to receive a quarterly 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 March 31, 2025, the accrued dividends on the Series C Preferred Stock was $ 219

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 .

EQUITY INCENTIVE PLAN

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, 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 shares were issued in the three months ended March 31, 2025 and 14,409 shares were issued during the three months ended March 31, 2024.

NOTE 11 – 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.

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

The Company believes that it has meritorious defenses to such action and intends to vigorously defend itself.

12 – SUBSEQUENT EVENTS

are no subsequent events.

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

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

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 thousand in

unpaid fees and commissions.

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

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

12 – BUSINESS SEGMENT

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 13 – SUBSEQUENT EVENTS

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

What changed 10-Q

Item 1. Financial Statements