What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-11-14 · 132 added, 181 removed, 11 unchanged (97% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NOTE REGARDING FORWARD-LOOKING STATEMENTS

Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws.

Statements that

are not historical facts, including statements about our beliefs and expectations, are forward-looking statements.

Forward-looking statements

include statements preceded by, followed by, or that include the words “may”, “could”, “would”, “should”,

“believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”,

“project”, “intend”, “foresee” and similar expressions.

These statements include, among others, statements

regarding our expected business outlook, anticipated financial and operating results, our business strategy and means to implement the

strategy, our objectives, the amount and timing of capital expenditures, the likelihood of our success in expanding our business, financing

plans, budgets, working capital needs, and sources of liquidity.

By their nature, forward-looking statements involve risks and uncertainties

because they relate to events and depend on circumstances that may or may not occur in the future.

Forward-looking

statements are only predictions and are not guarantees of performance.

These statements are based on our management’s beliefs and

assumptions, which in turn are based on currently available information.

Important assumptions relating to the forward-looking statements

include, among others, assumptions regarding demand for our products, the expansion of product offerings geographically or through new

marketing applications, the timing and cost of planned capital expenditures, competitive conditions, and general economic conditions.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking

statements within the meaning of the federal securities laws.

Statements that are not historical facts, including statements about our

beliefs and expectations, are forward-looking statements.

Forward-looking statements include statements preceded by, followed by, or that

include the words “may”, “could”, “would”, “should”, “believe”, “expect”,

“anticipate”, “plan”, “estimate”, “target”, “project”, “intend”,

“foresee” and similar expressions.

These statements include, among others, statements regarding our expected business outlook,

anticipated financial and operating results, our business strategy and means to implement the strategy, our objectives, the amount and

timing of capital expenditures, the likelihood of our success in expanding our business, financing plans, budgets, working capital needs,

and sources of liquidity.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and

depend on circumstances that may or may not occur in the future.

Forward-looking statements are only predictions and

are not guarantees of performance.

These statements are based on our management’s beliefs and assumptions, which in turn are based

on currently available information.

Important assumptions relating to the forward-looking statements include, among others, assumptions

regarding demand for our products, the expansion of product offerings geographically or through new marketing applications, the timing

and cost of planned capital expenditures, competitive conditions, and general economic conditions.

These assumptions could prove inaccurate.

Forward-looking statements also involve known and unknown risks and uncertainties, which could

cause actual results to differ materially from those contained in any forward-looking statement.

In addition, even if our actual results

are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results may not be indicative

of results or developments in subsequent periods.

Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results to differ materially

from those contained in any forward-looking statement.

In addition, even if our actual results are consistent with the forward-looking

statements contained in this Quarterly Report on Form 10-Q, those results may not be indicative of results or developments in subsequent

Many of these factors are beyond our ability to control or predict.

Such factors include,

but are not limited to, the following:

ability to raise capital when needed and on acceptable terms and conditions;

ability to manage credit and debt structures from vendors, debt holders, and secured lenders.

ability to manage the growth of our business through internal growth and acquisitions;

ability to attract and retain management, and to integrate and maintain technical information and management information systems.

with laws and regulations, including those relating to environmental matters, corporate governance matters and tax matters, as well

as any future changes to such laws and regulations;

a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our 2023

Form 10-K and Item 1A — “Risk Factors” in this Quarterly Report on Form 10-Q for the quarterly period ended September

30, 2024, as well as other reports and registration statements filed by us with the SEC.

These factors should not be construed as exhaustive

and should be read with other cautionary statements in this Quarterly Report on Form 10-Q and our other public filings.

For more information

about us and the announcements we make from time to time, visit our website at www.omniq.com.

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.

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.

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.

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.

following is a discussion of our financial condition, results of operations, financial resources, and working capital.

This discussion

and analysis should be read in conjunction with our unaudited condensed consolidated financial statements contained in this Form 10-Q.

Company’s sales from operations for the nine months ended September 30, 2024, were $56 million, a decrease of approximately $9

million, or 14%, over the nine months ended September 30, 2023.

loss from operations for the nine months ended September 30, 2024, was $3.2 million, a decrease of $3.9 million compared with the loss

in the nine months ended September 30, 2023, of $7.1 million.

Basic loss per share from continuing operations for the nine months ended

September 30, 2024, was ($0.63) versus ($1.50) per share for the same period in 2023.

OF THE CHANGES IN TRADING VENUE

May 3, 2024, The Nasdaq Stock Market LLC (“Nasdaq”) notified OMNIQ Corp.

(the “Company”) that the Nasdaq Hearings

Panel (the “Panel”) has determined to delist the Company’s common stock, and that trading of the Company’s securities

will be suspended at the open of trading on May 7, 2024.

As previously reported, on August 9, 2023, Nasdaq Listing Qualifications Staff

(the “Staff”) notified the Company that it no longer complied with the minimum $35 million market value of listed securities

(“MVLS”) required for continued listing as set forth in Listing Rule 5550(b)(2).

In accordance with Listing Rule 5810(c)(3)(A),

the Company was provided 180 calendar days, or until February 5, 2024, to regain compliance.

On February 8, 2024, Staff notified the

Company that it had determined to delist the Company as it did not comply with the MVLS requirement for listing on the Exchange.

15, 2024, the Company requested a hearing, which was held on April 11, 2024.

May 7, 2024, OMNIQ Corp.

stock transitioned from NASDAQ to the OTC Markets, and OMNIQ’s stock continues to trade on the OTCQB under

the ticker symbol “OMQS”, ensuring uninterrupted market activity for its shareholders.

AND CAPITAL RESOURCES

of September 30, 2024, the Company had cash in the amount of $1.2 million and a working capital deficit of $50 million, compared to cash

Such factors include, but are not limited to, the following:

Our ability to raise capital when needed and on acceptable terms and conditions;

Our ability to manage credit and debt structures from vendors, debt holders, and secured lenders.

Our ability to manage the growth of our business through internal growth and acquisitions;

Competitive pressures;

Our ability to attract and retain management, and to integrate and maintain technical information and management information systems.

Compliance with laws and regulations, including those relating to environmental matters, corporate governance matters and tax matters, as well as any future changes to such laws and regulations;

For a more detailed discussion of some of the foregoing

risks and uncertainties, see Item 1A — “Risk Factors” in our 2024 Form 10-K and Item 1A — “Risk Factors”

in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, as well as other reports and registration statements

filed by us with the SEC.

These factors should not be construed as exhaustive and should be read with other cautionary statements in this

Quarterly Report on Form 10-Q and our other public filings.

For more information about us and the announcements we make from time to time,

visit our website at www.omniq.com.

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 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.

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.

The following is a discussion of our financial condition,

results of operations, financial resources, and working capital.

This discussion and analysis should be read in conjunction with our unaudited

condensed consolidated financial statements contained in this Form 10-Q.

The Company’s sales from operations for the

three months ended March 31, 2025, were $19.9 million, an increase of approximately $1.6 million or 8.7%, over the three months ended March

The loss from operations for

the three months ended March 31, 2025, was $690 thousand, a decrease of $569 thousand compared with the loss in the three months ended

March 31, 2024, of $1.3 million.

Basic loss per share from continuing operations for the three months ended March 31, 2025, was ($0.20)

versus ($0.20) per share for the same period in 2024.

Comprehensive loss for the three months ended March 31, 2025 and 2024 was $1.6

million and $1.9 million respectively, the only component to comprehensive loss besides net loss is foreign currency translation.

LIQUIDITY AND CAPITAL RESOURCES

of March 31, 2025, the Company had cash in the amount of $2.7 million and a working capital deficit of $55 million, compared to cash

in the amount of $2.3 million, and a working capital deficit of $54.4 million as of December 31, 2024.

The Company had stockholders’

deficit attributable to OmniQ stockholders of $40.2 million and $35 million as of September 30, 2024, and December 31, 2023, respectively.

deficit attributable to OmniQ stockholders of $45.5 million and $43.8 million as of March 31, 2025, and December 31, 2024, respectively.

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

Company’s accumulated deficit was $121 million and $114 million as of September 30, 2024, and December 31, 2023.

Company’s operations provided net cash of $230 thousand and used $2.7 million in the nine months ended September 30, 2024,

and 2023, respectively.

The decrease in cash used by operations of $2.9 million is due to an increase in accounts

Company’s cash used in investing activities was $87 thousand for the nine months ended September 30, 2024, compared to cash provided

by investing activities of $598 thousand for the nine months ended September 30, 2023.

Company’s financing activities used $2.4 million of cash during the nine months ended September 30, 2024, and provided $323

thousand during the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, the Company made payments

of $2.7 million on its notes payable, compared to the payments of $1.1 million for the nine months ended September 30, 2023.

Additionally, the Company borrowed $329 thousand on the Company’s line of credit during the nine months ended September 30,

2024, compared to the nine months ended September 30, 2023, when $796 thousand was borrowed on the Company’s line of

of Operations

following tables set forth certain selected unaudited condensed consolidated statement of operations data for the periods indicated in

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

Three months ended September 30,

Company’s accumulated deficit was $126 million and $124 million as of March 31, 2025, and December 31, 2024.

Company’s operations provided net cash of $1 million and used $623 thousand in the three months ended March 31, 2025, and 2024,

respectively.

The increase in cash provided in operations of $1.6 million is due to the increase in revenue.

Company’s cash used in investing activities was $31 thousand for the three months ended March 31, 2025, compared to cash used in

investing activities of $48 thousand for the three months ended March 31, 2024.

Company’s financing activities used $1.2 million of cash during the three months ended March 31, 2025, and used $971 thousand during

the three months ended March 31, 2024.

Results of Operations

The following tables set forth certain selected unaudited

condensed consolidated statements of operations data for the periods indicated in dollars.

In addition, we note that the period-to-period

comparison may not be indicative of future performance.

For the 3 months ended

Cost of Goods sold

2 unchanged sentences

Net Loss per common Share from continuing operations

the three months ended September 30, 2024 and 2023, the Company generated net revenues in the amount of $18.5 million and $17 million,

respectively.

The increase between the three-month periods was attributable to the increase in demand.

of Goods Sold

the three months ended September 30, 2024 and 2023, the Company recognized a total of $14.6 million and $13 million, respectively, of

cost of goods sold.

For the three months ended September 30, 2024 and 2023, cost of goods sold were 79% and 77% of net revenues, respectively.

operating expenses for the three months ended September 30, 2024 and 2023 recognized was $5 million and $6.6 million, respectively,

representing a 25% decrease.

The decreases are related to the cost reduction plan put in place by management.

and Development – Research and development expenses for the three months ended September 30, 2024 and 2023 totaled $261

thousand and $482 thousand, respectively.

general and Administrative – Selling, general and administrative expenses for the three months ended September 30, 2024

and 2023 totaled $4.4 million and $5.6 million, respectively, representing a 21% decrease.

The decreases are related to the cost reduction

plan put in place by management.

– Depreciation expenses for the three months ended September 30, 2024 and 2023 totaled $90 thousand and $146 thousand,

respectively, representing a 38% decrease.

amortization – Intangible amortization expenses for the three months ended September 30, 2024 and 2023 totaled $228 thousand

and $418 thousand, respectively.

income and expenses

Expense – Interest expense for the three months ended September 30, 2024 totaled $929 thousand, as compared to $898 thousand

for the three months ended September 30, 2023.

For the nine months ended September 30,

For the three months ended March 31, 2025, and 2024,

the Company generated net revenues in the amount of $19.9 million and $18.3 million, respectively.

The increase between the three-month

periods was attributable to acceleration of projects by customers.

Cost of Goods Sold

For the three months ended March 31, 2025, and 2024,

the Company recognized a total of $14.8 million and $13.3 million, respectively, of cost of goods sold.

For the three months ended March

31, 2025, and 2024, cost of goods sold were 74% and 72% of net revenues, respectively.

Operating expenses

Loss from operations

Net Loss per common Share from continuing operations

the nine months ended September 30, 2024 and 2023, the Company generated net revenues in the amount of $56 million and $65 million, respectively.

The decrease between the nine-month periods was attributable to the decrease in demand.

of Goods Sold

the nine months ended September 30, 2024 and 2023, the Company recognized a total of $42 million and $51 million, respectively, of cost

of goods sold.

For the nine months ended September 30, 2024 and 2023, cost of goods sold were 75% and 79% of net revenues, respectively.

operating expenses for the nine months ended September 30, 2024 and 2023 recognized was $17 million and $21 million, respectively, representing

a 17% decrease.

The decreases are related to the cost reduction plan put in place by management.

and Development – Research and development expenses for the nine months ended September 30, 2024 and 2023 totaled $1.1

million and $1.5 million, respectively.

general and Administrative – Selling, general and administrative expenses for the nine months ended September 30, 2024

and 2023 totaled $15 million and $18 million, respectively, representing a 15% decrease.

The decreases are related to the cost reduction

plan put in place by management.

– Depreciation expenses for the nine months ended September 30, 2024, and 2023 totaled $298 thousand and $349 thousand,

respectively.

amortization – Intangible amortization expenses for the nine months ended September 30, 2024, and 2023 totaled $686 thousand

and $1.3 million, respectively.

income and expenses

Expense – Interest expense for the nine months ended September 30, 2024 totaled $2.6 million, as compared to $2.6 million

for the nine months ended September 30, 2023.

Company’s results of operations have not been materially affected by inflation and management does not expect inflation to have

a material impact on its operations in the future.

Balance Sheet Arrangements

Company currently does not have any off-balance sheet arrangements.

Cybersecurity

Management and Strategy

recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information

systems and protect the confidentiality, integrity, and availability of our data.

Material Risks & Integrated Overall Risk Management

have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture

of cybersecurity risk management.

This integration ensures that cybersecurity considerations are an integral part of our decision-making

processes at every level.

Our management team continuously evaluates and addresses cybersecurity risks in alignment with our business

objectives and operational needs.

Third-party Risk

we are aware of the risks associated with third-party service providers, we have implemented stringent processes to oversee and manage

We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring

to ensure compliance with our cybersecurity standards.

The monitoring includes annual assessments of the SOC reports of our providers

and implementing complementary controls.

This approach is designed to mitigate risks related to data breaches or other security incidents

originating from third-parties.

from Cybersecurity Threats

have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Total operating expenses for the three months ended

March 31, 2025, and 2024 recognized was $5.8 million and $6.3 million, respectively, representing a 7.7% decrease.

The decrease in operating

expenses was due primarily to management’s cost savings plan.

Research and Development – Research

and development expenses for the three months ended March 31, 2025, and 2024 totaled $507 thousand and $405 thousand, respectively.

Selling, general and Administrative

– Selling, general and administrative expenses for the three months ended March 31, 2025, and 2024 totaled $5.1 million and $5.6

million, respectively, representing a 9% decrease.

The decrease was due primarily to management’s cost savings plan.

Depreciation – Depreciation expenses

for the three months ended March 31, 2025, and 2024 totaled $28 thousand and $116 thousand, respectively, representing a 76% decrease.

The decrease is directly related to the reduction in fixed assets.

Intangible amortization – Intangible

amortization expenses for the three months ended March 31, 2025, and 2024 totaled $232 thousand and $231 thousand, respectively.

is due to life of intangibles and what is remaining to be amortized.

Other income and expenses

Interest Expense – Interest expense

for the three months ended March 31, 2025, totaled $462 thousand, as compared to $917 thousand for the three months ended March 31, 2024.

The decrease is primarily attributable to the reduced line of credit.

The Company’s results of operations have not

been materially affected by inflation and management does not expect inflation to have a material impact on its operations in the future.

Off- Balance Sheet Arrangements

The Company currently does not have any off-balance

sheet arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not Applicable

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 2. Management’s Discussion and Analysis