OMNIQ ACCELERATES MOBILE LPR AS DEMAND GROWS www.omniQ.com MLPI VEHICLE Mobile LPR in Action SALT LAKE CITY, Oct. 15, 2025 (GLOBE NEWSWIRE) -- OMNIQ (OTCMKTS: OMQS) (“OMNIQ” or “the Company”) today announced the continued rollout of eight new AI-based Mobile License Plate Inventory (MLPI, including Total Vehicle Recognition) deployments across airports, healthcare systems, and business complexes in 2025. The expansion reflects growing nationwide demand for flexible, data-secure access and enforcemen ...

Core Insights - Houghton County Airport (CMX) has implemented the OMNIQ airport management platform, enhancing operational efficiency, traveler convenience, and security since its launch in October 2024 [1][4][5] Group 1: Technology Implementation - The OMNIQ platform utilizes AI-powered machine vision for tasks such as license plate scanning and payment tracking, which reduces manual errors and improves consistency [2][6] - The PERCS™ system integrates license plate recognition with permits, payments, and citations, allowing for more accurate tracking and management of parking operations [6][9] Group 2: Customer Experience - Travelers can pay for parking through a web portal and mobile app, which minimizes missed payments and citations, thereby enhancing the overall travel experience [3][9] - CMX staff continue to provide hands-on customer service, assisting travelers and managing in-person payments, ensuring personal assistance is available when needed [2][9] Group 3: Financial Impact - In the last three months, the upgraded system has processed nearly 10,000 new subscriptions and 9,000 citations, generating significant new revenue for the airport [4] - The revenue generated supports essential services, including winter snow removal, highlighting the financial benefits of the technology implementation [5][9] Group 4: Community Role - CMX serves as a critical transportation hub in Michigan's Upper Peninsula, providing essential air service to multiple counties and supporting tens of thousands of passengers annually [7][8] - The partnership with OMNIQ reflects CMX's commitment to investing in technology that strengthens community services and operational efficiency [5][4]

Core Insights - OMNIQ Corp. reported a significant financial turnaround in Q2 2025, with net loss reduced to $34,000 from $5.1 million in the same period last year, and a 75% reduction in equity deficit on $15.7 million of revenue [1][10]. Financial Performance - The company ended Q2 2025 with $2.2 million in cash and positive operating cash flow of $6.07 million, an improvement of approximately $9.68 million compared to negative $3.6 million a year earlier [3]. - Stockholders' equity improved by $32.9 million, reducing the deficit from $(43.9 million) to $(11.0 million) [10]. - Revenue for the first half of 2025 was $15.7 million, down from $17.5 million in the same period of 2024 [10]. - Gross margin improved to 26% in 2025 from 23% in 2024 due to increased efficiency in purchases and pricing [10]. - Selling, General and Administrative (SG&A) expenses decreased by 31%, falling to $3.37 million from $4.9 million, driven by cost-saving initiatives [10]. Business Restructuring - The sale of the legacy business was a pivotal moment for the company, resulting in a net gain on disposal of approximately $34.7 million, which was recorded to Additional Paid-in Capital due to the related-party nature of the transaction [4]. - The results of the sold division were classified as discontinued operations, showing a loss of $1.7 million compared to $1.0 million in the prior year [4]. Strategic Focus - The CEO stated that the company has reshaped itself into a stronger, more focused business, with healthier balance sheets and profitable core operations, laying a solid foundation for responsible growth [5]. - OMNIQ utilizes patented AI technology for machine vision image processing solutions across various sectors, including supply chain management, public safety, and traffic management [5][6]. Market Engagement - The company serves a diverse customer base, including government agencies, healthcare, universities, and airports, and is engaged in several billion-dollar markets with double-digit growth potential [8].

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents OMNIQ Corp.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents OMNIQ Corp.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity (deficit), and statements of cash flows, along with detailed notes explaining significant accounting policies, going concern issues, business combinations, debt, equity, and the impact of discontinued operations [UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20AT%20JUNE%2030%2C%202025%20AND%20DECEMBER%2031%2C%202024) This section provides a comparative overview of OMNIQ Corp.'s financial position at June 30, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity Unaudited Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Assets | $26,780 | $43,589 | $(16,809) | -38.56% | | Total Liabilities | $37,754 | $87,477 | $(49,723) | -56.84% | | Total Stockholders' Equity (Deficit) | $(10,974) | $(43,888) | $32,914 | 74.99% | | Current Assets | $15,630 | $31,880 | $(16,250) | -50.97% | | Current Liabilities | $26,517 | $86,323 | $(59,806) | -69.28% | [UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20LOSS%20FOR%20THE%20THREE%20AND%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%2C%20AND%202024) This statement details OMNIQ Corp.'s revenues, gross profit, operating loss, net income (loss), and comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $7,802 | $8,436 | $15,782 | $17,587 | | Gross profit | $1,981 | $2,172 | $4,164 | $4,129 | | Loss from operations | $(484) | $(813) | $(678) | $(2,267) | | Net Income (Loss) | $2,051 | $(3,045) | $(34) | $(5,143) | | Net Income (Loss) per share - basic | $0.19 | $(0.28) | $(0.00) | $(0.48) | | Comprehensive income (loss) | $3,220 | $(1,876) | $(1,872) | $(3,733) | [UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)%20FOR%20THE%20THREE%20AND%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20AND%202024) This statement outlines changes in OMNIQ Corp.'s stockholders' equity (deficit), including additional paid-in capital and accumulated deficit, for the periods ended June 30, 2025 and 2024 Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit) (in thousands) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | December 31, 2024 | | :-------------------- | :------------ | :------------ | :---------------- | | Total Stockholders' Equity (Deficit) | $(10,974) | $(38,358) | $(43,888) | | Additional Paid-in Capital | $113,513 | $78,694 | $78,713 | | Accumulated Deficit | $(123,947) | $(119,025) | $(123,899) | - The increase in **Additional Paid-in Capital by $34,734 thousand** for the six months ended June 30, 2025, is primarily due to the sale of assets from a division, which was recorded as a capital contribution due to its related-party nature[14](index=14&type=chunk)[58](index=58&type=chunk)[63](index=63&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20FOR%20THE%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%2C%20AND%202024) This statement presents OMNIQ Corp.'s cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities | $6,072 | $(3,671) | | Net cash provided by (used in) investing activities | $(2,463) | $(103) | | Net cash (used in) provided by financing activities | $(1,716) | $1,369 | | Net change in cash and cash equivalents | $1,893 | $(2,405) | | Cash and cash equivalents at end of period | $2,209 | $1,373 | [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=10&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, significant events, and financial positions [NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) OMNIQ Corp.'s financial statements adhere to U.S. GAAP, with no material accounting policy changes except for the adoption of ASU 2023-09, and include details on net loss per common share calculation - The company adopted ASU 2023-09, 'Income Taxes (Topic 740), Improvement to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, but it is not expected to have a material impact on financial statements[21](index=21&type=chunk) Potentially Dilutive Securities (in thousands) | Potentially Dilutive Securities (in thousands) | June 30, 2025 | June 30, 2024 | | :--------------------------------------------- | :------------ | :------------ | | Options to purchase common stock | 2,126,833 | 1,297,333 | | Warrants to purchase common stock | 959,235 | 1,606,734 | | Total Potential shares excluded from diluted net loss per share | 3,086,068 | 2,904,067 | [NOTE 2 – GOING CONCERN](index=11&type=section&id=NOTE%202%20%E2%80%93%20GOING%20CONCERN) OMNIQ Corp. faces substantial doubt about its going concern ability due to significant deficits and operating losses, mitigated by management's cost reduction, sales focus, and recent division sale plans - The company has a working capital deficit of **$10.9 million** as of June 30, 2025, and an accumulated deficit of **$124 million**, raising substantial doubt about its ability to continue as a going concern[24](index=24&type=chunk)[27](index=27&type=chunk) - Management's plans to mitigate going concern issues include evaluating and reducing operating expenses, strategically focusing on increasing sales with prime customers, and concentrating sales efforts on the most profitable product lines[25](index=25&type=chunk)[27](index=27&type=chunk) - The Company completed the sale of one of its divisions as of June 30, 2025, which included the removal of a net **$45 million worth of debt** from the Company's books, contributing to the mitigation plan[27](index=27&type=chunk) [NOTE 3 – CONCENTRATIONS](index=11&type=section&id=NOTE%203%20%E2%80%93%20CONCENTRATIONS) OMNIQ Corp. significantly reduced customer and vendor concentration risks, with no single customer or vendor exceeding 3% of revenues or payables respectively for the six months ended June 30, 2025 Concentration Metric | Concentration Metric | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Largest Customer Revenue | < 3% | 23.7% | | Largest Customer Receivables | 6% | 26% | | Largest Vendor Payables | < 3% | 47% | [NOTE 4 – BUSINESS COMBINATIONS](index=12&type=section&id=NOTE%204%20%E2%80%93%20BUSINESS%20COMBINATIONS) OMNIQ's subsidiary acquired CodeBlocks Ltd. for approximately $1.2 million in February 2024, which was subsequently divested as part of a larger business unit sale by June 30, 2025 - OMNIQ acquired CodeBlocks Ltd. on February 1, 2024, for approximately **$1,190,360** (NIS 4,356,720)[28](index=28&type=chunk) - CodeBlocks Ltd. was subsequently sold as part of the divestiture discussed in Note 11 by June 30, 2025[28](index=28&type=chunk) [NOTE 5 – INVENTORY](index=12&type=section&id=NOTE%205%20%E2%80%93%20INVENTORY) Total inventories decreased significantly from $7.4 million at December 31, 2024, to $3.0 million at June 30, 2025, primarily due to the reclassification of $4.2 million in inventories related to discontinued operations Inventory (in thousands) | Inventory (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Raw materials | $308 | $287 | | Inventory in transit | $53 | $4,076 | | Finished goods (less allowance) | $3,407 | $49 | | Less allowance for obsolescence | $(763) | $(1,204) | | Total inventories (continuing operations) | $3,005 | $3,208 | | Inventories related to discontinued operations | $- | $4,197 | | Total inventories | $3,005 | $7,405 | [NOTE 6 – CREDIT FACILITIES AND LINE OF CREDIT](index=12&type=section&id=NOTE%206%20%E2%80%93%20CREDIT%20FACILITIES%20AND%20LINE%20OF%20CREDIT) OMNIQ Corp. utilizes various credit facilities for working capital, with a significant $7.5 million factoring agreement terminated and zeroed out concurrent with a recent asset sale - A factoring agreement with Prestige Capital Finance, LLC, with a maximum outstanding balance of **$7.5 million**, was terminated concurrent with the sale of Quest Marketing, Inc. assets, resulting in a **$0 balance** as of June 30, 2025[31](index=31&type=chunk) [NOTE 7 – RELATED PARTY NOTES PAYABLE](index=12&type=section&id=NOTE%207%20%E2%80%93%20RELATED%20PARTY%20NOTES%20PAYABLE) OMNIQ Corp. holds a $660 thousand Marin Note with zero accrued interest and entered into a new $10 million Summit Note at 5% interest, amortized over 10 years, concurrent with a business unit sale - The Marin Note, a **$660 thousand** note from December 2017, had **$0 accrued interest payable** as of June 30, 2025[32](index=32&type=chunk) - On June 30, 2025, the company entered into a **$10 million** promissory note (Summit Note) at **5% annual interest**, amortized over 10 years with a balloon payment in 3 years, concurrent with a business unit sale[33](index=33&type=chunk) - A **$200,000 prepaid expense** related to transaction costs with Summit Junction was recorded on the balance sheet as of June 30, 2025[33](index=33&type=chunk) [NOTE 8 – OTHER NOTES PAYABLE](index=13&type=section&id=NOTE%208%20%E2%80%93%20OTHER%20NOTES%20PAYABLE) OMNIQ Corp. has various other notes payable, primarily with Israeli banks, and as of June 30, 2025, was non-compliant with certain financial covenants, leading to debt reclassification as current, though early repayment has not been requested Other Notes Payable (in thousands) | Note Payable (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Note payable other | $7,342 | $8,746 | | Less current portion | $(6,932) | $(8,512) | | Long-term notes payable | $410 | $234 | - As of June 30, 2025, the company was **not in compliance** with certain financial covenants related to its Bank Leumi and Bank Hapoalim debt, resulting in the reclassification of the total balance as current debt[42](index=42&type=chunk) - Despite non-compliance, the lenders have not requested early repayment of the loans as of the date the financial statements were issued[42](index=42&type=chunk) [NOTE 9 – OTHER INCOME](index=14&type=section&id=NOTE%209%20%E2%80%93%20OTHER%20INCOME) For the six months ended June 30, 2025, OMNIQ Corp. recognized approximately $1.66 million in other income, including $609 thousand from government relief funds and $1.05 million from Employee Retention Credit refunds for prior years - The company received approximately **$609 thousand** (NIS 1.7 million) in government relief funds during the six months ended June 30, 2025[43](index=43&type=chunk) - Employee Retention Credit refunds amounted to approximately **$1.05 million** for returns filed for prior years during the six months ended June 30, 2025[43](index=43&type=chunk) [NOTE 10 – STOCKHOLDERS' EQUITY](index=14&type=section&id=NOTE%2010%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) OMNIQ Corp. has Series C Preferred Stock with preferential rights and $226 thousand in accrued dividends, and issued 1,035,000 stock options/warrants to employees and consultants, incurring $63,000 in compensation expense - As of June 30, 2025, **502,000 Series C Preferred Shares** were issued and outstanding, entitled to a quarterly dividend of **$0.06 per share per annum** and a liquidation preference of **$1 per share**[46](index=46&type=chunk) - Accrued dividends on Series C Preferred Stock totaled **$226 thousand** as of June 30, 2025[46](index=46&type=chunk) - During the quarter, the company issued **1,035,000 stock options or warrants** to 47 employees and consultants, including 50,000 options to the CEO and 100,000 warrants to an affiliated company, resulting in approximately **$63,000 in compensation expense**[50](index=50&type=chunk) [NOTE 11 – LITIGATION](index=15&type=section&id=NOTE%2011%20%E2%80%93%20LITIGATION) OMNIQ Corp. is involved in an ongoing $5.6 million Israeli lawsuit for lease breach and a new $389 thousand claim from a terminated consultant, following a settled employee commission case in February 2024 - A lawsuit was filed in an Israeli court on November 3, 2024, against Dangot Computers, OmniQ Technologies, and officers, alleging breach of a lease arrangement with an initial claim of approximately **$5.6 million** (NIS 21 million)[52](index=52&type=chunk)[101](index=101&type=chunk) - In March 2025, the company was named a defendant in a case involving a terminated consultant claiming approximately **$389 thousand** in unpaid fees and commissions[53](index=53&type=chunk)[102](index=102&type=chunk) [NOTE 12 – BUSINESS SEGMENT](index=15&type=section&id=NOTE%2012%20%E2%80%93%20BUSINESS%20SEGMENT) OMNIQ Corp. operates as a single reportable segment, offering software, communications, and automated management services, with performance evaluated by the CEO based on operating income (loss) - The company operates in a **single reportable segment**, providing solutions including software, communications, and automated management services[54](index=54&type=chunk) [NOTE 13 – DISCONTINUED OPERATIONS](index=15&type=section&id=NOTE%2013%20%E2%80%93%20DISCONTINUED%20OPERATIONS) OMNIQ Corp. divested its legacy business line to a related party for approximately $45.0 million, resulting in a $34.7 million gain recorded to Additional Paid-in Capital, while discontinued operations reported a $1.7 million net loss for the six months ended June 30, 2025 - On July 11, 2025 (effective June 30, 2025), OMNIQ Corp. sold substantially all assets and assumed certain liabilities of its legacy business line to Summit Junction Holdings LLC[55](index=55&type=chunk)[56](index=56&type=chunk) - The transaction consideration was approximately **$45.0 million**, comprising the buyer's assumption of up to **$55.0 million in specified liabilities** and OMNIQ's issuance of a **$10.0 million promissory note**[57](index=57&type=chunk) - The sale resulted in a net gain on disposal of approximately **$34.7 million**, which was recorded directly to Additional Paid-in Capital due to the related-party nature of the transaction and specific accounting guidance[58](index=58&type=chunk)[63](index=63&type=chunk) Discontinued Operations (in thousands) | Discontinued Operations (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------- | :--------------------------- | :--------------------------- | | Revenues | $24,599 | $19,787 | | Cost of goods sold | $19,115 | $13,975 | | Selling, general and administrative | $7,281 | $5,706 | | Net Loss from Discontinued Ops (Net of Tax) | $1,725 | $1,024 | - The CEO, Shai Lustgarten, is entitled to a bonus of **$1.72 million** (4% of the total transaction price) related to the divestiture, which has been accrued but not yet paid[62](index=62&type=chunk) [NOTE 14 – SUBSEQUENT EVENTS](index=17&type=section&id=NOTE%2014%20%E2%80%93%20SUBSEQUENT%20EVENTS) Subsequent to June 30, 2025, OMNIQ Corp. settled approximately $62,500 of debt by issuing 900,000 shares, including 450,000 to the CEO, and relocated its headquarters under a new 7-year lease - In July 2025, the company settled approximately **$62,500 of debt** by issuing **900,000 shares**, with **450,000 shares issued to CEO Shai Lustgarten** to settle $31,500 owed to him[64](index=64&type=chunk) - In July 2025, the company relocated its corporate headquarters to a new office/warehouse with a **7-year lease at $15,000 per month**[64](index=64&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=18&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of OMNIQ Corp.'s financial condition and operational results, highlighting the impact of divestiture, improved operating loss and net income, and enhanced liquidity driven by asset sales [PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=18&type=section&id=PRELIMINARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This cautionary note indicates the report contains forward-looking statements based on management's beliefs, which involve inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements that involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement[65](index=65&type=chunk)[66](index=66&type=chunk) [INTRODUCTION](index=18&type=section&id=INTRODUCTION) OMNIQ Corp. leverages patented AI technology to provide machine vision image processing solutions for diverse applications like supply chain, public safety, and traffic management, serving multiple billion-dollar markets - OMNIQ Corp. uses patented and proprietary artificial intelligence (AI) technology to deliver machine vision image processing solutions[68](index=68&type=chunk) - Solutions include data collection, real-time surveillance and monitoring for supply chain management, homeland security, public safety, traffic & parking management, and access control applications[68](index=68&type=chunk) - The company engages with several **billion-dollar markets** with double-digit growth, such as the Global Safe City market and the Ticketless Safe Parking market[71](index=71&type=chunk) [OVERVIEW](index=19&type=section&id=OVERVIEW) OMNIQ Corp. reclassified a divested division as discontinued operations, with continuing operations showing a 10.26% revenue decrease but a significant 70.09% improvement in operating loss and basic loss per share - The company reclassified revenues and expenses of a divested division into 'Discontinued Operations' for both current and prior periods[74](index=74&type=chunk) Overview Metrics (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Revenues | $15,782 | $17,587 | $(1,805) | -10.26% | | Loss from operations | $(678) | $(2,267) | $1,589 | -70.09% | | Basic loss per share from continuing operations | $(0.00) | $(0.48) | $0.48 | -100.00% | [LIQUIDITY AND CAPITAL RESOURCES](index=19&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of June 30, 2025, OMNIQ Corp. reported $2.2 million in cash and a significantly improved $10.9 million working capital deficit, with net cash from operating activities increasing to $6.08 million, primarily due to asset sales and operational efficiencies Liquidity and Capital Resources (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $2,200 | $2,300 | | Working capital deficit | $(10,900) | $(54,400) | | Stockholders' deficit | $(11,000) | $(43,800) | Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities | $6,080 | $(3,600) | | Net cash used in investing activities | $2,500 | $103 | | Net cash used in financing activities | $1,700 | $1,340 | - The increase in cash provided by operations by approximately **$10 million** is attributed to increased revenue and decreased overhead[78](index=78&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2025, OMNIQ Corp. saw a 10.26% revenue decrease but improved gross profit and a 70.09% reduction in operating loss, leading to a significantly reduced overall net loss despite increased loss from discontinued operations Results of Operations (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Variation ($) | Variation (%) | | :-------------------- | :--------------------------- | :--------------------------- | :------------ | :------------ | | Revenue | $15,782 | $17,587 | $(1,805) | (10.26)% | | Cost of Goods sold | $11,618 | $13,458 | $(1,841) | (13.68)% | | Gross Profit | $4,164 | $4,129 | $35 | 0.85% | | Operating Expenses | $4,842 | $6,396 | $(1,554) | (24.3)% | | Income (Loss) from operations | $(678) | $(2,267) | $1,589 | (70.09)% | | Net income (loss) from continuing operations | $1,691 | $(4,118) | $5,809 | -141% | | Loss from discontinued operations (net of tax) | $(1,725) | $(1,024) | $(701) | (68.46)% | | Net income (loss) | $(34) | $(5,142) | $5,108 | (99.34)% | - Revenues decreased by **10.26%** due to deceleration of customer projects[82](index=82&type=chunk) - Cost of goods sold decreased by **13.68%**, improving to **74% of net revenues** from 77% in the prior year[83](index=83&type=chunk) - Total operating expenses decreased by **24%** due to management's cost savings plan and the elimination of expenses associated with the legacy business sold[84](index=84&type=chunk) - Selling, general and administrative expenses decreased by **31%** due to cost savings initiatives, including headcount reductions and lower professional-services fees, and the removal of expenses associated with the legacy business[86](index=86&type=chunk) - Depreciation expenses decreased by **82%** due to the reduction in fixed assets following the sale of the legacy business[87](index=87&type=chunk) - Interest expense decreased due to fluctuations in borrowings and the retirement of debt associated with the legacy business, and included a **$325 thousand gain on debt settlement**[89](index=89&type=chunk) - Loss from discontinued operations increased to **$1.7 million**, reflecting transaction-related expenses and a one-time loss on the sale of certain assets[90](index=90&type=chunk) - Net loss significantly improved from **$5.1 million to $34 thousand**, driven by higher margins on continuing operations, lower operating expenses, and the gain on debt settlement, partially offset by increased loss from discontinued operations[91](index=91&type=chunk) [Inflation](index=21&type=section&id=Inflation) OMNIQ Corp. states that its results of operations have not been materially affected by inflation, and management does not anticipate a material impact from inflation in the future - Inflation has not materially affected the company's operations and is not expected to have a material impact in the future[92](index=92&type=chunk) [Off- Balance Sheet Arrangements](index=21&type=section&id=Off-%20Balance%20Sheet%20Arrangements) OMNIQ Corp. currently does not have any off-balance sheet arrangements - The company currently does not have any off-balance sheet arrangements[93](index=93&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=22&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) OMNIQ Corp. states that this item is not applicable for the current reporting period - This item is not applicable[95](index=95&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=22&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) OMNIQ Corp.'s CEO and CFO deemed disclosure controls ineffective as of June 30, 2025, due to a material weakness in internal control over financial reporting related to segregation of duties, with no material changes during the quarter [EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES](index=22&type=section&id=EVALUATION%20OF%20DISCLOSURE%20CONTROLS%20AND%20PROCEDURES) The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of OMNIQ Corp.'s disclosure controls and procedures as of June 30, 2025, and concluded they were not effective due to a previously reported material weakness in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **not effective** as of June 30, 2025, due to a material weakness in internal control over financial reporting[96](index=96&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=22&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) A material weakness in internal control over financial reporting was identified during the 2024 financial statements audit, specifically concerning segregation of duties and other immaterial weaknesses in data management and documentation - A **material weakness in internal control over financial reporting** was identified, specifically related to segregation of duties and other immaterial weaknesses in data management and documentation[97](index=97&type=chunk) [Changes in Internal Control Over Financial Reporting](index=22&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in OMNIQ Corp.'s internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected or are reasonably likely to materially affect the controls[98](index=98&type=chunk) [PART II - OTHER INFORMATION](index=23&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, defaults, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=23&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) OMNIQ Corp. is involved in an ongoing $5.6 million Israeli lawsuit for lease breach and a new $389 thousand claim from a terminated consultant, following a settled employee commission case in February 2024 - An ongoing lawsuit in an Israeli court alleges breach of a lease arrangement, with an initial claim of approximately **$5.6 million** (NIS 21 million)[101](index=101&type=chunk) - A new lawsuit was filed in March 2025 by a terminated consultant claiming approximately **$389 thousand** in unpaid fees and commissions[102](index=102&type=chunk) [ITEM 1A. RISK FACTORS](index=23&type=section&id=ITEM%201A.%20RISK%20FACTORS.) OMNIQ Corp. states that this item is not applicable for the current quarterly report, directing readers to its 2024 Form 10-K for a detailed discussion of risk factors - This item is not applicable for the current quarterly report; readers are referred to the 2024 Form 10-K for risk factors[103](index=103&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=23&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) OMNIQ Corp. reports no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities or use of proceeds were reported[104](index=104&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=23&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) OMNIQ Corp. reports no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[105](index=105&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=23&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) OMNIQ Corp. states that this item is not applicable for the current reporting period - This item is not applicable[106](index=106&type=chunk) [ITEM 5. OTHER INFORMATION](index=23&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) OMNIQ Corp. reports no other information for the current reporting period - No other information was reported[107](index=107&type=chunk) [ITEM 6. EXHIBITS](index=24&type=section&id=ITEM%206.%20EXHIBITS.) This section lists the exhibits filed with OMNIQ Corp.'s Form 10-Q, including certifications from executive officers (Sarbanes-Oxley Act Sections 302 and 906), various Inline XBRL documents, and a previously incorporated Share Purchase Agreement - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (Sections 302 and 906 of Sarbanes-Oxley Act) and various Inline XBRL documents[113](index=113&type=chunk) [SIGNATURES](index=25&type=section&id=SIGNATURES) The Form 10-Q report is duly signed on behalf of OMNIQ Corp. by Shai Lustgarten, who serves as the Chief Executive Officer, Interim Chief Financial Officer, and Chairman of the Board, as of August 19, 2025 - The report was signed by Shai Lustgarten, Chief Executive Officer, Interim Chief Financial Officer, and Chairman of the Board, on August 19, 2025[116](index=116&type=chunk)

Core Viewpoint - OMNIQ Corp has completed the sale of a portion of its U.S.-based legacy assets to Summit Junction Holdings LLC, which eliminates approximately 63% of the Company's debt and positions it for growth [1][3]. Financial Impact - The transaction is expected to generate an estimated $35 million gain in fiscal year 2025 due to the elimination of approximately $45 million in debt, significantly improving the Company's balance sheet [7]. Strategic Focus - The divestiture allows OMNIQ to streamline operations, enhance profitability, and concentrate resources on its core high-growth divisions, specifically in Smart Automation and AI-driven products, which generated approximately $38.5 million of the total 2024 consolidated revenue [2][5]. Operational Efficiency - The sale simplifies OMNIQ's organizational structure, reduces operational burdens, and allows for scalability, thereby creating greater operational flexibility and supporting long-term efficiency and cost optimization [4]. Long-term Vision - With a leaner structure, OMNIQ can focus on its highest-margin, recurring-revenue business lines, addressing market dynamics and investor expectations while positioning itself for sustainable shareholder value through innovation and customer delivery [5][6].

Financial Performance - In Q1 2025, the company reported revenue of $19.9 million, an increase of 8.7% compared to $18.3 million in Q1 2024 [2][3] - The net loss for the quarter remained steady at $2.1 million, unchanged from the same period last year [2] - Basic loss per share from continuing operations was $0.20, consistent with the same period in 2024 [3] - Comprehensive loss decreased to $1.6 million in Q1 2025 from $1.9 million in Q1 2024, representing a 15.8% improvement [3] - Operating income showed a loss of $690 thousand, an improvement of 45% from a loss of $1.3 million in Q1 2024 [3] Customer and Market Dynamics - No single customer accounted for more than 10% of total revenue in Q1 2025, contrasting with one customer that represented 23.7% of total revenue for the full year 2024 [4] - The company expanded its customer base across key sectors including transportation, healthcare, education, and municipal operations [5] - Demand for integrated automation and computer vision solutions remained strong, with solid traction in both new and existing markets [5] Operational Focus and Strategy - The company is committed to strengthening relationships with current customers by delivering system upgrades and improving integrations [6] - The operational focus remains on execution and building systems that meet real-world needs, rather than chasing trends [7][9] - The company is actively developing and refining product lines to address evolving customer needs in high-impact sectors such as parking, transportation, retail, and logistics [8] Company Overview - OMNIQ Corp. provides computerized and machine vision image processing solutions using patented AI technology for various applications including supply chain management and public safety [10] - The company serves government agencies and Fortune 500 companies across multiple sectors, including manufacturing, retail, and healthcare [11] - Since 2014, annual revenues have more than doubled, reaching $81 million in 2023, with a presence in over 40 countries [12]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) For the quarter ended March 31, 2025, OMNIQ Corp. reported an 8.7% revenue increase to $19.9 million and a reduced operating loss of $0.69 million, despite significant stockholders' and working capital deficits [Condensed Consolidated Balance Sheets](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets decreased to $35.1 million, while total liabilities also decreased, resulting in a worsening working capital deficit of $55.1 million and a total stockholders' deficit of $45.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2,712 | $2,349 | | Accounts receivable, net | $15,798 | $20,945 | | Total current assets | $24,028 | $31,880 | | Total Assets | $35,110 | $43,589 | | **Liabilities & Equity** | | | | Accounts payable and accrued liabilities | $64,850 | $66,097 | | Total current liabilities | $79,190 | $86,323 | | Total liabilities | $80,601 | $87,477 | | Total OmniQ stockholders' equity (deficit) | $(45,491) | $(43,888) | - The company has a significant working capital deficit of **$55.1 million** as of March 31, 2025[28](index=28&type=chunk) - The accumulated deficit reached **$126.0 million** as of March 31, 2025, an increase from $123.9 million at the end of 2024[10](index=10&type=chunk)[28](index=28&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20LOSS) For the three months ended March 31, 2025, revenues increased by 8.7% to $19.9 million, gross profit remained stable, and the loss from operations significantly reduced to $0.69 million due to lower operating expenses, while net loss per share remained unchanged Consolidated Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $19,903 | $18,317 | | Gross Profit | $5,141 | $5,058 | | Loss from operations | $(690) | $(1,259) | | Net Loss | $(2,089) | $(2,098) | | Net loss per share - basic | $(0.20) | $(0.20) | - Operating expenses decreased to **$5.8 million** from $6.3 million year-over-year, primarily due to a reduction in selling, general and administrative costs[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)) The total stockholders' deficit increased from $43.9 million to $45.5 million as of March 31, 2025, primarily driven by a net loss of $2.1 million, slightly offset by a positive cumulative translation adjustment - The total stockholders' deficit worsened to **$(45,491) thousand** at March 31, 2025, from $(43,888) thousand at December 31, 2024[14](index=14&type=chunk) - The change in deficit was mainly due to the net loss of **$(2,089) thousand** for the quarter[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For Q1 2025, the company generated $1.0 million in cash from operating activities, a significant improvement from the $0.6 million used in Q1 2024, ending the period with $2.7 million in cash and cash equivalents Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,018 | $(623) | | Net cash (used in) investing activities | $(31) | $(48) | | Net cash (used in) provided by financing activities | $(1,165) | $(971) | | **Cash and cash equivalents at end of period** | **$2,712** | **$881** | - The improvement in operating cash flow was largely driven by a **$5.3 million** positive change in accounts receivable[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Key notes highlight substantial doubt about the company's ability to continue as a going concern due to significant working capital and accumulated deficits, non-compliance with debt covenants, and notable customer and vendor concentrations - Management has identified conditions that raise substantial doubt about the company's ability to continue as a going concern, including a working capital deficit of **$55.1 million** and an accumulated deficit of **$126 million**[24](index=24&type=chunk)[28](index=28&type=chunk) - Management's mitigation plans include reducing operating expenses, focusing on profitable product lines, and relying on the continued support of its primary supplier, Blue Star, to whom it owes approximately **$56.6 million**[28](index=28&type=chunk) - The company was not in compliance with certain financial covenants related to its Bank Leumi and Bank Hapoalim debt as of March 31, 2025, which could result in an event of default[42](index=42&type=chunk) - For Q1 2025, one vendor accounted for **45%** of purchases, and one customer accounted for **11.2%** of outstanding receivables[26](index=26&type=chunk)[27](index=27&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management reported an 8.7% revenue increase to $19.9 million for Q1 2025 and a 45% reduction in operating loss, but the company's financial condition remains precarious with significant deficits despite improved operating cash flow [Overview](index=17&type=section&id=MD%26A%20Overview) The company's sales increased by 8.7% to $19.9 million in Q1 2025, while the loss from operations significantly improved by $569 thousand to $690 thousand, with basic loss per share remaining flat - Sales for Q1 2025 were **$19.9 million**, an increase of approximately **$1.6 million (8.7%)** over Q1 2024[63](index=63&type=chunk) - Loss from operations for Q1 2025 was **$690 thousand**, a decrease of **$569 thousand** compared to the $1.3 million loss in Q1 2024[64](index=64&type=chunk) [Liquidity and Capital Resources](index=17&type=section&id=MD%26A%20Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company had $2.7 million in cash but faced a $55 million working capital deficit and a $45.5 million stockholders' deficit, with operations providing $1.0 million in cash - The company had cash of **$2.7 million** and a working capital deficit of **$55 million** as of March 31, 2025[65](index=65&type=chunk) - Net cash provided by operations was **$1.0 million** for Q1 2025, a **$1.6 million** improvement from the cash used in Q1 2024, attributed to higher revenue[66](index=66&type=chunk) [Results of Operations](index=18&type=section&id=MD%26A%20Results%20of%20Operations) Revenue for Q1 2025 increased 8.7% to $19.9 million, but gross margin declined due to a higher increase in cost of goods sold, while operating expenses decreased by 7.7% due to cost savings Results of Operations Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | Variation $ | Variation % | | :--- | :--- | :--- | :--- | :--- | | Revenue | $19,903 | $18,317 | $1,586 | 8.66% | | Gross Profit | $5,141 | $5,058 | $83 | 1.64% | | Operating Expenses | $5,831 | $6,317 | $(486) | (7.69)% | | Loss from operations | $(690) | $(1,259) | $569 | (45.19)% | - The increase in revenue was attributed to the acceleration of projects by customers[70](index=70&type=chunk) - The decrease in operating expenses was primarily due to management's cost savings plan, which reduced SG&A expenses by **9%**[72](index=72&type=chunk)[73](index=73&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=19&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is not applicable for the current reporting period - Not Applicable[78](index=78&type=chunk) [Controls and Procedures](index=19&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2025, due to a material weakness in segregation of duties, though no material impact on reporting was identified - The CEO and Principal Accounting Officer concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2025[79](index=79&type=chunk) - A material weakness was identified in controls related to segregation of duties, a situation attributed to the small number of professionals in management[84](index=84&type=chunk)[85](index=85&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[88](index=88&type=chunk) [PART II - OTHER INFORMATION](index=21&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=21&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) The company is actively involved in two legal cases, including a $5.6 million claim for alleged breach of a lease agreement and a $389 thousand claim for unpaid consultant fees - A lawsuit was filed against subsidiary Dangot Computers in Israel by a commercial real estate company, with an initial claim of approximately **$5.6 million** for an alleged breach of a letter of intent[90](index=90&type=chunk) - In March 2025, a terminated consultant filed a lawsuit claiming approximately **$389 thousand** in unpaid fees and commissions[91](index=91&type=chunk) - A case with a former employee over **$60 thousand** in unpaid commissions was settled in February 2024[89](index=89&type=chunk) [Risk Factors](index=21&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section is not applicable for this quarterly report - Not applicable[92](index=92&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS.) There were no unregistered sales of equity securities during the period - None[93](index=93&type=chunk) [Defaults Upon Senior Securities](index=21&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) There were no defaults upon senior securities during the period - None[94](index=94&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This section is not applicable - Not applicable[95](index=95&type=chunk) [Other Information](index=21&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) There was no other information to report for the period - None[96](index=96&type=chunk) [Exhibits](index=22&type=section&id=ITEM%206.%20EXHIBITS.) The report includes standard exhibits such as Sarbanes-Oxley certifications and Inline XBRL data files - Exhibits filed include CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents[102](index=102&type=chunk)

Core Insights - OMNIQ Corporation reported year-end 2024 revenue of $73.5 million, a decrease from $81.19 million in 2023, reflecting a year-over-year decline of approximately 9% [3][4][9] - The company achieved a significant reduction in loss from operations, posting a loss of $6.9 million in 2024 compared to $26.2 million in 2023, marking a 74% decrease [4][9] - Comprehensive loss for 2024 was $9.3 million, down from $29 million in the prior year, representing a 68% decrease [5][9] Financial Performance - Consolidated revenue for 2024 was $73.57 million, down from $81.19 million in 2023, a decrease of $7.6 million [3] - Cost of goods sold in 2024 totaled $58 million, representing 79% of total revenue, compared to $65 million and 81% in 2023 [3] - Gross profit for 2024 was $15.4 million, relatively stable compared to $15.7 million in 2023 [4][9] Operational Efficiency - Selling, General and Administrative (SG&A) expenses decreased to $19.5 million in 2024 from $23 million in 2023, a reduction of 15% [5][9] - Total operating expenses for 2024 were $22.3 million, down from $41 million in 2023, reflecting a decrease of 47% [6] - The company reduced net loss attributable to common stockholders to $10 million in 2024, down from $29.4 million in 2023, with basic loss per share improving to $0.94 from $3.50 [7][9] Strategic Initiatives - In 2024, OMNIQ introduced new technologies, including the seeQ SaaS product, and launched pilot programs across various industries [8][10] - The company focused on integrated solutions over commodity hardware sales and deepened partnerships with fintech providers [13] - OMNIQ's IoT division performed well, with significant orders from various sectors, including $5 million from a major food and drug retail chain [12] Market Position and Future Outlook - OMNIQ's proprietary machine vision technologies are utilized in critical applications such as Homeland Security and parking automation, enhancing its competitive edge [17] - The company is evaluating strategic acquisitions to expand its portfolio and strengthen its market position [18] - Looking ahead to 2025, OMNIQ expects continued upward trends with several major projects in motion or entering pilot phases [21]

Part I [Business](index=4&type=section&id=ITEM%201.%20BUSINESS) OMNIQ provides AI-powered image-processing solutions for supply chain and security markets while facing Nasdaq delisting challenges - The company uses patented and proprietary **artificial intelligence (AI) technology** for data collection, real-time surveillance, and monitoring in sectors like supply chain management, homeland security, and public safety[15](index=15&type=chunk) - OMNIQ is **facing delisting from Nasdaq** due to non-compliance with several listing rules, including failure to maintain a minimum **$1.00 bid price**, a minimum market value of **$35 million**, and failure to hold a timely annual meeting[18](index=18&type=chunk)[20](index=20&type=chunk)[22](index=22&type=chunk) - The company's strategy is to focus on operational excellence, cost reduction, addressing debt, and pursuing revenue growth and technological leadership[24](index=24&type=chunk) - OMNIQ targets two main markets: **Safe City** (including homeland security, access control, and parking) and **Supply Chain Management**[36](index=36&type=chunk) - As of December 31, 2024, the company had approximately **166 employees**[44](index=44&type=chunk) Customer and Vendor Concentration (FY 2024) | Concentration Type | Percentage | Note | | :--- | :--- | :--- | | **Revenue** | 24% | From a single customer | | **Accounts Receivable** | 26% | From a single customer | | **Purchases** | 47% | From a single vendor | [Risk Factors](index=8&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, OMNIQ is not required to provide this section - This section is not required for smaller reporting companies[50](index=50&type=chunk) [Unresolved Staff Comments](index=8&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) As a smaller reporting company, OMNIQ is not required to provide this section - This section is not required for smaller reporting companies[51](index=51&type=chunk) [Cybersecurity](index=8&type=section&id=ITEM%201C.%20CYBERSECURITY) The company manages cybersecurity risks through established policies and board oversight, with no material incidents reported to date - The company has established processes for assessing, identifying, and managing material risks from cybersecurity threats, which are integrated into its overall risk management system[52](index=52&type=chunk) - The board of directors' **audit committee** is responsible for overseeing the company's cybersecurity risk management processes[57](index=57&type=chunk) - The company has not encountered cybersecurity challenges that have **materially impaired** its operations or financial standing[56](index=56&type=chunk) [Properties](index=9&type=section&id=ITEM%202.%20PROPERTIES) The company leases corporate offices in Utah and California, with its subsidiary leasing facilities in Israel - The corporate office is located in Salt Lake City, UT, under a five-year lease expiring in June 2026, with an annual expense of **$284,000**[61](index=61&type=chunk) - The company leases additional office and warehouse space in Anaheim, California, and multiple locations in Tel-Aviv, Israel, for its subsidiary Dangot[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) [Legal Proceedings](index=9&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is defending two significant lawsuits concerning a lease agreement and unpaid consultant fees, and recently settled a smaller case - A lawsuit filed by a commercial real estate company in Israel against subsidiary Dangot Computers alleges breach of a letter of intent for a lease, with an initial claim of approximately **US $5.6 million**[66](index=66&type=chunk) - In March 2025, a terminated consultant filed a lawsuit claiming approximately **$389,000** in unpaid fees and commissions[67](index=67&type=chunk) - A case involving a former employee claiming **$60,000** in unpaid commissions was settled in February 2024[65](index=65&type=chunk) [Mine Safety Disclosures](index=9&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) The company has no mine safety disclosures to report - No mine safety disclosures are reported[68](index=68&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=10&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's stock was delisted from Nasdaq to OTCMKTS, has not paid dividends, and raised $3.0 million through a 2023 offering - The company's common stock, symbol **OMQS**, was delisted from Nasdaq and now trades on the **OTCMKTS**[71](index=71&type=chunk)[2](index=2&type=chunk) - The company has **never paid cash dividends** on common stock[76](index=76&type=chunk) - In October 2023, the company raised approximately **$3.0 million** in gross proceeds from an offering of common stock and pre-funded warrants[79](index=79&type=chunk)[80](index=80&type=chunk) Quarterly Stock Price Range ($) | Period | High | Low | | :--- | :--- | :--- | | **FY 2023** | | | | Q1 | 5.15 | 4.27 | | Q2 | 4.14 | 3.95 | | Q3 | 1.61 | 1.53 | | Q4 | 0.65 | 0.57 | | **FY 2024** | | | | Q1 | 0.69 | 0.33 | | Q2 | 0.81 | 0.11 | | Q3 | 0.33 | 0.11 | | Q4 | 0.25 | 0.12 | [[Reserved]](index=11&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information - This item is reserved[81](index=81&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=11&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Revenue decreased 9.4% to $73.6 million and net loss narrowed to $10.0 million, but substantial doubt exists about its 'going concern' status [Going Concern](index=12&type=section&id=Going%20Concern) Substantial doubt about the company's ability to continue as a going concern arises from a $54 million working capital deficit and recurring losses - Principal conditions raising **substantial doubt** about the company's ability to continue as a going concern include a working capital deficit of **$54 million**, an accumulated deficit of **$124 million**, and multiple years of operating losses[87](index=87&type=chunk)[88](index=88&type=chunk)[273](index=273&type=chunk) - Management's mitigation plans involve reducing expenditures, focusing on profitable sales, and leveraging its relationship with key supplier Blue Star, to whom it owed approximately **$53.6 million** as of December 31, 2024[88](index=88&type=chunk)[275](index=275&type=chunk) [Results of Operations](index=13&type=section&id=Results%20of%20Operations) Revenue for FY2024 fell 9.4% to $73.6 million, while net loss improved to $10.0 million due to the absence of a prior-year goodwill impairment charge - The **9% decrease in revenue** was due to a decrease in deliverables and a delay in a significant customer project[91](index=91&type=chunk) - The significant decrease in operating expenses and net loss in 2024 is primarily because 2023 results included a non-cash **goodwill impairment charge of $14.7 million**, which was not present in 2024[93](index=93&type=chunk)[97](index=97&type=chunk)[101](index=101&type=chunk) Consolidated Results of Operations (in thousands) | Account | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $73,573 | $81,193 | $(7,620) | (9.39)% | | Gross Profit | $15,356 | $15,708 | $(352) | (2.24)% | | Loss from operations | $(6,911) | $(26,196) | $19,285 | (73.62)% | | Net loss | $(10,002) | $(29,431) | $19,429 | (66.02)% | | Net Loss per common Share | $(0.94) | $(3.50) | $2.56 | (73.14)% | [Liquidity and Capital Resources](index=14&type=section&id=Liquidity%20and%20Capital%20Resources) The company's working capital deficit worsened to $54 million, with operations providing $2.4 million in cash during FY2024 Key Liquidity Metrics (in millions) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash | $2.3 | $1.7 | | Working Capital Deficit | $(54.0) | $(45.0) | | Stockholders' Deficit | $(43.9) | $(35.0) | | Accumulated Deficit | $(123.9) | $(113.9) | Cash Flow Summary (FY 2024 vs FY 2023, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from operations | $2,368 | $170 | | Net cash used in investing | $(32) | $(331) | | Net cash used in financing | $(2,871) | $(50) | [Critical Accounting Policies](index=15&type=section&id=Critical%20Accounting%20Policies) Key accounting policies involve significant judgment in revenue recognition, goodwill impairment testing, and stock-based compensation valuation - **Revenue Recognition**: The company follows a five-step model to recognize revenue when performance obligations are satisfied and control is transferred to the customer[109](index=109&type=chunk)[252](index=252&type=chunk) - **Impairment of Goodwill and Intangibles**: Indefinite-lived assets like goodwill are tested for impairment at least annually[116](index=116&type=chunk)[119](index=119&type=chunk) - **Stock-Based Compensation**: The company uses the Black-Scholes option-pricing model to estimate the fair value of stock option grants[121](index=121&type=chunk)[123](index=123&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=17&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, OMNIQ is not required to provide this section - This section is not required for smaller reporting companies[129](index=129&type=chunk) [Financial Statements and Supplementary Data](index=17&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Audited financial statements reveal a 'going concern' warning from the auditor and identify goodwill valuation as a critical audit matter - The independent auditor's report expresses **substantial doubt** about the Company's ability to continue as a **going concern**, citing the deficit in stockholders' equity and recurring losses from operations[193](index=193&type=chunk)[273](index=273&type=chunk) - The valuation of goodwill and intangible assets was identified as a **Critical Audit Matter** due to the significant estimates and complex judgments involved in determining their fair value[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $31,880 | $27,354 | | Total Assets | $43,589 | $39,486 | | Total Current Liabilities | $86,323 | $72,705 | | Total Liabilities | $87,477 | $74,506 | | Total OmniQ stockholders' equity (deficit) | $(43,888) | $(35,020) | Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Revenues | $73,573 | $81,193 | | Gross Profit | $15,356 | $15,708 | | Loss from Operations | $(6,911) | $(26,196) | | Net Loss | $(10,002) | $(29,431) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=17&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on matters of accounting and financial disclosure - The company reported no disagreements with its accountants[131](index=131&type=chunk) [Controls and Procedures](index=18&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that both disclosure controls and internal controls over financial reporting were ineffective due to a material weakness in segregation of duties - Management concluded that the company's disclosure controls and procedures were **not effective** as of December 31, 2024[133](index=133&type=chunk) - Management concluded that internal controls over financial reporting were **not effective** as of December 31, 2024, due to a material weakness[137](index=137&type=chunk) - A **material weakness** was identified in controls related to **segregation of duties**, a situation attributed to the small size of the company's management team[138](index=138&type=chunk)[139](index=139&type=chunk) [Other Information](index=19&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company has no information to report under this item - No other information is reported[143](index=143&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=20&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The company's governance is led by a two-member board, with the CEO also serving as Chairman and interim CFO - The Board of Directors consists of **two members**: Shai Lustgarten (CEO and Chairman) and Guy Elhanani (Director)[145](index=145&type=chunk)[160](index=160&type=chunk) - Shai Lustgarten has served as CEO since April 2017 and is also currently the **interim CFO**[147](index=147&type=chunk) - Director Guy Elhanani is deemed **independent** and serves as the sole member and Chairperson for the Audit, Compensation, and Corporate Governance/Nominating Committees[161](index=161&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk)[168](index=168&type=chunk) - The company adopted a **Clawback Policy** on December 1, 2023, for the recovery of certain incentive-based compensation from executive officers[170](index=170&type=chunk) [Executive Compensation](index=20&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) CEO Shai Lustgarten's total compensation was $690,000 in 2024, with his employment agreement detailing salary and severance terms - CEO Shai Lustgarten's employment agreement includes an annual base salary of **$560,000** and specifies severance benefits[153](index=153&type=chunk) - Director compensation for 2024 consisted of **$24,000** in cash fees for each of the three directors listed for that year[155](index=155&type=chunk) Named Executive Officer Compensation (in thousands) | Name and Principal Position | Year | Salary ($) | Bonus ($) | All Other Comp ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Shai Lustgarten (CEO and Interim CFO) | 2024 | 637 | 25 | 28 | 690 | | | 2023 | 600 | 120 | 28 | 748 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=25&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Executive officers and directors as a group beneficially owned 11.6% of the company's common stock as of year-end 2024 Beneficial Ownership as of December 31, 2024 | Name of Beneficial Owner | Percentage of Shares Outstanding | | :--- | :--- | | Shai Lustgarten (Chairman and CEO) | 10.6% | | All Executive Officers and Directors as a group (5 individuals) | 11.6% | | Carlos Nissensohn | 7.4% | [Certain Relationships and Related Transactions, and Director Independence](index=25&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company discloses a related party transaction involving a $30,000 monthly consulting agreement with a principal stockholder - The company had a consulting agreement with principal stockholder Carlos J. Nissensohn, providing for a monthly fee of **$30,000**[175](index=175&type=chunk) [Principal Accountant Fees and Services](index=25&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information on accountant fees is incorporated by reference from the company's upcoming Proxy Statement - The required information will be included in the Proxy Statement and is **incorporated by reference**[176](index=176&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=26&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements and provides an index of exhibits filed with the report - This section lists the financial statements filed with the report, commencing on page F-1[179](index=179&type=chunk) - An index of exhibits required by Regulation S-K is provided, with documents incorporated by reference or filed herewith[180](index=180&type=chunk) [Form 10-K Summary](index=26&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable, and no summary is provided - No summary is provided under this item[181](index=181&type=chunk)

Core Insights - OMNIQ Corp has received a $4.4 million purchase order from a major logistics provider for ruggedized handheld mobile computers, indicating a rising demand for intelligent and durable solutions in logistics and supply chain management [1][2][3] Company Overview - OMNIQ Corp specializes in AI automation and enterprise mobility solutions, providing computerized and machine vision image processing solutions that enhance operational efficiency across various sectors [4][5] - The company has seen its annual revenues more than double since 2014, reaching $81 million in 2023, with clients in over 40 countries [5] Product Features - The ruggedized mobile computers are designed for frontline workers, offering real-time data access, workflow automation, and seamless system integration, which improves accuracy and productivity in warehouses and transportation hubs [2][3] - These devices are built to withstand harsh conditions while ensuring secure, high-speed connectivity for mission-critical applications [2] Market Position - OMNIQ is positioned as a trusted technology partner in the global supply chain, focusing on automation, IoT-enabled mobility, and intelligent data solutions [3] - The company addresses several billion-dollar markets with double-digit growth potential, including the Global Smart City and Public Safety markets [5]