UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended:
For the transition period from________ to__________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||
| OTCMKTS |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| (Do not check if a smaller reporting company) | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: shares of common stock, $ par value, as of May 20, 2026.
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMNIQ CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (In thousands, except share and per share data) | As of | |||||||
| March 31, 2026 | December 31, 2025 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation $ | ||||||||
| Goodwill | ||||||||
| Trade name, net of accumulated amortization of $ | ||||||||
| Customer relationships, net of accumulated amortization of $ | ||||||||
| Other intangibles, net of accumulated amortization of $ | ||||||||
| Right of use lease asset | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Line of credit | ||||||||
| Accrued payroll and sales tax | ||||||||
| Related party advances | ||||||||
| Note payable – related party, short term | ||||||||
| Notes payable – current portion | ||||||||
| Lease liability – current portion | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Related party notes payable | ||||||||
| Notes payable, less current portion | ||||||||
| Lease liability | ||||||||
| Other long term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (See Note 8) | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Series A Preferred stock; $ par value; shares designated, shares issued and outstanding | ||||||||
| Series B Preferred stock; $ par value; share designated, shares issued and outstanding | ||||||||
| Series C Preferred stock; $ par value; shares designated, shares issued and outstanding, respectively | ||||||||
| Common stock; $ par value; shares authorized; and shares issued and outstanding, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated (deficit) | ( | ) | ( | ) | ||||
| Accumulated other comprehensive (loss) | ( | ) | ( | ) | ||||
| Total OmniQ stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.
| F-1 |
OMNIQ CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| For the Three months ended | ||||||||
| March 31 | ||||||||
| (In thousands, except share and per share data) | 2026 | 2025 | ||||||
| Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Research & Development | ||||||||
| Selling, general and administrative | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other (expenses) income | ( | ) | ( | ) | ||||
| Total other expenses | ( | ) | ( | ) | ||||
| Net Loss Before Income Taxes | ( | ) | ( | ) | ||||
| Current Provision for Income Taxes | ||||||||
| Total Provision for Income Taxes | ||||||||
| Net Income (Loss) before discontinued operations | ( | ) | ( | ) | ||||
| Loss from Discontinued Operations, net | ( | ) | ||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Reconciliation of net loss to net loss attributable to common shareholders | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: Dividends attributable to non-common stockholders’ of OmniQ Corp | ( | ) | ( | ) | ||||
| Net loss attributable to common stockholders’ of OmniQ Corp | $ | ( | ) | $ | ( | ) | ||
| Net (loss) per share - basic attributable to common stockholders’ of OmniQ Corp | $ | ( | ) | $ | ( | ) | ||
| Net (loss) per share - diluted attributable to common stockholders’ of OmniQ Corp | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||
The accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.
| F-2 |
OMNIQ CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
For the Three Months ended March 31, 2025 and 2026
| Series C | Additional | Accumulated Other | Total Stockholders’ | |||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Equity | |||||||||||||||||||||||||||
| (In thousands) | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | (Deficit) | ||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Dividend on Class C Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Exercise of stock option | - | |||||||||||||||||||||||||||||||
| Stock Based Compensation | - | - | ||||||||||||||||||||||||||||||
| Cumulative Translation Adjustment | - | - | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | |||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying unaudited notes should be read in conjunction with these condensed unaudited consolidated financial statements.
| F-3 |
OMNIQ CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31,
| (In thousands) | 2026 | 2025 | ||||||
| Cash flows from operations | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss from discontinued operations | ||||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of ROU asset | ||||||||
| Loss from sale of other assets | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ( | ) | ) | |||||
| Inventory | ||||||||
| Other assets | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Accrued payroll and sales taxes payable | ( | ) | ||||||
| Lease liability | ( | ) | ( | |||||
| Deferred tax assets, net | ( | ) | ( | ) | ||||
| Other liabilities | ( | ) | ||||||
| Net cash provided by (used in) operating activities - continuing | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities - discontinuing | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash (used in) investing activities – continuing operations | ( | ) | ( | ) | ||||
| Net cash (used in) investing activities – discontinuing operations | ||||||||
| Net cash (used in) investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Net proceeds on exercise of options | ||||||||
| Payments on notes/loans payable | ( | ) | ( | ) | ||||
| Proceeds from draw on line of credit | ( | ) | ||||||
| Net cash (used in) provided by financing activities – continuing operations | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities – discontinuing operations | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Effect of foreign exchange rates on cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Non-cash activities: | ||||||||
| Declared dividends payable | $ | $ | ||||||
| Right of use asset acquired in exchange for lease liability | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
OMNIQ CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements include the accounts of OMNIQ Corp, and its wholly owned subsidiaries, referred to herein as “we,” “us,” “OMNIQ,” or the “Company.” Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
We describe our significant accounting policies in Note 2 of the notes to consolidated financial statements in the 2025 Form 10-K. During the three-month period ended March 31, 2026, there were no significant changes to those accounting policies other than below.
Recent Accounting Pronouncements not yet adopted
In November 2024, the FASB issued ASU 2025-03 “Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)” to improve the disclosures about an entity’s expenses. Upon adoption, we will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for our 2027 annual period, and our interim periods beginning in 2028, with early adoption permitted. The standard can be applied either prospectively or retrospectively. We are currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The standard changes when capitalization of internal-use software costs begins and updates the related guidance for modern software development methods. The Company is evaluating the impact of this guidance on the timing of capitalization, amortization, and related disclosures. The standard is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted.
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic EPS for the three-months ended March 31, 2026, and 2025 were and , respectively. Diluted net loss per share of common stock is the same as basic net loss per share of common stock because the effects of potentially dilutive securities are antidilutive.
| March 31, 2026 | March 31, 2025 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Potential shares excluded from diluted net loss per share | ||||||||
| F-5 |
NOTE 2 – GOING CONCERN
The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. The following are the principal conditions or events which potentially raise substantial doubt about the company’s ability to continue as a going concern:
| ● | Balancing the need for operational cash with the need to add additional products. | |
| ● | Timely and cost-effective development of products | |
| ● | Working
capital deficit of $ | |
| ● | Accumulated
deficit of $ | |
| ● | Multiple years of losses from operations |
Management Evaluation
Management considers the conditions outlined above as the most significant factors in raising substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.
Management’s Plans to Mitigate and Alleviate Conditions or Events
| ● | Management is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations. | |
| ● | Management has placed a strategic focus on increasing sales with prime customers. | |
| ● | Sales efforts are focused on the most profitable product lines. | |
| ● | The Company has implemented an aggressive debt settlement plan with its vendors and debt holders to clean up the Balance Sheet presentation and during 2025, the Company was able to settle many debts for a discount.
Short
term liabilities for the Company decreased from $ | |
| In
December 2025 management finalized an equity raise which resulted in approximately $ |
NOTE 3 – CONCENTRATIONS
For
the three-months ended March 31, 2026, and the year ended December 31, 2025, no customer accounted for more than
Accounts
receivable at March 31, 2026 and December 31, 2025 are made up of trade receivables due from customers in the ordinary course of business.
No customer accounted for more than
For
the three months ended March 31, 2026, and the year ended December 31, 2025 one vendor made up 45% and
NOTE 4 – INVENTORY
Inventory consisted of the following as of:
| In thousands | March 31, 2026 | December 31, 2025 | ||||||
| Raw materials | $ | $ | ||||||
| Inventory in transit | ||||||||
| Finished goods (less allowance) | ||||||||
| Less allowance for obsolescence | ( | ) | ( | ) | ||||
| Total inventories | $ | $ | ||||||
NOTE 5 – RELATED PARTY NOTES PAYABLE
Concurrent
with the sale of the Quest Solution division, the company entered into a Transition Services Agreement whereas the costs for some employees
would be split during the transition. Connected to that was advances to OMNIQ from the Buyer to facilitate the transition. This
entity is majority controlled by the Company’s CEO and thus treated as related party advances. The balance as of December 31, 2025
was $
| F-6 |
In
addition and concurrent with the sale of the Quest Solution division, the Company entered into a Promissory Note which bears interest
at
NOTE 6 – OTHER NOTES PAYABLE
| (In thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Note payable other | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term notes payable | $ | $ | ||||||
| In thousands | March 31, 2026 | December 31, 2025 | ||||||
| Related Party Notes Payable - other | $ | $ | ||||||
| Less current portion of related party note payable | ( | ) | ( | |||||
| Long Term Notes Payable – related party | $ | $ | ||||||
Notes Payable Other
On
July 29, 2021, the Company entered into a long-term loan from Leumi Bank totaling NIS
On
August 11, 2021, the Company purchased vehicles using cash and financing of NIS
During
the year ended December 31, 2023, the Company entered into a short-term loan Hapoalim Bank totaling NIS
In
February 2024, NIS
In
July 2024, an additional
In
December 2025, an additional
At
December 31, 2025, the Company owed Hapoalim Bank USD $
During
the year ended December 31, 2023, the Company entered into a short-term loan from Bank Leumi totaling NIS
In
March 2024, NIS
In
June 2025 the Company decreased the balance of the revolving loan by further NIS
| F-7 |
The
short-term loan (renewed every month) at 2025 is NIS
At
December 31, 2025, the Company owed Bank Leumi USD $
On
September 21, 2023, the Company entered into a long-term loan from Tzameret Mimunim totaling
As of March 31, 2026, the Company was not in compliance with certain financial covenants related to the Bank Leumi and Bank Hapoalim debt. The Company’s failure to comply with these financial covenants could result in an event of default under its debt agreements. Therefore, we reclassified the total balance as current debt on the balance sheet. On December 29, 2025, a new covenants agreement was signed with Bank Hapoalim, pursuant to which the Company is required to comply with the financial covenants set forth in the new agreement, commencing with the 2026 financial statements.
As
part of the sale of the Quest division and its assets, the Company entered into a Promissory Note which bears interest at
NOTE 7 – STOCKHOLDERS’ EQUITY
PREFERRED STOCK
Series A
As
of March 31, 2026, there were Series A preferred shares designated and Series A preferred shares outstanding.
Series B
As of March 31, 2026, there was preferred share designated and preferred shares outstanding.
Series C
As
of March 31, 2026, there were Series C Preferred Shares (“Series C”) authorized with issued and outstanding.
The Series C shares have preferential rights above common shares and the Series B Preferred Shares and is entitled to receive a quarterly
dividend at a rate of $ per share per annum and have a liquidation preference of $
During the quarter ended March 31, 2026, the Company issued shares upon exercise and receipt of funds for stock options. The proceeds
received were $
| F-8 |
NOTE 8 – LITIGATION
On
November 3, 2024 a commercial real estate company filed a lawsuit against Dangot Computers, OMNIQ Technologies and some of Dangot’s
officers alleging breach of a letter of intent for a lease arrangement. The claims were brought in an Israeli court. The initial claim
against Dangot Computers is NIS
In
March 2025, the Company was named a defendant in a case involving a consultant who was terminated and who claims he is owed approximately
$
On
June 30, 2025, the Company’s subsidiary Dangot Computers reached at settlement with one of its vendors in Israel related to past
due rebates and price protection payments entitled under prior agreements. The vendor agreed to pay Dangot Computers, approximately USD
$
During 2025, several companies filed third-party and fourth-party claims against our subsidiary, Dangot Computers alleging patent infringement. In the opinion of Dangot’s legal counsel, at this preliminary stage it is not yet possible to assess the likelihood of the claims; therefore, no provision has been recorded in the Company’s financial statements in connection with this matter.
NOTE 9 – BUSINESS SEGMENT
The Company operates in a single reportable segment, referred to as providing solutions including hardware, software, communications, and automated management service as an established distributor of barcode labels, tags, and ribbons, as well as RFID labels and tags. The business is managed by the chief executive officer who is the Chief Operating Decision Maker (CODM). The CODM evaluates segment performance based on operating income (loss) for purposes of allocating resources and evaluating financial performance. The accounting policies of our single reportable segment are the same as those for the Company as a whole.
NOTE 10 – DISCONTINUED OPERATIONS
As discussed in the Form 10K filed April 15, 2026, and the relevant Form 8-K, on July 11, 2025, OMNIQ Corp., a Delaware corporation (the “Company”), together with its subsidiaries, Quest Marketing, Inc., HTS Image Processing, Inc., OmniQ Vision Inc., HTS Image Ltd., OmniQ Technologies Ltd., and Dangot Computers, Ltd. (collectively, the “Sellers”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Summit Junction Holdings LLC, a Delaware limited liability company (the “Buyer”).
Pursuant to the Purchase Agreement, the Sellers agreed to sell, and Buyer agreed to purchase, substantially all of the assets and assume certain liabilities mainly associated with the Company’s legacy business line, including its integrated hardware, software, and automation solutions business, (the “Transferred Business”). The Transaction was consummated on July 11, 2025. Although the Purchase Agreement is dated as of June 30, 2025, the parties executed the agreement and consummated the Transaction on July 11, 2025.
The
aggregate consideration for the Transaction is approximately $
The assets sold include, among other things, accounts receivable, inventory, tangible personal property, intellectual property, contract rights, books and records, and other assets used or held for use in connection with the Transferred Business. Certain assets were excluded from the Transaction, including the Company’s cash and cash equivalents and all assets not related to the Transferred Business. Buyer assumed only those liabilities specified in the Purchase Agreement, and the Company retained all other liabilities, including those unrelated to the Transferred Business or expressly excluded.
The Purchase Agreement contains customary representations, warranties, and covenants, including pre-closing operating covenants, post-closing indemnification provisions, and certain limitations on liability. The Transaction and Purchase Agreement were approved by the Company’s Board of Directors effective June 30, 2025 following completion of a fairness opinion, dated June 27, 2025, from an independent financial advisor.
In connection with the closing, the Company and Buyer entered into and delivered various ancillary agreements, including a Bill of Sale, Assignment and Assumption Agreement, Trademark Assignment Agreement, Promissory Note, Intellectual Property License Agreement, and Transition Services Agreement. The Company also entered into a consent agreement with its largest vendor Bluestar to consent to the transfer of the liabilities owed to it from the Company to the Buyer. Due to an entity affiliated with Shai Lustgarten, the Company’s CEO as a principal member of the Buyer, the transaction is deemed related party.
Pursuant to his employment contract, the CEO, Shai Lustgarten
is entitled to a bonus equal to
Based
on ASC 850-10, ASC 845-10, ASC 820, and SEC Staff Accounting Bulletin Topics 5.G, 5.T, and 1.B.1, the transaction represents a capital
contribution from the CEO to the Company. While a fairness opinion was obtained, it does not fully satisfy ASC 820 fair value measurement
requirements for full recognition. Accordingly, the $
The
sale resulted in a net gain on disposal of approximately $
| F-9 |
The net gain (APIC) was calculated as follows (in thousands):
| Reduction of cash and cash equivalents | $ | ( | ) | |
| Reduction of accounts receivable, net | ( | ) | ||
| Reduction of inventory, net | ( | ) | ||
| Reduction of other current assets | ( | ) | ||
| Reduction in property and equipment, net of accumulated depreciation | ( | ) | ||
| Reduction in accounts payable and accrued liabilities | ||||
| Increase in other current liabilities | ( | ) | ||
| Increase in related party notes payable | ( | ) | ||
| Increase in additional paid-in capital | $ | ( | ) | |
| Income Taxes Payable on transaction | $ | |||
| Additional paid-in capital reduction | $ |
Details of net loss from discontinued operations, net of taxes, are as follows (in thousands):
| For the three months ended | March 31, 2026 | March 31, 2025 | ||||||
| Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Selling, general and administrative | ||||||||
| Research & Development | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Interest expense | ||||||||
| Other expenses (income) | ||||||||
| Current tax | ||||||||
| Net Income (Loss) from Discontinued Ops (Net of Tax) | $ | $ | ( | ) | ||||
Because the transaction was effective June 30, 2025, no assets or liabilities disposed in the sale were included on the balance sheet as of December 31, 2025. The balances of the disposed assets and liabilities as of December 31, 2024 were as follows:
| Assets | ||||
| Current Assets | ||||
| Accounts receivable, net | $ | |||
| Inventory, net | ||||
| Prepaid expenses | ||||
| Other current assets | ||||
| Total current assets | ||||
| Property and equipment, net of accumulated depreciation | ||||
| Right of use lease asset | ||||
| Total Assets | $ | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | $ | |||
| Accrued payroll and sales tax | ||||
| Lease liability – current portion | ||||
| Other current liabilities | ||||
| Total Current Liabilities | ||||
| Deferred revenue | ||||
| Lease liability | ||||
| Total liabilities | $ |
Cash flows related to the discontinued business have not been segregated and are included in the condensed consolidated statements of cash flows. The following table provides supplemental cash-flow information for the discontinued operations (in thousands):
| Three months ended March 31, 2026 | Three months ended March 31, 2025 | |||||||
| Depreciation and amortization | ||||||||
| Capital expenditures | ||||||||
| Other significant non-cash items | ||||||||
| Cancelation of lease | ||||||||
NOTE 11 – SUBSEQUENT EVENTS
Subsequent Event – Planned Divestiture of CodeBlocks
In connection with a transaction executed on June 30, 2025, the Company agreed to divest its CodeBlocks business, which is currently included within goodwill. As of December 31, 2025, the definitive agreements related to the divestiture of CodeBlocks had not been finalized or executed and remained subject to completion of final terms and approvals. Accordingly, the Company concluded that the criteria for classification as held for sale were not met as of year-end.
Subsequent to December 31, 2025, the Company has continued to finalize the terms of the transaction, and the definitive agreements are expected to be executed in the near term. The completion of the divestiture remains subject to final execution and customary conditions.
As discussed in Note 6. the Dangot Computers subsidiary has a bank loan which as discussed is in negotiations with receiving an extension on the bank covenants.
As of May 20, 2026, there are no other material subsequent events that have occurred.
| F-10 |
ITEM 2. 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. Many of these factors are beyond our ability to control or predict. 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; and |
For a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our 2025 Form 10-K and Item 1A — “Risk Factors” in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, 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.
Introduction
From 2008 to 2013, we were in the business of developing oil and gas reserves. In January 2014, we determined it was in the best interest of our stockholders to focus on operating companies with a track record of positive cash flows and larger existing revenue bases. Our strategy developed into leveraging management’s relationships in the business world for investments for us.
Since 2014, we have made the following acquisitions resulting in us becoming a leading provider of computerized and machine-vision image-processing solutions:
| ● | Quest Solutions, Inc. (January 2014) | |
| ● | Bar Code Specialties, Inc. (November 2014) | |
| ● | HTS Image Processing, Inc. (October 2018) | |
| ● | EyepaxIT Consulting LLC. (February 2020) | |
| ● | Dangot Computers Ltd. (July 2021) |
We use patented and proprietary artificial intelligence (AI) technology to deliver machine vision image processing solutions including data collection, real-time surveillance and monitoring for supply chain management, homeland security, public safety, traffic & parking management, and access control applications.
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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, technical service and support. Our highly tenured team of professionals has the knowledge and expertise to simplify the integration process for our customers. We deliver practical problem-solving solutions backed by numerous customer references.
Our customers include government agencies, healthcare, universities, airports, municipalities and more. 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.
OVERVIEW
The Company’s sales from operations for the three months ended March 31, 2026, were $7.7 million, a decrease of approximately $299 thousand or 4%, over the three months ended March 31, 2025.
The loss from operations for the three months ended March 31, 2026, was $1.26 million, an increase of $841 thousand compared with the loss in the three months ended March 31, 2025, of $425 thousand. Basic loss per share from continuing operations for the three months ended March 31, 2026, was ($0.13) versus ($0.19) per share for the same period in 2025. Comprehensive loss for the three months ended March 31, 2026 and 2025 was $1.7 million and $1.6 million respectively, the only component to comprehensive loss besides net loss is foreign currency translation.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2026, the Company had cash in the amount of $787 thousand and a working capital deficit of $14.6 million, compared to cash in the amount of $679 thousand, and a working capital deficit of $13.2 million as of December 31, 2025. The Company had stockholders’ deficit attributable to OmniQ stockholders of $14.1 million and $12.7 million as of March 31, 2026, and December 31, 2025, respectively. This increase in our stockholders’ deficit was primarily attributable to net losses.
The Company’s accumulated deficit was $125.7 million and $124 million as of March 31, 2026, and December 31, 2025.
The Company’s operations provided (used) net cash of $70 thousand and provided $1 million in the three months ended March 31, 2026, and 2025, respectively. The decrease in cash provided in operations of $1 million is due to the decrease in revenue.
The Company’s cash used in investing activities was $26 thousand for the three months ended March 31, 2026, compared to cash used in investing activities of $31 thousand for the three months ended March 31, 2025.
The Company’s financing activities used $0.68 million of cash during the three months ended March 31, 2026, and used $1.2 million during the three months ended March 31, 2025.
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 Three months ended March 31, |
Variation | |||||||||||||||
| In thousands | 2026 | 2025 | $ | % | ||||||||||||
| Revenue | $ | 7,680 | $ | 7,979 | $ | (299 | ) | (3.75 | )% | |||||||
| Cost of Goods sold | 5,425 | 5,796 | (371 | ) | (6.40 | )% | ||||||||||
| Gross Profit | 2,255 | 2,183 | 72 | 3.30 | % | |||||||||||
| Operating Expenses | 3,521 | 2,609 | 912 | 34.98 | % | |||||||||||
| Loss from operations | (1,266 | ) | (426 | ) | (840 | ) | 197.95 | % | ||||||||
| Net loss | (1,651 | ) | (2,089 | ) | 438 | (20.95 | )% | |||||||||
| Net Loss per common Share from continuing operations | $ | (0.11 | ) | $ | (0.19 | ) | $ | 0.08 | (41.03 | )% | ||||||
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Revenues
For the three months ended March 31, 2026, and 2025, the Company generated net revenues in the amount of $7.7 million and $7.9 million, respectively. The decrease between the three-month periods was attributable to timing of projects by customers.
Cost of Goods Sold
For the three months ended March 31, 2026, and 2025, the Company recognized a total of $5.4 million and $5.8 million, respectively, of cost of goods sold. For the three months ended March 31, 2026, and 2025, cost of goods sold were 70% and 73% of net revenues, respectively.
Operating expenses
Total operating expenses for the three months ended March 31, 2026, and 2025 recognized was $3.5 million and $2.6 million, respectively, representing a 35% increase. The increase in operating expenses was due primarily to increase costs in selling and general administrative expenses, specifically salaries.
Research and Development – Research and development expenses for the three months ended March 31, 2026, and 2025 totaled $478 thousand and $485 thousand, respectively.
Selling, general and Administrative – Selling, general and administrative expenses for the three months ended March 31, 2026, and 2025 totaled $2.7 million and $1.9 million, respectively, representing a 48% increase. The increase was due primarily to increased costs for selling and general administrative expenses.
Depreciation – Depreciation expenses for the three months ended March 31, 2026, and 2025 totaled $16 thousand and $26 thousand, respectively, representing a 38% decrease. The decrease is directly related to the reduction in fixed assets.
Intangible amortization – Intangible amortization expenses for the three months ended March 31, 2026, and 2025 totaled $256 thousand and $232 thousand, respectively. The increase 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, 2026, totaled $306 thousand, as compared to $260 thousand for the three months ended March 31, 2025. The increase is primarily attributable to the line of credit.
Inflation
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure and Control Procedures
We maintain “disclosure controls and procedures”, as such terms are defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosures. The Company acknowledges that any controls and procedures can provide only reasonable assurances of achieving the desired control objectives.
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We have carried out an evaluation as required by Rule 13a-15(d) under the supervision of and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based upon their evaluation, the Chief Executive Officer and Principal Accounting Officer concluded that, as of March 31, 2026, the Company’s disclosure controls and procedures were not effective. Although we have determined that the existing controls and procedures are not effective, the deficiencies identified have not been deemed material to our reporting disclosures.
(b) Management’s Report on Internal Controls over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Principal Accounting Officer, and affected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting cannot provide absolute assurance of achieving their objectives. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgement and breakdowns resulting from human failures. Due to their inherent limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. It is possible to design safeguards to reduce, but not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Management has used the framework set forth in the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on such an evaluation, our CEO concluded that, as of March 31, 2026, our internal controls over financial reporting were not effective.
As a result of our evaluation, we identified a material weakness in our controls related to segregation of duties and other immaterial weaknesses in several areas of data management and documentation.
Our management is composed of a small number of professionals resulting in a situation where limitations on segregation of duties exist. Accordingly, and as a result of the material weakness identified above, we have concluded that the control deficiencies result in a reasonable possibility that a material misstatement of the annual or interim financial statements may not be prevented on a timely basis by the Company’s internal controls. We continue to employ and refine a structure in which critical accounting policies, issues and estimates are identified, and together with other complex areas, are subject to multiple reviews by executives. In addition, we evaluate and assess our internal controls and procedures regarding our financial reporting, utilizing standards incorporating applicable portions of the Public Company Accounting Oversight Board’s 2009 Guidance for Smaller Public Companies in Auditing Internal Controls Over Financial Reporting as necessary on an on-going basis.
While the material weakness set forth above was the result of the scale of the Company’s operations and is intrinsic to its small size, the Company believes the risk of material misstatements relative to financial reporting are minimal.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by its registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permits the Company to provide only management’s report in this annual report.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 3, 2024 a commercial real estate company filed a lawsuit against Dangot Computers, OMNIQ Technologies and some of Dangot’s officers alleging breach of a letter of intent for a lease arrangement. The claims were brought in an Israeli court. The initial claim against Dangot Computers is NIS 21 million approximately US $5.6 million. The Company believes that it has meritorious defenses to such action and intends to vigorously defend itself. At this early stage, it is not possible to fully assess the chances of a lawsuit. The judge has referred the matter to mediation and the company believes that its exposure is significantly lower than the original claim. The Company has recorded a low level accrual representing the amount it currently estimates will be required for payment.
In March 2025, the Company was named a defendant in a case involving a consultant who was terminated and who claims he is owed approximately $389,000 in unpaid fees and commissions. The Company believes it has multiple defense and cross claims against the former consultant and is evaluating its response to the lawsuit, but plans to vigorously defend the suit.
On June 30, 2025, the Company’s subsidiary Dangot Computers reached at settlement with one of its vendors in Israel related to past due rebates and price protection payments entitled under prior agreements. The vendor agreed to pay Dangot Computers, approximately USD $1.2 million, based on certain milestones related to additional purchases. These payments are being treated as reduction in Cost of Goods sold upon receipt from the Vendor. As of December 31, 2025, the full amount had been received from the vendor.
During 2025, several companies filed third-party and fourth-party claims against our subsidiary, Dangot Computers alleging patent infringement. In the opinion of Dangot’s legal counsel, at this preliminary stage it is not yet possible to assess the likelihood of the claims; therefore, no provision has been recorded in the Company’s financial statements in connection with this matter.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission this Form 10-Q, including exhibits. You may read and copy all or any portion of the registration statement or any reports, statements, or other information in the files at SEC’s Public Reference Room located at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m.
You can request copies of these documents upon payment of a duplicating fee by writing to the Commission. You may call the Commission at 1-800-SEC-0330 for further information on the operation of its public reference room. Our filings, including the registration statement, will also be available to you on the website maintained by the Commission at http://www.sec.gov.
We intend to furnish our stockholders with annual reports which will be filed electronically with the SEC containing the consolidated financial statements audited by our independent auditors, and to make available to our stockholder’s quarterly reports for the first three quarters of each year containing unaudited interim consolidated financial statements.
Our website is located at http://www.omniq.com. The Company’s website and the information contained on that site, or connected to that site, is not part of or incorporated by reference into this filing.
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ITEM 6. EXHIBITS
EXHIBIT INDEX
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 20, 2026
| OMNIQ CORP. | ||
| By: | /s/ Shai Lustgarten | |
| Shai Lustgarten | ||
| Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board | ||
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