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 | ||
| The
|
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 ☐
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, $0.001 par value, as of November 7, 2022.
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMNIQ CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| (In thousands, except share and per share data) | As of | |||||||
| September 30, 2022 | December 31, 2021 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation of $ | ||||||||
| 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 | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Line of credit | ||||||||
| Accrued payroll and sales tax | ||||||||
| Notes payable, related parties – current portion | ||||||||
| Notes payable – current portion | ||||||||
| Lease liability – current portion | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities | ||||||||
| Notes payable, related party, less current portion | ||||||||
| Accrued interest and accrued liabilities, related party | ||||||||
| Notes payable, less current portion | ||||||||
| Lease liability | ||||||||
| Other long term liabilities | ||||||||
| Total liabilities | ||||||||
| 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) | ( | ) | ( | ) | ||||
| Cumulative Translation Adjustment | ( | ) | ||||||
| Total OmniQ stockholders’ deficit | ( | ) | ( | ) | ||||
| Non controlling interest | ||||||||
| TOTAL EQUITY (DEFICIT) | ( | ) | ||||||
| Total liabilities and equity (deficit) | $ | $ | ||||||
The accompanying unaudited notes should be read on 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 | For the nine months | |||||||||||||||
| ending September 30, | ending September 30, | |||||||||||||||
| (In thousands, except share and per share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Revenues | ||||||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| 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 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for Income Taxes | ||||||||||||||||
| Current | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income attributable to noncontrolling interest | ||||||||||||||||
| Net Loss attributable to OmniQ Corp | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 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 less non-common stockholder dividends | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income after non-common stockholder dividends attributable to noncontrolling interest | ||||||||||||||||
| Net loss attributable to common stockholders of OmniQ Corp | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) per share - basic attributable to common stockerholders’ of OmniQ Corp | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding - basic | ||||||||||||||||
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)
| Series C | Additional | Non | Other | Total Stockholders’ | ||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Controlling | Comprehensive | Equity | ||||||||||||||||||||||||||||||
| (In thousands) | Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Income (Loss) | (Deficit) | |||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Dividend on class C shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| ESPP stock issuance | - | - | ||||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||||||
| Stock and warrant issued for services | - | |||||||||||||||||||||||||||||||||||
| Exercise of stock options and warrants | - | |||||||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Other | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Dividend on class C shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| ESPP stock issuance | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||||||
| Exercise of stock options and warrants | - | |||||||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Conversion of equity | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Conversion of debt | - | |||||||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Dividend on class C shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| ESPP stock issuance | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | |||||||||||||||||||||||||||||||||||
| Exercise of stock options and warrants | - | |||||||||||||||||||||||||||||||||||
| Stock and warrant issuances, net of issuance costs | - | |||||||||||||||||||||||||||||||||||
| Stock and warrant issuance for acquisition | - | |||||||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | ( | ) | |||||||||||||||||||||||||||||||||
| Dangot acquisition | - | - | ||||||||||||||||||||||||||||||||||
| Post acquisition adjustment | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| ESPP stock issuance | - | |||||||||||||||||||||||||||||||||||
| Stock and warrant issued for services | - | - | ||||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||||||
| Exercise of stock options and warrants | - | |||||||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| ESPP stock issuance | - | |||||||||||||||||||||||||||||||||||
| Noncontrolling interests - distributions and other | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Exercise of stock options and warrants | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net (loss) income | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||
| Dividends | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| ESPP stock issuance | - | |||||||||||||||||||||||||||||||||||
| Other | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Exercise of stock options and warrants | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation – options, warrants, issuances | - | - | ||||||||||||||||||||||||||||||||||
| Stock and warrants issued for services | - | |||||||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net (loss) income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||
The accompanying unaudited notes should be read in conjunction with these condensed unaudited consolidated financial statements.
| F-3 |
OMNIQ CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30,
| (In thousands) | 2022 | 2021 | ||||||
| Cash flows from operations | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Loss on disposal of PP&E | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of ROU asset | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Other assets | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Accrued interest and accrued liabilities, related party | ||||||||
| Accrued payroll and sales taxes payable | ||||||||
| Lease liability | ( | ) | ||||||
| Deferred tax assets, net | ( | ) | ||||||
| Other liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Payment for additional ownership in subsidiary | ( | ) | ||||||
| Payment for acquisition, net of cash acquired | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of other assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from private placement | ||||||||
| Proceeds from ESPP stock issuance | ||||||||
| Proceeds from exercise of options and warrants | ||||||||
| Dividends paid | ( | ) | ||||||
| Payments on notes/loans payable | ( | ) | ( | ) | ||||
| Proceeds from the issuance of notes/loans payable | ||||||||
| Proceeds from draw on line of credit | ||||||||
| Net cash 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: | ||||||||
| Stock issued for services | $ | $ | ||||||
| Declared dividends payable | $ | $ | ||||||
| Net assets acquired in business combination | $ | $ | ||||||
| Stock options and warrants issued | $ | $ | ||||||
| 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. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. 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, 2021 (the “2021 Form 10-K”).
We describe our significant accounting policies in Note 2 of the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021. During nine-month period ended September 30, 2022, there were no significant changes to those accounting policies.
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 nine-months ended September 30, 2022, and 2021 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 anti-dilutive.
| In thousands | September 30, 2022 | September 30, 2021 | ||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Potential shares excluded from diluted net loss per share | ||||||||
| F-5 |
NOTE 2 – LIQUIDITY AND CAPITAL RESOURCES
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. The following are the principal conditions or events which potentially raise substantial doubt about the company’s ability to continue as a going 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 net losses from operations | |
| ● | Multiple years of negative cash flows from operations |
These facts and others have in the past raised concerns about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, which we have successfully accomplished to date.
The following conditions, plans and actions are currently being implemented by management to address the Company’s conditions:
| ● | The Company has common stock which is now traded publicly on the NASDAQ stock exchange. Accordingly, it is better able to successfully raise capital when needed. In addition, there are outstanding warrants from prior offerings that could be exercised depending upon the performance of our stock. | |
| ● | The
Company raised gross proceeds of $ | |
| ● | ||
| ● | The acquisition of Dangot has added capabilities to the Company which have already transformed into significant new orders in the Parking segment. Management expects the collaboration and cross sales to contribute to improved revenues and margins. | |
| ● | Management is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations. | |
| ● | March
25, 2022 management finalized an $ | |
| ● | As
of September 30, 2022, the Company had approximately $ | |
| ● | Historical results - For over ten years, the Company’s audit opinion has contained an explanatory paragraph describing an uncertainty about the Company’s ability to continue as a going concern. The fact that the Company has a ten plus year plus history of continuing operations, in and of itself, demonstrates an ability to continue for a period of 12 months, post-issuance of each report. | |
| ● | Blue
Star - The Company’s total accounts payable due to Blue Star as of September 30, 2022 was approximately $ |
Management believes that the aggregate impact of these plans is to mitigate the conditions raising substantial doubt about the Company’s ability to continue as a going concern within one year after the date financial statement issuance.
NOTE 3 – CONCENTRATIONS
For
the nine-months ended September 30, 2022 there were no customers concentrations to disclose, and for the year ended December 31,
2021, there were two customer accounted for
Accounts
receivable at September 30, 2022 and December 31, 2021 are made up of trade receivables due from customers in the ordinary course of
business. Two customers made up
For
the nine months ended September 30, 2022 and the year ended December 31, 2021 one vendor made up
| F-6 |
NOTE 4 – BUSINESS ACQUISITION
Dangot Computers Ltd
On May 3, 2021, the Company and Omniq Technologies Ltd., a wholly owned subsidiary of the Company (“Omniq Technologies”) entered into a share purchase agreement (the “Dangot Share Purchase Agreement”) with Mr. Haim Dangot. The Closing Consideration was paid on July 8, 2021 in the following manner: (a) the Company issued shares of its common stock having a share value of $ thousand and (b) cash in the amount of $ thousand and $ thousand payable to owner.
Effective
October 1, 2021, the Company exercised a portion of its option and purchased an additional
On
April 1, 2022, the Company closed on its acquisition of Dangot and exercised the remaining portion of its option to purchase
| F-7 |
NOTE 5 – CREDIT FACILITIES AND LINE OF CREDIT
We maintain operating lines of credit, factoring and revolving credit facilities with banks and finance companies to provide us working capital.
On
March 25, 2022 we entered into a Business Finance Agreement (the “BFA”) with BridgeBank a division of Western Alliance Bank
(“BridgeBank”) to establish the sale of accounts receivable credit facility, whereby we may obtain short-term financing by
selling and assigning acceptable accounts receivables to BridgeBank. Pursuant to the BFA, the outstanding principal amount of advances
made by BridgeBank at any time shall not exceed $
NOTE 6 – RELATED PARTY NOTES PAYABLE
Related party notes payable, consisted of the following as of:
| September 30, 2022 | December 31, 2021 | |||||||
| In thousands | ||||||||
| Note payable –Marin | $ | $ | ||||||
| Note payable –Thomet | ||||||||
| Total notes payable | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term portion | $ | $ | ||||||
Note Payable -Marin
In
December 2017, we entered into a $
Note Payable – Thomet
In
December 2017, we entered into a $
Future maturities of related party notes payable as of September 30, 2022, are as follows:
In thousands
| 2022 | ||||
| 2023 | ||||
| Total | $ |
| F-8 |
NOTE 7 – NOTES PAYABLE
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| Note Payable- Supplier | $ | $ | ||||||
| Note Payable other | ||||||||
| Total | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long Term Notes Payable | $ | $ | ||||||
Note Payable - Supplier
On
July 18, 2016, the Company and the Supplier entered into a certain secured promissory note, with an effective date of July 1, 2016, in
the principal amount of $
| ● | On
July 20, 2021, the Company entered into the Eighth Amendment to the Secured Promissory Note (the “Eighth Amendment”)
extending the maturity date to August 15, 2022 and reducing the interest rate from |
| ● | On March 25, 2022 the Company has paid off the entire remaining balance owed to the supplier. |
Notes Payable other
On
July 29, 2021 the Company entered into a long-term loan from Leumi Bank totaling NIS
On
November 28, 2021 the Company entered into another long-term loan from Leumi Bank totaling NIS
During
the year ended December 31, 2021, the Company entered into five lines of credit totaling NIS
On
August 11, 2021, the Company purchased vehicles using cash and financing of NIS
On
March 27, 2022 the Company entered into another long-term loan from Leumi Bank totaling NIS
NOTE 8 – OTHER LIABILITIES
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| Other vendor payable | $ | $ | ||||||
| Dividend payable | ||||||||
| Others | ||||||||
| Total other liabilities | ||||||||
| Less Current Portion | ( | ) | ( | ) | ||||
| Total long term other liabilities | $ | $ | ||||||
| F-9 |
NOTE 9 – STOCKHOLDERS’ EQUITY
PREFERRED STOCK
Series A
As
of September 30, 2022, there were Series A preferred shares designated and Series A preferred shares outstanding.
Series B
As of September 30, 2022, there was preferred share designated and preferred shares outstanding.
Series C
As
of September 30, 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 $
COMMON STOCK
In October 2021, OMNIQ’ Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain in the employ of and attract new employees, directors, officers, consultants, advisors and employees to the Company. Pursuant to the Plan, shares of the Company’s common stock, par value $ (the “Shares”), were set aside and reserved for issuance. The Plan approved by our stockholders at the December 2021, shareholders’ meeting. shares were issued under the Plan in 2021. On February 25, 2022, the Company granted stock options. These options were granted to employees as part of the Company’s Equity Incentive Plan.
For
the nine months ending September 30, 2022, $
In
December 2015, our Board of Directors approved the OMNIQ. Employee Stock Purchase Plan (the “ESPP”). For the nine months
ending September 30, 2022 employees purchased shares or $
On
June 15, 2022 our Board of Directors approved issuing shares as part of a consulting agreement. The shares were valued at $
On
June 15, 2022 our Board of Directors granted warrants as part of a consulting agreement. The shares were valued at $
On
June 15, 2022 our Board of Directors granted stock options as part of a consulting agreement. The shares were valued at $
On August 8, 2022 our Board of Directors approved issuing shares as compensation for executives valued at $ thousand. As of September 30, 2022 the shares have not been issued.
On August 8, 2022 our Board of Directors approved issuing warrants as part of a consulting agreement valued at $ thousand.
NOTE 10 – LITIGATION
The
Company was named a defendant in a case involving a former employee who claims he is owed approximately $
The company is not a party to any other pending material legal proceeding in which it is defending against any claims of material significance. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
NOTE 11 – SUBSEQUENT EVENTS
On October 23, 2022, the Company granted stock options valued at $ thousand to certain employees under the Company’s 2021 Equity Incentive Plan.
| 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.
Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission (“SEC”), we are under no obligation to publicly update or revise any forward-looking statements after we file this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise. Investors, potential investors and other readers are urged to consider the above-mentioned factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results or performance.
For a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and Item 1A — “Risk Factors” in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, 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 Internet website at www.omniq.com.
Introduction
We use patented and proprietary artificial intelligence (AI) technology to deliver data collection, real time surveillance and monitoring for supply chain management, homeland security, public safety, traffic & parking management and access control applications. The technology and services we provide helps our clients move people, assets and data safely and securely through airports, warehouses, schools, national borders, and many other applications and environments.
We offer end-to-end solutions that include hardware, software, communications, and full lifecycle management services. We are an established manufacturer and distributor of barcode labels, tags, and ribbons, as well as RFID labels and tags. Our highly tenured team of professionals has the knowledge and expertise to simplify the integration process for our customers, and our team delivers proven problem-solving solutions backed by numerous customer references. We offer comprehensive packaged and configurable software, and we are a leading provider of best-in-class mobile and wireless equipment.
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Our customers include government agencies and leading Fortune 500 companies from diverse sectors, including healthcare, food and beverage, manufacturing, retail, distribution, transportation and logistics, and oil, gas, and chemicals.
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 nine months ended September 30, 2022, were $77.5 million, an increase of approximately $24 million, or 45.25%, over the nine months ended September 30, 2021.
The loss from operations for the nine months ended September 30, 2022, was $6.1 million, a decrease of $2.8 million compared with the loss in the nine months ended September 30, 2021, of $8.9 million. Basic loss per share from continuing operations for the nine months ended September 30, 2022, was ($1.29) versus ($1.86) per share for the same period in 2021.
LIQUIDITY AND CAPITAL RESOURCES
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. The following are the principal conditions or events which potentially raise substantial doubt about the company’s ability to continue as a going 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 $32 million as of September 30, 2022 | |
| ● | Accumulated deficit of $80 million as of September 30, 2022 | |
| ● | Multiple years of net losses from operations | |
| ● | Multiple years of negative cash flows from operations |
These facts and others have in the past raised concerns about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, which we have successfully accomplished to date.
The following conditions, plans and actions are currently being implemented by management to address the Company’s conditions:
| ● | The Company has common stock which is now traded publicly on the NASDAQ stock exchange. Accordingly, it is better able to successfully raise capital when needed. In addition, there are outstanding warrants from prior offerings that could be exercised depending upon the performance of our stock. | |
| ● | The Company raised gross proceeds of $15 million from a private placement of its common stock in July 2021. | |
| ● | The Company received financing for the acquisition of the last 23% of shares of Dangot at a loan to value rate of 85%. The Company also expects that Dangot’s cashflow will be able to service the debts associated with its acquisition without the need for cash from the rest of the group. See note 11. | |
| ● | The acquisition of Dangot has added capabilities to the Company which have already transformed into significant new orders (so far approx. $1.3M) in the Parking segment. Management expects the collaboration and cross sales to contribute to improved revenues and margins. | |
| ● | Management is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations. | |
| ● | Management finalized an $8.5M line of credit from Western Alliance Bank. This line of credit will replace the high interest Action Capital line of Credit ($6M) and settle the ScanSource debt $2.5M. Overall the effective interest rate of the new line of credit is approx. 7% compared to 12% with Action and 10% with ScanSource. | |
| ● | As of September 30, 2022, the Company had approximately $3.8 million, in cash. | |
| ● | Historical results - For over ten years, the Company’s audit opinion has contained an explanatory paragraph describing an uncertainty about the Company’s ability to continue as a going concern. The fact that the Company has a ten plus year plus history of continuing operations, in and of itself, demonstrates an ability to continue for a period of 12 months, post-issuance of each report. | |
| ● | Blue Star - The Company’s total accounts payable due to Blue Star as of September 30, 2022 was approximately $35 M. Blue Star is an unsecured creditor, financing a substantial amount of the Company’s supply chain demand. Blue Star continues selling to the Company with preferable credit terms. Blue Star has agreed to reduce the annual interest rate on invoices that are past due to just 5%. We anticipate, consistent with prior periods, Blue Star will continue to extend us such preferable payments terms in the foreseeable future. As an unsecured creditor of the Company, Blue Star has no incentive to force a liquidation. The Company has enjoyed a good mutual relationship for the past four years. |
Management believes that the aggregate impact of these plans is to mitigate the conditions raising substantial doubt about the Company’s ability to continue as a going concern within one year after the date financial statement issuance.
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Results of Operations
The following tables set forth certain selected unaudited condensed consolidated statement 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.
| Three months ended September 30, | Variation | |||||||||||||||
| In thousands | 2022 | 2021 | $ | % | ||||||||||||
| Revenue | $ | 27,008 | $ | 20,513 | $ | 6,495 | 31.66 | % | ||||||||
| Cost of Goods sold | $ | 21,032 | $ | 15,842 | $ | 5,190 | 32.76 | % | ||||||||
| Gross Profit | $ | 5,976 | $ | 4,671 | $ | 1,305 | 27.94 | % | ||||||||
| Operating Expenses | $ | 8,634 | $ | 8,885 | $ | (251 | ) | (2.82 | )% | |||||||
| Loss from operations | $ | (2,658 | ) | $ | (4,214 | ) | $ | 1,556 | (36.92 | )% | ||||||
| Net loss | $ | (3,810 | ) | $ | (5,076 | ) | $ | 1,266 | (24.94 | )% | ||||||
| Net Loss per common Share from continuing operations | $ | (0.52 | ) | $ | (0.73 | ) | $ | 0.21 | (28.77 | )% | ||||||
Revenues
For the three months ended September 30, 2022 and 2021, the Company generated net revenues in the amount of $27 million and $20.5 million, respectively. The increase between the three-month periods was attributable to the additional sales channel’s provided by the acquisition of Dangot.
Cost of Goods Sold
For the three months ended September 30, 2022 and 2021, the Company recognized a total of $21 million and $15.8 million, respectively, of cost of goods sold. For the three months ended September 30, 2022 and 2021, cost of goods sold were 78% and 77% of net revenues, respectively.
Operating expenses
Total operating expense for the three months ended September 30, 2022 and 2021 recognized was $8.6 million and $8.9 million, respectively, representing a 2.8% decrease.
Research and Development – Research and development expenses for the three months ended September 30, 2022 and 2021 totaled $445 thousand and $474 thousand, respectively.
Selling, general and Administrative – Selling, general and administrative expenses for the three months ended September 30, 2022 and 2021 totaled $7.6 million and $6.8 million, respectively. The increase is due to non-cash stock compensation for employees and consultants.
Depreciation – Depreciation expenses for the three months ended September 30, 2022 and 2021 totaled $91 thousand and $82 thousand, respectively, representing a 11% increase. The increase is attributable to the addition of fixed assets.
Intangible amortization – Intangible amortization expenses for the three months ended September 30, 2022 and 2021 totaled $474 thousand and $1.5 million, respectively. The decrease is due to diminishing life of intangibles.
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Other income and expenses
Interest Expense – Interest expense for the three months ended September 30, 2022 totaled $880 thousand, as compared to $587 thousand for the three months ended September 30, 2021. The increase is primarily attributable to additional lines of credit.
| Nine months ended September 30, | Variation | |||||||||||||||
| In thousands | 2022 | 2021 | $ | % | ||||||||||||
| Revenue | $ | 77,539 | $ | 53,383 | $ | 24,156 | 45.25 | % | ||||||||
| Cost of Goods sold | $ | 59,449 | $ | 42,778 | $ | 16,671 | 38.97 | % | ||||||||
| Gross Profit | $ | 18,090 | $ | 10,605 | $ | 7,485 | 70.58 | % | ||||||||
| Operating Expenses | $ | 24,176 | $ | 19,527 | $ | 4,649 | 23.80 | % | ||||||||
| Loss from operations | $ | (6,086 | ) | $ | (8,922 | ) | $ | 2,836 | (31.79 | )% | ||||||
| Net loss | $ | (9,566 | ) | $ | (10,929 | ) | $ | 1,363 | (12.47 | )% | ||||||
| Net Loss per common Share from continuing operations | $ | (1.29 | ) | $ | (1.86 | ) | $ | 0.57 | (30.65 | )% | ||||||
Revenues
For the nine months ended September 30, 2022 and 2021, the Company generated net revenues in the amount of $78 million and $53 million, respectively. The increase between the nine-month periods was attributable to the additional sales channel’s provided by the acquisition of Dangot.
Cost of Goods Sold
For the nine months ended September 30, 2022 and 2021, the Company recognized a total of $59 million and $43 million, respectively, of cost of goods sold. For the nine months ended September 30, 2022 and 2021, cost of goods sold were 77% and 80% of net revenues, respectively. The 2022 decrease in cost of goods sold as a percentage of net revenue was attributable to discounts being granted during the Covid pandemic which are no longer being offered.
Operating expenses
Total operating expense for the nine months ended September 30, 2022 and 2021 recognized was $24 million and $20 million, respectively, representing a 24% increase. The increases are related to the additional operations from Dangot.
Research and Development – Research and development expenses for the nine months ended September 30, 2022 and 2021 totaled $1.4 million and $1.4 million, respectively.
Selling, general and Administrative – Selling, general and administrative expenses for the nine months ended September 30, 2022 and 2021 totaled $21.2 million and $15.3 million, respectively, representing a 38% increase. The increase was due to increased number of employees and operating activities from the acquisition of Dangot and non-cash stock compensation for employees and consultants.
Depreciation – Depreciation expenses for the nine months ended September 30, 2022 and 2021 totaled $241 thousand and $167 thousand, respectively, representing a 44% increase. The increase is directly increased by the acquisition of additional fixed assets.
Intangible amortization – Intangible amortization expenses for the nine months ended September 30, 2022 and 2021 totaled $1.3 million and $2.6 million, respectively. The decrease is due to diminishing life of intangibles.
Other income and expenses
Interest Expense – Interest expense for the nine months ended September 30, 2022 totaled $2.6 million, as compared to $1.9 million for the nine months ended September 30, 2021. The increase is primarily attributable to additional lines of credit.
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Inflation
The Company’s results of operations have not been 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
The Company’s management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as that term is defined in Rule 13a-15(e)) as of September 30, 2022, the end of the period covered by this Quarterly Report on Form 10-Q.
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Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer (Principal Financial and Accounting Officer) concluded that, as of September 30, 2022, our disclosure controls and procedures were ineffective as of the end of the period covered to ensure that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to the Company’s management, including its principal executive officer and its principal financial officer, as appropriate to allow timely decisions regarding required disclosure. This was due to the following material weaknesses which are indicative of many small companies with limited staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of accounting principles generally accepted in the United States of America and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer, and our Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosure.
During 2021, we identified material weaknesses in our internal control over financial reporting, which were disclosed in our annual report on Form 10-K filed with the SEC on March 31, 2022.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
We have been implementing additional internal control procedures in order to address the material weaknesses identified in our annual report on Form 10-K filed with the SEC on March 31, 2022.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was named a defendant in a case involving a former employee who claims he is owed approximately $60 thousand in unpaid commissions. The Company intends to defend the case. This case was filed in the Superior Court of the State of California, County of San Diego on October 21, 2020.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
On November 10, 2022, our Compensation Committeee approved, and our Board ratified, a new employment agreement with our Chief Financial Officer, Neev Nissenson. The agreement is for a period of three (3) years and provides for a base salary of 48,000 NIS/month and 12,000 NIS/month in Global Overtime Compensation. Pursuant to the agreement, we will issue Neev 10,000 shares of common stock within 30 days of signing the agreement. The agreement also provides for the payment of certain bonuses upon the attainment of certain criteria. The agreement is filed as an exhibit to this quarterly report on Form 10-Q.
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 consolidated financial statements audited by our independent auditors, and to make available to our stockholders 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 to be contained on that site, or connected to that site, is not part of or incorporated by reference into this filing.
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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: November 14, 2022
| OMNIQ CORP. | ||
| By: | /s/ Shai Lustgarten | |
| Shai Lustgarten | ||
| President and Chief Executive Officer | ||
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EXHIBIT INDEX
| 11 |
Exhibit 1
PERSONAL EMPLOYMENT AGREEMENT
THIS AGREEMENT (“Agreement”) is made and entered into this ____________ day of, by and between HTS Image, Ltd., corp. ID 515726016 of business address at 14 Yad Harutzim, Tel Aviv, Israel, OMNIQ, Corp. . a Delaware company (together the “Company”) and Neev Nissenson Israel I.D. ___________ of __________________________, Israel (“Executive”).
WHEREAS Company has employed Executive in the Position (as defined hereunder) in accordance with a Personal Employment Agreement dated September 5, 2019 (2019 agreement); and
WHEREAS the term of the 2019 agreement the term is ending on October 10, 2022; and
WHEREAS Company wishes to continue to employ Executive and Executive agrees to continue to be employed by Company;
WHEREAS the parties wish to regulate their relationship in accordance with the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises, covenants and undertakings contained herein, the parties hereto have hereby agreed as follows:
| 1. | Representations and Warranties. Executive represents and warrants to Company that he is free to be employed by Company pursuant to the terms contained in this Agreement and there are no contracts and/or impediments and/or restrictive covenants preventing full performance of the Executive’s duties and obligations hereunder. |
| 2. | Term. Executive’s employment with the Company shall commence as of November 1, 2022 (the “Commencement Date of Employment”) and shall continue until terminated in accordance with the provisions of Section 12 hereof (the “Term”). |
| 3. | Position |
| 3.1. | Executive shall be employed by Company in the position of a Chief Financial Officer (the “Position”), at a full-time scope of employment | |
| 3.2. | Regular work day in the Company shall be of 9 hours per day and Executive’s weekly rest day is Friday & Saturday. | |
| 3.3. | Executive will be reporting to the CEO, Shai Lustgarten. As a full-time employee, the company requires that you devote your full business time, attention, skills and efforts to the duties and responsibilities may be stipulated from time to time, by the company’s CEO. |
| 4. | Executive’s Duties. Executive affirms and undertakes throughout the Term: (a) to devote his working time, know-how, energy, expertise, talent, experience and best efforts, as shall be required, to the business and affairs of Company and to the performance of his duties with Company; (b) to perform and discharge well and faithfully, with devotion, honesty and fidelity, his obligations pursuant to his Position; (c) to comply with all of Company’s disciplinary regulations, work rules, policies, procedures and objectives, as may be determined by Company from time to time; (d) not to receive, at any time, whether during the Term and/or at any time thereafter, directly or indirectly, any payment, benefit and/or other consideration, from any third party in connection with his employment with Company; (e) to immediately and without delay inform the Company’s board of directors of any affairs and/or matters that might constitute a conflict of interest with Executive’s Position and/or employment with Company; (f) not to use any trade secrets or proprietary information in such a manner that may breach any confidentiality and/or other obligation Executive may have undertaken relating to any former employer(s) and/or any third party; and (g) to maintain the terms and conditions of this Agreement in strict confidence. |
| 5. | Compensation |
| 5.1. | Company shall pay Executive a monthly gross salary in the amount of NIS 48,000 (the “Base Salary”) as of the Effective Date. The Base Salary shall be adjusted according to the governmental directives published from time to time and binding on the Company (Tzavei Harchava) with respect to cost-of-living increases (Tosefet Yoker). | |
| 5.2. | In addition, the Company shall pay the Executive a monthly amount of NIS 12,000 as global compensation for overtime and extra hours (Shaot Nosafot) as such term is defined in the Work and Rest Hours Law (the “Global Overtime Compensation”). The Base Salary together with the Global Overtime Compensation shall be referred to herein as the “Salary” |
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| 5.3. | The Salary shall be payable in accordance with the Company’s customary payroll procedures, but not later than on the tenth (10h) day of the consecutive calendar month following the calendar month of employment to which the payment relates. | |
| 5.4. | The Salary shall serve as the basis for calculation of the deductions and contributions to managers’ insurance policy pursuant to section 8.1 hereunder and to the Advanced Study Fund pursuant to Section 8.2 hereunder, and for the calculation of all social benefits. Israeli income tax and other applicable withholdings with respect to the Salary shall be deducted from the Salary by the Company at source. |
| 6. | Bonus |
| 6.1. | Executive Bonus Plan. Executive shall be eligible to participate in the Company’s (omniQ Corp.) Executive Bonus Plan, as it may exist from time to time, which will include both cash and stock components and be based on measurable objectives established by the omniQ Corp’s Board of Directors for achievement in free cash flow, EBITDA, cost reduction, and/or any other factors the Board of Directors selects in its sole discretion. | |
| 6.2. | Early filing of annual 10K report. In addition to the above, should the Company file it annual report 10K earlier than one month before the filing deadline executive shall be entitled to a bonus of $10,000 | |
| 6.3. | Timely filing of annual 10K report. In addition to the above, should the Company file it annual report 10K later than one month before the filing deadline but nonetheless before the deadline the executive shall be entitled to a bonus of $8,000 | |
| 6.4. | Early filing of quarterly 10Q report. In addition to the above, should the Company file it quarterly report 10Q earlier than two weeks before the filing deadline executive shall be entitled to a bonus of $8,000 | |
| 6.5. | Timely filing of quarterly 10Q report. In addition to the above, should the Company file it annual report 10K later than two weeks before the filing deadline but nonetheless before the deadline the executive shall be entitled to a bonus of $5,000 | |
| 6.6. | Cost reduction bonus In addition to the aforementioned, should the Company’s costs go down during the term, the executive shall be entitled to a bonus stipulated by the board if at all. | |
| 6.7. | Excess sales bonus. In addition to the aforementioned, in the event that Company’s gross revenue exceeds $100,000,000 in a calendar year during the term of this agreement, the Executive shall be entitled to a bonus stipulated by the board if at all. | |
| 6.8. | M&A transaction bonus In addition to the aforementioned, M&A bonus: should a M&A transaction occur during the term, the executive shall be entitled to a bonus stipulated by the board if at all. | |
| 6.9. | Raising of equity funds bonus. In addition to the aforementioned, in the event that the Company closes on an equity capital raise transaction or transactions the executive shall be entitled to a bonus stipulated by the board if at all. |
| 7. | Stock Grants or Options, (a), Executive shall be eligible to receive additional performance-based stock options or grants in the Company, which will be determined during the duration of Executive’s employment with the Company (the “Employment Period ) and offered both at times and in amounts subject to the Board of Directors’ sole discretion. All such stock options or grants shall be subject to a vesting schedule determined by the Board of Directors. |
| 7.1. | (b)Within thirty days of this Agreement, omniQ Corp. shall grant Executive 10,000 shares of the Common Stock (the “Signing Stock”) of OMNIQ, Corp. Under the Company’s 2021 Stock Incentive Plan and Israel subchapter 102. |
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| 8. | Social and Fringe Benefits |
| 8.1. | Managers’ Insurance Pension Arrangements and social benefits commensurate with customary executive roles in Israel’s high tech industry. | |
| The Company shall insure the Executive under an accepted ‘Managers Insurance’ plan (the “Managers Insurance Policy”) or Pension Fund (the “Pension Fund”), at Executive’s choice, as follows: |
| 8.1.1. | Pension Fund. With respect to such part of the Salary for which allowances will be made into a Pension Fund, the contribution to the Pension Fund shall be calculated, based on such applicable share of the Salary, as follows: 8.33%, towards severance pay and 6.5% towards compensatory payment. Executive shall contribute, and for that purpose he hereby irrevocably authorizes and instructs Company to deduct from the Base Salary at source, an aggregate monthly amount equal to 6% of the Salary as Executive’s premium in respect of the compensatory payments component. | |
| 8.1.2. | Managers’ Insurance. With respect to such part of the Salary for which allowances will be made into a Managers’ Insurance policy, the Company’s contribution to Managers’ Insurance shall be calculated, based on such applicable share of the Salary, as follows: (i) 8.33% towards severance pay; and (ii) 6.5% towards compensatory payments. It is hereby clarified, that Company’s allowances towards compensatory payments includes payments by company towards a disability insurance, in a rate which shall provide for a disability allowance equal to seventy-five percent (75%) of the Executive’s Salary during the disability period of Executive, but not more than 2.5%. In any event, (i) in case the Company shall have to increase allowances for the disability insurance, so that Company’s allowances towards compensatory payments hereunder shall increase beyond 6.5%, the Company shall not be required to make allowances of more than 7.5% of the Salary towards the managers’ insurance and disability insurance combined; (ii) the Company shall not make allowances less than 5% towards the compensatory payments. In addition, Executive shall contribute, and for that purpose he hereby irrevocably authorizes and instructs Company to deduct from the Salary at source, an aggregate monthly amount equal to 6% of the Salary as Executive’s premium in respect of the compensatory payments component. | |
| 8.1.3. | The Executive will bear any and all taxes applicable to the Executive in connection with amounts paid by the Executive and/or the Company to the Managers’ Insurance Policy under this Section 8.1. | |
| 8.1.4. | Company and Executive, respectively declare and covenant that as evidenced by their respective signatures, they hereby undertake to be bound by the general settlement authorized as of 9.6.98 pertaining to Company’s payment to the benefit of pension funds and insurance funds, in place of severance payment in pursuance of the Severance Pay Law, 1963, attached hereto as Exhibit A. | |
| 8.1.5. | It is further agreed that such payment contribution made by Company towards the Manager’s Insurance Policy as above mentioned, shall be in place of severance payment due to Executive under any circumstances in which Executive shall be entitled to severance payment subject to the applicable law, including but not limited to the Severance Pay Law, 1963. |
| 8.2. | Advanced Study Fund |
| 8.2.1. | In addition to the Salary, Company shall contribute an aggregate monthly amount equal to 7.5% of the Salary towards an advanced study fund (Keren Hishtalmut) (the “Advanced Study Fund”) acceptable to Company. | |
| 8.2.2. | Executive shall contribute, and for that purpose, Executive hereby irrevocably authorizes and instructs Company to deduct from his Salary at source, an aggregate monthly amount equal to 2.5% of the Salary as Executive’s participation in such Advanced Study Fund. | |
| 8.2.3. | Executive shall bear any and all taxes applicable in connection with amounts payable by Executive and/or Company to the Advanced Study Fund pursuant to this Section 6.2. | |
| 8.2.4. | Notwithstanding the foregoing, in the event that the Salary shall exceed the recognized ceiling for withholdings that are exempted from taxes under the provisions of applicable law in effect from time to time (the “Advanced Study Fund Ceiling”), Company shall contribute that amount which is equal to 7.5% of the Advanced Study Fund Ceiling only, and Executive shall contribute that amount which is equal to 2.5% of the Advanced Study Fund Ceiling only. |
| 4 |
| 8.2.5. | For the removal of doubt it is hereby clarified, that in the event of termination of Executive’s employment under this Agreement for any reason other than a Termination for Cause (as defined hereinafter) Executive shall be entitled to all sums accumulated in the Advanced Study Fund. In the event of a Termination for Cause (as defined hereinafter) Executive shall not be entitled to any of Company’s contributions to the Advanced Study Fund made during the Term |
| 8.3. | Vacation | |
| Executive shall be entitled to annual leave of 28 days. The scheduling of each vacation shall be coordinated with the company CEO. | ||
| 8.4. | Sick Leave | |
| Executive shall be entitled to sick leave in accordance with the provisions of the Sickness Pay Law, 1976. | ||
| 8.5. | Recreation Pay | |
| Executive shall be entitled to annual recreation pay (Dmey Havra’a) in an amount to be determined in accordance with Israeli regulations as in effect from time to time with respect to such pay. | ||
| 8.6. | Company Car, reimbursement and equipment | |
| 8.7. | The Executive shall be entitled to the use of a new family Company car, which shall be leased or rented by the Company for use by the Executive in accordance with the Company’s policy. The Company shall pay all expenses in connection with the car, and shall reimburse the Executive for all income taxes imposed in connection with his use of the car by way of grossing up (“GILUM”) | |
| 8.8. | The Executive shall be entitled to receive prompt reimbursement of direct expenses reasonably incurred by him in connection with the performance of his duties hereunder provided that written receipts are produced for the same and approved by the Company. | |
| 8.9. | The Company shall furnish the Executive with a mobile phone and a laptop and reimburse the Executive for expenses in connection therewith. |
| 9. | Proprietary Information and Confidentiality |
| 9.1. | Executive is aware that in the course of his employment with Company during the Term and/or in connection therewith, Executive may have access to, and be entrusted with, technical, proprietary, sales, legal, financial, and other data and information with respect to the affairs and business of the Company, its affiliates, customers and suppliers, and including information received by Company from any third party subject to obligations of confidentiality towards said third party, all of which data and information, whether documentary, written, oral or computer generated, shall be deemed to be, and referred to as “Proprietary Information”, which, by way of illustration but not limitation, shall include trade and business secrets, processes, patents, Improvements, ideas, inventions (whether reduced to practice or not), techniques, products, and technologies (actual or planned), financial statements, marketing plans, strategies, forecasts, customer and/or supplier lists and/or relations, research and development activities, formula, data, know-how, designs, discoveries, models, computer hardware and software, drawings, dealings and transactions, except for such information which, on the date of disclosure, is, or thereafter becomes, available in the public domain or is generally known in the industry through no fault on the part of Executive. | |
| 9.2. | Executive agrees and declares that all Proprietary Information, patents and/or patent applications, copyrights and other intellectual property rights in connection therewith, are and shall remain the sole property of Company and its assigns. | |
| 9.3. | During the Term and thereafter, Executive shall keep in confidence and trust all Proprietary Information, and any part thereof, and will not use or disclose and/or make available, directly or indirectly, to any third party any Proprietary Information without the prior written consent of Company, except and to the extent as may be necessary in the ordinary course of performing Executives’ duties pertaining to the Company and except and to the extent as may be required under any applicable law, regulation, judicial decision or determination of any governmental entity. |
| 5 |
| 9.4. | Without derogating from the generality of the foregoing, Executive agrees as follows: |
| 9.4.1. | He will not copy, transmit, reproduce, summarize, quote, publish and/or make any commercial or other use whatsoever of the Proprietary Information, or any part thereof, without the prior written consent of Company, except as may be necessary in the performance of his duties pertaining to the Company; | |
| 9.4.2. | He shall exercise the highest degree of care in safeguarding the Proprietary Information against loss, theft or other inadvertent disclosure and will take all reasonable steps necessary to ensure the maintaining of confidentiality; | |
| 9.4.3. | He shall not enter into the data bases of Company for any purpose whatsoever, including, without limitation, review, download, insert, change, delete and/or relocate any information, except as may be necessary in the performance of his duties pertaining to the Company; | |
| 9.4.4. | Upon termination of his employment, and/or as otherwise requested by Company, he shall promptly deliver to Company all Proprietary Information and any and all copies thereof, in whatever form, that had been furnished to Executive, prepared thereby and/or came to his possession in any manner whatsoever, during and in the course of his employment with Company, and shall not retain and/or make copies thereof in whatever form. |
| 9.5. | Executive acknowledges that any breach by him of his obligations pursuant to this Section 9 would cause substantial damage for which the Company shall hold his liable. | |
| 9.6. | The provisions of this Section 9 shall apply also to any Proprietary Information disclosed to Executive prior to Commencement Date of Employment, and shall survive termination of this Agreement and shall remain in full force and effect at all times thereafter. |
| 10. | Non-Competition and Non-Solicitation |
| 10.1. | Executive hereby covenants that throughout the Term and for a period of twelve (12) months following the effective date of termination of Executive’s employment howsoever arising thereafter, Executive will not: |
| 10.1.1. | Engage, directly or indirectly, whether independently or as an Executive, consultant or otherwise, including by way of ownership of more than 5% of the issued and outstanding share capital (on a fully diluted and as converted basis) of a corporation, through any corporate body and/or with or through others, in any activity, company, corporation, partnership, joint venture and/or other entity of any sort, competing directly with the actual and/or planned activities and/or products of the Company and its affiliates, as same have existed and shall exist from time to time during the Term and thereafter as shall exist at the effective date of termination of his employment with Company. | |
| 10.1.2. | Whether on his own account and/or on behalf of others, in any way offer, solicit, interfere with and/or endeavor to entice away from Company and/or any of its affiliates, any person, firm or company with whom Company and/or any of its affiliates shall have any contractual and/or commercial relationship as an Executive, consultant, licenser, joint venturer, supplier, customer, distributor, agent or contractor of whatsoever nature, existing or under negotiation on or prior to the effective date of termination of Executive’s employment with Company. |
| 10.2 | Executive hereby acknowledges that the provisions of this Section 10 derive from his access to Proprietary Information, and are reasonable and fair. |
| 11. | Inventions |
| 11.1. | Executive agrees to promptly and from time to time fully inform and disclose to Company all inventions, designs, improvements and discoveries which Executive now has or may hereafter have during the Term which pertain to or relate to the Company and its business, as now being conducted and as proposed to be conducted, or to any experimental work performed by Company, whether conceived by Executive alone or with others and whether or not conceived during regular working hours. (“Inventions”). |
| 6 |
| 11.2. | All Inventions, and any and all rights, interests and title therein, shall be the exclusive property of Company and Executive shall not be entitled, and hereby waives now and/or in the future, any claim to any right, compensation and/or reward in connection therewith. | |
| 11.3. | In the event that by operation of law, any Invention shall be deemed Executive’s, the Executive hereby assigns and shall in the future take all the requisite steps (including by way of illustration only, signing all appropriate documents) to assign to Company and/or its designee any and all of his foregoing rights, titles and interests, on a worldwide basis and hereby further acknowledges and shall in the future acknowledge Company’s full and exclusive ownership in all such Inventions. To the extent necessary, Executive shall, during the Term or at any time thereafter, execute all documents and take all steps necessary to effectuate the assignment to Company and/or its designee and/or to assist Company to obtain the exclusive and absolute rights, title and interests in and to all Inventions, whether by the registration of patent, trade mark, trade secret and/or any other applicable legal protection, and to protect same against infringement by any third party. This provision shall apply with equal force and effect to all items that may be subject to copyright or trademark protection. | |
| 11.4. | The provisions of this Section 11 shall survive termination of this Agreement and shall be and remain in full force and effect at all times thereafter. | |
| 11.5. | Without derogating from anything hereinabove, the Company shall be the sole and exclusive owner of any and all materials, including, without limitation, any and all original works of authorship, and all materials, texts, reports, data, and other recorded information, in preliminary or final form, prepared by Consultant as part of the Services (the “Work Product”), including any and all copyrights therein and moral rights. Without derogating from the foregoing, Executive shall not claim any rights of ownership or license to Work Product, including without limitation copyrights and moral rights pertaining to the Services and the Work Product. | |
| It is hereby clarified that Executive will not be entitled to any further consideration for such undertakings, expressly including no entitlement to royalties or any other compensation for any Service Inventions as defined in Section 132 of the Patent Law, 1967 (the “Patent Law”). This clause constitutes an express waiver of any rights Executive may have under Section 134 of the Patent Law. |
| 12. | Term & Termination |
| 12.1. | Except as otherwise provided for herein, the term of this Agreement shall commence on the Commencement Date of and continue thereafter for two (2) years (the “Term”). The Term shall be automatically renewed for successive one (1) year period. At that time, the parties will address and negotiate in good faith any mutually agreeable extension or replacement of this Agreement. Even so, the parties agree that the employment with the Company during the Term and the extension period, notwithstanding the provisions of this Agreement or the potential for any extensions thereof or subsequent agreements, may be terminated by either Executive or the Company for any or no reason, with or without Cause (as defined below), and pursuant to the terms provided below. | |
| 12.2. | Either party may furnish the other party hereto with a written notice that this Agreement is terminated (“Termination Notice”). The Termination Notice may be with or without cause and must be furnished to the other party, at least 90 ( ninety) days prior to the Termination Notice having effect (“Notice Period”). The Termination Notice shall set forth both the date on which said notice is being furnished and the date on which the Termination Notice shall be effective. | |
| 12.3. | In the event that a Termination Notice is delivered by either party hereto, the following shall apply: |
| 12.3.1. | During the Notice Period, Executive shall be obligated to continue to discharge and perform all of his duties and obligations with Company and to take all steps, satisfactory to the Company, to ensure the orderly transition to any persons designated by Company of all matters handled by Executive during the course of his employment with Company. | |
| 12.3.2. | Notwithstanding the above, Company shall be entitled to waive Executive’s services with Company during the Notice Period or any part thereof and/or terminate the employer-employee relationship prior to the completion of the Notice Period; in such events Company shall pay Executive the Salary and provide Executive with, or, in the event of termination of the employer-Executive relationship prior to the completion of the Notice Period, pay Executive the value of, the social and fringe benefits as detailed in Section 8, to which he would otherwise be entitled for the duration of the Notice Period, or any part thereof. |
| 7 |
| 12.3.3. | For the removal of doubt, it is clarified that, in the event Company waives any and/or all of Executive’s services with Company during the Notice Period as aforesaid, Executive shall, immediately, upon receipt of notice of such waiver, return to Company any and all equipment provided to his for purposes of the performance of his duties under this Agreement. |
| 12.4. | The provisions of Sections 12.1 and 12.2 above notwithstanding, Company, by furnishing a notice to Executive, shall be entitled to terminate his employment with Company with immediate effect where said termination is a Termination for Cause. In the event of such termination, without derogating from the rights of Company under this Agreement and/or any applicable law, Executive shall not be entitled to severance pay and/or to any of the consideration specified in Section 10.2 above. In addition, and in the event of the circumstances set forth in Section 6.1.6 above, Executive shall not be entitled to the Company’s contributions to the Manager’s Insurance Policy and/or to the Advanced Study Fund. | |
| 12.5. | As used in this Agreement, the term “Termination for Cause” shall mean termination of Executive’s employment with Company as a result of the occurrence of any one of the following: (i) Executive has committed a dishonorable criminal offense; (ii) Executive is in breach of his duties of trust or loyalty to Company; (iii) Executive deliberately causes harm to Company’s business affairs; (iv) Executive breaches the confidentiality and/or non-competition and/or non-solicitation and/or assignment of inventions provisions of this Agreement; and/or (v) circumstances that do not entitle Executive to severance payments under any applicable law and/or under any judicial decision of a competent tribunal. | |
| 12.6. | Notwithstanding anything to the contrary in Section 12.2 above and without derogating from Company’s rights pursuant to any applicable law, in the event that Executive shall terminate his employment with Company with immediate effect or upon shorter notice than the Notice Period, Company shall have the right to offset the Salary and/or any benefits to which Executive shall have otherwise been entitled for his employment hereunder during the Notice Period, or any part thereof, as the case may be, from any other payments payable to Executive. | |
| 12.7. | Upon termination of Executive’s employment with Company, and as a condition to the fulfillment of Company’s obligations, if any, towards Executive at such time, Executive affirms and undertakes to transfer his Position to his replacement, as shall be determined by Company, in an efficient, complete, appropriate and orderly manner, and to fulfill his obligations under the provisions of the Sections 9 through 11 above. |
| 13. | General Provisions |
| 13.1. | Executive shall not be entitled to any additional bonus, payment or other compensation in connection with his employment with Company, other than as provided herein. | |
| 13.2. | Company shall withhold, or charge Executive with, all taxes and other compulsory payments as required under applicable law with respect to all payments, benefits and/or other compensation paid to Executive in connection with his employment with Company. | |
| 13.3. | Company shall be entitled to offset from any and/or all payments to which Executive shall be entitled thereof, any and/or all amounts to which Company shall be entitled from Executive at such time. | |
| 13.4. | Either party’s failure or delay in enforcing any of the provisions of this Agreement shall not, in any way, be construed as a waiver of any such provisions, or prevent such party thereafter from enforcing each and every other provision of this Agreement which were previously not enforced. | |
| 13.5. | Notices given hereunder shall be in writing and shall be deemed to have been duly given on the date of personal delivery, on the date of postmark if mailed by certified or registered mail, or on the date sent by facsimile upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and electronic confirmation of receipt, addressed as set forth above or such other address as either party may designate to the other in accordance with the aforesaid procedure. | |
| 13.6. | This Agreement shall be interpreted and construed in accordance with the laws of the State of Israel. The parties submit to the exclusive jurisdiction of the competent courts of the State of Israel in any dispute related to this Agreement. | |
| 13.7. | This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matters hereof, and supersedes all prior agreements and understandings between the parties with respect thereto. | |
| 13.8. | Captions and paragraph headings used in this Agreement are for convenience purposes only and shall not be used for the interpretation thereof. Words in the masculine gender shall include the feminine gender. | |
| 13.9. | This Agreement shall not be amended, modified or varied by any oral agreement or representation other than by a written instrument executed by both parties or their duly authorized representatives. | |
| 13.10. | This Agreement shall constitute a “Notice regarding details of Terms of Employment” (the “Notice”) pursuant to the Notice to Executive Law (Terms of Employment), 2002. | |
| 13.11. | Nothing in this notice and/or agreement shall derogate from any right Executive is entitled to according to any law, extension order, collective bargain agreement, or any other contract concerning Executive’s terms of employment |
| 8 |
IN WITNESS WHEREOF, the parties hereto have hereby duly executed this Agreement on the day and year first set forth above.
| Company. | |||
| By: | |||
| Title: | |||
| OMNIQ Corp. Inc. | |||
| By: | |||
| Title: | |||
| 9 |
Exhibit A
GENERAL APPROVAL REGARDING PAYMENTS BY EMPLOYERS TO A PENSION FUND AND INSURANCE FUND IN LIEU OF SEVERANCE PAY
By virtue of my power under section 14 of the Severance Pay Law, 1963 (hereinafter: the “Law”), I certify that payments made by an employer commencing from the date of the publication of this approval publication for his employee to a comprehensive pension benefit fund that is not an insurance fund within the meaning thereof in the Income Tax (Rules for the Approval and Conduct of Benefit Funds) Regulations, 1964 (hereinafter: the “Pension Fund”) or to managers insurance including the possibility of an insurance pension fund or a combination of payments to an annuity fund and to a non-annuity fund (hereinafter: the “Insurance Fund), including payments made by him by a combination of payments to a Pension Fund and an Insurance Fund, whether or not the Insurance Fund has an annuity fund (hereinafter: the “Employer’s Payments), shall be made in lieu of the severance pay due to the said employee in respect of the salary from which the said payments were made and for the period they were paid (hereinafter: the “Exempt Salary”), provided that all the following conditions are fulfilled:
| (1) | The Employer’s Payments - |
| (a) | To the Pension Fund are not less than 141/3% of the Exempt Salary or 12% of the Exempt Salary if the employer pays for his employee in addition thereto also payments to supplement severance pay to a benefit fund for severance pay or to an Insurance Fund in the employee’s name in an amount of 21/3% of the Exempt Salary. In the event the employer has not paid an addition to the said 12%, his payments shall be only in lieu of 72% of the employee’s severance pay; | |
| (b) | To the Insurance Fund are not less than one of the following: |
| (2) | 131/3% of the Exempt Salary, if the employer pays for his employee in addition thereto also payments to secure monthly income in the event of disability, in a plan approved by the Commissioner of the Capital Market, Insurance and Savings Department of the Ministry of Finance, in an amount required to secure at least 75% of the Exempt Salary or in an amount of 21/2% of the Exempt Salary, the lower of the two (hereinafter: “Disability Insurance”); |
| (3) | 11% of the Exempt Salary, if the employer paid, in addition, a payment to the Disability Insurance, and in such case the Employer’s Payments shall only replace 72% of the Employee’s severance pay; In the event the employer has paid in addition to the foregoing payments to supplement severance pay to a benefit fund for severance pay or to an Insurance Fund in the employee’s name in an amount of 21/3% of the Exempt Salary, the Employer’s Payments shall replace 100% of the employee’s severance pay. |
| (4) | No later than three months from the commencement of the Employer’s Payments, a written agreement is executed between the employer and the employee in which - |
| (a) | The employee has agreed to the arrangement pursuant to this approval in a text specifying the Employer’s Payments, the Pension Fund and Insurance Fund, as the case may be; the said agreement shall also include the text of this approval; | |
| (b) | The employer waives in advance any right, which it may have to a refund of monies from his payments, unless the employee’s right to severance pay has been revoked by a judgment by virtue of Section 16 and 17 of the Law, and to the extent so revoked and/or the employee has withdrawn monies from the Pension Fund or Insurance Fund other than by reason of an entitling event; in such regard “Entitling Event” means death, disability or retirement at after the age of 60. |
| (5) | This approval is not such as to derogate from the employee’s right to severance pay pursuant to any law, collective agreement, extension order or employment agreement, in respect of salary over and above the Exempt Salary. |
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
I, Shai Lustgarten, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2022 of OMNIQ Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 | /s/ Shai Lustgarten |
| Shai Lustgarten, | |
| Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
I, Neev Nissenson, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2022 of OMNIQ Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 | /s/ Neev Nissenson |
| Neev Nissenson | |
| Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(b) UNDER
THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 1350 OF
CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE
Each of the undersigned, Shai Lustgarten and Neev Nissenson, certifies pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, that (1) this quarterly report on Form 10-Q for the quarter ended September 30, 2022 of OMNIQ Corp. (the “Company”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and (2) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 14, 2022
| /s/ Shai Lustgarten | |
| Shai Lustgarten, | |
| Chief Executive Officer | |
| /s/ Neev Nissenson | |
| Neev Nissenson | |
| Chief Financial Officer |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||
| ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. 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, 2021 (the “2021 Form 10-K”).
We describe our significant accounting policies in Note 2 of the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021. During nine-month period ended September 30, 2022, there were no significant changes to those accounting policies.
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 nine-months ended September 30, 2022, and 2021 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 anti-dilutive.
|
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LIQUIDITY AND CAPITAL RESOURCES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| LIQUIDITY AND CAPITAL RESOURCES | NOTE 2 – LIQUIDITY AND CAPITAL RESOURCES
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. The following are the principal conditions or events which potentially raise substantial doubt about the company’s ability to continue as a going concern:
These facts and others have in the past raised concerns about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, which we have successfully accomplished to date.
The following conditions, plans and actions are currently being implemented by management to address the Company’s conditions:
Management believes that the aggregate impact of these plans is to mitigate the conditions raising substantial doubt about the Company’s ability to continue as a going concern within one year after the date financial statement issuance.
|
CONCENTRATIONS |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Risks and Uncertainties [Abstract] | |
| CONCENTRATIONS | NOTE 3 – CONCENTRATIONS
For the nine-months ended September 30, 2022 there were no customers concentrations to disclose, and for the year ended December 31, 2021, there were two customer accounted for 23% of the Company’s consolidated revenues.
Accounts receivable at September 30, 2022 and December 31, 2021 are made up of trade receivables due from customers in the ordinary course of business. Two customers made up 44.3% of the accounts receivable balance at September 30, 2022 and one customer represented 17% of the balance of accounts receivable at December 31, 2021.
For the nine months ended September 30, 2022 and the year ended December 31, 2021 one vendor made up 65% and 65%, respectively, of our purchases.
|
BUSINESS ACQUISITION |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Business Combination and Asset Acquisition [Abstract] | |
| BUSINESS ACQUISITION | NOTE 4 – BUSINESS ACQUISITION
Dangot Computers Ltd
On May 3, 2021, the Company and Omniq Technologies Ltd., a wholly owned subsidiary of the Company (“Omniq Technologies”) entered into a share purchase agreement (the “Dangot Share Purchase Agreement”) with Mr. Haim Dangot. The Closing Consideration was paid on July 8, 2021 in the following manner: (a) the Company issued shares of its common stock having a share value of $ thousand and (b) cash in the amount of $ thousand and $ thousand payable to owner.
Effective October 1, 2021, the Company exercised a portion of its option and purchased an additional 26% of Dangot bringing its ownership to 77%. The Company paid $4,012,000 to purchase the additional shares.
On April 1, 2022, the Company closed on its acquisition of Dangot and exercised the remaining portion of its option to purchase 23.0% of the capital stock, thereby making Dangot a fully owned subsidiary of the Company. The Company paid $3,518,000 to purchase the additional shares. The Company utilized its working capital and a combination of short and long term loans.
|
CREDIT FACILITIES AND LINE OF CREDIT |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Debt Disclosure [Abstract] | |
| CREDIT FACILITIES AND LINE OF CREDIT | NOTE 5 – CREDIT FACILITIES AND LINE OF CREDIT
We maintain operating lines of credit, factoring and revolving credit facilities with banks and finance companies to provide us working capital.
On March 25, 2022 we entered into a Business Finance Agreement (the “BFA”) with BridgeBank a division of Western Alliance Bank (“BridgeBank”) to establish the sale of accounts receivable credit facility, whereby we may obtain short-term financing by selling and assigning acceptable accounts receivables to BridgeBank. Pursuant to the BFA, the outstanding principal amount of advances made by BridgeBank at any time shall not exceed $8.5 million. BridgeBank reserves and withholds to 15% of the face amount of each account purchased in a reserve account. During the nine months ended September 30, 2022 we had a net borrowing of an additional $1.8 million on the line and incurred $645 thousand in origination fees. As a result of entering into the BFA we have paid off and terminated the Factoring and Security Agreement with Action Capital. See notes 11 and 19 the 2021 Form 10-K.
The annual interest rate with respect to the daily average balance of unpaid advances outstanding under the BFA (computed on a monthly basis) is equal to the “Prime Rate” of Wells Fargo Bank N.A. plus 1.5%, plus a monthly fee equal to 0.15% of the average outstanding balance. The BFA credit facility is collateralized with a senior security interest in certain assets of the Company. The BFA includes customary representations and warranties and default provisions for transactions of this type.
|
RELATED PARTY NOTES PAYABLE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY NOTES PAYABLE | NOTE 6 – RELATED PARTY NOTES PAYABLE
Related party notes payable, consisted of the following as of:
Note Payable -Marin
In December 2017, we entered into a $660 thousand, 1.89% annual interest rate note payable (the “Marin Note”) with two individuals from whom we previously acquired their company (in 2014). The Marin Note is payable in 60 monthly principal payments of $20 thousand beginning in October 2018. Accrued interest payable as of September 30, 2022, was $71 thousand. Accrued interest is payable at maturity.
Note Payable – Thomet
In December 2017, we entered into a $750 thousand, zero percent annual interest rate note payable (the “Thomet Note”) with an individual from whom we previously acquired his company (in 2014). The Thomet Note is payable in 60 monthly principal payments of $13 thousand beginning in October 2018.
Future maturities of related party notes payable as of September 30, 2022, are as follows:
In thousands
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NOTES PAYABLE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES PAYABLE | NOTE 7 – NOTES PAYABLE
Note Payable - Supplier
On July 18, 2016, the Company and the Supplier entered into a certain secured promissory note, with an effective date of July 1, 2016, in the principal amount of $12.5 million (the “Secured Promissory Note”). The USD Note accrues interest at 18% per annum and is payable in six consecutive monthly installments of principal and accrued interest in a minimum principal amount of $250 thousand each, with any remaining principal and accrued interest due and payable on December 31, 2016.
Notes Payable other
On July 29, 2021 the Company entered into a long-term loan from Leumi Bank totaling NIS 7 million, which at the time was approximately $2.16 million. The note accrues interest at 4.7% per annum and is payable in 8 installments of principal and interest over 4 years. The note is secured by shares of Dangot Computers, Ltd.
On November 28, 2021 the Company entered into another long-term loan from Leumi Bank totaling NIS 3.5 million, which at the time was approximately $1.1 million. The note accrues interest at 7% per annum and is payable in 8 installments of principal and interest over 4 years. The note is secured by shares of Dangot Computers, Ltd.
During the year ended December 31, 2021, the Company entered into five lines of credit totaling NIS 17.5 million, as of September 30, 2022 the outstanding balance was NIS 17.5 million, approximately $4.9 million.
On August 11, 2021, the Company purchased vehicles using cash and financing of NIS 500 thousand, approximately $155 thousand, to be paid off in monthly interest and principal payments over 5 years. The loan accrues interest at 7.5% per annum and is secured by the vehicles. As of September 30, 2022, the remaining balance was NIS 231 thousand, which was approximately $65 thousand.
On March 27, 2022 the Company entered into another long-term loan from Leumi Bank totaling NIS 3.5 million, which at the time was approximately $1.1 million. The note accrues interest at 7% per annum and is payable in 8 installments of principal and interest over 4 years. The note is secured by shares of Dangot Computers, Ltd.
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OTHER LIABILITIES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHER LIABILITIES | NOTE 8 – OTHER LIABILITIES
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STOCKHOLDERS’ EQUITY |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Equity [Abstract] | |
| STOCKHOLDERS’ EQUITY | NOTE 9 – STOCKHOLDERS’ EQUITY
PREFERRED STOCK
Series A
As of September 30, 2022, there were Series A preferred shares designated and Series A preferred shares outstanding. The board of directors of the Company (the “Board”) had previously set the voting rights for the Series A preferred stock at 1 share of preferred to 250 common shares.
Series B
As of September 30, 2022, there was preferred share designated and preferred shares outstanding.
Series C
As of September 30, 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 $1 per share. Series C shares outstanding are convertible into common stock at the rate of 20 preferred shares to one share of common stock. As of September 30, 2022, the accrued dividends on the Series C Preferred Stock was $71 thousand.
The Series C Preferred Stock has a liquidation value and conversion price of $1.00 per share ($20.00 per 20 shares of preferred stock which convert to one share of common stock) and automatically converts into Common Stock at $1.00 per share ($20.00 per 20 shares of preferred stock which convert to one share of common stock) in the event that the Company’s common stock has a closing price of $30 per share for 20 consecutive trading days.
COMMON STOCK
In October 2021, OMNIQ’ Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain in the employ of and attract new employees, directors, officers, consultants, advisors and employees to the Company. Pursuant to the Plan, shares of the Company’s common stock, par value $ (the “Shares”), were set aside and reserved for issuance. The Plan approved by our stockholders at the December 2021, shareholders’ meeting. shares were issued under the Plan in 2021. On February 25, 2022, the Company granted stock options. These options were granted to employees as part of the Company’s Equity Incentive Plan.
For the nine months ending September 30, 2022, $147 thousand in stock options and stock warrants were exercised in exchange for shares of OMNIQ common stock.
In December 2015, our Board of Directors approved the OMNIQ. Employee Stock Purchase Plan (the “ESPP”). For the nine months ending September 30, 2022 employees purchased shares or $27 thousand of common stock.
On June 15, 2022 our Board of Directors approved issuing shares as part of a consulting agreement. The shares were valued at $109 thousand.
On June 15, 2022 our Board of Directors granted warrants as part of a consulting agreement. The shares were valued at $176 thousand.
On June 15, 2022 our Board of Directors granted stock options as part of a consulting agreement. The shares were valued at $173 thousand.
On August 8, 2022 our Board of Directors approved issuing shares as compensation for executives valued at $ thousand. As of September 30, 2022 the shares have not been issued.
On August 8, 2022 our Board of Directors approved issuing warrants as part of a consulting agreement valued at $ thousand.
|
LITIGATION |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| LITIGATION | NOTE 10 – LITIGATION
The Company was named a defendant in a case involving a former employee who claims he is owed approximately $60 thousand in unpaid commissions. The Company’s intends to defend the case. This case was filed in the Superior Court of the State of California, County of San Diego on October 21, 2020.
The company is not a party to any other pending material legal proceeding in which it is defending against any claims of material significance. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
|
SUBSEQUENT EVENTS |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS
On October 23, 2022, the Company granted stock options valued at $ thousand to certain employees under the Company’s 2021 Equity Incentive Plan. |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||
| Net Loss Per Common Share |
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic EPS for the nine-months ended September 30, 2022, and 2021 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 anti-dilutive.
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNINGS PER SHARE |
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RELATED PARTY NOTES PAYABLE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF NOTES PAYABLE, RELATED PARTIES | Related party notes payable, consisted of the following as of:
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| SCHEDULE OF FUTURE MATURITIES OF NOTES PAYABLE, RELATED PARTIES | Future maturities of related party notes payable as of September 30, 2022, are as follows:
In thousands
|
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NOTES PAYABLE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF OTHER NOTES PAYABLE |
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OTHER LIABILITIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF OTHER LIABILITIES |
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SCHEDULE OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNINGS PER SHARE (Details) - shares shares in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Potential shares excluded from diluted net loss per share | 3,656 | 3,058 |
| Share-Based Payment Arrangement, Option [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Potential shares excluded from diluted net loss per share | 2,174 | 1,654 |
| Warrant [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Potential shares excluded from diluted net loss per share | 1,482 | 1,404 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Weighted-average number of common shares outstanding | 7,558,311 | 5,971,440 |
CONCENTRATIONS (Details Narrative) - Customer Concentration Risk [Member] |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
| Revenue Benchmark [Member] | Two Customers [Member] | ||
| Concentration Risk [Line Items] | ||
| Concentration risk percentage | 23.00% | |
| Accounts Receivable [Member] | Two Customer [Member] | ||
| Concentration Risk [Line Items] | ||
| Concentration risk percentage | 44.30% | |
| Accounts Receivable [Member] | One Customer [Member] | ||
| Concentration Risk [Line Items] | ||
| Concentration risk percentage | 17.00% | |
| Accounts Payable [Member] | One Vendor [Member] | ||
| Concentration Risk [Line Items] | ||
| Concentration risk percentage | 65.00% | 65.00% |
BUSINESS ACQUISITION (Details Narrative) - USD ($) |
Apr. 02, 2022 |
Oct. 02, 2021 |
Jul. 08, 2021 |
Oct. 01, 2021 |
|---|---|---|---|---|
| Dangot Computers Ltd [Member] | ||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
| Purchase of additional option percent | 23.00% | 26.00% | ||
| Ownership percentage | 77.00% | |||
| Stock issued during period, value, purchase of assets | $ 3,518,000 | $ 4,012,000 | ||
| Dangot Share Purchase Agreement [Member] | ||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
| Stock issued during period, shares | 220,103 | |||
| Stock issued during period, value | $ 2,084,000 | |||
| Cash | 5,058,000 | |||
| Accrued payable to owner | $ 600,000 |
CREDIT FACILITIES AND LINE OF CREDIT (Details Narrative) - USD ($) $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
Mar. 25, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Line of Credit Facility [Line Items] | |||
| Proceeds from line of credit | $ 1,879 | $ 926 | |
| Business Finance Agreement [Member] | Bridge Bank [Member] | |||
| Line of Credit Facility [Line Items] | |||
| Line of credit facility maximum borrowing capacity | $ 8,500 | ||
| Percentage of reserve account | 15.00% | ||
| Proceeds from line of credit | 1,800 | ||
| Line of credit, origination fees | $ 645 | ||
| Line of credit, interest rate, description | The annual interest rate with respect to the daily average balance of unpaid advances outstanding under the BFA (computed on a monthly basis) is equal to the “Prime Rate” of Wells Fargo Bank N.A. plus 1.5%, plus a monthly fee equal to 0.15% of the average outstanding balance | ||
SCHEDULE OF NOTES PAYABLE, RELATED PARTIES (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2017 |
|---|---|---|---|
| Short-Term Debt [Line Items] | |||
| Total notes payable | $ 390 | $ 683 | |
| Less current portion | (390) | (390) | |
| Long-term portion | 293 | ||
| Note Payable - Marin [Member] | |||
| Short-Term Debt [Line Items] | |||
| Total notes payable | 240 | 420 | $ 660 |
| Note Payable - Thomet [Member] | |||
| Short-Term Debt [Line Items] | |||
| Total notes payable | $ 150 | $ 263 | $ 750 |
SCHEDULE OF FUTURE MATURITIES OF NOTES PAYABLE, RELATED PARTIES (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| Related Party Transactions [Abstract] | |
| 2022 | $ 98 |
| 2023 | 292 |
| Total | $ 390 |
RELATED PARTY NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands |
1 Months Ended | |||
|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Aug. 11, 2021 |
|
| Short-Term Debt [Line Items] | ||||
| Notes payable related parties | $ 390 | $ 683 | ||
| Debt instrument, percentage | 7.50% | |||
| Note Payable - Marin [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Notes payable related parties | $ 660 | 240 | 420 | |
| Debt instrument, percentage | 1.89% | |||
| Debt instrument, frequency of periodic payment | 60 | |||
| Debt instrument, principal periodic payments | $ 20 | |||
| Accrued interest | 71 | |||
| Note Payable - Thomet [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Notes payable related parties | $ 750 | $ 150 | $ 263 | |
| Debt instrument, percentage | 0.00% | |||
| Debt instrument, frequency of periodic payment | 60 | |||
| Debt instrument, principal periodic payments | $ 13 |
SCHEDULE OF OTHER NOTES PAYABLE (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Total | $ 10,850 | $ 10,167 |
| Less current portion | (7,995) | (7,521) |
| Long Term Notes Payable | 2,855 | 2,646 |
| Note Payable Supplier [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total | 2,243 | |
| Note Payable Other [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total | $ 10,850 | $ 7,924 |
SCHEDULE OF OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Other Liabilities Disclosure [Abstract] | ||
| Other vendor payable | $ 801 | $ 801 |
| Dividend payable | 145 | 1,418 |
| Others | 1,757 | 1,882 |
| Total other liabilities | 2,703 | 4,101 |
| Less Current Portion | (2,558) | (2,683) |
| Total long term other liabilities | $ 145 | $ 1,418 |
LITIGATION (Details Narrative) $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| Accrued liabilities for commissions, expense and taxes | $ 60 |
SUBSEQUENT EVENTS (Details Narrative) - Two Thousand And Twenty One Equity Incentive Plan [Member] - Subsequent Event [Member] $ in Thousands |
Oct. 23, 2022
USD ($)
shares
|
|---|---|
| Subsequent Event [Line Items] | |
| Number of shares grant | shares | 19,000 |
| Number of shares grant, value | $ | $ 91 |
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