STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 14 – STOCKHOLDERS’ EQUITY

PREFERRED STOCK

Series A

As of December 31, 2022 and 2021, there were 2,000,000 Series A preferred shares authorized and zero Series A preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 13 common shares.

Series B

As of December 31, 2022 and 2021, there was one (1) preferred share authorized and zero preferred shares outstanding.

Series C

As of December 31, 2022 and 2021, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 544,500 and 544,500 issued and outstanding, respectively. The Series C shares have preferential rights above common shares and the Series B Preferred Shares and is entitled to receive a quarterly dividend at a rate of $0.06 per share per annum and have a liquidation preference of $1 per share. Series C shares outstanding are convertible into common stock at the rate of 20 preferred shares to one share of common stock. As of December 31, 2022 and 2021, the accrued dividends on the Series C Preferred Stock was $153 thousand and $126 thousand, respectively.

In 2021, certain holders of Series C Shares elected to convert $1.6 million or 1,600,530 Series C shares and $194 thousand in accrued dividends in exchange for 105,551 OMNIQ common stock shares.

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, 1,118,856 shares of the Company’s common stock, par value $0.001 (the “Shares”), were set aside and reserved for issuance. The Plan approved by our stockholders at the December 2021, shareholders’ meeting. 841,500 shares were issued to employees and consultants in 2022, and no shares were issued under the Plan in 2021.

In August 2020, 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, one million (1,000,000) shares of the Company’s common stock, par value $0.001 (the “Shares”), were set aside and reserved for issuance. The Plan approved by our stockholders at the September 2020, shareholders’ meeting. No shares were issued under the Plan in 2021, or 2022.

In December 2015, our Board of Directors approved the OMNIQ. Employee Stock Purchase Plan (the “ESPP”). For the years ending December 31, 2022 and 2021, employees purchased 7,025 ($37 thousand) shares and 2,186 ($16 thousand) shares of commons stock.

Warrants and Stock Options

In connection with the July 2021 Securities Purchase Agreement previously described, we issued warrants to purchase 171,429 shares of our common stock at an exercise price equal to $7.70 per Warrant Share, which warrants are exercisable for a period of five years from the issuance date. The warrants were valued at $1.3 million.

Options and warrants are valued at the grant date using the Black-Scholes valuation methodology. The Company determines the assumptions used in the valuation of warrants and option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options and warrants granted throughout the year.

The valuation assumptions used to determine the fair value of each option and warrant awarded in 2022: expected stock price volatility ranged from 104.33 to 126.44%; expected term in years 3.25; and risk-free interest rate ranged from 1.76% to 4.52%.

The valuation assumptions used to determine the fair value of each warrant awarded in 2021: expected stock price volatility 151.0% expected term in years 5; and risk-free interest rate 0.41%.

No additional options were issued in 2021.

No warrants were exercised during the year ended December 31, 2022.

For warrants exercised during the year ended December 31, 2021, the difference between the fair value of the Common Stock issued and the respective exercise price was $683 thousand.

The following table summarizes information about warrants granted during the years ended December 31:

	2022				2021
	Number of Warrants		Weighted Average Exercise Price		Number of Warrants		Weighted Average Exercise Price
Balance, beginning of year		1,378,929	$	7.40		1,366,667	$	7.19
Warrants granted		112,805		6.59		171,429		7.70
Warrants expired		10,000		8.00		40,000		10.00
Warrants exercised		-				119,167		6.99
Balance, end of year		1,481,734		7.34		1,378,929		7.40
Exercisable warrants		1,424,234	$	7.38		1,295,596	$	6.38

Outstanding warrants as of December 31, 2022 are as follows:

	Weighted Average				Weighted				Weighted
Range of	Residual Life				Average				Average
Exercise	Span		Outstanding		Exercise		Exercisable		Exercise
Prices	(in years)		Warrants		Price		Warrants		Price
5.91		4.33		40,000	$	5.91		5,000	$	5.91
6.95		4.23		42,805		6.95		42,805		6.95
7.00		2.62		847,500		7.00		855,000		7.00
7.50		3.68		250,000		7.50		250,000		7.50
7.70		3.52		171,429		7.70		171,429		7.70
10.00		0.39		100,000		10.00		100,000		10.00
5.91 to 10.00		2.41		1,481,734	$	7.34		1,424,234	$	7.38

Warrants outstanding have the following expiry date and exercise prices as of the years ended December 31:

	Exercise
Expiry Date	Prices		2022		2021
February 27, 2022		8.00		-		10,000
May 18, 2023		10.00		50,000		50,000
October 14, 2023		10.00		50,000		50,000
October 06, 2024		7.00		847,500		847,500
September 01, 2025		7.50		83,334		83,334
June 04, 2026		7.50		83,333		83,333
July 7, 2026		7.70		171,429		171,429
December 04, 2027		7.50		83,333		83,333
March 25, 2027		6.95		42,805		-
May 1, 2027		7.00		30,000		-
May 1, 2027		5.91		40,000		-
				1,481,734		1,378,929

We have a stock option plan whereby the Board of Directors, may grant to directors, officers, employees, or consultants of the Company options to acquire common shares. The Board of Directors of the Company has the authority to determine the terms, limits, restrictions and conditions of the grant of options, to interpret the plan, and make all decisions relating thereto. The plan was adopted by the Company’s Board of Directors on November 17, 2014 in order to provide an inducement and serve as a long-term incentive program. The maximum number of common shares that may be reserved for issuance was set at 500,000.

The option exercise price is established by the Board of Directors and may not be lower than the market price of the common shares at the time of grant. The options may be exercised during the option period determined by the Board of Directors, which may vary, but will not exceed ten years from the date of the grant. There are 500,000 of the Company’s common shares which may be issued pursuant to the exercise of share options granted under the Plan.

For options exercised during the year ended December 31, 2022, the difference between the fair value of the Common Stock issued and the respective exercise price was $369 thousand. As of December 31, 2022, the intrinsic value for vested stock options was $477 thousand.

For options exercised during the year ended December 31, 2021, the difference between the fair value of the Common Stock issued and the respective exercise price was $1.5 million. As of December 31, 2021, the intrinsic value for vested stock options was $6.6 million.

Stock Options - The following table summarizes information about stock options granted during the years ended December 31,

	2022				2021
	Number of Stock Options		Weighted Average Exercise Price		Number of Stock Options		Weighted Average Exercise Price
Balance, beginning of year		1,559,300	$	4.58		1,811,550	$	4.32
Stock options granted		841,500		-		-		-
Stock options expired		-		-		28,750		-
Stock options cancelled, forfeited		9,000		-		-		-
Stock options exercised		201,217		-		223,500		-
Balance, end of year		2,190,583		5.00		1,559,300		4.58
Exercisable stock options		1,420,312	$	4.96		1,065,133	$	4.56

Stock options outstanding at the end of the year have the following expiry date and exercise prices as of December 31,

	Exercise
Expiry Date	Prices		2022		2021
February 17, 2022		1.50		-		38,017
February 17, 2022		1.80		-		76,033
February 28, 2023		5.00		20,000		20,000
March 05, 2023		2.40		242,000		247,000
July 31, 2023		5.00		127,500		127,500
October 31, 2023		4.40		10,000		54,000
November 30, 2023		5.40		120,250		131,750
November 20, 2024		10.00		125,000		125,000
April 20, 2025		4.20		10,000		10,000
March 1, 2027		5.14		648,500		-
March 1, 2027		5.65		140,000		-
May 1, 2027		5.90		30,000		-
October 31, 2027		5.98		19,000		-
September 30, 2030		4.40		318,333		350,000
September 30, 2030		4.84		380,000		380,000
				2,190,583		1,559,300

We recorded stock compensation expense relating to the vesting of stock options and warrants as follows for the years ended December 31,

	2022		2021
In thousands
Stock compensation	$	1,321	$	951
Stock Option vesting		1,852		1,600
Total	$	3,173	$	2,551