STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 14 – STOCKHOLDERS’ EQUITY

PREFERRED STOCK

Series A

As of December 31, 2023 and 2022, 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, 2023 and 2022, there was one preferred share authorized and zero preferred shares outstanding.

Series C

As of December 31, 2023 and 2022, there were 3,000,000 Series C Preferred Shares (“Series C”) authorized with 502,000 and 544,500 issued and outstanding, respectively. The Series C shares have preferential rights above common shares and the Series B Preferred Shares, are 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, 2023 and 2022, the accrued dividends on the Series C Preferred Stock was $181 thousand and $153 thousand, respectively.

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’s Board of Directors adopted an Equity Incentive Plan (the “Plan”), as an incentive to retain 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 was approved by our stockholders at the December 2021, shareholders’ meeting. On February 25, 2022, the Company granted 792,500 stock options. These options were granted to employees as part of the Plan. On October 23, 2022 19,000 stock options were granted to employees as part of the Plan. No shares were issued under the Plan in 2023.

In December 2015, our Board of Directors approved the OMNIQ’s Employee Stock Purchase Plan (the “ESPP”). For the years ending December 31, 2023 and 2022, employees purchased 14,838 ($31 thousand) shares and 7,025 ($37 thousand) shares of commons stock.

On October 5, 2023, OmniQ Corp. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with ThinkEquity LLC, as representatives (the “Representatives”) of the several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale (the “Offering”) of 2,775,000 shares of the Company’s common stock, par value $0.001 per share, at a price to the public of $1.00 per share (the “Underwritten Shares”) and pre-funded warrants (the “Pre-Funded Warrants”) to purchase 225,000 shares of the Company’s common stock at a price to the public of $0.999 per Pre-Funded Warrant. Under the terms of the Underwriting Agreement, the Underwriters have agreed to purchase the Underwritten Shares from the Company at a price of $1.00 per share and the Pre-Funded Warrants at a price of $0.999 per Pre-Funded Warrant. The Company also granted the Underwriters an option exercisable for 45 days from the date of the Underwriting Agreement to purchase up to an additional 450,000 shares of common stock solely for the purpose of covering over-allotments (together with the Underwritten Shares, the “Shares”). All of the Shares and Pre-Funded Warrants in the Offering are being sold by the Company. The Company also issued warrants to the Representative (the “Representative’s Warrants”), exercisable to purchase 140,000 shares of common stock, at an exercise price of $1.25 per share.

The gross proceeds from the Offering were approximately $3.0 million before deducting underwriting discounts and commissions and other offering expenses payable by the Company and assuming no exercise of the Underwriters’ option to purchase additional shares.

Warrants and Stock Options

The valuation assumptions used to determine the fair value of each option and warrant awarded during the year ended December 31, 2023 are as follows: expected stock price volatility 126.44%, expected term in years 3.25, and risk-free interest rate 4.73%. The estimated fair value of the warrants were $.55.

The valuation assumptions used to determine the fair value of each option and warrant awarded during the year ended December 31, 2022 are as follows: 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%.

No warrants were exercised during the years ended December 31, 2023 or 2022.

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

	2023					2022
	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price
Balance, beginning of year		1,481,734		$	7.34		1,378,929		$	7.40
Warrants granted		225,000			1.00		112,805			6.59
Warrants expired		(100,000	)		10.00		(10,000	)		8.00
Warrants exercised		-			-		-			-
Balance, end of year		1,606,734			6.28		1,481,734			7.34
Exercisable warrants		1,359,234		$	7.16		1,424,234		$	7.38

Outstanding warrants as of December 31, 2023 are as follows:

Range of Exercise Prices		Weighted Average Residual Life Span (in years)		Outstanding Warrants		Weighted Average Exercise Price		Exercisable Warrants		Weighted Average Exercise Price
	1.00		4.78		225,000	$	1.00		-	$	1.00
	5.91		3.33		40,000		5.91		25,000		5.91
	6.95		3.23		42,805		6.95		42,805		6.95
	7.00		1.62		877,500		7.00		870,000		7.00
	7.50		2.68		250,000		7.50		250,000		7.50
	7.70		3.52		171,429		7.70		171,429		7.70
	1.00 to 10.00		2.68		1,606,734	$	6.28		1,359,234	$	7.16

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

Expiry Date	Exercise Prices		2023		2022
May 18, 2023		10.00		-		50,000
October 14, 2023		10.00		-		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		42,805
May 1, 2027		7.00		30,000		30,000
May 1, 2027		5.91		40,000		40,000
October 11, 2028		1.00		225,000		-
				1,606,734		1,481,734

We have a stock option plan whereby the Board of Directors may grant directors, officers, employees, or consultants of the Company options to acquire common shares. The Board of Directors has the authority to determine the terms, limits, restrictions and conditions, interpret the plan, and make all decisions relating thereto. The current plan was adopted by the board of directors in December 2021 with a maximum of 1,118,856 shares to be issued.

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.

For options exercised during the year ended December 31, 2023, the difference between the fair value of the Common Stock issued and the respective exercise price was $373 thousand. As of December 31, 2023, the intrinsic value for vested stock options was $0.

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.

As of December 31, 2023 the total compensation cost related to nonvested awards not yet recognized was $355 thousand. The weighted average period over which it is expected to be recognized is 2 months.

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

	2023					2022
	Number of Stock  Options			Weighted Average Exercise Price		Number of Stock  Options			Weighted Average Exercise Price
Balance, beginning of year		2,190,583		$	5.00		1,559,300		$	4.58
Stock options granted		-			-		841,500			-
Stock options expired		(287,750	)		-		-			-
Stock options cancelled, forfeited		(208,574	)		-		(9,000	)		-
Stock options exercised		(235,426	)		-		(201,217	)		-
Balance, end of year		1,458,833			4.97		2,190,583			5.00
Exercisable stock options		1,354,896		$	4.94		1,420,312		$	4.96

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

Expiry Date	Exercise Prices		2023		2022
February 28, 2023		5.00				20,000
March 05, 2023		2.40				242,000
July 31, 2023		5.00				127,500
October 31, 2023		4.40				10,000
November 30, 2023		5.40				120,250
November 20, 2024		10.00				125,000
April 20, 2025		4.20		10,000		10,000
March 1, 2027		5.14		563,500		648,500
March 1, 2027		5.65		140,000		140,000
May 1, 2027		5.90		30,000		30,000
October 31, 2027		5.98		17,000		19,000
September 30, 2030		4.40		318,333		318,333
September 30, 2030		4.84		380,000		380,000
				1,458,833		2,190,583

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

	2023		2022
In thousands
Stock Compensation	$	273	$	1,321
Stock Option vesting		1,682		1,852
Total	$	1,955	$	3,173