false FY 0000278165

 14868
 P2Y

 0.03 0.03 0.76 0.44

 2023-06-30

 2024-03-14

 us-gaap: NonrelatedPartyMember

 us-gaap: NonrelatedPartyMember

 us-gaap: SeriesAPreferredStockMember

 us-gaap: SeriesAPreferredStockMember

 us-gaap: SeriesBPreferredStockMember

 us-gaap: SeriesBPreferredStockMember

 us-gaap: TradeNamesMember

 us-gaap: TradeNamesMember

 us-gaap: CustomerRelationshipsMember

 us-gaap: CustomerRelationshipsMember

 us-gaap: OtherIntangibleAssetsMember

 us-gaap: OtherIntangibleAssetsMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: ComputerEquipmentMember

 us-gaap: ComputerEquipmentMember

 us-gaap: OfficeEquipmentMember

 us-gaap: OfficeEquipmentMember

 us-gaap: SoftwareDevelopmentMember

 us-gaap: LeaseholdImprovementsMember

 us-gaap: VehiclesMember

 us-gaap: AccountsPayableMember
 us-gaap: SupplierConcentrationRiskMember
 OMQS:TwoVendorsMember

 us-gaap: AccountsPayableMember
 us-gaap: SupplierConcentrationRiskMember
 OMQS:OneVendorMember

 us-gaap: EmployeeStockOptionMember

 us-gaap: EmployeeStockOptionMember

 OMQS:BlueStarMember

 2023-10-01
 2023-10-31

 OMQS:DangotComputersLimitedMember

 OMQS:OmniqTechnologiesMember

 2021-07-07
 2021-07-08

 2021-07-08

 OMQS:HaimDangotMember

 OMQS:HaimDangotMember

 OMQS:HaimDangotMember

 2021-10-02

 OMQS:HaimDangotMember

 2021-10-02

 2022-04-01
 2022-04-01

 OMQS:DangotComputersLimitedMember

 OMQS:DangotComputersLimitedMember

 us-gaap: AccountsReceivableMember
 us-gaap: CustomerConcentrationRiskMember
 OMQS:CustomerMember

 OMQS:ManufacturingAndLabEquipmentMember

 OMQS:ManufacturingAndLabEquipmentMember

 us-gaap: LeaseholdImprovementsMember

 us-gaap: ComputerEquipmentMember

 us-gaap: ComputerEquipmentMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: VehiclesMember

 us-gaap: FiniteLivedIntangibleAssetsMember

 us-gaap: FiniteLivedIntangibleAssetsMember

 OMQS:BusinessFinanceAgreementMember
 OMQS:BridgeBankMember

 OMQS:BusinessFinanceAgreementMember
 OMQS:BridgeBankMember

 OMQS:BusinessFinanceAgreementMember
 OMQS:BridgeBankMember

 2022-03-23
 2022-03-25

 OMQS:NotePayableMarinMember

 OMQS:NotePayableMarinMember

 OMQS:NotePayableMarinMember

 2017-12-31

 OMQS:NotePayableMarinMember

 2017-12-01
 2017-12-31

 2017-12-31

 2017-12-01
 2024-12-31

 2017-12-01
 2017-12-31

 OMQS:NotePayableOtherMember

 OMQS:NotePayableOtherMember

 OMQS:OtherNotePayableMember

 OMQS:LeumiBankMember

 2021-07-29

 OMQS:LeumiBankMember
 OMQS:IsraeliPrimeRateMember

 2021-07-29

 OMQS:LeumiBankMember

 2021-07-28
 2021-07-29

 2021-08-11

 2021-08-10
 2021-08-11

 OMQS:HapoalimBankMember

 2022-09-13

 OMQS:HapoalimBankMember

 OMQS:LeumiBankMember

 OMQS:TzameretMember

 2023-09-21

 OMQS:TzameretMember

 2023-09-21
 2023-09-21

 OMQS:SaltLakeCityUTMember

 OMQS:SaltLakeCityUTMember

 OMQS:AnaheimCAMember

 OMQS:AnaheimCAMember

 OMQS:YadHarutzimMember
 OMQS:DangotComputersLtdMember

 OMQS:YadHarutzimMember
 OMQS:DangotComputersLtdMember

 OMQS:YadHarutzimMember
 OMQS:GamdanMember

 OMQS:YadHarutzimMember
 OMQS:GamdanMember

 OMQS:RivalStreetMember

 OMQS:RivalStreetMember

 srt: DirectorMember

 OMQS:EquityIncentivePlanMember

 2021-10-01
 2021-10-31

 OMQS:EquityIncentivePlanMember

 2021-10-31

 OMQS:EmployeesAndConsultantsMember

 2022-02-25
 2022-02-25

 OMQS:EmployeesAndConsultantsMember

 2022-10-23
 2022-10-23

 OMQS:EmployeeStockPurchasePlanMember

 OMQS:EmployeeStockPurchasePlanMember

 OMQS:UnderwritingAgreementMember

 OMQS:UnderwritingAgreementMember

 OMQS:PreFundedWarrantsMember

 OMQS:PreFundedWarrantsMember

 OMQS:UnderwrittenSharesMember

 OMQS:UnderwrittenSharesMember

 OMQS:WarrantsMember

 srt: DirectorMember
 OMQS:SharePurchaseOptionPlanMember

 2021-01-01

 OMQS:ExercisePriceRangeOneMember

 OMQS:ExercisePriceRangeOneMember

 OMQS:ExercisePriceRangeTwoMember

 OMQS:ExercisePriceRangeTwoMember

 OMQS:ExercisePriceRangeThreeMember

 OMQS:ExercisePriceRangeThreeMember

 OMQS:ExercisePriceRangeFourMember

 OMQS:ExercisePriceRangeFourMember

 OMQS:ExercisePriceRangeFiveMember

 OMQS:ExercisePriceRangeFiveMember

 OMQS:ExercisePriceRangeSixMember

 OMQS:ExercisePriceRangeSixMember

 OMQS:MayEighteenTwoThousandTwentyThreeMember

 OMQS:MayEighteenTwoThousandTwentyThreeMember

 OMQS:OctoberFourteenTwoThousandTwentyThreeMember

 OMQS:OctoberFourteenTwoThousandTwentyThreeMember

 OMQS:OctoberSixTwoThousandTwentyFourMember

 OMQS:OctoberSixTwoThousandTwentyFourMember

 OMQS:SeptemberOneTwoThousandTwentyFiveMember

 OMQS:SeptemberOneTwoThousandTwentyFiveMember

 OMQS:JuneFourTwoThousandTwentySixMember

 OMQS:JuneFourTwoThousandTwentySixMember

 OMQS:JulySevenTwoThousandTwentySixMember

 OMQS:JulySevenTwoThousandTwentySixMember

 OMQS:DecemberFourTwoThousandTwentySevenMember

 OMQS:DecemberFourTwoThousandTwentySevenMember

 OMQS:MarchTwentyFifthTwoThousandTwentySevenMember

 OMQS:MarchTwentyFifthTwoThousandTwentySevenMember

 OMQS:MayFirstTwoThousandTwentySevenMember

 OMQS:MayFirstTwoThousandTwentySevenMember

 OMQS:MayFirstTwoThousandTwentySevenOneMember

 OMQS:MayFirstTwoThousandTwentySevenOneMember

 OMQS:OctoberElevenTwoThousandTwentyEightMember

 OMQS:OctoberElevenTwoThousandTwentyEightMember

 OMQS:FebruaryTwentyEightTwoThoudsandTwentyThreeMember

 OMQS:FebruaryTwentyEightTwoThoudsandTwentyThreeMember

 OMQS:FebruaryTwentyEightTwoThoudsandTwentyThreeMember

 OMQS:MarchZeroFiveTwoThousandTwentyThreeMember

 OMQS:MarchZeroFiveTwoThousandTwentyThreeMember

 OMQS:MarchZeroFiveTwoThousandTwentyThreeMember

 OMQS:JulyThirtyOneTwoThousandTwentyThreeMember

 OMQS:JulyThirtyOneTwoThousandTwentyThreeMember

 OMQS:JulyThirtyOneTwoThousandTwentyThreeMember

 OMQS:OctoberThirtyFirstTwoThousandTwentyThreeMember

 OMQS:OctoberThirtyFirstTwoThousandTwentyThreeMember

 OMQS:OctoberThirtyFirstTwoThousandTwentyThreeMember

 OMQS:NovemberThirtyTwoThousandTwentyThreeMember

 OMQS:NovemberThirtyTwoThousandTwentyThreeMember

 OMQS:NovemberThirtyTwoThousandTwentyThreeMember

 OMQS:NovemberTwentyThousandTwentyFourMember

 OMQS:NovemberTwentyThousandTwentyFourMember

 OMQS:NovemberTwentyThousandTwentyFourMember

 OMQS:AprilTwentyTwoThousandTwentyFiveMember

 OMQS:AprilTwentyTwoThousandTwentyFiveMember

 OMQS:AprilTwentyTwoThousandTwentyFiveMember

 OMQS:MarchFirstTwoThousandTwentySevenMember

 OMQS:MarchFirstTwoThousandTwentySevenMember

 OMQS:MarchFirstTwoThousandTwentySevenMember

 OMQS:MarchFirstTwoThousandTwentySevenOneMember

 OMQS:MarchFirstTwoThousandTwentySevenOneMember

 OMQS:MarchFirstTwoThousandTwentySevenOneMember

 OMQS:MayFirstTwoThousandTwentySevenMember

 OMQS:OctoberThirtyFirstTwoThousandTwentySevenMember

 OMQS:OctoberThirtyFirstTwoThousandTwentySevenMember

 OMQS:OctoberThirtyFirstTwoThousandTwentySevenMember

 OMQS:SeptemberThirtyTwoThousandThirtyMember

 OMQS:SeptemberThirtyTwoThousandThirtyMember

 OMQS:SeptemberThirtyTwoThousandThirtyMember

 OMQS:SeptemberThirtyTwoThousandThirtyOneMember

 OMQS:SeptemberThirtyTwoThousandThirtyOneMember

 OMQS:SeptemberThirtyTwoThousandThirtyOneMember

 OMQS:ConsultingAgreementMember
 OMQS:MrCarlosJNissensonMember

 2020-02-01
 2020-02-28

 OMQS:ConsultingAgreementMember

 2020-02-01
 2020-02-28

 OMQS:ConsultingAgreementMember

 2020-02-01
 2020-02-28

 us-gaap: CustomerConcentrationRiskMember
 us-gaap: SalesRevenueNetMember
 OMQS:NoCustomerMember

 us-gaap: CustomerConcentrationRiskMember
 us-gaap: SalesRevenueNetMember
 OMQS:CustomerOneMember

 country: US

 country: US

 country: IL

 country: IL

 country: RU

 country: RU

 OMQS:RestOfTheWorldMember

 OMQS:RestOfTheWorldMember

 OMQS:PurchaseAndSaleAgreementMember
 us-gaap: SubsequentEventMember

 2024-01-18

 OMQS:PrestigeCapitalFinanceLLCMember
 us-gaap: SubsequentEventMember

 2024-01-18
 2024-01-18

 us-gaap: SubsequentEventMember

 2024-01-30

 OMQS:Integer

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE

 SECURITIES
EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE

 SECURITIES
EXCHANGE ACT OF 1934

 Commission
File Number: 001-40768

 OMNIQ
CORP.

 (Exact
name of Registrant as specified in its charter)

 Delaware

 20-3454263

 (State
 or other jurisdiction of

 (IRS
 Employer

 incorporation
 or organization)

 Identification
 No.)

 1865
West 2100 South, Salt
Lake City, UT
 84119

 (Address
of principal executive offices) (zip code)

 (800)
 242-7272

 (Issuer's
telephone number, including area code)

 Securities
registered under Section 12(b) of the Exchange Act: None.

 Title
 of class

 Trading
 symbol

 Name
 of each exchange on which registered

 Common
 Stock, $0.001 par value

 OMQS

 The
 Nasdaq Stock
 Market LLC

 Securities
registered under Section 12(g) of the Exchange Act: None.

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

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. Yes
 No

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 and post such files). Yes
 No

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

 Non-accelerated
 filer

 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.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
 No

 The
aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which
the common equity was last sold or the average bid and asked price of such common equity, as of the last business day of the registrant's
most recently completed second fiscal quarter, June 30, 2023, was $ 26,698,048.

the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 10,690,211
 shares of common stock were outstanding as of
March 14, 2024.

 TABLE
OF CONTENTS

 PART
 I

 ITEM
 1. BUSINESS

 ITEM
 1A. RISK FACTORS

 ITEM
 1B. UNRESOLVED STAFF COMMENTS

 ITEM
 1C. CYBERSECURITY

 ITEM
 2. PROPERTIES

 ITEM
 3. LEGAL PROCEEDINGS

 ITEM
 4. MINE SAFETY DISCLOSURES

 PART
 II

 ITEM
 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 ITEM
 6. [RESERVED]

 ITEM
 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 ITEM
 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 ITEM
 8. FINANCIAL STATEMENTS AND SUPPLEMENETARY DATA

 ITEM
 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 ITEM
 9A. CONTROLS AND PROCEDURES

 ITEM
 9B. OTHER INFORMATION

 PART
 III

 ITEM
 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 ITEM
 11. EXECUTIVE COMPENSATION

 ITEM
 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 ITEM
 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 ITEM
 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 PART
 IV

 ITEM
 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 ITEM
 16. SUMMARY

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This
Annual Report on Form 10-K 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. These factors should not be construed
as exhaustive and should be read with the other cautionary statements in this Annual Report on Form 10-K.

 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 Annual Report on Form 10-K, those results may not be indicative
of results or developments in subsequent periods. Many of these factors are beyond our ability to control or predict. Such factors include,
but are not limited to, the following:

 Our
 ability to raise capital when needed and on acceptable terms and conditions;

 Our
 ability to manage credit and debt structures from vendors, debt holders and secured lenders.

 Our
 ability to manage the growth of our business through internal growth and acquisitions;

 Competitive
 pressures;

 Our
 ability to attract and retain management, and to integrate and maintain technical information and management information systems.

 Compliance
 with laws and regulations, including those relating to environmental matters, corporate governance matters and tax matters, as well
 as any future changes to such laws and regulations; and

 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 Annual Report on Form 10-K, 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.

 PART
I

 ITEM
1. BUSINESS

 General

 OMNIQ
Corp., a Delaware corporation, formerly Quest Solution, Inc., together with its wholly owned and majority owned subsidiaries, referred
to herein as "we", "us", "our," "OMNIQ," or the "Company," was incorporated
in 1973. Since its incorporation, the Company has been involved in various lines of business.

 Our
Company

 From
2008 to 2013, we were in the business of developing oil and gas reserves. In January 2014, we determined it was in the best interest
of our stockholders to focus on operating companies with a track record of positive cash flows and larger existing revenue bases. Our
strategy developed into leveraging management's relationships in the business world for investments for us.

 Since
2014, we have made the following acquisitions resulting in us becoming a leading provider of computerized and machine-vision image-processing
solutions:

 Quest
 Solutions, Inc. (January 2014)

 Bar
 Code Specialties, Inc. (November 2014)

 HTS
 Image Processing, Inc. (October 2018)

 EyepaxIT
 Consulting LLC. (February 2020)

 Dangot
 Computers Ltd. (July 2021)

 We
use patented and proprietary artificial intelligence (AI) technology to deliver 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.

 Our
principal solutions include hardware, software, communications, and automated management services. We are an established distributor
of barcode labels, tags, and ribbons, as well as RFID labels and tags. We provide printing solutions, credit card terminals, automatic
kiosks and point-of-care units. We also offer technical service and support. 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.

 Our
customers include government agencies and leading Fortune 500 companies from diverse sectors, including healthcare, food and beverage,
manufacturing, retail, distribution, and transportation and logistics. Since 2014, our annual consolidated revenues have grown to more
than $80 million with clients in more than 40 countries. We currently engage with several billion-dollar markets with double-digit growth,
including the Global Safe City market and the Ticketless Safe Parking market.

 Recent
Developments

 On
November 21, 2023, we received a notice (the "Notice") from the staff of the Listing Qualifications Department (the "Staff")
of The Nasdaq Stock Market LLC ("Nasdaq") notifying us that we were not in compliance with Nasdaq Listing Rule 5550(a)(2)
because we failed to maintain a minimum bid price of $1.00 over the previous 32 consecutive business days dated October 6, 2023 to November
20, 2023. The Nasdaq rules provide us with a compliance period of 180 calendar days in which to regain compliance. If at any time during
this 180-day period the closing bid price of our security is at least $1 for a minimum of ten consecutive business days, the Staff will
provide written confirmation of compliance and this matter will be closed. If we choose to implement a reverse stock split, it must be
completed no later than ten business days prior to the expiration of 180 calendar day compliance period, which is May 10, 2024, to regain
compliance.

 In
the event we do not regain compliance, we may be eligible for additional time. To qualify, we will be required to meet the continued
listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, apart from the bid price
requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, by
effecting a reverse stock split, if necessary. If the Company meets these requirements, the Staff will inform the Company that it has
been granted an additional 180 calendar days. However, if it appears to Staff that the Company will not be able to cure the deficiency,
or if the Company is otherwise not eligible, the Staff will provide notice that its securities will be subject to delisting.

 On
January 5, 2024, we received another notice from the Nasdaq Staff notifying us that we were not in compliance with Nasdaq Listing Rule
5620(a) because we failed to hold an annual meeting within one year following the last fiscal year. The Nasdaq rules provide us with
a compliance period of 45 calendar days to submit a plan to regain compliance. If Nasdaq accepts the plan, Nasdaq can grant an extension
until June 28, 2024, to regain compliance. We scheduled the annual stockholders' meeting,
to be held on April 8, 2024. The Company intends to submit a plan of compliance with the 45-day period.

 On
August 9, 2023, we had received a notice from the Nasdaq Staff notifying us that in accordance with Nasdaq Listing Rule 5550(b)(2), the
Company had a market value of listed securities below the minimum $35,000,000 required for continued listing for the previous 30 consecutive
trading days. Therefore, in accordance with Listing Rule 5810(c)(3)(C), we were provided 180 calendar days, or until February 5, 2024
to regain compliance.

 On
February 8, 2024, we received a new notice from the Nasdaq Staff that we had not regained compliance with Nasdaq Listing Rule 5550(b)(2),
and thus, unless we request an appeal of this determination from the Staff, our common stock will be suspended at the opening of business
on February 20, 2024, removing our securities from listing and registration on Nasdaq. In accordance with the Nasdaq Listing Rule 5800
Series, we could appeal the Staff's determination to the hearings panel (the "Hearings Panel"), which may stay the
suspension of the Company's securities pending the Hearings Panels decision. We filed an appeal with the Hearings Panel on February
14, 2024, and paid the $20,000 fee for a hearing in accordance with Nasdaq Rules.

 Our
Strategy

 Our
plan is to focus on operational excellence and cost reduction, addressing the balance sheet debt and putting together a business plan
that is based on revenue growth and technological leadership. We intend to continue to identify synergies within the Company to offer
a more complete line of products, services, and technological solutions to customers throughout the world. Furthermore, the markets in
which OMNIQ operates are undergoing consolidation, and OMNIQ continues to identify strategic companies in data collection, mobile systems,
integrations, and other complementary technologies for potential future acquisition in order to become the leading specialty integrator
within our served markets.

 We
are a provider of products and solutions to two main markets: supply chain management and safe city. We have expanded our product solutions,
which are based on artificial intelligence and machine-learning algorithms, offering computer-vision applications. Our product offerings
have established us as an innovative and technological company. We are a pioneer in providing cutting-edge technology solutions to the
markets we serve.

 We
simplify the integration process because of our experienced team of professionals. We deliver problem-solving solutions backed by numerous
customer references. We offer comprehensive packaged and configurable software. Our software offering is a mix of internally developed
and third-party software.

 Our
ground-breaking AI-based vision solutions are currently in use for sensitive Homeland Security anti-terror projects and automated parking
solutions. Inspired by time-critical "friend or foe" decision-making processes, our patented algorithms are based on a combination
of cognitive science and machine-learning-based pattern-recognition technology which is arbitrated through a multi-layered decision-making
process that offers both speed and accuracy.

 Our
experienced team of consulting and integration professionals guide companies through the entire development and deployment process, from
selecting technology, to the successful company-wide rollout of a customized solution that fits their unique requirements. After performing
a thorough technical evaluation of the customer's current operations and specific operational problems, our team determines the
best hardware and software solutions to optimize the customer's operational workflow. We deliver ongoing services provided throughout
the deployment process and the entire product life cycle. We also deliver full installation services for all mobile data-collection computers,
automatic kiosks, point of care, and printing equipment including full staging and kitting of the equipment.

 We
have been successful in delivering mission-critical mobile-computing and data-collection solutions to customers from small businesses
to Fortune 500 companies. The requirements and needs of our customers continue to evolve as they require new mobile and wireless technologies
and services to make their business more competitive and profitable. The result is a continuous flow of opportunities for us to assist
customers to evaluate, choose, implement, and support the right mobile and data collection solutions. As we focus on what we do best,
we believe that there is more than adequate market size, growth, and opportunity available to the Company to succeed.

 The
Company offers a full suite of configurable packaged software solutions that provide customers with unique solutions with significant
business Return on Investment ("ROI"), including:

 Order
Entry: Increases productivity in the field. Remote workers increasingly demand rapid access to real-time information and up-to-date
data to facilitate and streamline their job functions in the field—our Order Entry Software is the answer.

 Intelligent
Order Entry: Adds intelligence to legacy order entry system to maximize profits. The hand-held industry is a vital link in
getting remote orders from the field to corporate. Our Intelligent Order Entry Software adds this capability to legacy order entry systems.

 Warehouse:
Enhances efficiency in distribution and manufacturing environments. The warehouse is a collection of applications for portable
devices that extend the power of the existing system out to the warehouse floor and dock doors.

 Proof
of Delivery: Enhances document delivery performance. We offer proof-of-delivery capabilities as part of our Mobility Suite
that gives companies an edge over competitors by improving customer service.

 QTSaaS
(Quest Total Solutions as a Service): Provides mobility solutions. QTSaaS is a complete mobile-services offering that
includes hardware, software, and wireless data in a bundled subscription payment offering over a period of time. Our partnership with
wireless carriers allows us to offer mobility solutions to our customers on platforms that extend the market into new mobile applications
that previously were not being automated.

 Media
and Label Business: Provides recurring revenue from consumable products. The largest segment of data collection opportunity
for us is the barcode label market providing ongoing and repeatable purchasing business. We intend to continue in the label business
to drive business growth and increased margins.

 Our
Target Markets

 The
two markets we target are Safe City and Supply Chain Management. Within the Safe City market, our groundbreaking AI-based vision solutions
are currently in use for sensitive Homeland Security anti-terror projects and discerning customers within the access control, airport,
border crossing, municipality safety, and parking industries. We seek to utilize our expertise and software solutions in markets which
provide the greatest opportunity to increase margins. Within the Supply Chain Management market, we believe we can further develop our
existing customer base who need to replace their legacy systems with a new go-to-market strategy.

 We
have been successful in integrating mission-critical mobile-computing and data-collection solutions for small businesses up to Fortune
500 companies. The needs of our customers continue to evolve as they require new mobile and wireless technologies and services to make
their business more competitive and profitable. The result is a continuous flow of opportunities to assist customers in evaluating, choosing,
implementing, and supporting the right mobile and data-collection solutions.

 We
believe integrating our patented and proprietary AI technology into our existing Supply Chain offerings will allow for automated logistics
monitoring and optimization, creating operational efficiencies at higher margins for us and our customers.

 Our
Sales Strategy

 Our
direct sales teams are supported by systems engineers with tenured experience in the mobile industry. The sales organization's
growth mirrors the addition of new products and services. Sales team members are organized by industry, areas of opportunity, areas of
expertise, and territory. Our sales teams address national accounts offering a broad array of unique solutions for key lines of business
applications, which provide opportunities for upselling and cross selling to our customers. For the Israeli market we have direct sales
teams that are organized by industry and product line. In Israel we also offer comprehensive technical service and support which increases
customer confidence and supports the sales process.

 Salespeople
are supported internally by support personnel—who coordinate quotes and logistics—and by members of the systems engineering
group and software teams—who provide technical expertise.

 Competition

 The
mobile-system-integration market is characterized by a limited number of large competitors and numerous smaller niche players. We typically
pursue larger accounts and national customers, competing most often with larger channel partners. For specific solutions, we also compete
with niche players who are often focused on a single industry. Hardware sales are competitive because of online retailers. We believe
our consultative, integrated-solutions approach is a clear differentiator for most prospective customers.

 Human
Capital

 OMNIQ's
operating philosophy is growth and continued success, which requires management and employees to work together in a spirit of cooperation
and teamwork. Our core values emphasize an environment where safety, diversity, inclusion, talent development, training, and retention
are top priorities. This has enabled us to meet various challenges over the years. Our progress reflects this strong, mutual commitment
between the Company and its employees. We believe our employees are our greatest asset. We remain focused on providing friendly and safe
working conditions, providing competitive pay, offering quality benefits, producing revenue for the continued growth of the Company,
and supporting the communities in which we operate. We realize our success is a direct result of the hard work and dedication of our
employees. Each employee at OMNIQ is a contributing partner in our future growth and we strive to maintain a mutually beneficial culture
that also fosters the professional development of each employee.

 As
of December 31, 2023, we had approximately 182 employees. Of these employees, 160 are salaried personnel (including commissioned employees)
and 22 are hourly personnel. Our employees perform the following functions: sales, assembly and warehouse, technical services, and office
and administrative support. We believe we have good relationship with our employees. Generally, the total number of employees does not
significantly fluctuate throughout the year.

 Concentrations

 For
the year ended December 31, 2023, no customer accounted for more than 10% of the Company's revenues. For the year ended December
31, 2022, one customer accounted for 30% of the Company's revenues.

receivables are made up of trade receivables due from customers in the ordinary course of business. As of December 31, 2023 and 2022,
no customer accounted for more than 10% of the outstanding receivables.

payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2023 and 2022. Two vendors made
up 38% and one vendor made up 48% of our purchases during the year ended December 31, 2023 and 2022, respectively.

 Available
Information

 OMNIQ's
website, www.omniq.com, and the information contained on that site, or connected to that site, are not part of or incorporated
by reference into this filing.

 We
file electronically with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The SEC maintains an Internet
site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC. Copies of these reports, proxy and information statements and other information may be obtained by electronic request at
the following e-mail address: publicinfo@sec.gov. We use the Investor section of our website as a means of disclosing material non-public
information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor
section of our website, in addition to following press releases, SEC filings, and public conference calls and webcasts.

 ITEM
1A. RISK FACTORS

 This
section is not required for smaller reporting companies.

 ITEM
1B. UNRESOLVED STAFF COMMENTS

 This
section is not required for smaller reporting companies.

 ITEM
1C. CYBERSECURITY

 We
have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated
these processes into our overall risk management systems and processes. We routinely assess material risks from cybersecurity threats,
including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on
the confidentiality, integrity, or availability of our information systems or any information residing therein.

 We
conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our
business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include
identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such
risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.

 Following
these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address
any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.

 We
engage consultants or other third parties in connection with our risk assessment processes. These service providers assist us to design
and implement our cybersecurity policies and procedures, as well as to monitor and test our safeguards. We require each third-party service
provider to certify that it has the ability to implement and maintain appropriate security measures, consistent with all applicable laws,
to implement and maintain reasonable security measures in connection with their work with us, and to promptly report any suspected breach
of its security measures that may affect our company.

 We
have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

 Governance

 Our
board of directors addresses the Company's cybersecurity risk management as part of its general oversight function. The board of
directors' audit committee is responsible for overseeing Company's cybersecurity risk management processes, including oversight
and mitigation of risks from cybersecurity threats.

 Our
cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including the information
technology team. Our executive team including our Chief Executive Officer, is responsible for hiring appropriate personnel, helping to
integrate cybersecurity risk considerations into the Company's overall risk management strategy, and communicating key priorities
to relevant personnel.

 Our
cybersecurity incident response and vulnerability management policies are designed to escalate certain cybersecurity incidents to members
of management depending on the circumstances, including our Chief Executive Officer. In addition, the Company's incident response
and vulnerability management policies include reporting to the audit committee of the board of directors for certain cybersecurity incidents
including significant breaches to the Company's networks or systems. The audit committee receives regular reports from the information
technology team concerning the Company's significant cybersecurity threats and risk and the processes the Company has implemented
to address them. The audit committee also has access to various reports, summaries or presentations related to cybersecurity threats,
risk and mitigation.

 ITEM
2. PROPERTIES

 OMNIQ's
corporate offices are currently located at 1865 West 2100 South, Salt Lake City, UT 84119. Our executive management, sales, operations,
accounting, and administrative functions are located at the corporate offices. The corporate office annual lease expense is $284 thousand.
The space is under a five-year lease and expires June 2026.

 We
lease office and warehouse space for our satellite sales and technical support staff in Anaheim, California. Signed a new lease March
2023 and annual lease expense is $46 thousand.

 Dangot's
corporate offices are currently located at Yad Harutzim 14 Tel-Aviv, Israel. The main corporate office, Yad Harutzim 14, serves as the
company's main building on the 2nd and 3rd floors, used by the management and most of the sales staff, technicians, etc. The corporate
office annual lease expense is NIS 784,380. The space is under a five years and eleven months lease and expires November 2024.

 We
lease office space (Gamdan- 1st floor) for our finance and service department at Yad Harutzim 14 Tel-Aviv, Israel. The lease provides
for monthly payments of NIS 18,814. As of December 31, 2023, the Company had 12 months remaining on the lease.

 We
lease office and warehouse space for our products and technical support staff at Rival Street, Tel-Aviv, Israel. The lease provides for
monthly payments of NIS 41,200. The space is under a six and half year lease and expires June 2025.

 ITEM
3. 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.
This case was settled in February 2024.

 ITEM
4. MINE SAFETY DISCLOSURES

 NONE.

 PART
II

 ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market
Information

 On
October 8, 2021 the Company's common stock became available on The Nasdaq Stock Market LLC
under the symbol "OMQS". Before then, shares of OMNIQ's common stock were not traded on an established market.
OMNIQ's common stock was traded through broker/dealers and in private transactions, and quotations reported on the OTCQB under
the symbol "OMQS". OTCQB quotations reflected interdealer prices, without mark-up, mark-down or commission and may not represent
actual transactions. No dividends have been declared or paid on OMNIQ's common stock and none are likely to be declared or paid
in the near future.

 Common
 Stock

 High

 Low

 Fiscal Year Ended December 31, 2022:

 Fiscal Quarter Ended March 31, 2022

 $
 7.05

 $
 4.35

 Fiscal Quarter Ended June 30, 2022

 $
 7.32

 $
 5.13

 Fiscal Quarter Ended September 30, 2022

 $
 8.75

 $
 5.27

 Fiscal Quarter Ended December 30, 2022

 $
 6.38

 $
 4.13

 Fiscal Year Ended December 31, 2023:

 Fiscal Quarter Ended March 31, 2023

 $
 5.15

 $
 4.27

 Fiscal Quarter Ended June 30, 2023

 $
 4.14

 $
 3.95

 Fiscal Quarter Ended September 30, 2023

 $
 1.61

 $
 1.53

 Fiscal Quarter Ended December 31, 2023

 $
 0.65

 $
 0.57

 Equity
Compensation Plan Information

 Plan
 category

 Number of securities to be issued

 upon exercise of outstanding options,

 warrants
 and rights

 Weighted-average exercise

 price of outstanding options,

 warrants
 and rights

 Number of securities remaining

 available for future issuance under

 equity compensation plans (excluding

 securities reflected in column
 (a)

 (a)

 (b)

 (c)

 Equity compensation plans approved
 by security holders

 3,065,566

 $
 5.66

 606,856

 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.

 Securities
Authorized for Issuance under Equity Compensation Plans

 The
information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in
Part III, Item 12 of this Annual Report on Form 10-K, and is incorporated herein by reference.

 Dividends
and other Distributions

 OMNIQ
has never declared or paid any cash dividends on its common stock. The Company currently plans to retain future earnings to finance the
growth and development of its business and does not anticipate paying any cash dividends in the foreseeable future. OMNIQ may incur indebtedness
in the future which may prohibit or effectively restrict the payment of dividends. Any future determination to pay cash dividends will
be at the discretion of OMNIQ's Board of Directors. The Company's Series C Preferred Stock pays a 6% dividend, but the Company
has been unable to make such dividend payments, thus those dividends are accrued quarterly. Accrued but unpaid dividends do not bear
interest.

 Recent
Sales of Unregistered Securities

 In
December 2015, our Board of Directors approved the OMNIQ's Employee Stock Purchase Plan (the "ESPP"). During 2023,
the Company issued an aggregate of 14,838 shares of common stock to certain individuals as part of the ESPP valued at approximately $31
thousand.

 Issuer
Purchases of Equity Securities

 The
Company did not repurchase any of its equity securities during the fourth quarter ended December 31, 2023.

 Use
of Proceeds from Sale of Registered Securities

 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. The Offering
closed on October 11, 2023.

 ITEM
6. [RESERVED]

 Reserved.

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The
following discussion summarizes the financial position of OMNIQ, Corp. and its consolidated subsidiaries as of December 31, 2023, and
its consolidated results of operations for the year ended December 31, 2023, and should be read in conjunction with our consolidated
financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K. The following discussion
contains, in addition to historical information, forward-looking statements that include risks and uncertainties (see discussion of "Forward-Looking
Statements" included elsewhere in this Annual Report on Form 10-K). Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors.

 The
Company's consolidated revenue for the year ended December 31, 2023 were $81.2 million, representing a decrease of $19.6 million
from the year ended December 31, 2022 of $100.8 million. Revenues in 2023 and 2022 are presented in accordance with Accounting Standards
Codification Topic 606, Revenue from Contracts with Customers ("Topic 606").

 Net
loss attributable to common stockholders' of OMNIQ Corp was $29.5 million in 2023, an increase of $15.7 million from the 2022 loss
of $13.8 million. Basic loss per share attributable to common stockholders was $3.50 for the year 2023 compared to $1.82 per share for
the year 2022.

 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.

 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 $45 million as of December 31, 2023

 deficit of $113.9 million as of December 31, 2023

 Multiple
 years of losses from operations

 Year
 over year decrease in sales

 Noncompliance
 with certain debt covenants

Evaluation

considers the conditions outlined above as the most significant factors in raising substantial doubt about the Company's ability
to continue as a going concern within one year after the date the financial statements are issued.

 Management's
Plans to Mitigate and Alleviate Conditions or Events

 is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations.

 has placed a strategic focus on increasing sales with prime customers.

 Sales
 efforts are focused on the most profitable product lines.

 Blue
 Star - The Company's total accounts payable due to Blue Star as of December 31, 2023, was approximately $42 million. Blue Star
 is an unsecured creditor, financing a substantial amount the Company's supply chain demand. Management believes that Blue Star
 will continue supplying the Company with preferable credit terms. Blue Star has agreed to the annual interest rate of 5% on invoices
 that are past due. 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 five years.

 finalized a new line of credit with an additional financial institution.

 In
 October 2023 management finalized an equity raise which resulted in $2.5 million in net cash received from investors.

 Overview
– Results of Operations

 The
following table sets forth certain selected condensed 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.

 For
 the year ended December 31,

 Variation

 2023

 2022

 $

 %

 Revenue

 $

 81,193

 $

 100,758

 $

 (19,565

)

 (19.42

 %)

 Cost of Goods sold

 65,485

 78,654

 (13,169

)

 (16.74

 %)

 Gross Profit

 15,708

 22,104

 (6,396

)

 (28.94

 %)

 Operating Expenses

 41,904

 31,656

 10,248

 32.37

 %

 Loss from operations

 (26,196

)

 (9,552

)

 (16,644

)

 174.25

 %

 Net loss

 (29,431

)

 (13,614

)

 (15,817

)

 116.18

 %

 Net Loss per common Share from continuing operations

 $

 (3.50

)

 $

 (1.82

)

 $

 (1.68

)

 92.22

 %

 Revenues

 Revenue
for the years ended December 31, 2023 and 2022 were generated from the sales of hardware, service contracts, software, labels and ribbons,
and related services provided by the Company to its customers. For the years ended December 31, 2023 and 2022, the Company recognized
$81.2 million and $100.8 million in net revenues, respectively. This represents a decrease of 19%. The decrease was due to two main factors:
(1) The decrease in deliverables due to the war in Israel, and (2) a delay in the timing of a significant software project.

 Cost
of Goods Sold

 For
the years ended December 31, 2023 and 2022, the Company recognized a total of $65 million and $78.7 million, respectively, of cost of
goods sold. Cost of goods sold was 81% of revenues for 2023 and 78% of revenue for 2022. Our gross margin percentage has remained relatively
stable in an industry that is experiencing gross-margin pressure.

 Operating
Expenses

 For
the years ended December 31, 2023 and 2022, operating expenses were $41.9 million and $31.7 million, respectively. This represents an
increase of $10.2 million, or 32%, which is due to impairment expense of $14.7 million. The following explains in detail the change in
operating expenses.

 Research
& Development – Research and development for the years ended December 31, 2023 and 2022 totaled $2.2 million and $1.8
million, respectively. This represents an increase of $328 thousand or 18%, which is due to investment in developing additional software.

 Selling,
General and Administrative – Selling, General and Administrative expenses were $23 million for the year ended December
31, 2023, compared to $27.7 million for the year ended December 31, 2022, representing a decrease of $4.7 million, or 17%. The change
was due to a decrease in commissions as a result of lower sales and management's efforts to cut costs.

 – Depreciation for the year ended December 31, 2023 was $464 thousand compared to $324 thousand for the year ended December
31, 2022. This represents an increase of $140 thousand, or 43%, attributable to growth in fixed assets.

 Intangible
Amortization – Intangible amortization expense for the year ended December 31, 2023 was $1.6 million, compared to $1.8
million for the year ended December 31, 2022.

 Impairment
of Goodwill – During the year ended December 31, 2023 the Company experienced significant decline in our stock price and
sustained losses from operations. Therefore, we completed a quantitative goodwill impairment analysis as of December 31, 2023. The results
of the analysis indicated an impairment loss for goodwill related to acquisitions prior to 2021, and we recorded a non-cash impairment
of $14.7 million.

 Other
Income and Expenses

 The
Company incurred $3.3 million in interest expense for the year ended December 31, 2023, compared to $3.5 million for the year ended December
31, 2022. The interest expense is comprised of interest incurred on promissory notes payable, the company's line of credit, and
vendor payables.

Currency Transactions

 The
Company has multiple subsidiaries conducting operations in Israel, therefore there were transactions denominated in currency other than
US dollars for both 2023 and 2022. Foreign transaction gains and losses are reported on the consolidated statement of operations and
comprehensive loss and were included in the amount of loss from comprehensive income.

 Provision
for Income Taxes

 For
the year ended December 31, 2023, the Company has $741 thousand of current income tax provision (US State & Local and Foreign) and
$221 thousand deferred income tax expense.

 For
the year ended December 31, 2022, the Company has $35 thousand of current income tax provision (US State & Local and Foreign) and
$30 thousand deferred income tax expense.

 Net
loss

 The
Company realized a net loss of $29.4 million for the year ended December 31, 2023, compared to a net loss of $13.6 million for the year
ended December 31, 2022. The increased loss in 2023 is due primarily to impairment of goodwill and the decrease in revenue.

 Liquidity
and Capital Resources

 As
of December 31, 2023, the Company had cash in the amount of $1.7 million and a working capital deficit of $45 million, compared to cash
in the amount of $1.3 million, and a working capital deficit of $38 million as of December 31, 2022. The Company had stockholders'
deficit attributable to OmniQ stockholders of $35 million and $10.5 million as of December 31, 2023 and 2022, respectively. This increase
in our stockholders' deficit was primarily attributable to net losses.

 The
Company's accumulated deficit was $113.9 million and $84.4 million as of December 31, 2023 and 2022, respectively.

 The
Company's operations provided net cash of $170 thousand and $1.2 million for the years ended December 31, 2023 and 2022, respectively.
The decrease of cash from operations of $1 million is primarily a result of reduction in sales.

 The
Company's cash used in investing activities was $331 thousand for the year ended December 31, 2023 compared to cash used by investing
activities of $4.2 million for the year ended December 31, 2022.

 The
Company's financing activities used $50 thousand of cash during the year ended December 31, 2023, and used $3 million during the
year ended December 31, 2022. During the year ended December 31, 2023, the Company made payments of $1.4 million on its notes payable,
compared to the year ended December 31, 2022, when the Company made payments of $2.5 million on its notes payable, including its Supplier
Secured Promissory note and related party notes payable. Additionally, the Company paid $1.6 million on the Company's line of credit
during the year ended December 31, 2023, compared to the year ended December 31, 2022, when the Company paid $4 million on the line of
credit. The Company raised net proceeds of $2.4 million for the year ended December 31, 2023 and no funds were raised for the year ended
December 31, 2022.

 Off-Balance
Sheet Arrangements

 The
Company currently does not have any off-balance sheet arrangements.

 Critical
Accounting Policies

 We
prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
The application of many accounting principles requires us to make assumptions, estimates, and/or judgments that affect the reported amounts
of assets, liabilities, revenues, and expenses in our consolidated financial statements. We base our estimates and judgments on historical
experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates, and/or judgments,
however, are often subjective and may change based on changing circumstances or changes in our analyses. If actual amounts are ultimately
different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts first
become known. We believe the following critical accounting policies could potentially produce materially different results if we were
to change underlying assumptions, estimates, and/or judgments. See also note 2 to our consolidated financial statements for a summary
of our significant accounting policies.

 Revenue
Recognition.

 We
determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of
the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the
performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied.

 We
combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near
the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract,
or the services are considered a single performance obligation. Our contracts are typically governed by a customer purchase order or
work order. The contract generally specifies the delivery of what constitutes a single performance obligation. If an arrangement involves
multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value
on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction
price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations.
The standalone selling price is based on an observable price for services sold to other comparable customers.

 As
discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of
a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.
We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and
other taxes collected concurrently with revenue producing activities are excluded from revenue.

 A
contract liability is recognized as deferred revenue when we invoice customers, or receive customer cash payments, in advance of satisfying
the related performance obligation(s) under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied
the related performance obligation.

 We
have four main revenue streams: (1) Hardware sales, (2) Hardware installation/configuration, (3) Hardware service contracts, and (4)
Third-party software sales. For all these revenue streams, our performance obligations are satisfied at a point in time, and therefore,
revenue is recognized at the point in time when a customer takes control of the good or asset created by the service. Factors that may
indicate transfer of control are when we have the right to receive payment for the good or service, when the legal title of the asset
has been transferred, physical possession of the asset has been transferred, the customer obtains the significant risks and rewards of
ownership of the asset, and the customer accepts the asset. For some customers, control is transferred when the customer, or the customer's
courier, picks up the hardware from our warehouse. For other customers, control is transferred upon delivery. For hardware sales which
also include installation and/or configuration as a single performance obligation, control is transferred only when the hardware is delivered
and installed/configured. For hardware service contracts and for third-party software sales, the Company acts as the agent in the transaction,
and thus recognizes revenue on a net basis at a point in time when the transaction has been facilitated.

 We
leverage drop-ship shipments with many of our partners and suppliers to deliver hardware to our customers without having to physically
hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-ship arrangements
on a gross basis as the principal in the transaction when the product is received by the customer because we control the product prior
to transfer to the customer. We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if
something were to happen to the hardware during shipping, we set the price of the product charged to the customer, we assume credit risk
for nonpayment by our customer, and we work closely with customers to determine their hardware specifications.

reviews historical returns on at least an annual basis to determine the need for an allowance for sales returns. Historically, sales
returns have been extremely limited, with the effect on the financial statements immaterial. Sales returns during any particular year
are so small and so infrequent that management determined that any material reserve against sales returns would likely not be appropriate.

 Definite-lived
Intangible Assets Impairment Evaluation

 The
Company periodically evaluates the carrying value of definite-lived intangibles when events or changes in circumstances indicate that
the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include,
but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes
in the manner of its use of acquired assets or its overall business strategy, and significant industry or economic trends. The Company
amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded no impairment loss
for definite-lived intangible assets during the years ended December 31, 2023 and 2022.

 When
the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of
the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted
cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount
exceeds the fair market value of the asset.

 If
the Company's revenues or other estimated operating results are not achieved at or above our forecasted level, and the Company
is unable to recover such costs through price increases, the carrying value of certain of the Company's intangible assets may prove
to be unrecoverable and we may incur impairment charges of definitive-live intangible assets.

 Indefinite-lived
Intangible Assets, Including Goodwill

 Indefinite-lived
intangible assets, including goodwill, are not amortized but are required to be reviewed for impairment at least annually or when events
or circumstances indicate that carrying value may exceed fair value. The Company is permitted the option to first assess qualitative
factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the fair value
of the Company's reporting unit is less than its corresponding carrying value. If, after assessing the totality of events and circumstances,
the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its corresponding carrying
value then the Company is not required to take further action. However, if the Company concludes otherwise, then the Company must calculate
the fair value of the reporting unit and compare it with its carrying amount, including Indefinite-lived intangible assets and recognize
impairment equal to the difference between the carrying amount of the reporting unit and its fair value, considering the related income
tax effect from any tax-deductible goodwill.

 Stock
Based Compensation

 We
periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for
financing costs. We account for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided
by Financial Accounting Standards Board (the "FASB") where the value of the award is measured on the date of grant and recognized
as compensation expense on the straight-line basis over the vesting period.

 We
record stock-based compensation expense according to the provisions of ASC Topic 718, Compensation – Stock Compensation ("Topic
718"). Topic 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in
the financial statements based on their fair values. Under the provisions of Topic 718, the Company determines the appropriate fair value
model to be used for valuing share-based payments and the amortization method for compensation cost.

 The
fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates
the expected volatility and expected option life consistent with Topic 718. The expected volatility of the Company's common stock
at the date of grant is estimated based on a historic volatility rate and the expected option life is calculated based on historical
stock options as the best estimate of future exercise patterns. The dividend yield assumption is based on historical and anticipated
dividend payouts. The risk-free interest rate assumption is based on observed US treasury rates consistent with the expected life of
each stock option grant. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation
expense only for those awards that are expected to vest. Compensation expense is recorded for all stock options expected to vest based
on the amortization of the fair value at the date of grant on a straight-line basis primarily over the vesting period of the options.

conflicts

 We
are closely monitoring developments in the war between Israel and Hamas that began on October 7, 2023 including potential impacts to
The Companies business, customers, suppliers, employees, and operations in Israel, the Middle East and elsewhere. At this time, impacts
to The Company are expected to be minimal but is subject to change given the volatile nature of the situation.

 Additional
accounting policies can be found in Note 2 to our Audited Consolidated Financial Statements.

 Recently
adopted accounting pronouncements

 In
June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standard Update ("ASU") 2016-13,
Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities will
measure credit losses for financial assets and certain other instruments that are not measured at fair value through net income. The
new expected credit loss impairment model requires immediate recognition of estimated credit losses expected to occur. Additional disclosures
are required regarding assumptions, models, and methods for estimating the credit losses. ASU 2019-10, Financial Instruments-Credit Losses
(Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, deferred the effective date for non-public
companies. The standard is effective for non-public companies for fiscal years beginning after December 15, 2022. We adopted these requirements
as of January 1, 2023 with no material impact on our consolidated financial statements.

 In
August 2020, the Financial Statement Accounting Board (the "FASB") issued ASU 2020-06 which simplifies the accounting for
convertible instruments and its application of the derivatives scope exception for contracts in an entity's own equity. For contracts
in an entity's own equity, the new guidance eliminates some of the current requirements for equity classification such as the requirement
that settlement in unregistered shares is permitted. In addition, the new guidance reduces the number of accounting models that require
separating embedded conversion features from convertible instruments, including eliminating the requirement to recognize a beneficial
conversion feature if the conversion feature is in the money and does not require bifurcation as a derivative liability. As a result,
only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately.
The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires
enhanced disclosures about the terms of convertible instruments and contracts in an entity's own equity. The Company adopted the
new standards January 1, 2023. The adoption of this standard may allow the Company, in the future and in certain circumstances, to avoid
derivative treatment of warrants and avoid beneficial conversion treatment of certain convertible preferred shares. Adoption of this
standard had no effect on the Company's financial statements.

 Recent
Accounting Pronouncements not yet adopted

 In
November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which
requires retrospective disclosure of significant segment expenses and other segment items on an annual and interim basis. Additionally,
it requires disclosure of the title and position of the Chief Operating Decision Maker ("CODM"). This ASU will be effective
for the Company's fiscal December 31, 2024 year-end and interim periods beginning in fiscal 2025, with early adoption permitted.
We are assessing the impact of this guidance on our disclosures; it will not have an impact on our results of operations, cash flows,
or financial condition.

 In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual
tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well
as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction.
This ASU will be effective for the Company's fiscal December 31, 2025 year-end, with early adoption permitted. We are assessing
the impact of this guidance on our disclosures; it will not have an impact on our results of operations, cash flows, or financial condition.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 This
section is not required for smaller reporting companies.

 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 The
financial statements required by this Item are included as a separate section of this report commencing on page F-1.

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 NONE

 ITEM
9A. CONTROLS AND PROCEDURES

 (a)
Evaluation of Disclosure and Control Procedures

 We
maintain "disclosure controls and procedures", as such terms are defined under Exchange Act Rule 13a-15(e), that are designed
to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within
the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer ("CEO") and Principal Accounting Officer, as appropriate, to allow timely decisions
regarding required disclosures. The Company acknowledges that any controls and procedures can provide only reasonable assurances of achieving
the desired control objectives.

 We
have carried out an evaluation as required by Rule 13a-15(d) under the supervision of and with the participation of our management, including
our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls
and procedures as of December 31, 2023. Based upon their evaluation, the Chief Executive Officer and Principal Accounting Officer concluded
that, as of December 31, 2023, the Company's disclosure controls and procedures were not effective. Although we have determined
that the existing controls and procedures are not effective, the deficiencies identified have not been deemed material to our reporting
disclosures.

 (b)
Management's Report on Internal Controls over Financial Reporting

 The
Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting refers to the process designed
by, or under the supervision of, our Chief Executive Officer and Principal Accounting Officer, and affected by our Board, management
and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.

 Internal
control over financial reporting cannot provide absolute assurance of achieving their objectives. Internal control over financial reporting
is a process that involves human diligence and compliance and is subject to lapses in judgement and breakdowns resulting from human failures.
Due to their inherent limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by
internal control over financial reporting. It is possible to design safeguards to reduce, but not eliminate, this risk. Management is
responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

has used the framework set forth in the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internal control over
financial reporting.

 A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is
a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented
or detected on a timely basis. Based on such evaluation, our CEO concluded that, as of December 31, 2023, our internal controls over
financial reporting were not effective.

 As
a result of our evaluation, we identified a material weakness in our controls related to segregation of duties and other immaterial weaknesses
in several areas of data management and documentation.

 Our
management is composed of a small number of professionals resulting in a situation where limitations on segregation of duties exist.
Accordingly, and as a result of the material weakness identified above, we have concluded that the control deficiencies result in a reasonable
possibility that a material misstatement of the annual or interim financial statements may not be prevented on a timely basis by the
Company's internal controls. We continue to employ and refine a structure in which critical accounting policies, issues and estimates
are identified, and together with other complex areas, are subject to multiple reviews by executives. In addition, we evaluate and assess
our internal controls and procedures regarding our financial reporting, utilizing standards incorporating applicable portions of the
Public Company Accounting Oversight Board's 2009 Guidance for Smaller Public Companies in Auditing Internal Controls Over Financial
Reporting as necessary on an on-going basis.

 While
the material weakness set forth above was the result of the scale of the Company's operations and is intrinsic to its small size,
the Company believes the risk of material misstatements relative to financial reporting are minimal.

 This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by its registered public accounting firm pursuant to the Dodd-Frank
Wall Street Reform and Consumer Protection Act, which permits the Company to provide only management's report in this annual report.

 (c)
Changes in Internal Control over Financial Reporting

 There
were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

 ITEM
9B. OTHER INFORMATION

 NONE

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISTICTIONS THAT PREVENT INSPECTIONS

 NONE

 PART
III

 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 The
following table presents information with respect to our officers and directors as of the date of this Report:

 Name

 Age

 Positions

 Shai
 Lustgarten

 CEO
 and Chairman

 Neev
 Nissenson

 Yaron
 Shalem

 Guy
 Elhanani

 Mina
 Teicher

 Background
of our officers and directors

 The
following is a brief account of the education and business experience during at least the past five years of our officers and directors,
indicating each person's principal occupation during that period, and the name and principal business of the organization in which
such occupation and employment were carried out.

 Shai
S. Lustgarten, was appointed the Company's CEO in April 2017 and served as the Company's interim Chief Financial Officer
("CFO") from December 2018 through September 2019 and again from November 2023 and is still the interim CFO as of the date
of this report. Mr. Lustgarten had been the Chief Executive Officer of Teamtronics, Inc. beginning June 2016. Teamtronics manufactures
rugged computers and electronic equipment mainly used in the Gas and oil industry. From 2014 to 2017, Mr. Lustgarten was the Chief Executive
Officer at Micronet Limited Inc., a developer and manufacturer of mobile computing platforms for integration into fleet management and
mobile workforce solutions listed on the Tel Aviv Stock Exchange. From 2013 to 2014, Mr. Lustgarten served as EVP Business Development
and Head of the Aerospace and defense Division of Micronet EnertecTechnologies, a technology company listed on the NASDAQ Capital Market.
From 2009 to 2013 Mr. Lustgarten was VP of Sales, Marketing and CMO of TAT Technologies, a world leading supplier of electronic systems
to the commercial and defense markets. His prior experience also includes serving as CEO of T.C.E. Aviation Ltd. in Belgium and serving
from 1993 to 1997 as the assistant to the Military Attach at the Embassy of Israel in Washington, DC. He received his Bachelor
of Science degree in Business Management & Computer Science from the University of Maryland.

 Neev
Nissenson became a director of the Company in April 2017 and was appointed as our CFO in September 2019 and resigned as CFO November
2023. Mr. Nissenson continues to serve as a director on the board. He is an experienced entrepreneur and financial officer. In 2015,
Mr. Nissenson founded Hotwine, Inc., a California based wine startup company. Since August 2016 and until October 2019, Mr. Nissenson
served as the CFO of Hypnocore, Ltd., an Israeli-based startup company that develops mobile applications for sleep monitoring and therapy.
From 2011 to 2015, Mr. Nissenson was the CFO of GMW, Inc., a high-end wine retailer from Napa, California. Before that, Mr. Nissenson
served as the Vice President from 2006 to 2011 and the CFO from 2009 to 2011 at Phoenix International Ventures, Inc., an aerospace defense
company. Mr. Nissenson was also a member of the Municipal Committee for Business from 2004 to 2007 and a member of Municipal Committee
for Street Naming from 2005 to 2007 in the City of Herzliya, Israel. He was also an armored-platoon commander in the Israeli Defense
Forces (Reserve) Armored Corps with a rank of Captain. Mr. Nissenson graduated from Tel Aviv University in 2005 with a B.A. majoring
in General History and Political Science. In 2007, he graduated from the Hebrew University with an Executive Master's degree in
Business Administration specializing in Integrative Management.

 Yaron
Shalem became a director of the Company in April 2017. He has extensive experience in financial and business management. Mr. Shalem
has served as the CFO at Saga Monetary Technologies Limited (UK) since January 2018. Prior to that Mr. Shalem served as the CFO at Singulariteam
VC from January 2014 till January 2018. He also worked as the CFO at Mobli Media Inc. from January 2014 to December 2016. Mr. Shalem's
experience also includes serving as the CFO of TAT Technologies Ltd., a NASDAQ-listed company, from April 2008 to December 2013. Mr.
Shalem is a CPA in Israel. He received his B.A. in Economy & Accounting from Tel Aviv University in 1999 and an MBA degree from Bar-Ilan
University in 2004.

 Guy
Elhanani became a director of the Company in August 2021. Mr. Elhanani is a qualified CFO with experience leading financial strategies
to facilitate company growth. Mr. Elhanani is serving as the CFO of Tarya Ltd., a public Fintech company which its shares are traded
in the Tel Aviv Stock Exchange. Mr. Elhanani and has been the CFO and a partner of Singulariteam VC, a venture capital firm, since 2018.
Mr. Elhanani has been the CFO of Sirin Labs since 2017. Sirin Labs is a multinational, high-tech company specializing in secured mobile
phones. From 2015 to 2017, Mr. Elhanani was the CFO of SalesTech, an online internet technology servicing company. Mr. Elhanani has also
served as the CFO of other companies, including: Micronet Ltd. (2012-2015); InterLogic Ltd. (2007-2012); and Finotec Group Inc. (2006-2007).
From 2003 to 2006, Mr. Elhanani was the corporate controller of On Track Innovations Ltd. From 1999 to 2003, Mr. Elhanani was a senior
auditor at Kesselman and Kesselman (PWC Israel). Mr. Elhanani was a lecturer at IVC College in Israel from 2014 to 2018 and at Hebrew
University in Jerusalem from 2001 to 2003. Mr. Elhanani has also served as a board member for various companies, including: General Robotics
(2017-2021); Effective Space Solutions (2017-2021); Octopus Systems (2017-2021); and Infinity AR (2017-2019). Mr. Elhanani received a
B.A. in Accounting and Economics, and a Master of Business Administration, specializing in finance, from Hebrew University.

 Mina
Teicher became a director of the Company in December 2022. Ms. Teicher is the former Chief Scientist of the Israel government. She
is a leading mathematician specializing in Algebraic Geometry with applications to computer vision, cryptography, cyber security, neuroscience,
neuro-medical devices, and complex societal systems, such as financial markets and health systems. She earned a PhD in Mathematics from
Tel Aviv University and a postdoctoral fellowship from the Institute for Advanced Study in Princeton. She has published 140 scientific
papers, wrote 5 books, mentored 80 students (Master, PhD, and postdocs) in Israel and the USA, organized 20 international conferences,
and won prestigious invitations to deliver lectures, numerous awards, and highly competitive research grants (in Israel, Germany, Italy,
the European Union, the USA, and China).

 Board
Diversity

 The
table below provides certain information regarding the diversity of our board of directors as the date of this annual report.

 Board
 Diversity Matrix

 Country
 of Principal Executive Offices:

 United
 States

 Private Issuer

 No

 Disclosure
 Prohibited under Home Country Law

 N/A

 Total
 Number of Directors

 Female

 Male

 Non-Binary

 Did
 Not Disclose Gender

 Part
 I: Gender Identity

 Directors

 -

 -

 Part
 II: Demographic Background

 Underrepresented
 Individual in Home Country Jurisdiction

 -

 LGBTQ+

 -

 Did
 Not Disclose Demographic Background

 -

 Our
Board seeks members from diverse professional backgrounds who combine a solid professional reputation and knowledge of our business and
industry with a reputation for integrity. Our Board does not have a formal policy concerning diversity and inclusion but is in the process
of establishing a policy on diversity. Diversity of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate
Governance Committee considers when recommending director nominees to our Board. Our Board also seeks members that have experience in
positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or
were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our Company. While
the Board has continued its efforts to identify candidates that have such experience, they have currently been unable to identify any
such candidates which fulfill the diversity requirement with the requisite professional experience.

 Family Relationships

 There
are no family relationships among and between the issuer's directors, officers, persons nominated or chosen by the issuer to become
directors or officers, or beneficial owners of more than ten percent of any class of the issuer's equity securities.

 ITEM
11. EXECUTIVE COMPENSATION

 The
table below shows the compensation for services in all capacities we paid during the year ended December 31, 2023 and 2022 to the individuals
serving as our principal executive officers (whom we refer to collectively as our "named executive officers");

 Name
 and Principal Position

 Year

 Salary ($)

 Bonus ($)

 Stock Awards

 Option Awards

 All
 Other

 Total

 Shai Lustgarten

 2023

 -

 -

 $

 Chief Executive Officer and Interim CFO

 2022

 -

 $
 1,824

 Neev Nissenson

 2023

 -

 -

 $

 Chief Financial Officer (1)

 2022

 -

 $

 (1)

 Effective
 November 17, 2023, Neev Nissenson resigned from his position as CFO.

 Bonuses

 Any
bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the named
executive's responsibilities with the Company. As we continue to grow, more defined bonus programs may be established to attract
and retain our employees at all levels.

Contracts

 In
February 2020, we entered into an employment agreement with Mr. Lustgarten, the Company's CEO, (the "Lustgarten Agreement")
pursuant to which Mr. Lustgarten shall continue to serve as the Company's CEO. The Lustgarten Agreement has a four-year term and
automatically renews for additional one-year periods unless either-party elects to terminate the Lustgarten Agreement. Pursuant to the
Lustgarten Agreement, the Company shall pay Mr. Lustgarten an annual base salary of $560,000. Mr. Lustgarten shall also be eligible to
receive i) equity awards pursuant to the Company's Equity Incentive Plans and ii) certain milestone bonuses as set forth in the
Lustgarten Agreement. In the event Mr. Lustgarten's employment is terminated by Mr. Lustgarten for good reason, or terminated by
the Company without cause, Mr. Lustgarten shall be entitled to the greater of (i) the unpaid base salary or (ii) one year's base
salary.

 At
the sole discretion of our Board, all officers are entitled to merit-based cash and equity bonuses.

 Name

 Year

 Fees Earned
 or Paid in

 Cash
 ($)

 Stock Awards

 Option 1 Awards

 Non-Equity
 Incentive Plan Compensation

 Nonqualified

 Deferred

 All
 Other

 Total

 Yaron Shalem (1)

 2023

 -

 -

 -

 -

 -

 2022

 -

 -

 -

 -

 Guy Elhanani (1)

 2023

 -

 -

 -

 -

 -

 2022

 -

 -

 -

 -

 1.

 The
 fair value of the options awarded to Mr. Shalem, and Mr. Elhanani in 2022 was determined to be $46 thousand using the Black-Scholes
 Option Pricing Model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the
 stock options or warrants, and future dividends

 POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 The
employment agreements for our named executive officers generally provide that in the event of termination of such executive's employment
for any reason, or if the executive resigns, the Company is required to pay certain separation benefits, including (i) unpaid annual
salary earned through the termination date; (ii) unused vacation; (iii) accrued and unpaid expenses; and (iv) other vested and accrued
benefits to which he is entitled under the Company's employee benefit plan. In the event the executive voluntarily resigns for
"good reason" (as defined in each executive's respective Employment Agreement) or the Company terminates their employment
for any reason other than for cause (as defined in each executive's respective Employment Agreement), the Company will be required
to pay certain termination benefits, including (i) a lump sum payment equal to the greater of (A) unpaid annual salary through the end
of the Initial Term or Renewal Term (as those terms are defined in each executive's respective Employment Agreement) or (B) two
years of annual salary, and (ii) COBRA reimbursement.

 Indebtedness
of Directors, Senior Officers, Executive Officers and Other Management

 None
of our directors, executive officers or any associate or affiliate of our Company during the last two fiscal years is or has been indebted
to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

 CORPORATE
GOVERNANCE

 Board
Leadership Structure and Risk Oversight

 Our
Board currently consists of 5 members: Mr. Shai Lustgarten, Mr. Neev Nissenson, Mr. Yaron Shalem, Mr. Guy Elhanani, and Ms. Mina Teicher.

 One
of the key functions of our Board is to provide oversight of our risk management process. Our Board administers this oversight function
directly, with support from its three standing committees—the Audit Committee, the Compensation Committee, and the Corporate Governance/Nominating
Committee. The information set forth in Item
1C is also incorporated herein by reference.

Independence

 Pursuant
to Item 407(a)(1)(ii) of Regulation S-K promulgated under the Securities Act, we have adopted the definition of "independent director"
as set forth in Rules 5000(a)(19) and 5605(a)(2) of the rules of the Nasdaq Stock Market. The Board determined that Mr. Yaron Shalem,
Mr. Guy Elhanani, and Ms. Mina Teicher qualify as "independent directors" pursuant to such rules.

 Board
Committees

 We
have three standing committees: the Audit Committee, the Compensation Committee, and the Corporate Governance/Nominating Committee. We
believe that the members of the Audit Committee, Compensation Committee and Corporate Governance/Nominating Committee are deemed to be
"independent" pursuant to the NASDAQ listing standards and applicable SEC rules. We believe that all members of our Board
have been and remain qualified to serve on the committees of our Board and have the experience and knowledge to perform the duties required
of the committees.

 Audit
Committee

 The
Audit Committee consists of Mr. Yaron Shalem, Mr. Guy Elhanani, and Ms. Mina Teicher whereby Mr. Shalem is the Chairperson. Our Board
has determined that Mr. Shalem qualifies as an "audit committee financial expert," as defined under the rules of the SEC.

 The
primary responsibility of the Audit Committee is to oversee our financial reporting process on behalf of the Board and report the results
of their activities to the Board. The Audit Committee's responsibilities include providing assistance to the Board relating to:

 the
 integrity of the Company's financial statements and the related public reports;

 disclosures
 and regulatory filings in which they appear;

 the
 systems of internal control over financial reporting, operations, and legal/regulatory compliance;

 the
 performance, qualifications, and independence of the Company's independent accountants;

 the
 performance, qualifications, and independence of the Company's internal audit function, and

 compliance
 with the Company's ethics policies and applicable legal and regulatory requirements.

 Our
Audit Committee charter is available on the "About Us" subpage of our website (www.omniq.com).

Committee

 The
Compensation Committee consists of Mr. Yaron Shalem, Mr. Guy Elhanani, and Ms. Mina Teicher. Mr. Shalem serves as Chairperson.

 The
Compensation Committee's responsibilities include, among others:

 approve
 annually the corporate goals and objectives applicable to the compensation of the CEO and/or President, evaluate at least annually
 the CEO's and/or President's performance in light of those goals and objectives, and determine and approve the CEO's
 and/or President's compensation level based on this evaluation;

 review
 matters relating to executive succession and management development;

 formulate,
 evaluate, and approve compensation for the Company's officers;

 formulate,
 evaluate, and approve cash incentives and deferred compensation plans for executives;

 formulate,
 administer, and—when appropriate—recommend to the Board for approval, incentive compensation plans and equity-based plans;
 and

 approve
 employment contracts, severance agreements, change in control provisions, and other compensatory arrangements with Company executives.

 The
Compensation Committee has the authority, in its sole discretion, to select, retain, and obtain the advice of a compensation consultant
as necessary to assist with the execution of its duties and responsibilities.

 Our
Compensation Committee charter is available on the "About Us" subpage of our website (www.omniq.com).

 Corporate
Governance/Nominating Committee

 The
Corporate Governance/Nominating Committee consists of Mr. Yaron Shalem, Mr. Guy Elhanani, and Ms. Mina Teicher. Mr. Shalem serves as
Chairperson.

 The
Corporate Governance/Nominating Committee's responsibilities include, among others:

 develop
 and oversee the Company's corporate governance practices and procedures. Which includes identifying best practices, reviewing,
 and recommending to the Board for approval any changes to the documents, policies, and procedures in the Company's corporate
 governance framework;

 establish
 procedures for the director nomination and to determine the qualifications, qualities, skills, and other expertise required to be
 a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director;

 identify
 and screen individuals qualified to become members of the Board, consistent with the above criteria, considering any director candidates
 recommended by the Company's stockholders;

 oversee
 a process for an annual evaluation of the Company's CFO and/or President; and

 develop
 and oversee a process for an annual evaluation of the Board and its committees, including a formal assessment of each individual
 director.

 Our
Corporate Governance/Nominating Committee charter is available on the "About Us" subpage of our website (www.omniq.com).

 Clawback
Policy

 On
December 1, 2023 the Board adopted the OMNIQ Corp. Clawback Policy (the "Clawback Policy"), providing for the recovery of
certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to
restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the
previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period
or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant
to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC
to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer's chief executive officer and
chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of
misconduct, and the reimbursement of those funds to the issuer. A copy of the Clawback Policy has been filed herewith and can also be
found at www.omniq.com/investor-lounge.

 Involvement
in Certain Legal Proceedings

 Our
directors and executive officers have not been involved in any of the following events during the past ten years:

 1.

 any
 bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer
 either at the time of the bankruptcy or within two years prior to that time;

 2.

 any
 conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor
 offenses);

 3.

 being
 subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
 permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking
 activities or to be associated with any person practicing in banking or securities activities;

 4.

 being
 found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated
 a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 5.

 being
 subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed,
 suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law
 or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or
 fraud in connection with any business entity; or

 6.

 being
 subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,
 any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members
 or persons associated with a member.

 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 The
following table sets forth certain information regarding beneficial ownership of our Common Stock as of December 31, 2023: (i) by each
of our directors, (ii) by each of our executive officers, (iii) by our executive officers and directors as a group, and (iv) by each
person or entity known by us to beneficially own 5% or more of any class of our common stock. As of December 31, 2023, there were 10,675,802
shares of our common stock outstanding.

 Name
 of Beneficial Owner

 Amount
 of Beneficial Ownership

 Percentage
 of

 Shares

 Outstanding

 Shai Lustgarten
 (Chairman and CEO) 1

 1,460,155

 10.6
 %

 Neev Nissenson 2

 60,000

 0.4
 %

 Yaron Shalem 4

 49,464

 0.4
 %

 Guy Elhanani 5

 0.1
 %

 Mina Teicher 6

 0.1
 %

 All Executive Officers and
 Directors as a group (5 individuals)

 1,589,619

 11.6
 %

 Carlos Nissensohn 3

 1,019,667

 7.4
 %

 1.

 370,000 shares issuable upon the exercise of options. Also includes (i) 1,056,822 shares and (ii) 33,333 shares issuable upon the
 exercise of warrants held by Walefar Investments Ltd., which is beneficially owned by Mr. Lustgarten.

 2.

 50,000 shares issuable upon the exercise of options. Also includes 10,000 shares.

 3.

 739,308 shares held by Campbeltown Consulting Ltd., which is beneficially owned by Mr. Carlos J. Nissensohn. Also includes (i) 57,026
 shares and (ii) 223,333 shares issuable upon exercise of options and warrants.

 4.

 20,000 shares issuable upon exercise of options. Also includes 29,464 shares.

 5.

 10,000 shares issuable upon exercise of options.

 6.

 10,000 shares issuable upon exercise of options.

 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 In
February 2020, OMNIQ entered into a consulting agreement with Mr. Carlos J. Nissensohn and/or an entity under his control, a consultant
to the Company and principal stockholder, (the "Nissensohn Agreement") pursuant to Mr. Nissensohn and/or an entity under
his control will provide certain consulting services to the Company. The Nissensohn Agreement has a four-year term and automatically
renews for additional one-year periods unless either party elects to terminate the Nissensohn Agreement. Pursuant to the Nissensohn Agreement,
we will pay Mr. Nissensohn a monthly fee of $30,000. Mr. Nissensohn shall also be eligible to receive certain milestone bonuses as set
forth in the Nissensohn Agreement. Mr. Nissensohn is a principal stockholder of the Company. Mr. Nissensohn is the father of Neev Nissenson,
board member and former CFO.

 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 The
information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.

 PART
IV

 ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 (a)(1)
The following documents are filed under pages F-1 through F-26 and are included as part of this Form 10-K:

 OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (HAYNIE)

 OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (BARZILY)

 BALANCE SHEETS

 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 STATEMENTS OF EQUITY (DEFICIT)

 STATEMENTS OF CASH FLOWS

 NOTES
 TO CONSOLIDATED FINANCIAL STATEMENTS

 (a)(2)
Financial statement schedules are omitted as they are not applicable.

 (a)(3)
Exhibits required by Item 601 of Regulation S-K are incorporated herein by reference and are listed on the attached Exhibit Index, which
begins immediately following the financial statements of this Annual Report on Form 10-K.

 ITEM
16. FORM 10-K SUMMARY.

 NONE.

 Signatures

 Pursuant
to the requirements of Section 13 or 15(d) 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:
April 1, 2024

 OMNIQ
 CORP.

 By:

 /s/
 Shai Lustgarten

 Shai
 Lustgarten

 Chief
 Executive Officer, Interim Chief Financial Officer and Chairman of the Board

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Shai Lustgarten

 Chairman
 of the Board, Chief Executive Officer and Interim Chief Financial Officer

 April

 Shai
 Lustgarten

 /s/
 Yaron Shalem

 April

 Yaron
 Shalem

 /s/
 Mina Teicher

 April

 Mina
 Teicher

 /s/
 Guy Elhanani

 April

 Guy
 Elhanani

 OMNIQ
CORP.

TO CONSOLIDATED FINANCIAL STATEMENTS

 OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB: 457
 (HAYNIE)

 OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB: 2015
 (BARZILY)

 BALANCE SHEETS

 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

 STATEMENTS OF CASH FLOWS

 NOTES
 TO CONSOLIDATED FINANCIAL STATEMENTS

 F- 1

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and Stockholders of OMNIQ Corp.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of OMNIQ Corp. (the Company) as of December 31, 2023, and 2022, and the related
consolidated statements of operations and comprehensive loss, stockholders' equity (deficit), and cash flows for each of the years
in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our
opinion, the consolidated financial position of the Company present fairly, in all material respects, the consolidated financial position
of the Company as of December 31, 2023, and 2022 and the results of its operations and its cash flows for each of the years in the two-year
period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

 We
did not audit portions of the December 31, 2023, and 2022, consolidated financial statements for Dangot Computers, Ltd., a wholly owned
subsidiary. The portions not audited by us include assets of $20.2 million and $27.5 million as of December 31, 2023, and 2022, respectively,
and total revenues of $44.8 million and $45.5 million for the years ended December 31, 2023, and 2022, respectively. Those portions of
the December 31, 2023, and 2022, consolidated financial statements were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as they relate to the amounts included for Dangot Computers, Ltd. is based solely on the reports of the
other auditors.

 Consideration
of the Company's Ability to Continue as a Going Concern

 The
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed
in Note 3 to the financial statements, the Company has a deficit in stockholders' equity, and has sustained recurring losses from
operations. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans
with regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

 Critical
Audit Matters

 The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

and Intangible Assets— Refer to Note 8 to the consolidated financial statements

 As
described in Note 9 to the financial statements, the Company has $5.7 million of intangible assets and $1.8 million of goodwill
after recording an impairment loss of $14.7 million. The Company evaluates its goodwill and intangible assets at least annually or more
frequently when events or changes in circumstances indicate the carrying value may not be recoverable. In consideration of
impairment, the Company employed a third-party specialist to prepare a valuation based on management's estimates and market
information.

 We
identified potential impairment of these assets as a critical audit matter because of the significant estimates and assumptions made
by management to estimate fair value, including the impact of forecasted growth, and the difference between the fair values and the carrying
values as of December 31, 2023. This required a high degree of auditor judgment and an increased extent of effort, including the need
to involve our fair value specialist, when performing audit procedures to evaluate the reasonableness of management's estimates
and assumptions related to certain assumptions within the projected cash flows.

 Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. We followed professional standards relating to the use of specialists employed by management. These procedures
included, among others, evaluating the expertise and independence of third-party specialists, gaining an understanding of management's
process for developing the fair value estimate, and assessing the inputs and key assumptions used to develop the models. We used professionals
inside our firm with specialized skills and knowledge to assess the methodology.

 /s/
 Haynie & Company

 Salt
Lake City, Utah

 April

 We
have served as the Company's auditor since 2019

 F- 2

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and Stockholders of OMNIQ CORP.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheet of Dangot Computers Ltd. (the "Company") as of December 31, 2023,
and 2022, and the related consolidated statements of operations and comprehensive loss, change in stockholders' equity (deficit). and
cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the
"Financial Statement"). In our opinion, the consolidated financial statement present fairly, in all material respects, the
financial position of the Company as of December 31, 2023, and 2022 and the results of its operation and its cash flows for each of the
years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States
of America.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

 Critical
Audit Matters

 Critical
audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be
communicated to the board of directors and that: (1) relate to accounts or disclosures that are material to the financial statements
and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters.

 We
have served as the Company's auditor since 2020.

 BARZILY
AND CO., CPA's

 Jerusalem,
Israel

 April
1,2024

 F- 3

 OMNIQ
CORP.

BALANCE SHEETS

 As
of December 31,

 (In
 thousands, except share and per share data)

 2023

 2022

 ASSETS

 Current
 assets

 Cash
 and cash equivalents

 $
 1,678

 $
 1,311

 receivable, net

 18,654

 23,893

 6,028

 8,726

 Prepaid
 expenses

 1,268

 Other
 current assets

 Total
 current assets

 27,354

 35,671

 Property
 and equipment, net of accumulated depreciation of $ 1,166
 and $ 1,030

 1,066

 1,086

 Goodwill, net of accumulated
 impairment of $ 14,868
 and $ 0,

 1,788

 16,542

 Trade
 name, net of accumulated amortization of $ 4,850
 and $ 4,458,

 1,377

 1,826

 Customer
 relationships, net of accumulated amortization of $ 11,814
 and $ 10,762,

 3,777

 4,967

 Other
 intangibles, net of accumulated amortization of $ 1,669
 and $ 1,541,

 Right
 of use lease asset

 1,862

 2,300

 Other
 assets

 1,758

 1,744

 Total
 Assets

 $
 39,486

 $
 64,811

 LIABILITIES
 AND STOCKHOLDERS' EQUITY

 Current
 liabilities

 payable and accrued liabilities

 $
 56,741

 $
 53,701

 Line of credit

 1,971

 Accrued
 payroll and sales tax

 1,537

 2,633

 Notes
 payable, related parties

 -

 Notes
 payable – current portion

 10,196

 11,572

 Lease
 liability – current portion

 Other
 current liabilities

 3,106

 2,429

 Total
 current liabilities

 72,705

 73,541

 Long term
 liabilities

 Accrued
 interest and accrued liabilities, related party

 Notes
 payable, less current portion

 Lease
 liability

 1,011

 1,404

 Other
 long-term liabilities

 Total
 liabilities

 74,506

 75,337

 Stockholders'
 equity (deficit)

 A Preferred stock; $ 0.001
 par value; 2,000,000
 shares designated, 0
 shares issued and outstanding

 -

 -

 B Preferred stock; $ 0.001
 par value; 1
 share designated, 0
 shares issued and outstanding

 -

 -

 C Preferred stock; $ 0.001
 par value; 3,000,000
 shares designated, 502,000
 and 544,500
 shares issued and outstanding, respectively

 Preferred
 stock

 Common
 stock; $ 0.001 par
 value; 15,000,000 shares
 authorized; 10,675,802 and
 7,714,780 shares
 issued and outstanding, respectively

 Additional
 paid-in capital

 78,340

 73,714

 (deficit)

 ( 113,923
)

 ( 84,460
)

 other comprehensive income

 Total
 OmniQ stockholders' equity (deficit)

 ( 35,020
)

 ( 10,526
)

 Total
 liabilities and equity (deficit)

 $
 39,486

 $
 64,811

 The
accompanying notes are integral to these consolidated financial statements.

 F- 4

 OMNIQ
CORP.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 For
the Years Ended December 31,

 (In
 thousands, except share and per share data)

 2023

 2022

 Revenues

 $
 81,193

 $
 100,758

 Cost
 of goods sold

 65,485

 78,654

 Gross profit

 15,708

 22,104

 Operating
 expenses

 Research
 & Development

 2,154

 1,826

 Selling,
 general and administrative

 22,960

 27,707

 1,640

 1,799

 impairment expense

 14,686

 -

 Total
 operating expenses

 41,904

 31,656

 Loss
 from operations

 ( 26,196
)

 ( 9,552
)

 Other income (expenses):

 Interest
 expense

 ( 3,303
)

 ( 3,496
)

 Other
 (expenses) income

 ( 575
)

 ( 601
)

 Total
 other expenses

 ( 3,878
)

 ( 4,097
)

 Net Loss Before Income Taxes

 ( 30,074
)

 ( 13,649
)

 Provision for Income Taxes

 Current

 Total
 Provision for Income Taxes

 Net Loss

)

)

 Net
 income attributable to noncontrolling interest

 -

 Net
 Loss attributable to OmniQ Corp

 $
)

 $
 ( 13,681
)

 Net Loss

 $
)

 $
)

 currency translation adjustment

 Comprehensive
 loss

 $
 ( 29,091
)

 $
 ( 13,249
)

 Reconciliation of net loss
 to net loss attributable to common shareholders

 Net loss

 $
)

 $
)

 Less:
 Dividends attributable to non-common stockholders' of OmniQ Corp

 ( 32
)

 ( 206
)

 Net
 loss attributable to common stockholders' of OmniQ Corp

 $
 ( 29,463
)

 $
 ( 13,820
)

 Net
 (loss) per share - basic attributable to common stockholders' of OmniQ Corp

 $
 ( 3.50
)

 $
 ( 1.82
)

 Weighted average number
 of common shares outstanding - basic

 8,412,494

 7,576,434

 The
accompanying notes are integral to these consolidated financial statements.

 F- 5

 OMNIQ
CORP.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

 For
the Years Ended December 31, 2023 and 2022

 C

 Additional

 Non

 Other

 Total

 Stockholders'

 Preferred
 Stock

 Common
 Stock

 Paid-in

 Controlling

 Comprehensive

 Equity

 (In
 thousands)

 Shares

 Amount

 Shares

 Amount

 Capital

 Deficit

 Interest

 Income
 (Loss)

 (Deficit)

 December 31, 2021

 $

 7,459

 $

 $
 70,606

 $
 ( 70,571
)

 $
 2,396

 $
 ( 154
)

 $
 2,298

 Dividend on Class C Shares

 -

 -

 -

 -

 -

 ( 206
)

 -

 -

 ( 206
)

 ESPP Stock Issuance

 -

 -

 -

 -

 -

 -

 Stock and Warrant issued for
 services

 -

 -

 -

 -

 -

 -

 Stock-based compensation –
 options, warrants, issuances

 -

 -

 -

 3,173

 -

 -

 -

 3,173

 Warrant issuances, net of
 issuance costs

 -

 -

 -

 -

 -

 -

 -

 Exercise of stock options
 and warrants

 -

 -

 -

 -

 -

 -

 Non-controlling interests,
 distributions and other

 -

 -

 -

 -

 ( 668
)

 -

 ( 2,443
)

 -

 ( 3,111
)

 Other

 -

 -

 -

 ( 12
)

 -

 -

 -

 -

 Cumulative Translation Adjustment

 -

 -

 -

 -

 -

 ( 2
)

 ( 20
)

 Net
 (loss) income

 -

 -

 -

 -

 -

 ( 13,681
)

 -

)

 December 31, 2022

 $

 7,714

 $

 $
 73,714

 $
 ( 84,460
)

 $
 -

 $

 $
 ( 10,526
)

 Balance

 $

 7,714

 $

 $
 73,714

 $
 ( 84,460
)

 $
 -

 $

 $
 ( 10,526
)

 Dividend on Class C Shares

 -

 -

 -

 -

 -

 ( 32
)

 -

 -

 ( 32
)

 ESPP Stock Issuance

 -

 -

 -

 -

 -

 -

 Stock-based compensation –
 options, warrants, issuances

 -

 -

 -

 -

 1,955

 -

 -

 -

 1,955

 Stock and Warrant issued for
 services

 -

 -

 -

 -

 -

 -

 Exercise of stock options
 and warrants

 -

 -

 -

 -

 -

 -

 Stock and warrant issuances,
 net of issuance costs

 -

 -

 2,775

 2,405

 -

 -

 -

 2,408

 Conversion of equity

 ( 42
)

 -

 -

 -

 -

 -

 -

 -

 Cumulative Translation Adjustment

 -

 -

 -

 -

 -

 -

 -

 Net
 (loss) income

 -

 -

 -

 -

 -

)

 -

 -

)

 December 31, 2023

 $

 10,675

 $

 $
 78,340

 $
 ( 113,923
)

 $
 -

 $

 $
 ( 35,020
)

 Balance

 $

 10,675

 $

 $
 78,340

 $
 ( 113,923
)

 $
 -

 $

 $
 ( 35,020
)

 The
accompanying notes to the financials should be read in conjunction with these financial statements.

 F- 6

 OMNIQ
CORP.

STATEMENTS OF CASH FLOWS

 For
the Years Ended December 31,

 (In
 thousands)

 2023

 2022

 Cash
 flows from operations

 Net
 loss

 $
)

 $
)

 Adjustments
 to reconcile net loss to net cash provided by operating activities:

 Loss
 on disposal of PP&E

 -

 Noncash
 interest expense

 -

 Stock-based
 compensation

 1,955

 3,173

 Stock
 and warrant issued for services

 and amortization

 2,104

 2,119

 impairment

 14,686

 -

 of ROU asset

 1,000

 Changes
 in operating assets and liabilities:

 receivable

 4,948

 1,472

 Prepaid
 expenses

 2,398

 ( 2,490
)

 Other
 assets

 payable and accrued liabilities

 2,732

 10,830

 Accrued
 interest and accrued liabilities, related party

 Accrued
 payroll and sales taxes payable

 ( 1,021
)

 Lease
 liability

 ( 904
)

 ( 1,000
)

 Deferred
 tax assets, net

 ( 32
)

 ( 263
)

 Other
 liabilities

 1,244

 ( 1,419
)

 Net
 cash provided by (used in) operating activities

 1,203

 Cash
 flows from investing activities

 Payment
 for additional ownership in subsidiary

 -

 ( 3,518
)

 Purchase
 of property and equipment

 ( 479
)

 ( 451
)

 Proceeds
 from sale of other assets

 ( 185
)

 Net
 cash provided by (used in) investing activities

 ( 331
)

 ( 4,154
)

 Cash
 flows from financing activities

 Proceeds
 from ESPP stock issuance

 Proceeds
 from exercise of options and warrants

 Dividends
 paid to non-controlling interest

 -

 ( 1,448
)

 Net
 proceeds from issuance of common stock

 2,408

 -

 Payments
 on notes/loans payable

 ( 1,444
)

 ( 2,525
)

 Proceeds
 from the issuance of notes/loans payable

 4,770

 Payments
 on line of credit

 ( 1,628
)

 ( 4,038
)

 Net
 cash (used in) provided by financing activities

 ( 50
)

 ( 3,057
)

 Net
 change in cash and cash equivalents

 ( 211
)

 ( 6,008
)

 Effect
 of foreign exchange rates on cash and cash equivalents

 Cash
 and cash equivalents at beginning of period

 1,311

 7,085

 Cash
 and cash equivalents at end of period

 $
 1,678

 $
 1,311

 Non-cash
 activities:

 Stock
 issued for services

 $
 -

 $

 Declared
 dividends payable

 $

 $

 Right
 of use asset acquired in exchange for lease liability

 $
 1,110

 $

 Supplemental
 disclosure of cash flow information:

 $

 Cash
 paid for interest

 $
 3,318

 $
 2,569

 Cash
 paid for income taxes

 $
 -

 $

 The
accompanying notes are integral to these consolidated financial statements.

 F- 7

 OMNIQ
CORP.

 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 For
the Years Ended December 31, 2023 and 2022

 NOTE
1 – NATURE OF OPERATIONS

 OMNIQ
Corp., a Delaware corporation, formerly Quest Solution, Inc., together with its wholly owned and majority owned subsidiaries, referred
to herein as "we", "us", "our," "OMNIQ," or the "Company," was incorporated
in 1973. Since its incorporation, the Company has been involved in various lines of business.

 From
2008 to 2013, we were in the business of developing oil and gas reserves. In January 2014, we determined it was in the best interest
of our stockholders to focus on operating companies with a track record of positive cash flows and larger existing revenue bases. Our
strategy developed into leveraging management's relationships in the business world for investments for us.

 Since
2014, we have made the following acquisitions resulting in us becoming a leading provider of computerized and machine-vision image-processing
solutions:

 Quest
 Solutions, Inc. (January 2014)

 Bar
 Code Specialties, Inc. (November 2014)

 HTS
 Image Processing, Inc. (October 2018)

 EyepaxIT
 Consulting LLC. (February 2020)

 Dangot
 Computers Ltd. (July 2021)

 We
use patented and proprietary artificial intelligence (AI) technology to deliver 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.

 Our
principal solutions include hardware, software, communications, and automated management services. We are an established distributor
of barcode labels, tags, and ribbons, as well as RFID labels and tags. We provide printing solutions, credit card terminals, automatic
kiosks and point-of-care units. We also offer technical service and support. 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.

 Our
customers include government agencies and leading Fortune 500 companies from diverse sectors, including healthcare, food and beverage,
manufacturing, retail, distribution, and transportation and logistics. Since 2014, our annual consolidated revenues have grown to more
than $80 million with clients in more than 40 countries. We currently engage with several billion-dollar markets with double-digit growth,
including the Global Safe City market and the Ticketless Safe Parking market.

 F- 8

 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles
of Consolidation and Basis of Presentation

 Our
consolidated financial statements include the financial position and results of operations of OMNIQ Corp. and its wholly owned subsidiaries:
Quest Marketing, Inc., HTS Image Processing, Inc., OmniQ Vision Inc., HTS Image Ltd., OmniQ Technologies Ltd., and Dangot Computers Ltd.

 All
significant intercompany accounts and transactions have been eliminated in these consolidated financial statements. Business combinations
are included in the consolidated financial statements from their respective dates of acquisition.

 Use
of Estimates

 We
prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America,
which requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities
and related disclosures at the date of the consolidated financial statements and the reported amounts of revenues and expenses during
the reported period. These assumptions and estimates could have a material effect on our consolidated financial statements. Actual results
may differ materially from those estimates. We review our estimates on an ongoing basis based on information currently available, and
changes in facts and circumstances may cause us to revise these estimates.

 Cash

 Cash
consists of petty cash, checking, savings, and money market accounts. The Company maintains its cash in bank deposit accounts which,
at times, may exceed federally insured limits.

Receivable

 We
manage credit risk associated with our accounts receivables at the customer level. Because the same customers typically generate the
revenues that are accounted for under both Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic
606) and Accounting Standards Codification Topic 326, Credit Losses (Topic 326), the discussions below on credit risk and
our allowances for doubtful accounts address our total revenues from Topic 606 and Topic 326.

 Pursuant
to Topic 326 for our accounts receivables, we maintain an allowance for doubtful accounts that reflects our estimate of our expected
credit losses. Our allowance is estimated using a loss-rate model based on delinquency. The estimated loss rate is based on our historical
experience with specific customers, our understanding of our current economic circumstances, reasonable and supportable forecasts, and
our own judgment as to the likelihood of ultimate payment based upon available data. We perform credit evaluations of customers and establish
credit limits based on reviews of our customers' current credit information and payment histories. We believe our credit risk is
somewhat mitigated by our geographically diverse customer base and our credit evaluation procedures. The actual rate of future credit
losses, however, may not be similar to past experience. Our estimate of doubtful accounts could change based on changing circumstances,
including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase
or decrease our allowance for doubtful accounts.

 Substantially
all inventory consists of raw materials and finished goods and are valued at the lower of historic cost or net realizable value; where
net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable
cost of completion, disposal and transportation. Historic inventory costs are calculated on a first-in, first-out basis or specific cost.

 Property
and Equipment

 Property
and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives. Ordinary repair and maintenance
costs are included in sales, general and administrative ("SG&A") expenses on our consolidated statements of operations.
However, expenditures for additions or improvements that significantly extend the useful life of the asset are capitalized in the period
incurred. At the time assets are sold or disposed of, the cost and accumulated depreciation are removed from their respective accounts
and the related gains or losses are reflected in the statements of operations in gains from sales of property and equipment, net.

 F- 9

 We
periodically evaluate the appropriateness of remaining depreciable lives assigned to property and equipment. Leasehold improvements are
amortized using the straight-line method over their estimated useful lives or the remaining term of the lease, whichever is shorter.
Generally, we assign the following estimated useful lives to these categories:

OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT

 Category

 Estimated
 Useful Life

 Furniture
 and fixtures

 to 7
 years

 Computer
 equipment

 to 5
 years

 Office
 equipment

 to 10
 years

 Software

 years

 Leasehold
 improvements

 years

 Vehicles

 years

 Definite-lived
Intangible Assets

 The
Company periodically evaluates the carrying value of definite-lived intangibles when events or changes in circumstances indicate that
the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include,
but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes
in the manner of its use of acquired assets or its overall business strategy, and significant industry or economic trends. The Company
amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded no
 impairment loss for definite-lived intangible
assets during the years ended December 31, 2023 and 2022.

 When
the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of
the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted
cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount
exceeds the fair market value of the asset.

 If
the Company's revenues or other estimated operating results are not achieved at or above our forecasted level, and the Company
is unable to recover such costs through price increases, the carrying value of certain of the Company's intangible assets may prove
to be unrecoverable and we may incur impairment charges of definitive-live intangible assets.

 Definite-lived
intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over
useful lives ranging from 3
 to 11
 years with a remaining weighted average lifespan
of 7.1
 years.

 Indefinite-lived
Intangible Assets, Including Goodwill

 Indefinite-lived
intangible assets, including goodwill, are not amortized but are required to be reviewed for impairment at least annually or when events
or circumstances indicate that carrying value may exceed fair value. The Company is permitted the option to first assess qualitative
factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the fair value
of the Company's reporting unit is less than its corresponding carrying value. If, after assessing the totality of events and circumstances,
the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its corresponding carrying
value then the Company is not required to take further action. However, if the Company concludes otherwise, then the Company must calculate
the fair value of the reporting unit and compare it with its carrying amount, including Indefinite-lived intangible assets and recognize
impairment equal to the difference between the carrying amount of the reporting unit and its fair value, considering the related income
tax effect from any tax-deductible goodwill.

Payable

payable are made up of payables due to vendors in the ordinary course of business as of December 31, 2023 and 2022. Two vendors made
up 38 %
and one vendor made up 48 %
of our purchases during the year ended December 31, 2023 and 2022, respectively.

 Leases

 We
determine whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract. A
contract contains a lease if there is an identified asset, and we have the right to control the asset for a period of time in exchange
for consideration. Lease arrangements can take several forms. Some arrangements are clearly within the scope of lease accounting, such
as a real estate contract that provides an explicit contractual right to use a building for a specified period of time in exchange for
consideration. However, the right to use an asset can also be conveyed through arrangements that are not leases in form, such as leases
embedded within service and supply contracts. We analyze all arrangements with potential embedded leases to determine if an identified
asset is present, if substantive substitution rights are present, and if the arrangement provides the customer control of the asset.

 F- 10

 Our
lease portfolio is substantially comprised of operating leases related to leases of real estate. From time to time, we may also lease
various types of small equipment and vehicles.

 Operating
lease right-of-use ("ROU") assets represent our right to use an individual asset for the lease term and lease liabilities
represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at
the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide the lessor's
implicit rate, we use our incremental borrowing rate ("IBR") at the commencement date in determining the present value of
lease payments by utilizing a fully collateralized rate for a fully amortizing loan with the same term as the lease.

 Lease
terms include options to extend the lease when it is reasonably certain those options will be exercised. Our leases can include rental
escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when such renewal
options and/or termination options are reasonably certain of exercise.

 An
ROU asset is subject to the same impairment guidance as assets categorized as property and equipment. As such, any impairment loss on
ROU assets is presented in the same manner as an impairment loss recognized on other long-lived assets.

 A
lease modification is a change to the terms and conditions of a contract that change the scope or consideration of a lease. For example,
a change to the terms and conditions to the contract that adds or terminates the right to use one or more underlying assets, or extends
or shortens the contractual lease term, is a modification. Depending on facts and circumstances, a lease modification may be accounted
as either: (1) the original lease plus the lease of a separate asset(s) or (2) a modified lease. A lease will be remeasured if there
are changes to the lease contract that do not give rise to a separate lease.

 Revenue
Recognition

 We
determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of
the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the
performance obligations in the contract; and (5) recognition of revenue when, or as, a performance obligation is satisfied.

 We
combine contracts with the same customer into a single contract for accounting purposes when the contracts are entered into at or near
the same time and the contracts are negotiated as a single commercial package, consideration in one contract depends on the other contract,
or the services are considered a single performance obligation. Our contracts are typically governed by a customer purchase order or
work order. The contract generally specifies the delivery of what constitutes a single performance obligation. If an arrangement involves
multiple performance obligations, the items are analyzed to determine the separate units of accounting, whether the items have value
on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction
price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations.
The standalone selling price is based on an observable price for services sold to other comparable customers.

 As
discussed in more detail below, revenue is recognized when a customer obtains control of promised goods or services under the terms of
a contract and is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.
We do not have any material extended payment terms, as payment is due at or shortly after the time of the sale. Sales, value-added and
other taxes collected concurrently with revenue producing activities are excluded from revenue.

 A
contract liability is recognized as deferred revenue when we invoice customers, or receive customer cash payments, in advance of satisfying
the related performance obligation(s) under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied
the related performance obligation.

 We
have four main revenue streams: (1) Hardware sales, (2) Hardware installation/configuration, (3) Hardware service contracts, and (4)
Third-party software sales. For all these revenue streams, our performance obligations are satisfied at a point in time, and therefore,
revenue is recognized at point in time when a customer takes control of the good or asset created by the service. Factors that may indicate
transfer of control are when we have the right to receive payment for the good or service, when the legal title of the asset as been
transferred, physical possession of the asset has been transferred, the customer obtains the significant risks and rewards of ownership
of the asset, and the customer accepts the asset. For some customers, control is transferred when the customer, or the customer's
courier, picks up the hardware from our warehouse. For other customers, control is transferred upon delivery. For hardware sales which
also include installation and/or configuration as a single performance obligation, control is transferred only when the hardware is delivered
and installed/configured. For hardware service contracts and for third-party software sales, the Company acts as the agent in the transaction,
and thus recognizes revenue on a net basis at a point in time when the transaction has been facilitated.

 We
leverage drop-ship shipments with many of our partners and suppliers to deliver hardware to our customers without having to physically
hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-ship arrangements
on a gross basis as the principal in the transaction when the product is received by the customer because we control the product prior
to transfer to the customer. We also assume primary responsibility for the fulfillment in the arrangement, we assume inventory risk if
something were to happen to the hardware during shipping, we set the price of the product charged to the customer, we assume credit risk
for nonpayment by our customer, and we work closely with customers to determine their hardware specifications.

reviews historical returns on at least an annual basis to determine the need for an allowance for sales returns. Historically, sales
returns have been extremely limited, with the effect on the financial statements immaterial. Sales returns during any particular year
are so small and so infrequent that management determined that any material reserve against sales returns would likely not be appropriate.

 Stock-Based

 We
periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for
financing costs. We account for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided
by Financial Accounting Standards Board (the "FASB") where the value of the award is measured on the date of grant and recognized
as compensation expense on the straight-line basis over the vesting period.

 We
record stock-based compensation expense according to the provisions of ASC Topic 718, Compensation – Stock Compensation ("Topic
718"). Topic 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in
the financial statements based on their fair values. Under the provisions of Topic 718, the Company determines the appropriate fair value
model to be used for valuing share-based payments and the amortization method for compensation cost.

 The
fair value of each stock option grant and warrant is estimated on the date of grant using the Black-Scholes option-pricing model. The
Company estimates the expected volatility and expected option life consistent with Topic 718. The expected volatility of the Company's
common stock at the date of grant is estimated based on a historic volatility rate and the expected option life is calculated based on
historical stock options as the best estimate of future exercise patterns. The dividend yield assumption is based on historical and anticipated
dividend payouts. The risk-free interest rate assumption is based on observed US treasury rates consistent with the expected life of
each stock option grant. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation
expense only for those awards that are expected to vest. Compensation expense is recorded for all stock options expected to vest based
on the amortization of the fair value at the date of grant on a straight-line basis primarily over the vesting period of the options.

 F- 11

 Advertising

 The
Company expenses marketing and advertising costs as incurred. During 2023 and 2022, the Company spent $ 379
 thousand and $ 630
 thousand, respectively, on marketing, trade show,
and advertising.

Currency Translation

 Our
consolidated financial statements are presented in U.S. dollars. The functional currency for the Company is U.S. dollars. Transactions
in currencies other than the functional currency are recorded using the appropriate exchange rate at the time of the transaction. All
our continuing operations are conducted in U.S. dollars except for subsidiaries located in Israel. The records of the Israeli operations
were maintained in the local currency and translated to the reporting currency as follows: assets and liabilities are translated using
the balance sheet period-end date exchange rate. Expenses and income are translated using the weighted average exchange rates for the
reporting period. Foreign translation gains and losses are reported on the consolidated statement of operations and comprehensive loss
and were included in the amount of loss from comprehensive income. The aggregate foreign currency transaction loss included in net income
for the years ended December 31, 2023 and 2022 was $ 1
 million, respectively.

 Income
Taxes

 We
account for our income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets
and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets, liabilities, and income taxes
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in
the period that includes the enactment date. Income tax expense is based on reported earnings before income taxes.

 Our
income is subject to taxation in both the U.S. and a foreign jurisdiction, Israel. Significant judgment is required in evaluating the
Company's tax positions and determining its provision for income taxes. The Company establishes reserves for income-tax-related
uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies
are established when we believe positions do not meet the more-likely-than-not recognition threshold. We adjust uncertain tax liabilities
in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision
for income taxes includes the impact of uncertain tax liabilities and changes in liabilities that are considered appropriate.

 Comprehensive
Income (Loss)

 Comprehensive
income (loss) is defined as a change in equity of a business enterprise during a period from transactions and other events and circumstances
from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions
to owners. Our other comprehensive income (loss) is composed of foreign currency translation adjustments.

 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 years ended December 31, 2023 and December 31, 2022 were 8,412,494
 and 7,576,434,
respectively. Diluted net loss per share of common stock is the same as basic net loss per share of common stock because the effects
of potentially dilutive securities are antidilutive.

 The
following table sets forth the potentially dilutive securities as of December 31, 2023 and 2022, excluded from the computation of diluted
net loss per share because such securities have an anti-dilutive impact due to losses reported:

OF ANTI DILUTIVE SECURITIES EXCLUDES FROM COMPUTATION OF EARNINGS PER SHARE

 2023

 2022

 Options to purchase
 common stock

 1,471,407

 2,190,583

 to purchase common stock

 1,606,734

 1,481,734

 Potential
 shares excluded from diluted net loss per share

 3,078,141

 3,672,317

 F- 12

 Reclassifications
and Comparability

 Certain revenue and cost of goods sold amounts in the financial statements
of the prior year have been reclassified to be presented on a net basis rather than a gross to conform to the current year's presentation
for comparative purposes. The total amount reclassified from cost of goods sold to revenue, as a reduction, was $1.8 million. This had
no effect on total assets or net income.

 Recently
adopted accounting pronouncements

 In
June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standard Update ("ASU") 2016-13,
Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities will
measure credit losses for financial assets and certain other instruments that are not measured at fair value through net income. The
new expected credit loss impairment model requires immediate recognition of estimated credit losses expected to occur. Additional disclosures
are required regarding assumptions, models, and methods for estimating the credit losses. ASU 2019-10, Financial Instruments-Credit Losses
(Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, deferred the effective date for non-public
companies. The standard is effective for non-public companies for fiscal years beginning after December 15, 2022. We adopted these requirements
as of January 1, 2023 with no material impact on our consolidated financial statements.

 In
August 2020, the Financial Statement Accounting Board (the "FASB") issued ASU 2020-06 which simplifies the accounting for
convertible instruments and its application of the derivatives scope exception for contracts in an entity's own equity. For contracts
in an entity's own equity, the new guidance eliminates some of the current requirements for equity classification such as the requirement
that settlement in unregistered shares is permitted. In addition, the new guidance reduces the number of accounting models that require
separating embedded conversion features from convertible instruments, including eliminating the requirement to recognize a beneficial
conversion feature if the conversion feature is in the money and does not require bifurcation as a derivative liability. As a result,
only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately.
The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires
enhanced disclosures about the terms of convertible instruments and contracts in an entity's own equity. The Company adopted the
new standards January 1, 2023. The adoption of this standard may allow the Company, in the future and in certain circumstances, to avoid
derivative treatment of warrants and avoid beneficial conversion treatment of certain convertible preferred shares. Adoption of this
standard had no effect on the Company's financial statements.

 Recent
Accounting Pronouncements not yet adopted

 In
November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.
2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires retrospective disclosure of significant
segment expenses and other segment items on an annual and interim basis. Additionally, it requires disclosure of the title and position
of the Chief Operating Decision Maker ("CODM"). This ASU will be effective for the Company's fiscal December 31, 2024
year-end and interim periods beginning in fiscal 2025, with early adoption permitted. We are assessing the impact of this guidance on
our disclosures; it will not have an impact on our results of operations, cash flows, or financial condition.

 In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual
tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well
as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction.
This ASU will be effective for the Company's fiscal December 31, 2025 year-end, with early adoption permitted. We are assessing
the impact of this guidance on our disclosures; it will not have an impact on our results of operations, cash flows, or financial condition.

 NOTE
3 – GOING CONCERN

 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 $ 45 million
 as of December 31, 2023

 deficit of $ 113.9 million as of December 31, 2023

 Multiple
 years of losses from operations

 Year
 over year decrease in sales

 Noncompliance
 with certain debt covenants

Evaluation

considers the conditions outlined above as the most significant factors in raising substantial doubt about the Company's ability
to continue as a going concern within one year after the date the financial statements are issued.

 Management's
Plans to Mitigate and Alleviate Conditions or Events

 is evaluating operating expenses and is developing a plan to reduce expenditures without negatively impacting current operations.

 has placed a strategic focus on increasing sales with prime customers.

 Sales
 efforts are focused on the most profitable product lines.

 Blue
 Star - The Company's total accounts payable due to Blue Star as of December 31, 2023, was approximately $ 42
 million. Blue Star is an unsecured creditor,
 financing a substantial amount the Company's supply chain demand. Management believes that Blue Star will continue supplying
 the Company with preferable credit terms. Blue Star has agreed to the annual interest rate of 5 %
 on invoices that are past due. 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 five years.

 finalized a new line of credit with an additional financial institution.

 In
 October 2023 management finalized an equity raise which resulted in $ 2.5
 million in net cash received from investors.

 F- 13

 NOTE
4 – BUSINESS ACQUISITIONS

 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. Pursuant to the Dangot Share
Purchase Agreement, Omniq Technologies agreed to purchase 51 %,
or 5,100
 shares, of the capital stock of Dangot Computers
Ltd., an Israel company ("Dangot"), from Dangot's sole shareholder, Haim Dangot, for consideration equivalent to 23,740,500
 NIS (New Israeli Shekel), which equaled US $ 7.6
 million (the "Closing Consideration"),
based on the exchange rate at the date of acquisition.

 The
Closing Consideration was paid on July 8, 2021 in the following manner: (a) the Company issued 220,103
 shares of its common stock having a share value
of $ 2,084
 thousand and (b) cash in the amount of $ 5,058
 thousand, and (c) $ 600
 thousand payable to owner.

 Haim
Dangot also granted Omniq Technologies an irrevocable option to purchase the remaining 4,900
 shares, or 49 %,
of Dangot's capital stock (the "Dangot Option") in the 12-month period following the closing date (the "Dangot
Option Period") at a share purchase price of 465,500
 NIS, which equaled US $ 143
 thousand, per each 1 %
of Dangot's remaining shares on a fully diluted basis which is the same valuation per share as the purchase price for the 51 %.
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 thousand 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
 thousand to purchase the additional shares. The
Company utilized its working capital and a combination of short- and long-term loans.

 The
following table summarizes the consideration given and the purchase price allocation:

OF RECOGNIZED FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

 Purchase
 Price Consideration (in thousands)

 Total

 Consideration

 Cash payments

 $
 5,058

 Accrued payable to owner

 Fair value of stock issued (220,103 shares)

 2,084

 Debt
 assumed

 5,310

 Total
 consideration

 $
 13,052

 Cash

 $

 Accounts receivable

 13,470

 4,616

 Other assets

 5,392

 Property and equipment

 1,758

 Trade name

 1,893

 Customer relationship

 3,139

 Other
 intangible assets

 Assets acquired

 $
 32,471

 Current liabilities assumed

 ( 12,911
)

 Non-controlling
 interest

 ( 6,508
)

 Net
 assets acquired

 $
 13,052

 F- 14

 NOTE
5 – CONTRACTS WITH CUSTOMERS

 The
balance of deferred revenues is included in other current and long-term liabilities on the balance sheet. The following table summarizes
changes in deferred revenue as of December 31:

OF DEFERRED REVENUE

 2023

 2022

 Beginning balance

 $
 1,393

 $
 2,101

 Less amounts recognized during
 the year

 ( 945
)

 ( 711
)

 Add
 new deferred revenue

 1,827

 Ending
 Balance

 $
 2,275

 $
 1,393

 NOTE
6 – ACCOUNTS RECEIVABLE

receivable consisted of the following as of December 31:

OF ACCOUNTS RECEIVABLE

 In

 2023

 2022

 Trade accounts
 receivable

 $
 19,155

 $
 24,348

 Less
 allowance for doubtful accounts

 ( 501
)

 ( 455
)

 Total
 accounts receivable (net)

 $
 18,654

 $
 23,893

receivable as of December 31, 2023 and 2022 are made up of trade receivables due from customers in the ordinary course of business. No
customer accounted for more than 10 %
of the balance of accounts receivable for either period.

 NOTE
7 – INVENTORY

consisted of the following as of December 31:

OF INVENTORY

 In

 2023

 2022

 Raw materials

 $

 $

 Inventory in transit

 2,004

 Finished goods

 5,072

 6,350

 Less
 allowance for obsolescence

 ( 238
)

 ( 277
)

 Total
 inventories

 $
 6,028

 $
 8,726

 NOTE
8 – PROPERTY AND EQUIPMENT

 The
following is a summary of the components of property and equipment as of December 31:

OF PROPERTY AND EQUIPMENT

 In

 2023

 2022

 Manufacturing
 and lab equipment

 $

 $

 Leasehold improvements

 Software and computer equipment

 Furniture and equipment

 Vehicle

 Property and equipment, Gross

 Less:
 accumulated depreciation

 ( 1,166
)

 ( 1,030
)

 Property and equipment,
 Net

 $
 1,066

 $
 1,086

expense for the years ended December 31, 2023 and 2022 was approximately $ 464
 thousand and $ 324
 thousand, respectively.

 NOTE
9 – GOODWILL AND INTANGIBLE ASSETS

 Impairment
of Goodwill – During the year ended December 31, 2023 the Company experienced significant decline in our stock price and sustained
losses from operations. Therefore, we completed a quantitative goodwill impairment analysis as of December 31, 2023. The results of the
analysis during the fourth quarter indicated an impairment loss for goodwill related to acquisitions prior to 2021, and we recorded a
non-cash impairment of $ 14.7 million. Accumulated impairment of goodwill for the years ended
December 31, 2023 and 2022 was $ 14.7
 million and $ 0,
respectively.

 Identifiable
intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over
the estimated useful lives ranging from 3
 to 11
 years. Amortization expense for the years ended
December 31, 2023 and 2022 was $ 1.6
 million and $ 1.8
 million, respectively

assets consisted of the following as of December 31:

OF GOODWILL ASSETS CONSISTED

 In

 2023

 2022

 balance, beginning of year

 $
 16,542

 $
 16,453

 Impairment
 loss

 ( 14,686
)

 -

 Effective
 foreign exchange rates

 ( 68
)

 balance, end of year

 $
 1,788

 $
 16,542

 Intangible
assets consisted of the following as of December 31:

OF GOODWILL AND INTANGIBLE ASSETS

 In

 2023

 2022

 Trade names

 6,227

 6,284

 Customer relationships

 15,591

 15,729

 Other intangibles

 2,173

 2,216

 amortization

 ( 18,333
)

 ( 16,761
)

 Intangibles,
 net

 $
 5,658

 $
 7,468

 The
future amortization expense on the trade names, customer relationships, and other intangibles are as follows:

OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

 In

 Years
 ending December 31,

 2024

 $

 2025

 2026

 2027

 2028

 Thereafter

 1,729

 Total

 $
 5,658

 F- 15

is not amortized but is evaluated for impairment annually or when indicators of a potential impairment are present. The impairment testing
of goodwill is performed separately from our impairment testing of intangibles. The annual evaluation for impairment of goodwill and
intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating
plans. None of the goodwill is deductible for income tax purposes.

 Purchased
intangible assets with finite useful lives are amortized over their respective estimated useful lives (using an accelerated method for
customer relationships and trade names) to their estimated residual values, if any. The Company's finite-lived intangible assets
consist of customer relationships, contractor and resume databases, trade names, and internal use software and are being amortized over
periods ranging from two
 to nine
years. Purchased intangible assets are reviewed
annually to determine if facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying
amount of assets may not be recoverable. If such facts and circumstances exist, recoverability is assessed by comparing the projected
undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective
carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful
life is shorter than originally estimated, the rate of amortization is accelerated, and the remaining carrying value is amortized over
the new shorter useful life. No
 impairments were identified or changes to estimated
useful lives have been recorded as of December 31, 2023 and 2022.

 NOTE
10 – CREDIT FACILITIES AND LINE OF CREDIT

 We
maintain operating lines of credit, factoring, and revolving credit facilities with banks and finance companies to provide 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 a credit facility, whereby we could obtain short-term financing by selling and assigning acceptable
accounts receivables to BridgeBank. Gross proceeds received during the years ended December 31, 2023 and 2022 were $ 35
 million and $ 50
 million, respectively. This agreement was terminated
in 2023.

 The
annual interest rate with respect to the daily average balance of unpaid advances outstanding under the BFA (computed on a monthly basis)
was 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 was collateralized
with a senior security interest in certain assets of the Company. The BFA included customary representations and warranties and default
provisions for transactions of this type.

 NOTE
11 – RELATED PARTY NOTES PAYABLE

 Related
party notes payable, consisted of the following as of December 31:

OF NOTES PAYABLE, RELATED PARTIES

 2023

 2022

 Note payable –
 Marin

 $
 -

 $

 Note
 payable – Thomet

 -

 Total
 notes payable, related parties

 $
 -

 $

 The
remaining balances were paid in full during the year ended December 31, 2023. For the years ended December 31, 2023 and 2022, the Company
recorded interest expense in connection with these notes in the amount of $ 1
 thousand and $ 8
 thousand, respectively.

 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 was payable in 60
monthly principal payments of $ 20
 thousand beginning in October 2018. Accrued interest
payable as of December 31, 2023 and 2022, was $ 73
 thousand and $ 72
 thousand, respectively. Accrued interest was
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 was payable in
monthly principal payments of $ 13
 thousand beginning in October 2018.

 F- 16

 NOTE
12 – OTHER NOTES PAYABLE

 Other
notes payable consists of the following as of December 31,

OF OTHER NOTES PAYABLE

 In

 2023

 2022

 Notes Payable
 - other

 $
 10,461

 $
 11,627

 Less
 current portion

 ( 10,196
)

 ( 11,572
)

 Long
 Term Notes Payable

 $

 $

 Future
maturities of notes payable are as follows for the years ending December 31, 2023:

OF FUTURE MATURITIES OF NOTE PAYABLE

 In

 2024

 $
 10,196

 2025

 Total

 $
 10,461

 Other
Notes Payable

 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 the Israeli
Prime Rate plus 4.5 %
which currently equals 8.25 %
per annum and is payable in 8
 instalments of principal and interest over 4
years. The note is secured by shares of Dangot
Computers, Ltd

 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.

 On
September 13, 2022, the Company entered into a long-term loan from Hapoalim Bank totaling NIS 3
 million, approximately US $ 0.9
 million. The note accrues interest at 7.5 %
per annum and is payable in 36
 instalments of principal and interest over 3
years.

 During
the year ended December 31, 2023, the Company entered into a short-term loan Hapoalim Bank totaling NIS 5.5
 million, approximately US $ 1.5
 million. The note accrues interest at 7.3 %
per annum.

 During
the year ended December 31, 2023, the Company entered into a short-term loan from Bank Leumi totaling NIS 21.5
 million, approximately US $ 5.9
 million. The note accrues interest at 7.6 %
per annum.

 On
September 21, 2023, the Company entered into a long-term loan from Tzameret Mimunim totaling 1.5 M
NIS, approximately US $ 393
 thousand. The note accrues interest at the Israeli
Prime Rate plus 3.5 %
which currently equals 9.75 %
per annum and is payable in 36
 monthly installments.

 As
of December 31, 2023, the Company was not in compliance with certain financial covenants related to the Bank Leumi and Bank Hapoalim
debt. The Company's failure to comply with these financial covenants could result in an event of default under its debt agreements.
Therefore, we reclassified the total balance as current debt on the balance sheet. The Company is actively pursuing options to address
its noncompliance. The lenders have not requested early repayment of the loan as of the date when these financial statements were available
to be issued.

 F- 17

 NOTE
13 – COMMITMENTS AND CONTINGENCIES

 Profit
Sharing Plan

 We
maintain a contributory profit-sharing plan covering substantially all full-time employees within the requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA"). In 2016, the Safe Harbor element was removed from the plan, so the employer may make
a discretionary matching contribution equal to a uniform percentage or dollar amount of participants' elective deferrals for each
Plan Year. The plan also includes a 401(k)-savings plan feature that allows substantially all employees to make voluntary contributions
and provides for discretionary matching contributions determined annually by the Board of Directors. For the years ending December 31,
2023 and 2022, the company has elected to match; the total expense was $ 109
 thousand and $ 122
 thousand, respectively.

 Operating
Leases

 As
of December 31, 2023, we had 5 Operating leases as follows:

 Office
 space in Salt Lake City UT with monthly payments of $ 24
 thousand.
 As of December 31, 2023, the Company had 32
 months
 remaining on the lease.

 Office
 space in Anaheim, CA with monthly payments of $ 4
 thousand.
 As of December 31, 2023, the Company had 27
 months
 remaining on the lease.

 Dangot's
 corporate offices are currently located at Yad Harutzim 14 Tel-Aviv, Israel. The main corporate office, Yad Harutzim 14, serves as
 the company's main building on the 2nd and 3rd floors, used by the management and most of the sales staff, technicians, etc.
 The corporate office annual lease expense is NIS 784,380.
 As of December 31, 2023, the Company had 11
 months remaining on the lease.

 We
 lease office space (Gamdan- 1st floor) for our finance and service department at Yad Harutzim 14 Tel-Aviv, Israel. The lease provides
 for monthly payments of NIS 18,814.
 As of December 31, 2023, the Company had 12
 months remaining on the lease.

 We
 lease office and warehouse space for our products and technical support staff at Rival Street, Tel-Aviv, Israel. The lease provides
 for monthly payments of NIS 41,200.
 AS of December 31, 2023, the Company had 18
 months remaining on the lease.

 F- 18

 Other
information related to our operating leases is as follows:

OF OTHER INFORMATION RELATED TO OPERATING LEASE

 ROU asset - January 1, 2022

 $
 3,556

 ( 1,000
)

 Effective foreign exchange
 rates

 ( 256
)

 Increase

 -

 ROU asset - December 31,
 2022

 2,300

 Increase

 1,164

 Decrease

 ( 437

)

 Effective foreign exchange
 rates

 ( 273)

 ( 892
)

 ROU
 asset – December 31, 2023

 $
 1,862

 Lease liability – January
 1, 2022

 $
 3,607

 Increase

 -

 Effective foreign exchange
 rates

 ( 261
)

 ( 1,000
)

 Lease liability – December
 31, 2022

 2,346

 Increase

 Decrease

 ( 661

)

 Effective foreign exchange
 rates

 ( 904
)

 Lease
 liability - December 31, 2023

 $
 1,896

 As
of December 31, 2023, our operating leases had a weighted average remaining lease term of 19.81
 months and a weighted average discount rate of
 6 %.

 The
table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years
to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2023:

OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

 In

 Year

 Minimum lease

 payments

 2024

 $

 2025

 2026

 Total

 2,076

 Less
 interest

 ( 180
)

 Present
 value of future minimum lease payments

 1,896

 Less
 current obligations

 ( 885
)

 Long
 term lease obligations

 $
 1,011

 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. This case was
settled in February 2024.

 F- 19

 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 government 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 beneficiary 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
14 – STOCKHOLDERS' EQUITY

 PREFERRED
STOCK

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.

B

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

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.

 F- 20

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:

OF WARRANTS ACTIVITY

 2023

 2022

 Number
 of

 Number
 of

 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

 exercised

 -

 -

 -

 -

 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:

OF OUTSTANDING WARRANTS

 Range
 of

 Exercise Prices

 Residual Life

 Span (in
 years)

 Outstanding

 Exercisable

 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

 F- 21

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

OF WARRANTS OUTSTANDING, EXPIRY DATE AND EXERCISE PRICES

 Expiry
 Date

 Exercise Prices

 2023

 2022

 May
 18, 2023

 10.00

 -

 50,000

 14, 2023

 10.00

 -

 50,000

 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

 7.00

 30,000

 30,000

 May

 5.91

 40,000

 40,000

 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,

OF STOCK OPTIONS GRANTED

 2023

 2022

 Number
 of
 Stock Options

 Number
 of
 Stock Options

 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
)

 -

 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

 F- 22

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

OF STOCK OPTIONS, EXPIRY DATE AND EXERCISE PRICES

 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

 31, 2023

 4.40

 -

 November
 30, 2023

 5.40

 -

 120,250

 November
 20, 2024

 10.00

 -

 125,000

 April
 20, 2025

 4.20

 March

 5.14

 563,500

 648,500

 March

 5.65

 140,000

 140,000

 May

 5.90

 30,000

 30,000

 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,

OF STOCK COMPENSATION EXPENSE

 2023

 2022

 Stock Compensation

 $

 $
 1,321

 Stock
 Option vesting

 1,682

 1,852

 Total

 $
 1,955

 $
 3,173

 NOTE
15 – RELATED PARTY TRANSACTIONS

 In
February 2020 we amended the consulting agreement with Mr. Carlos J. Nissensohn, a principal shareholder of the Company and a family
member of a director and former officer of the Company. The terms and condition of the contract are as follows:

 Monthly
 Fee: a monthly fee of $ 30,000.

 Debt
 Financing Fee: If
 the Company procures debt financing during the term of this Agreement and without any equity component, then the Consultant, who
 shall have coordinated the transaction through which the Company procured the debt financing, shall be entitled to 5% of the gross
 funds raised; however if the Company is required to pay a success fee to another external entity, the Consultant shall be entitled
 to only 3% of the gross funds raised. Consultant's right to receive such fee shall remain in force for a period of 24 months
 immediately following the termination of this Agreement.

 Equity
 Financing Fee: If
 the Company procures equity financing in an amount equal to or greater than $2,000,000 during the term of this Agreement, then the
 Consultant shall be entitled to a success fee of $60,000 upon the Company's receipt of at least $2,000,000. Consultant's
 right to receive such fee shall remain in force for a period of 24 months immediately following the termination of this Agreement.
 If the Company procures equity financing in an amount equal to or greater than $4,000,000 during the term of this Agreement, then
 the Consultant shall be entitled to a success fee of $180,000 upon the Company's receipt of at least $4,000,000. Consultant's
 right to receive such fee shall remain in force for a period of 24 months immediately following the termination of this Agreement.
 If the Company procures equity financing in an amount equal to or greater than $6,000,000 during the term of this Agreement, then
 the Consultant shall be entitled to a success fee to be determined by the Board of Directors but not less than $250,000 upon the
 Company's receipt of at least $6,000,000. Consultant's right to receive such fee shall remain in force for a period of
 24 months immediately following the termination of this Agreement.

 Uplisting
 to National Exchange. If the Consultant assists in the planning and monitoring of a successful listing or offering of securities
 by the Company, or any subsidiary thereof, on the NASDAQ or New York Stock Exchange markets and such a listing or offering shall
 be consummated within 24 months as of the date hereof, then the Consultant shall be entitled to a $ 80,000
 onetime payment which shall be paid on the
 1st day that the OMNIQ shares become traded on such national exchange.

 M&A
 Fee:

 If
 the Company closes any M&A transaction with a third party target during the term of this Agreement, then the Consultant shall
 be entitled to a success fee in the amount equal to five percent ( 5 %)
 of the total transaction price, in any combination of cash and shares to be determined by OMNIQ, to be paid to the Consultant within
 two (2) weeks of the closing of such transaction. In the event an external entity is entitled to a success fee from the same M&A
 transaction, the Consultant's fee shall be reduced to no less than two and one-half percent ( 2.5 %)
 and such amount reduced from Consultant's fee shall be reallocated to the fee due to such external entity.

 If
 the Company closes any M&A transaction in which it is the acquired company, then the Consultant shall be entitled to a success
 fee in the amount equal to two percent ( 2 %)
 of the total transaction price, in any combination of cash and shares to be determined by the Company, to be paid to the Consultant
 within two (2) weeks of the closing of such transaction.

 The
 fees described in this Section 2(e) shall also apply to any M&A transaction that closes after the term of this Agreement but
 which the Consultant substantially contributed to prior to the termination of this Agreement.

 Sales Fee: Consultant shall be entitled to a fee equal to five percent ( 5 %)
 of the year-to-year growth in the Company's foreign sales of its products and services during the term of the Agreement. Such
 fee shall be paid within a reasonable time after the end of each fiscal year. If this Agreement is terminated prior to the end of
 a fiscal year, then the Consultant shall be entitled to receive a pro-rated amount of the sales growth realized by the Company that
 year.

 F- 23

 NOTE
16 – CONCENTRATION AND GEOGRAPHIC DATA

 For
the year ended December 31, 2023, no customer accounted for more than 10 %
of the Company's revenues. For the year ended December 31, 2022, one customer accounted for 30 %
of the Company's revenues.

 Information
about Geographic Areas

 Revenues
by geography are based on the shipping addresses of our customers. The following tables set forth revenues by geographic area for the
years ended December 31,

OF REVENUES BY GEOGRAPHIC AREA

 In

 2023

 2022

 Revenues:

 United States

 $
 33,666

 $
 49,236

 Israel

 35,804

 42,217

 Russia

 9,215

 -

 Rest
 of the world

 2,508

 9,305

 Total
 revenues

 $
 81,193

 $
 100,758

 The
Company's operations are subject to various political, economic, and other risks and uncertainties inherent in the countries in
which the Company operates. Among other risks, the Company's operations are subject to the risks of restrictions on transfer of
funds, export duties, quotas and embargoes, domestic and international customs and tariffs, changing taxation policies, foreign exchange
restrictions, political conditions, and governmental regulations.

 We
are closely monitoring developments in the war between Israel and Hamas that began on October 7, 2023 including potential impacts to
The Companies business, customers, suppliers, employees, and operations in Israel, the Middle East and elsewhere. At this time, impacts
to The Company are expected to be minimal but is subject to change given the volatile nature of the situation.

 NOTE
17 – INCOME TAX

 For
the year ended December 31, 2023, the Company has $ 741
 thousand of current income tax expense (US State
& Local and Foreign) and $ 221
 thousand deferred income tax benefit.

 The
tax effect of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows as of December
31,

OF DEFERRED TAX ASSETS AND LIABILITIES

 In

 Deferred
 tax assets

 2023

 2022

 Reserves and deferred
 revenue

 $
 1,213

 $

 163(j) Limitation

 3,165

 2,260

 Foreign deferred tax assets

 Net
 operating loss

 10,731

 8,353

 Total gross deferred tax assets

 15,465

 11,158

 Less:
 Valuation Allowance

 ( 14,947
)

 ( 10,890
)

 Net deferred tax assets

 Deferred tax liabilities

 ( 162
)

 ( 134
)

 Total
 deferred tax liabilities

 ( 162
)

 ( 134
)

 Net
 deferred tax assets

 $

 $

 F- 24

 Components
of net deferred tax assets, including a valuation allowance, are as follows as of December 31:

OF DEFERRED TAX ASSETS AND VALUATION ALLOWANCES

 2023

 2022

 Net deferred tax
 assets

 $
 15,303

 $
 11,025

 Valuation
 allowance

 ( 14,947
)

 ( 10,890
)

 Total
 deferred tax assets

 $

 $

 The
valuation allowance for deferred tax assets as of December 31, 2023 and 2022 was $ 14.9
 million and $ 10.9
 million, respectively. In assessing the recovery
of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the
periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this assessment. Management has recorded a 100% valuation allowance,
against its U.S. net deferred tax assets, since Management believes it is more likely than not that it will not be realized at the date
of this statement. The Company will continue to monitor the potential utilization of this asset. Should factors and evidence change to
aid in this assessment, a potential adjustment to the valuation allowance in future periods may occur. The Company records any penalties
and interest as a component of operating expenses.

 The
reconciliation between statutory rate and effective rate is as follows as of December 31,:

OF RECONCILIATION OF STATUTORY RATE AND EFFECTIVE TAX RATE

 2023

 2022

 Federal statutory
 tax rate

 21.00
 %

 21.00
 %

 State taxes

 (.03
)%

 ( 0.07
)%

 Foreign income taxes

 ( 5.79
)%

 ( 4.45
)%

 Change in valuation allowance

 ( 6.66
)%

 ( 16.13
)%

 Return to provision adjustments

 ( 0.00
)%

 (.03
)%

 amortization

 ( 10.31
)%

 (.76
)%

 Effective
 tax rate

 ( 1.79
)%

 (.44
)%

 The
Company reported no uncertain tax liability as of December 31, 2023 and expects no significant change to the uncertain tax liability
over the next twelve months. The Company's 2020, 2021, 2022, and 2023 federal and state income tax returns are open for examination
by the applicable governmental authorities.

 As
of December 31, 2023, the Company had a net operating loss (NOL) carryforward of approximately $ 43.8
 million. A portion of the NOL carryforward begins
to expire in 2028. Under Section 382 of the Internal Revenue Code of 1986, as amended ("IRC Section 382"), a corporation
that undergoes an "ownership change" is subject to limitations on its use of pre-change NOL carryforwards to offset future
taxable income. Within the meaning of IRC Section 382, an "ownership change" occurs when the aggregate stock ownership of
certain stockholders (generally 5% shareholders, applying certain look-through rules and aggregation rules which combine unrelated shareholders
that do not individually own 5% or more of the corporation's stock into one or more "public groups" that may be treated
as 5-percent shareholder) increases by more than 50 percentage points over such stockholders' lowest percentage ownership during
the testing period (generally three years). In general, the annual use limitation equals the aggregate value of common stock at the time
of the ownership change multiplied by a specified tax-exempt interest rate. The Company has not completed a study as to whether there
is a 382 limitation on its NOLs that will limit or possibly eliminate the use of its NOLs in the future. Company's Management has
recorded a 100% valuation allowance on the entire NOL as it believes that it is more likely than not that the deferred tax asset associated
with the NOLs will not be realized regardless of whether or not an "ownership change" has occurred.

 NOTE
18 – SUBSEQUENT EVENTS

 On
January 18, 2024, the Company's wholly owned subsidiary, Quest Marketing, Inc. ("Quest") entered into a Purchase and
Sale Agreement (the "Purchase and Sale Agreement") with Prestige Capital Finance, LLC ("Prestige"), in which
Quest has sold, transferred and assigned all of its rights, title and interest to specific accounts receivable owed to Quest. The maximum
outstanding balance of Quest to Prestige shall be $ 7.5
 million.

 In
addition, Prestige's purchase from Quest shall be at a discount. The discount shall be based on the number of days an account is
outstanding. The discount fee shall be as follows: If
paid within 30 days a discount fee of 1.50% plus an additional.50% for each 10-day period thereafter up to a maximum of 90 days.

 On
January 30, 2024, OMNIQ Corp. (the "Company'), its wholly owned subsidiary, Dangot Computers Ltd. ("Dangot"),
CodeBlocks Ltd. (CodeBlocks"). and CodeBlock's owners, Alina Lifshits and Erez Attia entered into a Share Purchase Agreement
(the "Purchase Agreement") pursuant to which Dangot, acquired all of the capital stock of CodeBlocks in exchange for NIS
 4,666,664
 (approximately US $ 1,275,044
 based on today's exchange rate). The consideration
is payable in seven equal installments with the final payment due on January 11, 2025. The purchase Agreement closed on February 1, 2024.

 F- 25

 EXHIBIT

 Exhibit
 No.

 Description

 (a)

 Exhibits.

 3.1

 Form
 of Certificate of Amendment to the Certificate of Incorporation, as amended, dated November 18, 2019 incorporated by reference to
 Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on November 18, 2019.

 3.2

 Amendment
 to Certificate of Designation of Series C Preferred Stock on June 17, 2016, incorporated by reference to Exhibit 3.1 to the Company's
 Current Report on Form 8-K, filed with the SEC on June 21, 2016.

 3.3

 Form
 of Certificate of Amendment to the Certificate of Incorporation, as amended, of OMNIQ Corp., dated September 30, 2020, incorporated
 by reference to the Company's Current Report on Form 8-K, filed with the SEC on October 2, 2020.

 4.1

 $12,492,136.51
 Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada Inc.,
 Quest Exchange Ltd. and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference
 to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed with the SEC on July 22, 2016.

 4.2*

 Description
 of Securities

 4.3

 $483,173.60
 CAD Secured Promissory Note, from Quest Solution, Inc., Bar Code Specialties, Inc., Quest Marketing, Inc., Quest Solution Canada
 Inc., Quest Exchange Ltd. and their subsidiaries and/or affiliates, jointly and severally, to ScanSource, Inc., incorporated by reference
 to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed with the SEC on July 22, 2016.

 4.4

 Form
 of Warrant, incorporated by referenced to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed with the SEC on April
 9, 2019.

 4.5

 Form
 of Placement Agent Warrant, incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed with
 the SEC on April 9, 2019.

 10.1

 Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.1 to the
 Company's Current Report on Form 8-K, filed with the SEC on April 6, 2017.

 10.2

 Modification
 Agreement by and between the Company and Shai Lustgarten dated February 17, 2017, incorporated by reference to Exhibit 10.1 to the
 Company's Current Report on Form 8-K, filed with the SEC on April 6, 2017.

 10.14

 Consulting
 Agreement by and between the Company and Carlos J Nissensohn dated August 2, 2017 incorporated by reference to Exhibit 10.1 to the
 Company's Current Report on Form 8-K, filed with the SEC on August 4, 2017.

 10.15

 Consulting
 Agreement by and between the Company and YES-IF dated September 8, 2017, incorporated by reference to Exhibit 10.1 to the Company's
 Current Report on Form 8-K filed with the SEC on September 8, 2017.

 10.17

 Agreement by and between the Company and Benjamin Kemper dated October 2, 2017, incorporated by reference to Exhibit 10.3 to the
 Company's Current Report on Form 8-K filed with the SEC on October 5, 2017.

 10.24

 Agreement by and between the Company and David Marin dated February 28, 2018. 2018 Equity Incentive Plan incorporated by reference
 to Exhibit 10.9 to the Company's Current Report on Form 8-K filed with the SEC on March 12, 2018.

 10.36

 Neev
 Nissenson Employment Agreement, incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed
 with the SEC on September 9, 2019.

 10.37

 Asset
 Purchase Agreement, dated February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form
 8-K filed with the SEC on March 4, 2020.

 10.38

 Shai
 Lustgarten Employment Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.2 to the Company's
 Current Report on Form 8-K filed with the SEC on March 4, 2020.

 10.39

 Consulting
 Agreement, dated as of February 27, 2020, incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form
 8-K filed with the SEC on March 4, 2020.

 10.40

 Asset
 Purchase Agreement dated February 28, 2020, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form
 8-K filed with the SEC on March 4, 2020.

 10.41

 Agreement with Shai Lustgarten on September, 2019, incorporated by reference to Exhibit 10.1 to the Company's Current Report
 on Form 8-K filed with the SEC on September 9, 2019.

 10.42

 Consulting
 Agreement with Carlos J. Nissensohn on September, 2019, incorporated by reference to Exhibit 10.2 to the Company's Current
 Report on Form 8-K filed with the SEC on September 9, 2019.

 10.43

 2023
 Equity Incentive Plan, incorporated by reference to Appendix B to the Company's Definitive Proxy Statement on Schedule 14A

 10.44

 Asset
 Purchase Agreement dated January 18, 2024, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form
 8-K filed with the SEC on January 24, 2024

 10.45

 Share
 Purchase Agreement dated January 30, 2024, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form
 8-K filed with the SEC on February 5, 2024

 14.1*

 Code
 of Ethics

 21.1*

 Subsidiaries
 of the Registrant

 23.1*

 Consent
 of Independent Registered Public Accounting Firm

 31.1*

 Certification
 of our Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2*

 Certification of our Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1*

 Certification
 of our Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

 32.2*

 Certification
 of our Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

 99.4*

 Clawback
 Policy

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Cover

 *
Filed herewith.

 ITEM
16. NONE.