OMNIQ’s Q4 2023 EARNINGS RELEASE

SALT LAKE CITY, 28, 2024 — OMNIQ Corp. (NASDAQ: OMQS) (“OMNIQ” or the “Company”), a provider of Artificial Intelligence (AI) and IoT–based solutions will release Full Year 2023 Earnings after the market close on Monday, April 1st, 2024. The announcement will be followed by a live earnings call with management the following morning, Tuesday, April 2nd, 2024, at 9:00 AM EST.

• Reduction in General Administrative expenses by $4.7 million, or 17% YoY
• Reduction of thirty-four employees compared to December 31^st, 2022.
• Increased Cash Assets by $300 Thousand.
• Decrease in current liabilities by $836 Thousand.
• 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.
• Losses reported are largely impacted by non-cash impairments*, our non-cash Goodwill impairment expenses amounted to $14.7 million for December 31^st, 2023.

Fourth Quarter 2023 Financial Results

OMNIQ reported revenue of $16 million for the quarter ended December 31, 2023. Our Gross Margin was 13% compared to 2022 which had a gross margin of 17%. As a result of management’s effort to reduce costs. The total operating expenses for the quarter before the non-cash impairment expenses were $6.5M, compared with $7.6 million in the fourth quarter of 2022. These results resulted in savings of $1.2M for the quarter. The total expenses including the $14.7M impairment were $19.1M.

Net loss for the quarter was $17.8 million, compared with a loss of $4 million, or a loss of $0.53 per basic share, for the fourth quarter of last year. The loss was largely impacted by the $14.7 impairment expense.

Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization) for the fourth quarter of 2023 amounted to a loss of $3.6 million compared with an adjusted EBITDA loss of $1.4 million in the fourth quarter of 2022.

Cash balance on December 31, 2023, was approximately $1.7 million compared with $1.1 million on December 31, 2022.

FY 2023 Financial Results

OMNIQ reported revenue of $81.1 million for the year ended December 31, 2023, a decrease of $19.6 million from $100.8 million for the year ended December 31, 2022. Our Gross Profit decreased to $15.7 million in the year that ended December 31, 2023, compared to $22.1 million in 2022. Total operating expenses excluding the Impairment cost for the year ended December 31, 2023, were $27.2M a decrease of $4.5M compared with $31.7 million in the year ended December 31, 2022. While including the non-cash impairment the expenses were $41.9M for the year ended December 31^st, 2023.

Net loss for the year ended December 31, 2022, was $29.4 million, or a loss of $3.45 per basic share, compared with a loss of $13.6 million, or a loss of $1.82 per basic share, for the year ended December 31, 2022.

Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization) for the year ended December 31, 2023, amounted to a loss of $7.4 million compared with an adjusted EBITDA loss of $2.9 million in 2022.

Additional Q4 2023 and Recent Events

• Multi-year contract for Israel’s largest logistics center.
• AI-machine vision ordered for La Guardia, NY Stewart, and Newark Airports.
• Addition of AI-based in-car face detection.
• Acquisition of Codeblocks; a fintech company ensuring proprietary unique features.
• Fintech solution ordered for Israel’s largest fast-food chain.
• Self-Service Taxi kiosks ordered for Ben-Gurion Airport to improve service, safety, and regulate pricing for travelers.
• Fintech solution ordered for U.S.-owned restaurant chain.
• Contract to upgrade 450 sporting goods stores in the US.
• Recent purchase order from Nestle for logistic operations.

Shareholder update  

We wanted to present to you the main concerns that we have been working through this year. Namely, balancing the need for operational cash with the need to add additional products. Ultimately, we plan to prioritize the timely and cost-effective development of new products so that we can remain competitive in the markets in which we are involved. Certain political events created a delay in our Israel-based research and development departments in 2023.  

One challenge is that we are experiencing a working capital deficit of $45 million and an accumulated deficit of $114 million. We have also seen a year-over-year decrease in sales and a reduction of goodwill. To mitigate this, we have placed a strategic focus on increasing sales with prime customers. No customer accounted for more than 10% of the revenues in 2023 vs year end 2022 when one customer accounted for 30% of the Company’s revenues. Additionally, our sales efforts are focused on the most profitable product lines.  

To ensure we have sufficient working capital, In October 2023, management finalized an equity raise which resulted in $2.5 million in net cash received from investors. Management also finalized a new line of credit with an additional financial institution. The company has a debt obligation to Blue Star as of December 31, 2023, that was approximately $42 million. Blue star is an unsecured creditor that finances a substantial amount of 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 an annual interest rate of 5% on invoices that are past due. The Company has enjoyed a good mutual relationship for the past five years. We leverage drop-ship shipments with many of our partners and suppliers to deliver hardware to our customers without physically holding the inventory at our warehouses, thereby increasing efficiency, and reducing costs.  

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.   We also terminated the acquisition agreement of Tadiran Telecom due to the contractual terms and conditions not being met.

“In navigating through the complex landscape shaped by global and market events, it is provided us with a valuable opportunity to reflect deeply on our core operations and values. It’s like looking in a mirror, not to critique what we see with harshness, but to understand where our strengths lie and where we need to evolve. These insights are now guiding us toward making significant, forward-thinking changes. We are not just addressing the immediate issues at hand; we are laying down the foundation for a healthier, more robust future for our company. This period of transformation, though demanding, is an investment in our collective future, ensuring we emerge not just intact but stronger and more aligned with our mission than ever before.” – Shai Lustgarten, CEO

OMNIQ Fourth Quarter 2023 Earnings Call Details

• Tuesday, April 02, 2024 – 9:00 AM Eastern Time
• Participant Numbers:   Toll Free: 888-506-0062
• International: 973-528-0011
• Participant Access Code: 102048

Participants will be greeted by an operator and asked for the access code. If a caller does not have the code, they can reference the company name. We have found that using access codes expedites entry into the call and suggest the code be distributed with the dial in numbers.

Teleconference Replay Number:       

• Toll Free: 877-481-4010
• International: 919-882-2331
• Replay Passcode: 50290
• Webcast URL: https://www.webcaster4.com/Webcast/Page/2310/50290

ABOUT OMNIQ CORP.

OMNIQ specializes in advanced computer and machine vision technologies, leveraging proprietary and patented artificial intelligence to offer innovative solutions. The Company’s comprehensive suite of services includes sophisticated data collection systems, real-time surveillance, and monitoring solutions tailored to a broad spectrum of sectors, including supply chain management, homeland security, public safety, traffic, and parking management. Our innovative offerings are meticulously crafted to enhance the security and efficiency of moving people, assets, and information through critical infrastructures like airports, warehouses, and national borders, ensuring streamlined operations and improved safety.

The Company caters to a diverse range of clients, from government bodies to prestigious Fortune 500 companies operating in various sectors such as manufacturing, retail, healthcare, distribution, transportation, logistics, food and beverage, and the oil, gas, and chemical industries. By integrating OMNIQ Corp.’s state-of-the-art solutions, these entities have been able to navigate the complexities of their respective fields more effectively, significantly improving their operational efficiency.

The Company has made notable strides in fast-growing markets, including the Global Safe City sector, expected to reach $67.1 billion by 2028, the smart parking industry, anticipated to grow to $16.4 billion by 2030, and the fast-casual restaurant market, projected to expand to $209 billion by 2027. These achievements underscore OMNIQ Corp.’s commitment to aligning with sectors experiencing an increased demand for advanced AI technology solutions. For more details, please visit our website at www.OMNIQ.com.

Information about forward-looking statements

This press release contains forward-looking statements as outlined by the Private Securities Litigation Reform Act of 1995, particularly under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements discuss anticipated future events, economic performance, and financial results, offering predictions rather than historical facts, based on current expectations and forecasts.

Forward-looking statements in this document, marked by phrases such as “anticipate,” “expect,” “may,” “believe,” and other similar expressions, should not be interpreted as guarantees of future performance.

These projections are made with the information available at the time and reflect the management’s current views on future events. However, they are subject to various risks and uncertainties that could cause the actual outcomes to differ markedly from those outlined or suggested. Factors influencing these outcomes include changes in product demand, the launch of new products, the ability to sustain and grow customer and strategic partnerships, competitive dynamics, market expansion, financial health, debt management, and the successful integration of new acquisitions.

Key forward-looking statements made here include those related to financial strategies, revenue enhancement, and operational efficiencies. For an in-depth examination of risks and uncertainties that could impact OMNIQ Corp.’s future results, we invite you to consult our recent submissions to the Securities and Exchange Commission at https://www.sec.gov. OMNIQ Corp. undertakes no obligation to update these forward-looking statements, except as may be required by law, to reflect current information or future events.

Contact Info: IR@omniq.com

* Impairment of Goodwill – During the year ended December 31, 2023, the Company experienced a 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.