Company: OMQS
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001813
Chunk: 842

Company: OMNIQ Corp.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 10
Chunk 842
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 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.

Management
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
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 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