Company: OMQS
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001813
Chunk: 310

Company: OMNIQ Corp.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 5
Chunk 310
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 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.

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.

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, 2024 and 2023.

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