Company: OMQS
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001813
Chunk: 1023

Company: OMNIQ Corp.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 13
Chunk 1023
---
  
    State taxes 
     (0.10)% 
     (0.03)%
  
    Foreign income taxes 
     0.28% 
     (5.78)%
  
    Change in valuation allowance 
     (12.17)% 
     (6.67)%
  
    Return to provision adjustments 
     0.00% 
     0.00%
  
    Other 
     0.00% 
     (10.31)%

    Effective tax rate 
     9.01% 
     (1.78)%

The
Company reported no uncertain tax liability as of December 31, 2024 and expects no significant change to the uncertain tax liability
over the next twelve months. The Company’s 2021, 2022, 2023, and 2024 federal and state income tax returns are open for examination
by the applicable governmental authorities.

As
of December 31, 2024, the Company had a net operating loss (NOL) carryforward of approximately $45.7 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