Attached files
file | filename |
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EX-99.4 - OMNIQ Corp. | ex99-4.htm |
EX-99.2 - OMNIQ Corp. | ex99-2.htm |
8-K/A - OMNIQ Corp. | form8-ka.htm |
HTS IMAGE PROCESSING, INC
CONDENSED COMBINED BALANCE SHEET
September 30, | December 31, | |||||||
(In thousands) | 2018 | 2017 | ||||||
Unaudited | Audited | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 770 | $ | 101 | ||||
Accounts receivable, net | 3,435 | 869 | ||||||
Inventories, net | 1,421 | 801 | ||||||
Prepaid expenses and other current assets | 171 | 78 | ||||||
TOTAL CURRENT ASSETS | 5,797 | 1,849 | ||||||
Fixed assets, net | 179 | 110 | ||||||
Goodwill | 2,684 | - | ||||||
TOTAL ASSETS | $ | 8,660 | $ | 1,959 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 2,466 | $ | 428 | ||||
Accrued payroll and sales tax | 137 | 281 | ||||||
Deferred tax Liability | - | 15 | ||||||
Notes payable, related party | 127 | - | ||||||
Other current liabilities | 3,965 | 11 | ||||||
TOTAL CURRENT LIABILITIES | 6,695 | 735 | ||||||
LONG TERM LIABILITIES | ||||||||
Other long term liabilities | 2,556 | 1,378 | ||||||
TOTAL LIABILITIES | $ | 9,252 | $ | 2,113 | ||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS’ EARNINGS (DEFICIT) | ||||||||
Series C Preferred stock | $ | - | $ | - | ||||
Common stock | 2 | 1 | ||||||
Accumulated earnings (deficit) | (544 | ) | (155 | ) | ||||
TOTAL STOCKHOLDERS’ EARNINGS (DEFICIT) | (542 | ) | (154 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 8,710 | $ | 1,959 |
HTS IMAGE PROCESSING, INC
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS
FOR THE 9-MONTH PERIOD ENDED SEPTEMBER 30, 2018
(In thousands except per share data) | Unaudited | |||
Revenue | $ | 6,419 | ||
Cost of revenue | 3,581 | |||
Gross profit (loss) | 2,838 | |||
Operating expenses | ||||
General and administrative | 167 | |||
Salary and employee benefits | 1,668 | |||
Research and development | 43 | |||
Professional fees | 440 | |||
Total operating expenses | 2,318 | |||
Income from operations | 520 | |||
Other income (expenses) | (335 | ) | ||
Income before income taxes | 185 | |||
Income tax benefit (provision) | (127 | ) | ||
Net income available to common stockholders | $ | 58 | ||
Basic and diluted net loss per common share | $ | 0.58 | ||
Basic and diluted weighted average common shares outstanding | 100,000 |
NOTE 1 — DESCRIPTION OF BUSINESS
Overview
HTS Image Processing, Inc (formerly Teamtronics, Inc.) (a Delaware C corporation - the Company) was organized on September 20, 2016 to manufacture and sell portable rugged computerized equipment for industrial and field automation.
HTS a technological world leader in computer vision image processing-based solutions for Security, Safe Cities, Traffic Management, Parking Management, Law Enforcement, Surveillance and Access Control. HTS’ groundbreaking AI-based vision solutions are currently in use for sensitive Homeland Security anti-terror projects and discerning customers including: the Brookhaven National Laboratory for access control, JFK Airport, Newark Airport, La Guardia Airport, Boston’s Logan Airport, the U.S. Department of Transportation for readers at the US/Mexico border crossing, as well as a Florida municipality, and a Middle Eastern Homeland Security authority for the automated monitoring of sensitive zones.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Company are prepared on the accrual basis of accounting and in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents - Cash and cash equivalents are defined as cash and investments that have a maturity of less than three months. As of December 31, 2017, the Company had no cash equivalents in banks in excess of FDIC insurance of $250,000.
Accounts Receivable - Accounts receivable are stated net of an allowance for doubtful accounts. The Company estimates the allowance based on historical write-offs and management experience. As of September 30, 2018, management estimated all accounts receivable were collectible in full and accordingly, no allowance has been provided.
Inventory - The Company’s inventories are stated at the lower of cost (using the first-in first-out method - FIFO) or market. Inventories include raw materials (hardware, computer accessories etc.), and work-in-process. Work-in-process have standard overhead and labor costs allocated based on a percentage determined by management.
Property & Equipment - Property and equipment are recorded at cost. Depreciation and amortization expense is calculated using the straight-line method over the estimated useful lives, generally from three to fifteen years. Maintenance, repairs and minor renewals are expensed as incurred. The cost of property sold or otherwise disposed of and the related accumulated depreciation is relieved from the accounts, and any gains or losses arising from sale or disposal are included in income.
Paid Time Off - The Company provides paid time off for vacation, sick and personal time for its employees. Employees do not have the option of cashing out unused paid time off. The Company expenses the paid time off as incurred. No accrual has been made at year end due to the immateriality of the balance.
Impairment of long-lived assets - Management reviews net carrying value of all property and equipment and other long-lived assets on a periodic basis or whenever events or circumstances indicate that the carrying value of those assets may not be recoverable.
An impairment loss is recognized when the carrying amount of an asset exceeds the sum of the undiscounted estimated future cash flows. In this circumstance, the Company would recognize an impairment loss equal to the difference between carrying value and the fair value of the asset.
Income Taxes – The Company is a C Corporation and files income tax returns with the U.S. Federal and Utah state jurisdictions. The Company accounts for income taxes under the provisions of ASC 715-60, “Accounting for Income Taxes”, requiring companies to account for deferred income taxes using the asset and liability method. Under such practices, the Company recognizes deferred tax assets and liabilities related to the future tax consequences attributable to ongoing differences between the financial statement carrying amount and tax basis of existing assets and liabilities. The effect of income tax credits, loss carry-forwards and changes in statutory tax rates are recognized in the periods that such amounts are expected to be realized.
The Company adopted the provisions of ASC 740-10, “Accounting for Uncertainty in Income Taxes”. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740-10 requires a company to determine whether it is more-likely-than-not that a tax position will be sustained “when challenged” or “when examined” by the applicable taxing authority based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of ASC 740-10, management performed a review of its material tax positions and determined that there were no unrecognized tax benefits which would materially affect the effective tax rate if recognized.
The Company will include interest and penalties arising from the underpayment of income taxes in the statements of income in the provision for income taxes. As of December 31, 2017, the Company had no accrued interest or penalties related to uncertain tax positions. Tax years that remain subject to examination are years 2016 and forward.
Income Tax of subsidiary – The Company adopts the laws of the country in which the subsidiary is located in accordance with the tax laws of the country.
Revenue Recognition - The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price to the customer is fixed or determinable, and collection of the resulting receivable is reasonably assured. These criteria are usually met at the time of product shipment.
Advertising - Advertising, promotions and marketing costs are charged to operations as incurred. Advertising expense for the year ended September 30, 2018 was $0.
Fair Value of Financial Instruments - The carrying amounts reported in the accompanying financial statements for cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term maturities of these financial instruments. The carrying amounts of the Company’s debt obligations approximate fair value based on current interest rates for instruments with similar terms.
NOTE 3 — ACCOUNTS RECEIVABLE, NET
September 30, | December 31, | |||||||
2018 | 2017 | |||||||
accounts receivable | $ | 3,435 | $ | 869 | ||||
Allowance for Doubtful Accounts | — | — | ||||||
accounts receivable, net | $ | 3,435 | $ | 869 |
NOTE 4 — INVENTORIES
Inventories are stated at the lower of cost or market, computed using the first-in, first-out method. Inventories consist of the following:
September 30, | December 31, | |||||||
2018 | 2017 | |||||||
Raw materials | $ | 1,372 | $ | 719 | ||||
Working-in-process | 49 | 82 | ||||||
Total inventories | $ | 1,421 | $ | 801 |
NOTE 5 — PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following:
September 30, | December 31, | |||||||
2018 | 2017 | |||||||
Production equipment | $ | 190 | $ | 87 | ||||
Office Equipment | 23 | 7 | ||||||
Vehicles | 63 | 63 | ||||||
accumulated depreciation | (97 | ) | (47 | ) | ||||
Property and equipment, net | $ | 179 | $ | 110 |