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Odysight.ai Inc.

Odysight.ai Inc.ODYSEarnings & Financial Report

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What changed in Odysight.ai Inc.'s 10-K — 2024 vs 2025

Top changes in Odysight.ai Inc.'s 2025 10-K

300 paragraphs added · 304 removed · 233 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

74 edited+11 added−27 removed72 unchanged
Visual remote access capabilities allow for expert support and collaboration, even across different locations. 6 Our current business model is to identify customers interested in adding real-time visualization and analytics to their existing or new products. This model includes the initial kit sale including vision-based sensors, processing unit with embedded software and basic set of algorithms.
Visual remote access capabilities allow for expert support and collaboration, even across different locations. 6 Our current business model is to identify customers interested in adding real-time visualization and analytics to their existing or new products. This model includes the initial kit sale including vision-based sensors, and processing unit with embedded software and basic set of algorithms.
This involves addressing operators, OEMs, maintenance and repair organizations, and forming strategic partnerships with entities holding strong market positions that can benefit from our solution, providing them immediate value and a technological edge, thereby accelerating our sales and global expansion.
This involves addressing operators, OEMs, maintenance and repair organizations, and forming strategic partnerships with entities holding strong market positions that can benefit from our solution, providing them with immediate value and a technological edge, thereby accelerating our sales and global expansion.
Many of the laws and regulations to which we are subject are still evolving and being tested in courts and could be interpreted in ways that could harm our business. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate.
Many of the laws and regulations to which we are subject are still evolving and are being tested in courts, and could be interpreted in ways that could harm our business. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate.
Our technology can detect minuscule deformations that will eventually leave the bearings vulnerable to surface fatigue. AI algorithms can then forecast the time of failure. This not only helps ensure that the bearings are replaced, when necessary, but also prevents collateral damage to nearby components, machines or systems that would occur should the bearings fail. Cost Savings.
Our technology can detect minuscule deformations that will eventually leave the bearings vulnerable to surface fatigue. AI algorithms can then forecast the estimated time of failure. This not only helps ensure that the bearings are replaced, when necessary, but also prevents collateral damage to nearby components, machines or systems that would occur should the bearings fail. Cost Savings.
We have commercial agreements and purchase orders for hundreds of airborne systems of various original equipment manufacturers, or OEMs, in aerospace and have completed successful demonstration projects for various industrial users. We are in the process of developing additional applications for our vision-based sensing portfolio, which are anticipated to provide significant benefits to our customers.
We have commercial agreements and purchase orders for hundreds of airborne systems of various original equipment manufacturers, or OEMs, in the aerospace industry, and have completed successful demonstration projects for various industrial users. We are in the process of developing additional applications for our vision-based sensing portfolio, which are anticipated to provide significant benefits to our customers.
Among other things, certain applicable laws and regulations require or may in the future require the submission of annual reports to certain governmental agencies certifying that such products comply with applicable performance standards, the maintenance of manufacturing, testing and distribution records, and the reporting of certain product defects to such regulatory agency or consumers.
Among other things, certain applicable laws and regulations require or may in the future require the submission of annual reports to certain governmental agencies certifying that such products comply with applicable performance standards, the maintenance of manufacturing, testing and distribution records, and the reporting of certain product defects to such regulatory agencies or consumers.
On April 20, 2020, Odysight.ai Ltd. entered into an Amended and Restated Intercompany Services Agreement with Xylo Technologies, which effectively amended and restated an intercompany services agreement dated May 30, 2019. On June 5, 2023, we changed our name to Odysight.ai Inc.
On April 20, 2020, we entered into an Amended and Restated Intercompany Services Agreement with Xylo Technologies, which effectively amended and restated an intercompany services agreement dated May 30, 2019. On June 5, 2023, we changed our name to Odysight.ai Inc.
On May 18, 2020, we and Xylo Technologies entered into a certain Side Letter Agreement, whereby the parties agreed to amend certain terms of the Amended and Restated Asset Transfer Agreement and related documents.
On May 18, 2020, we entered into a certain Side Letter Agreement with Xylo Technologies, whereby the parties agreed to amend certain terms of the Amended and Restated Asset Transfer Agreement and related documents.
We believe that our ability to compete successfully depends primarily on the following factors: ● continuing to advance our vision-based sensor solution; ● leveraging our data and AI capabilities; ● maintaining and attracting customers; ● developing and launching new products and transformative brands; ● responding to changing customer demands in a timely manner; ● maintaining the value and reputation of our brand; 11 ● attracting and retaining a team committed to innovation; ● effectiveness of our products; ● accessible pricing; ● customer service; and ● effectiveness of our marketing strategies.
We believe that our ability to compete successfully depends primarily on the following factors: ● continuing to advance our vision-based sensor solution; ● leveraging our data and AI capabilities; ● maintaining and attracting customers; ● developing and launching new products and transformative brands; ● responding to changing customer demands in a timely manner; ● maintaining the value and reputation of our brand; 10 ● attracting and retaining a team committed to innovation; ● effectiveness of our products; ● accessible pricing; ● customer service; and ● effectiveness of our marketing strategies.
Such approval may entail additional payments to the IIA, as determined under the Innovation Law and regulations. 14 In general, with regard to any IIA-funding, the Innovation Law requires, among other things, that the products developed as part of the programs under which the grants were given be manufactured in Israel, and restricts the ability to transfer know-how directly or indirectly funded by the IIA outside of Israel.
Such approval may entail additional payments to the IIA, as determined under the Innovation Law and regulations. 13 In general, with regard to any IIA-funding, the Innovation Law requires, among other things, that the products developed as part of the programs under which the grants were given be manufactured in Israel, and restricts the ability to transfer know-how directly or indirectly funded by the IIA outside of Israel.
In addition, our solution may be installed at the design stage as well as retrofit. Due to these advantages, we believe that our vision-based sensor solutions are appealing to customers seeking the benefits of condition based monitoring and predictive maintenance solutions in hard-to-reach locations and harsh environments. Potential long-term growth due to recurring subscription-based model.
In addition, our solution may be installed at the design stage as well as retrofit. Due to these advantages, we believe that our vision-based sensor solutions are appealing to customers seeking the benefits of condition based monitoring and predictive maintenance solutions in hard-to-reach locations and harsh environments. Potential long-term growth driven by recurring subscription-based model.
Our solution was further developed to monitor safety critical and other components on the aircraft and today the solution has been procured for the SH-60 Seahawk helicopter and deployed on the AH-64 Apache and other operational platforms in Israel and globally. Odysight TruVision System Architecture Our specialized software collects, processes, detects, and records real time information from multiple sensors.
Our solution was further developed to monitor safety critical and other components on the aircraft and today the solution has been procured for the SH-60 Seahawk helicopter and deployed on the AH-64 Apache and other operational platforms in Israel and globally. Our System Architecture Our specialized software collects, processes, detects, and records real time information from multiple sensors.
The rich and informative data, continuously collected and analyzed by our solution on our secured cloud, provides customers with real-time failure / anomaly detection, events and data recordings, interfacing with platform mission systems and providing real-time alerts and streaming video or images, all while training our algorithms for ongoing improved accuracy and prediction capabilities.
The data, continuously collected and analyzed by our solution on our secured cloud, provides customers with real-time failure / anomaly detection, events and data recordings, interfacing with platform mission systems and providing real-time alerts and streaming video or images, all while training our algorithms for ongoing improved accuracy and prediction capabilities.
We pursue the registration of domain names for websites that we use and that we consider material to the marketing of our products, including the odysight.ai domain. 12 We generally seek to enter into confidentiality agreements and proprietary rights agreements with our employees, consultants, contractors and suppliers and to control access to, and distribution of, our proprietary information and source code.
We pursue the registration of domain names for websites that we use and that we consider material to the marketing of our products, including the odysight.ai domain. 11 We generally seek to enter into confidentiality agreements and proprietary rights agreements with our employees, consultants, contractors and suppliers and to control access to, and distribution of, our proprietary information and source code.
This is a stark difference from other maintenance approaches, such as preventive maintenance, that can increase downtime by implementing either insufficient or excessive maintenance. Advanced Training and Support . Real-time and historical visual information serve as powerful training tools for technicians, improving their skills and preparedness.
This is a stark difference from other maintenance approaches, such as preventive maintenance, which can increase downtime by implementing either insufficient or excessive maintenance. Advanced Training and Support . Real-time and historical visual information serve as powerful training tools for technicians, improving their skills and preparedness.
Our vision-based system and analysis ensures consistent and objective detection of issues, reducing human error and enhancing the reliability of maintenance predictions and interventions. The data analytics we provide offer maintenance teams with insights that help machines perform optimally as long as possible.
Our vision-based system and analysis ensure consistent and objective detection of issues, reducing human error and enhancing the reliability of maintenance predictions and interventions. The data analytics we provide offer maintenance teams with insights that help machines perform optimally as long as possible.
Currently, our revenues are derived mostly from sales of the Odysight TruVision solution. As we expand the installed base of our solutions, we expect subscriptions for the continued support of our technology to become the foundation of our recurring revenue for sustainable growth over time. 7 Unique research and development capabilities and a robust intellectual property portfolio.
Currently, our revenues are derived mostly from sales of our solutions. As we expand the installed base of our solutions, we expect subscriptions for the continued support of our technology to become the foundation of our recurring revenue for sustainable growth over time. 7 Unique research and development capabilities and a robust intellectual property portfolio.
Our competitors could also independently develop technologies like ours, and our intellectual property rights may not be broad enough for us to prevent competitors from selling products and services incorporating those technologies.
Our competitors could also independently develop technologies like ours, and our intellectual property rights may not be broad enough or early enough for us to prevent competitors from selling products and services incorporating those technologies.
In the aerospace market alone, which constitutes commercial aviation, military rotorcraft, fixed wing aircraft and UAVs, we believe that our Aerospace TAM is currently more than $10 billion.
In the aerospace market alone, which includes commercial aviation, military rotorcraft, fixed wing aircraft and UAVs, we believe that our Aerospace TAM is currently more than $10 billion.
We believe our intellectual property and know-how present a significant barrier to entry for our competitors. Experienced management team. We are led by a highly experienced management team with a successful track record in predictive maintenance, condition-based monitoring, aerospace, software, algorithms, video analytics, optics and system engineering.
We believe our intellectual property and knowledge present a significant barrier to entry for our competitors. Experienced management team. We are led by a highly experienced management team with a successful track record in predictive maintenance, condition-based monitoring, aerospace, software, algorithms, video analytics, optics and system engineering.
We believe the performance of the Odysight TruVision solution, in conjunction with the flexibility of our software, will allow us to continue providing new solutions to our customers and further develop the use cases for our systems across various vertical markets. Extend Our Technology Leadership .
We believe the performance of our solutions, in conjunction with the flexibility of our software, will allow us to continue providing new solutions to our customers and further develop the use cases for our systems across various vertical markets. Extend Our Technology Leadership .
To engage new customers, we employ various sales and marketing strategies. We employ several professional experienced sales managers in relevant fields of expertise, in addition to a team of consultants who analyze global trends and designated geographical territories to assist us in targeting potential customers.
To engage new customers, we employ various sales and marketing strategies. We employ several professional experienced sales managers in relevant fields of expertise, in addition to a team of consultants who assist us in targeting potential customers by analyzing global trends and designated geographical territories.
Following this acquisition, we integrated and fully adopted the acquired miniaturized imaging business into the company as our primary business activity. On December 1, 2019, Xylo Technologies and Odysight.ai Ltd. consummated a certain Amended and Restated Asset Transfer Agreement, which transferred and assigned certain assets and intellectual property rights related to its miniaturized imaging business.
Following this acquisition, we integrated and fully adopted the acquired miniaturized imaging business into the company as our primary business activity. On December 1, 2019, we consummated a certain Amended and Restated Asset Transfer Agreement with Xylo Technologies, which transferred and assigned certain assets and intellectual property rights related to its miniaturized imaging business.
Position Ourselves as Leading PdM and CBM Solution Provider in Aerospace and Expand to New Verticals . We continue to sign new commercial agreements in the aerospace vertical and believe our solution is highly relevant and a value add in many aerospace platforms. In addition, we are working to develop new vertical opportunities, including transportation, energy and other industries.
Position Ourselves as Leading PdM and CBM Solution Provider in Aerospace and Expand to New Verticals . We continue to sign new commercial agreements in the aerospace vertical and believe our solution is highly relevant and provides additional value in many aerospace platforms. In addition, we are working to develop new vertical opportunities, including transportation, energy and other industries.
Our marketing efforts include, but are not limited to, the following: ● engaging third-party companies and local consultants as territorial representatives in key markets to target leading companies in relevant industries; ● initiating business engagements based on leads received through our marketing efforts or through active interaction with key industry influencers, ● conducting proof of concept demonstrations in order to evaluate the feasibility of integration of the Odysight TruVision solution for monitoring their systems and to demonstrate the significant value proposition of our technology to customers; ● networking through personal contacts in the aerospace, defense, transportation, maritime, energy and medical industries; and ● participating in major aerospace, defense, vision technology and other exhibitions as well as Industry 4.0 specific events.
Our marketing efforts include, but are not limited to, the following: ● engaging third-party companies and local consultants as territorial representatives in key markets to target leading companies in relevant industries; ● initiating business engagements based on leads received through our marketing efforts or through active interaction with key industry influencers; ● conducting proof of concept demonstrations with customers in various industries in order to evaluate the feasibility of integrating our solutions for monitoring their systems and to demonstrate the significant value proposition of our technology; ● networking through personal contacts in the aerospace, defense, transportation, maritime and energy industries; and ● participating in major aerospace, defense, vision technology, and other exhibitions, as well as Industry 4.0 specific events.
When a potential opportunity is identified, we seek to protect our rights by establishing relevant intellectual property safeguards and developing prototypes for the required application. Manufacturing and Supply We rely on both in-house manufacturing together with outsourced manufacturing for a portion of the assembly of our vision-based sensor products.
When a potential opportunity is identified, we seek to protect our rights by establishing relevant intellectual property safeguards and developing prototypes for the required application. Manufacturing and Supply We rely on a combination of in-house and outsourced manufacturing for the assembly of our vision-based sensor products.
Our value proposition is based on providing actual condition of a platform in real-time, offering significant value through enhanced safety, efficiency and cost savings. Our big data analytics provide predictive insights regarding an entire system life cycle, spare parts management and smart prediction of system performance.
Our value proposition is based on providing actual condition of a platform in real-time, offering significant value through enhanced safety, efficiency and cost savings and transition from periodic maintenance to condition-based maintenance. Our data analytics provide predictive insights regarding an entire system life cycle, spare parts management and smart prediction of system performance.
The operational, financial and quality benefits of using the Odysight TruVision solution include the following: Enhanced Safety. The Odysight TruVision solution enhances worker safety without sacrificing productivity and while minimizing planned and unexpected downtime. This is made possible by early detection of potential failures, which can prevent accidents and help to ensure the aircraft operates within safe parameters.
The operational, financial and quality benefits of using our solutions include the following: Enhanced Safety. \ Our solutions enhance worker safety without sacrificing productivity, while minimizing planned and unexpected downtime. This is made possible by early detection of potential failures, which can prevent accidents and help to ensure the aircraft operates within safe parameters.
Vision-based specialized sensors. The Odysight TruVision solution utilizes high end device sensor technology coupled with software-defined products. With this combination, we develop new solutions for industry-specific requirements, constantly expanding our product offerings. Compelling value proposition. We designed the Odysight TruVision solution to provide improved operating efficiency and safety, minimize maintenance costs, reduce downtime and extend operational life.
Vision-based specialized sensors. Our solutions utilize high end device sensor technology coupled with software-defined products. With this combination, we develop new solutions for industry-specific requirements, constantly expanding our product offerings. Compelling value proposition. We design our solutions to provide improved operating efficiency and safety, minimize maintenance costs, reduce downtime and extend operational life.
Predictive maintenance is estimated to cut maintenance costs by 5 to 10 percent. This is savings on costs related to inventory management, the personnel needed to install replacement components and more. Under conventional maintenance programs, in cases of emergencies and unexpected machine breakdown, these costs can multiply.
Predictive maintenance is estimated to cut maintenance costs on average by 25 percent. These savings are on costs related to inventory management, the personnel needed to install replacement components and more. Under conventional maintenance programs, in cases of emergencies and unexpected machine breakdown, these costs can multiply.
We manufacture and sell the Odysight TruVision solution that contains electronic components, and such components may contain materials that are subject to government regulation in both the locations where we develop, manufacture and assemble our products, as well as the locations where we sell our products.
We manufacture and sell solutions that contain electronic components, and such components may contain materials that are subject to government regulation in both the locations where we develop, manufacture, and assemble our products, as well as the locations where we sell our products.
Market Opportunity We believe the Odysight TruVision solution has potential application across diverse industry verticals as it is a core technology. As the benefits of vision-based sensor technology become more widely accepted, we believe there are significant market opportunities available for our product offerings.
Market Opportunity We believe that our solutions have potential application across diverse industry verticals as it is a core technology. As the benefits of vision-based sensor technology become more widely accepted, we believe there are significant market opportunities available for our product offerings.
Our core technologies include: ● Vision-Based Sensor Technology : This innovative approach uses micro cameras and specialized AI models to monitor and analyze system health in real-time, even in hard-to-reach and harsh environments. ● AI and Machine Learning : We employ sophisticated proprietary AI algorithms to predict potential hazards, optimize maintenance schedules and enhance operational efficiency. ● High-Resolution Visualization : Our solution provides detailed visual data, enabling accurate detection and monitoring of issues such as liquid leaks and bearing malfunctions. ● Cloud-Based Analytics : The collected data is continuously analyzed on a secure cloud platform, offering customers both raw data and processed insights for improved decision-making.
Our core technologies include: ● Vision-Based Sensor Technology : This innovative approach uses micro sensors to monitor and analyze system health condition in real-time, designed for hard-to-reach and harsh environments. ● AI and Machine Learning : We employ sophisticated proprietary AI algorithms and models to predict potential hazards, optimize maintenance schedules and enhance operational efficiency. ● High-Resolution Visualization : Our solution provides detailed visual data, enabling accurate detection and monitoring of issues such as liquid leaks, cracks, deformation and many other use cases. ● Cloud-Based Analytics : The collected data is continuously analyzed on a secure cloud platform or “On Prem”, offering customers both raw data and processed insights for improved decision-making.
The Odysight TruVision solution streams visual information to our processing unit, an in-platform, high-performance AI/machine learning computer, allowing maintenance and operations teams, on the ground and during operations, visibility into areas that are inaccessible under normal operating conditions or where conditions are not suitable for continuous real-time monitoring.
Our Solutions Our solutions stream visual information to our processing unit, an in-platform, high-performance AI/ML (machine learning) computer, allowing maintenance and operations teams, on the ground and during operations, visibility into areas that are inaccessible under normal operating conditions or where conditions are not suitable for continuous monitoring.
The solution is designed as an open architecture that supports both a full solution by the Odysight TruVision or integration with existing systems. 5 Our Business Model and Value Proposition Our unique video-based sensors, embedded software and AI algorithms are currently being deployed in hard-to-reach locations and harsh environments across a variety of PdM and CBM use cases.
This open architecture supports both our full solution or integration with existing systems. 5 Our Business Model and Value Proposition Our unique video-based sensors, embedded software and AI algorithms are currently being deployed in hard-to-reach locations and harsh environments across a variety of PdM and CBM use cases.
As of the date of this Annual Report, we had 61 employees in full- or part-time capacities. Our employees are all located in Israel. None of our employees are represented by labor unions or covered by collective bargaining agreements. We believe that we maintain good relations with all our employees.
As of the date of this Annual Report, we had 52 employees in full or part-time capacities. While most of our employees are all located in Israel, we also have employees in the U.S. None of our employees are represented by labor unions or covered by collective bargaining agreements. We believe that we maintain good relations with all our employees.
Failure to comply with anti-corruption laws and trade control laws could subject us to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses. Grants from the Israel Innovation Authority On May 21, 2023, we were awarded a grant by the IIA. The purpose of this grant is to support and our production capabilities.
Failure to comply with anti-corruption laws and trade control laws could subject us to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and to legal expenses. Grants from the Israel Innovation Authority On May 21, 2023, we were awarded a grant by the Israel Innovation Authority, or the IIA.
Our deep knowledge and intellectual property is protected by a broad patent portfolio, including 17 issued patents, seven of which are in the U.S., and 55 pending patent applications, 19 of which are in the U.S. (including provisional patent applications), as of the date of this Annual Report.
Our deep knowledge and intellectual property are protected by a broad patent portfolio, including 19 issued patents, 10 of which are in the U.S., and 63 pending patent applications, 25 of which are in the U.S. (including provisional patent applications), as of the date of this Annual Report.
Programs and policies applicable to our employees generally include, but are not limited to, benefits programs, equity compensation plans, flexible work schedules, diversity and inclusion initiatives, professional development opportunities, paid time-off policies and recognition and rewards programs. 15 As of the date of this Annual Report, we have four officers which consists of a Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and Senior VP of Product Portfolio, all of whom are engaged on a full-time basis.
Programs and policies applicable to our employees generally include, but are not limited to, benefits programs, equity compensation plans, flexible work schedules, diversity and inclusion initiatives, professional development opportunities, paid time-off policies and recognition and rewards programs. 14 As of the date of this Annual Report, we have three officers, which consist of a Chief Executive Officer, Chief Financial Officer and Chief Business Officer, all of whom are engaged on a full-time basis.
For more information regarding the risks relating to intellectual property, see “Item 1.A — Risk Factors — Risks Related to our Intellectual Property .” Government Regulation We are subject to a variety of laws, regulations and licensing requirements of U.S. federal, state and local authorities, including Israel.
For more information regarding the risks relating to intellectual property, see “Item 1.A — Risk Factors — Risks Related to our Intellectual Property .” Government Regulation We are subject to a variety of laws, regulations and licensing requirements of U.S. federal, state, and local authorities, as well as those of Israel and other countries in which we operate.
(formerly Medigus Ltd.), an Israeli company traded on Nasdaq, or Xylo Technologies and Odysight.ai Ltd., the IIA approved a transfer of IIA know-how developed by Xylo Technologies in the framework of the Bio Medical Photonic Consortium, or the Xylo Technologies Consortium.
(formerly Medigus Ltd.), or Xylo Technologies, and Odysight.ai Ltd., the IIA approved a transfer of IIA know-how developed by Xylo Technologies in the framework of the Bio Medical Photonic Consortium, or the Xylo Technologies Consortium.
Based on industry reports and our estimates, the global predictive maintenance market was approximately $8 billion in 2024 and is projected to grow to approximately $34 billion by 2030, at a compound annual growth rate of approximately 30%.
Based on industry reports and our estimates, the global predictive maintenance market was approximately $14 billion in 2025 and is projected to grow to approximately $82 billion by 2031, at a compound annual growth rate of approximately 34%.
Our customers benefit from increased safety, a reduction in downtime, a more efficient data driven operation, increased mission readiness and lower maintenance costs for their monitored platforms, using the prediction capabilities of our solution to efficiently plan maintenance work on monitored components. Our solution enhances safety and minimizes downtime by enabling real-time visual analysis of any failure occurrences.
Our customers benefit from increased safety, a reduction in downtime, a more efficient data driven operation, increased mission readiness and lower maintenance costs for their monitored platforms, using the prediction capabilities of our solution to efficiently plan maintenance work on monitored components.
For example, there exist U.S. Federal Aviation Administration and International Civil Aviation Organization requirements for certain airplane models to be subject to CE certification, a regulatory standard that verifies certain products are safe for sale and use in much of Europe. These and other requirements are applicable for the Odysight TruVision solution in various jurisdictions across the globe.
For example, there exist U.S. Federal Aviation Administration and International Civil Aviation Organization requirements for certain airplane models to be subject to CE certification, a regulatory standard that verifies certain products are safe for sale and use in much of Europe.
This strategy allows for immediate revenue generation from system sales, and also set the base to create a steady stream of recurring revenue from multi-year software subscriptions services. Our solution provides upsell opportunities including expanding algorithmic functionalities, additional applications, fleet management solutions and improved cloud management.
This strategy allows for immediate revenue generation from system sales, while also setting a base that we believe will allow us in the future to create a steady stream of recurring revenue from multi-year software subscriptions services when the warranty expires. Our solution provides upsell opportunities including expanding algorithmic functionalities, additional applications, fleet management solutions and improved cloud management.
We aim to be the industry benchmark for real-time, visual-based machine and infrastructure health monitoring through AI and machine learning data analytics.
We aim to be the industry benchmark for real-time, visual-based machine and infrastructure health monitoring and predictive maintenance analysis through AI and machine learning data analytics. Our Mission We aim to become the industry standard for real time, visual based, health monitoring using AI/ML data analytics.
Execute On Our Product Roadmap We continue to place a priority on innovation and product development to be competitive in our target markets over time to win new and expanded business opportunities.
We plan to continue focusing on efficient growth by expanding our sales and marketing efforts to secure new customers. Execute On Our Product Roadmap We continue to place a priority on innovation and product development to be competitive in our target markets over time to win new and expanded business opportunities.
Sales and Marketing We are focused on the aerospace vertical while we target Industry 4.0, transportation and energy markets where there is a growing need for our vision-based sensor technology.
Sales and Marketing We are focused on the aerospace vertical while we target Industry 4.0, transportation and energy markets where there is a growing need for our vision-based sensor technology. We are generating commercial revenues in aerospace, and advancing Industry 4.0 and transportation initiatives, from proof-of-concept and demos into commercial deliveries.
Our vision-based sensing technology provides solutions across diverse PdM and CBM markets, and in harsh conditions as demonstrated in a variety of environments, including outer space during NASA’s Robotic Refueling Mission, or RRM3, the Israeli Air Force, the Israeli Ministry of Defense, a global international defense contractor and a leading Fortune 500 medical company.
Our vision-based sensing technology provides solutions across diverse PdM and CBM markets, and in harsh conditions as demonstrated in a variety of environments, including outer space during NASA’s Robotic Refueling Mission, or RRM3.
Increased Efficiency and Mission Capability. On average, organizations are estimated to lower their machine failure rates by 70 percent using a predictive maintenance program.
Increased Efficiency and Mission Capability. Organizations are estimated to lower their machine failure rates significantly by using predictive maintenance programs.
The analysis of machine data from our vision-based sensing solution and analytics will highlight the situations in which components fail or breakdown frequently. Maintenance teams can use this information to minimize breakdowns. Reduced Downtime . Unexpected downtime is expensive, and can be one of the largest money drains in Industry 4.0 organizations.
The analysis of machine data from our vision-based sensing solution and analytics will highlight the situations in which components fail or break down frequently. Maintenance teams can use this information to minimize breakdowns. Reduced Downtime .
Accordingly, all rights and obligations with regard to the IIA under the Innovation Law, in connection with such know-how, now apply to us.
Accordingly, all rights and obligations with regard to the IIA under the Israeli Encouragement of Research, Development and Technological Innovation in the Industry Law, 5744-1984, or the Innovation Law, in connection with such know-how, now apply to us.
The focus of our R&D team is to provide technological innovation and associated intellectual property that expands the value proposition of our vision-based sensor solutions.
Our development strategy is to identify features and products for the hardware and software that enhance and improve the performance of our solutions for our customers. The focus of our R&D team is to provide technological innovation and associated intellectual property that expands the value proposition of our vision-based sensor solutions.
In the event of an extended failure of a supplier or suppliers in this area, it is possible that we could experience an interruption in supply until we established new sources or, in some cases, implemented alternative processes.
However, we obtain certain components from single source suppliers. In the event of an extended failure of one or more of these suppliers, it is possible that we could experience an interruption in supply until we established new sources or, in some cases, implemented alternative processes.
(Sumita), a specialty optical fiber technology company, pursuant to which we granted a non-exclusive license to Sumita to one of our imaging patent families in return for payment of royalties and a grant-back license to Odysight.ai of Sumita’s patents and patent applications related to fiber optics illumination. To date, only an immaterial amount of royalties has accrued.
In January 2022, we entered into a patent cross-licensing arrangement with Japan-based Sumita Optical Glass, Inc., or Sumita, a specialty optical fiber technology company, pursuant to which we granted Sumita a non-exclusive license to one of our imaging patent families in return for payment of royalties and a grant-back license to Odysight.ai of Sumita’s patents and patent applications related to fiber optics illumination.
As used in this Annual Report, Industry 4.0, or I4.0, refers to the integration of advanced technologies into manufacturing and industrial processes to create smart, interconnected systems for improved efficiency and productivity. Odysight solutions are already deployed in the aviation and medical sectors.
Unexpected downtime is expensive and can be one of the largest money drains in Industry 4.0 organizations (as used in this Annual Report, Industry 4.0, or I4.0, refers to the integration of advanced technologies into manufacturing and industrial processes to create smart, interconnected systems for improved efficiency and productivity).
Our Company We are a pioneer in the development, production and marketing of an innovative visualization AI solution that deploys small cameras to monitor critical safety components in hard-to-reach locations and harsh environments, across various PdM, and CBM use cases.
Item 1. Business Our Company We are a pioneer in the development, production and marketing of innovative visual monitoring artificial intelligence, or AI, solutions that deploy small visual sensors to monitor critical safety components in hard-to-reach locations and harsh environments, across various PdM, and CBM use cases applied both for the civil and defense sectors.
Additionally, we leverage advanced big data analytics to offer predictive insights throughout the entire system lifecycle. This includes efficient spare parts management and intelligent performance predictions, ensuring optimal system reliability and efficiency.
Our solution aims to enhance safety and minimize costly downtime by enabling real-time visual analysis of any failure occurrences and to leverage advanced big data analytics to offer predictive insights throughout the entire system lifecycle. This includes efficient spare parts management and intelligent performance predictions, ensuring optimal system reliability and efficiency.
As of March 20, 2025, our patent portfolio included 17 issued patents, seven of which are in the U.S., and 55 pending patent applications, 19 of which are in the U.S. (including provisional patent applications).
As of March 18, 2026, our patent portfolio included 19 issued patents, nine of which are in the U.S., one allowed patent application in the U.S., and 63 pending patent applications, 25 of which are in the U.S. (including provisional patent applications, not including PCT applications).
In addition, we are audited annually by MEDCERT GmbH, a German Notified Body. 13 We are subject to a number of laws and regulations that involve matters central to our business. These laws and regulations involve privacy, data protection, intellectual property, competition and other subjects.
These and other requirements are applicable to our solutions in various jurisdictions across the globe. 12 We are subject to a number of laws and regulations that involve matters central to our business. These laws and regulations involve privacy, data protection, intellectual property, competition and other subjects.
VIEW Ltd., a private company organized under the laws of the State of Israel and a wholly owned subsidiary of Odysight.ai Inc., to act as a local agent for the defense market in Israel. On January 9, 2025, we formed an additional wholly-owned subsidiary, Odysight.Ai Eu S.r.l., a private company organized under the laws of Italy.
In addition, our trading symbol on the OTCQB was changed from “SCTC” to “ODYS”, effective as of February 13, 2024. On February 28, 2024, we formed D. VIEW Ltd., a private company organized under the laws of the State of Israel and a wholly-owned subsidiary of Odysight.ai Inc., to act as a local agent for the defense market in Israel.
We are implementing a comprehensive sales and marketing approach that encourages widespread adoption of our products. Our aim is to sell the Odysight TruVision solution by targeting the Israeli home market, utilizing global platforms available in the U.S. and internationally.
Our aim is to sell our solutions by targeting the Israeli home market, utilizing global platforms available in the U.S. and internationally.
We have a total of 19 patent families, 12 of which are in the predictive maintenance field and seven are related to imaging technology. In January 2022, we entered into a patent cross-licensing arrangement with Japan-based Sumita Optical Glass, Inc.
We have a total of 24 patent families, 19 of which are in the predictive maintenance field and five are related to imaging technology.
We have recently secured several contracts for our PdM and CBM systems with major government clients and defense and aviation companies and our backlog as of December 31, 2024 of approximately $15 million (compared to approximately $2.6 million as of December 31, 2023) reflects mostly those contracts. 4 Our vision-based sensor technology Initially used in medical devices, our video-based sensor solution (comprising image acquisition, data collection and storage and image processing, including PdM and CBM) have contributed significantly to visual aids for medical teams in an FDA-cleared minimally invasive surgical device.
Historically, our revenue stream has been derived mainly from the medical sector. 4 Our vision-based sensor technology Initially used in medical devices, our video-based sensor solution (comprising image acquisition, data collection and storage and image processing, including PdM and CBM) have contributed significantly to visual aids for medical teams in an FDA-cleared minimally invasive surgical device.
Our products, which meet aerospace standards, combined with our management expertise, knowledge, and professional relationships, provide a strong foundation to engage with prospective clients. We plan to continue focusing on efficient growth by expanding our sales and marketing efforts to secure new customers.
We believe there is significant potential to attract new customers in the aerospace vertical, where we already have leading clients. Our products, which meet aerospace standards, combined with our management expertise, knowledge, and professional relationships, provide a strong foundation to engage with prospective clients.
Subject to our successfully achieving all predetermined milestones, the maximum grant amount that can be received is NIS 1 million (approximately US$ 277,777). As of December 31, 2024, we received IIA royalty-bearing grants totaling approximately NIS 515,000 (approximately US$130,000).
The purpose of this grant is to support our production capabilities. Subject to our successfully achieving all predetermined milestones, the maximum grant amount that can be received is NIS 1 million (approximately $ 277,777 using the NIS-dollar exchange rate at the time of grant).
Our significant growth opportunities are focused on the aerospace vertical where we have achieved sales to leading clientele, as well as expansion into new verticals. Acquire New Customers. We believe there is significant potential to attract new customers in the aerospace vertical, where we already have leading clients.
Our significant growth opportunities are focused on the aerospace vertical where we have achieved sales to leading clientele, as well as expansion into the industrial and transportation verticals as part of Industry 4.0. We continue to apply our technology and solutions to a broad range of applications within both the civil and defense sectors. Acquire New Customers.
For example, the unplanned downtime of machines is estimated to cost industrial manufacturers as much as $50 billion annually. The Odysight TruVision solution has been designed to eliminate unplanned downtime and allows maintenance teams to keep necessary, planned downtime to a minimum and at a more convenient, less disruptive schedule.
For example, Siemens estimates that the world’s 500 largest companies lose almost $1.4 trillion annually through unplanned downtime, which is equivalent to approximately 11% of their revenues. Our solutions have been designed to eliminate unplanned downtime and allows maintenance teams to keep necessary, planned downtime to a minimum and at a more convenient, less disruptive schedule.
Currently, we have four major customers that are expected to generate a substantial portion of our forecasted revenue in the near term.
Currently, we have three major customers that are expected to generate a substantial portion of our forecasted revenue in the near term. To date, Odysight.ai has made significant progress in deploying its advanced vision-based sensing and predictive maintenance technologies across multiple sectors, including defense, aerospace, transportation and industrial markets.
We often initially submit applications to the USPTO as provisional patent applications.
To date, only an immaterial amount of royalties has accrued. We often initially submit applications to the United States Patent and Trademark Office, or USPTO, as provisional patent applications.
We are also required to obtain various licenses and permits from state, local and Israeli authorities in connection with the operation of our business. Given that we do not manufacture or distribute end-user products and instead service businesses pursuant to a business-to-business model, we are subject to fewer regulatory standards commonly associated with manufacturers or distributors.
We are also required to obtain various licenses and permits from such authorities in connection with the operation of our business.
On February 11, 2025, our common stock began trading on the Nasdaq Capital Market under the symbol “ODYS”. 16
On January 9, 2025, we formed an additional wholly-owned subsidiary, Odysight.Ai Eu S.r.l., a private company organized under the laws of Italy. On February 11, 2025, our common stock began trading on the Nasdaq Capital Market under the symbol “ODYS”. 15
Any inability or delay in finding a suitable replacement supplier or suppliers could negatively affect our business, financial condition, results of operations and reputation. Our facility in Omer holds the following certifications: AS9100, ISO13485, IPC-A-610, and IPC-7711/7721. We have completed the process of implementing the I SO14001 Standard to comply with environmental management systems.
Any inability or delay in finding a suitable replacement supplier or suppliers could negatively affect our business, financial condition, results of operations and reputation. However, we perform periodic supply chain risk analysis and seek to procure required components to enable consistency in production of our solutions.
Research and Development Our research and development activities are conducted internally by a team of 32 research and development staff based in Israel. Our development strategy is to identify features and products for the hardware and software that enhance and improve the performance of our solutions for our customers.
Our facility in Omer holds the following certifications: ISO 9001, AS9100, ISO14001, ISO13485, IPC-A-610, and IPC-7711/7721. Research and Development Our research and development activities are conducted internally by a team of 29 research and development staff based in Israel.
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Item 1. Business Our Mission We aim to become the industry standard for real time, visual based, health monitoring using AI/ML data analytics.
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Our solutions are already deployed in the industrial, automotive and aviation sectors. Our customers include the Israeli Air Force, the Israeli Ministry of Defense, a global international defense contractor, NASA, and Israel Railways Ltd., as well as a leading European provider of elevator monitoring solutions.
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The Odysight TruVision solution is successfully used by NASA, as we seek to reshape the aerospace, Industry 4.0, transportation and energy markets with a vison-based technology leveraging AI and machine learning to deliver innovative solutions that transform maintenance practices.
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At the same time, we have initiated market-entry activities in multiple geographies and continue to expand globally across aerospace and additional verticals as opportunities unfold. 8 We are implementing a comprehensive sales and marketing approach that encourages widespread adoption of our products.
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Our customers include the Israeli Air Force, the Israeli Ministry of Defense, France-based Safran Aircraft Engines, a global international defense contractor, a leading Fortune 500 medical company as well as NASA, who came back to us for a repeat order. Historically, our revenue stream has been derived mainly from the medical sector.
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The Company established strong partnerships and collaborations with prominent clients such as Elbit Systems, Israel Aerospace Industries, SIPAL S.P.A., Israel Railways and several major international defense contractors.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Some of the more significant challenges include the following: ● We have a limited operating history and may not be able to successfully operate our business or execute our business plan. ● We have a history of losses and anticipate that we will continue to incur significant losses for the foreseeable future. ● We may need to raise additional capital before we can expect to become profitable from sales of our solutions.
Some of the more significant challenges include the following: ● We have a limited operating history and may not be able to successfully operate our business or execute our business plan. ● We have a history of losses and anticipate that we will continue to incur significant losses for the foreseeable future. ● We expect that we will need to raise additional capital before we can expect to become profitable from sales of our solutions.
Further, international trade conflicts could have negative consequences on the demand for our products and services outside Israel. Other risks of doing business internationally include political and economic instability in the countries of our customers and suppliers, changes in diplomatic and trade relationships and increasing instances of terrorism worldwide.
Further, international trade conflicts could have negative consequences on the demand for our products and services outside of Israel. Other risks of doing business internationally include political and economic instability in the countries of our customers and suppliers, changes in diplomatic and trade relationships, and increasing instances of terrorism worldwide.
U.S. and international regulators impose more stringent compliance and reporting requirements in response to product recalls and safety issues in the automotive and aeronautic industry. As the mechanical components that carry our products go into production, we may become subject to stringent requirements, including a duty to report, subject to strict timing requirements, safety defects with our products.
U.S. and international regulators impose more stringent compliance and reporting requirements in response to product recalls and safety issues in the automotive and aeronautic industry. As the mechanical components that carry our products go into production, we may become subject to stringent requirements, including a duty to report safety defects with our products, subject to strict timing requirements.
We are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 5737-1977 and the Israeli Prohibition on Money Laundering Law, 5760-2000, collectively, the Israeli Anti-Corruption Laws, and other anticorruption, anti-bribery and anti-money laundering laws in the jurisdictions in which we do business, both domestic and abroad.
We are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, to Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 5737-1977 and the Israeli Prohibition on Money Laundering Law, 5760-2000, collectively, the Israeli Anti-Corruption Laws, and to other anticorruption, anti-bribery and anti-money laundering laws in the jurisdictions in which we do business, both domestic and abroad.
Any violation of the FCPA, the Israeli Anti-Corruption Laws or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions or suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, a decline in the market price of our common stock or overall adverse consequences to our reputation and business, all of which may have an adverse effect on our results of operations and financial condition.
Any violation of the FCPA, the Israeli Anti-Corruption Laws or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions, suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, a decline in the market price of our common stock or overall adverse consequences to our reputation and business, all of which may have an adverse effect on our results of operations and financial condition.
Patent applications in the United States and in many other countries are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our new products or solution technologies could have been filed by others without our knowledge.
Patent applications in the United States and in many other countries are published approximately 18 months after the earliest filing date for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our new products or solution technologies could have been filed by others without our knowledge.
Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our future patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.
Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our future patents at risk of being invalidated or interpreted narrowly, put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.
If we cannot successfully compete with new or existing technologies or future developed products, our marketing and sales will suffer, and we may never be profitable. ● Our inability to retain key members of our senior management could impair our future success. ● The estimates and forecasts of market opportunity and market growth included in this Annual Report may prove to be inaccurate, and we cannot assure you our business will grow at similar rates, or at all, or that we will be able to address, fully or at all, the markets we believe represent our market opportunity. ● Adverse conditions in the aerospace, industrial, transportation, energy and medical markets or the global economy more generally could have adverse effects on our results of operations. ● Our business could be adversely affected if we fail to maintain product quality and product performance at an acceptable cost or if we incur significant losses, increased costs or harm to our reputation or brand as a result of product liability claims or product recalls. ● We are subject to, and must remain in compliance with, numerous laws and governmental regulations across various countries concerning the manufacturing, use, distribution and sale of our vision-based sensor products.
If we cannot successfully compete with new or existing technologies or future developed products, our marketing and sales will suffer, and we may never be profitable. ● Our inability to retain key members of our senior management could impair our future success. ● The estimates and forecasts of market opportunity and market growth included in this Annual Report may prove to be inaccurate, and we cannot assure you our business will grow at similar rates, or at all, or that we will be able to address, fully or at all, the markets we believe represent our market opportunity. ● Adverse conditions in the aerospace, industrial, transportation and energy markets or the global economy more generally could have adverse effects on our results of operations. ● Our business could be adversely affected if we fail to maintain product quality and product performance at an acceptable cost or if we incur significant losses, increased costs or harm to our reputation or brand as a result of product liability claims or product recalls. ● We are subject to, and must remain in compliance with, numerous laws and governmental regulations across various countries concerning the manufacturing, use, distribution and sale of our vision-based sensor products.
The degree of market acceptance will depend on a number of factors, including: ● the cost, safety, efficacy/performance, perceived value and convenience of our technology and any current or future product that we may develop; ● the ability of third parties to enter into relationships with us; ● the effectiveness of our sales and marketing efforts; ● the strength of marketing and distribution support for, and timing of market introduction of, competing technology and products; ● government regulations and economic incentives; ● our ability to scale up our operations to meet anticipated demand; and ● publicity concerning our technology or products or competing technology and products. 21 Our efforts to penetrate industries and educate the marketplace regarding the benefits of our vision-based sensory technology, and reasons to seek the commissioning of products based on our technology, may require significant resources and may never be successful.
The degree of market acceptance will depend on a number of factors, including: ● the cost, safety, efficacy/performance, perceived value and convenience of our technology and any current or future product that we may develop; ● the ability of third parties to enter into relationships with us; ● the effectiveness of our sales and marketing efforts; ● the strength of marketing and distribution support for, and timing of market introduction of competing technology and products; ● government regulations and economic incentives; ● our ability to scale up our operations to meet anticipated demand; and ● publicity concerning our technology or products or competing technology and products. 20 Our efforts to penetrate industries and educate the marketplace regarding the benefits of our vision-based sensory technology, and reasons to seek the commissioning of products based on our technology, may require significant resources and may never be successful.
Among other things, certain applicable laws and regulations require or may in the future require the submission of annual reports to certain governmental agencies certifying that such products comply with applicable performance standards, the maintenance of manufacturing, testing and distribution records, and the reporting of certain product defects to such regulatory agency or consumers.
Among other things, certain applicable laws and regulations require or may in the future require the submission of annual reports to certain governmental agencies certifying that such products comply with applicable performance standards, the maintenance of manufacturing, testing and distribution records, and the reporting of certain product defects to such regulatory agencies or consumers.
While we make strategic planning decisions based on the assumption that the aerospace, industrial, transportation and energy markets that we are targeting will grow, our business is dependent, in large part on, and directly affected by, business cycles and other factors affecting the aerospace, industrial, transportation, energy and medical markets and the global economy generally.
While we make strategic planning decisions based on the assumption that the aerospace, industrial, transportation and energy markets that we are targeting will grow, our business is dependent, in large part on, and directly affected by business cycles and other factors affecting the aerospace, industrial, transportation and energy markets and the global economy generally.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products in violation of our intellectual property rights generally.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products in violation of our intellectual property rights.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations, fines and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our business, financial condition and prospects. 31 As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.
Any failure or perceived failure by us to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations, fines and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our business, financial condition and prospects. 30 As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.
Any provision of our amended and restated articles of incorporation, our bylaws or Nevada law that has the effect of delaying or deterring a change in control of our Company could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. 39 If we fail to comply with the rules and regulations under the Sarbanes-Oxley Act, our operating results, our ability to operate our business and investors’ views of us may be harmed.
Any provision of our amended and restated articles of incorporation, our bylaws or Nevada law that has the effect of delaying or deterring a change in control of our Company could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. 38 If we fail to comply with the rules and regulations under the Sarbanes-Oxley Act, our operating results, our ability to operate our business and investors’ views of us may be harmed.
In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our new products to market. 34 Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised due to disclosure during this type of litigation.
In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our new products to market. 33 Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised due to disclosure during this type of litigation.
Accordingly, we expect face significant operational risks from doing business internationally, including: ● fluctuations in foreign currency exchange rates; ● potentially longer sales and payment cycles; ● potentially greater difficulties in collecting accounts receivable; 27 ● potentially adverse tax consequences; ● reduced protection of intellectual property rights in certain countries, particularly in Asia and South America; ● difficulties in staffing and managing foreign operations, including cultural differences between countries and language barriers; ● laws and business practices favoring local competition; ● costs and difficulties of customizing products for foreign countries; ● compliance with a wide variety of complex foreign laws, treaties and regulations; ● a worldwide health crisis, such as the COVID-19 pandemic, which may cause us, third-party vendors and manufacturers and/or customers to temporarily suspend our or their respective operations in the affected city or country; ● tariffs, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets; and ● being subject to the laws, regulations and the court systems of many jurisdictions.
Accordingly, we expect to face significant operational risks from doing business internationally, including: ● fluctuations in foreign currency exchange rates; ● potentially longer sales and payment cycles; ● potentially greater difficulties in collecting accounts receivable; 26 ● potentially adverse tax consequences; ● reduced protection of intellectual property rights in certain countries, particularly in Asia and South America; ● difficulties in staffing and managing foreign operations, including cultural differences between countries and language barriers; ● laws and business practices favoring local competition; ● costs and difficulties of customizing products for foreign countries; ● compliance with a wide variety of complex foreign laws, treaties and regulations; ● a worldwide health crisis, such as a pandemic, which may cause us, third-party vendors and manufacturers and/or customers to temporarily suspend our or their respective operations in the affected city or country; ● tariffs, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets; and ● being subject to the laws, regulations and the court systems of many jurisdictions.
Any significant adverse change in any of these factors may result in a reduction in sales of Odysight solutions and could have a material adverse effect on our business, results of operations and financial condition.
Any significant adverse change in any of these factors may result in a reduction in sales of our solutions and could have a material adverse effect on our business, results of operations, and financial condition.
Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel. 42 The transfer of IIA-supported technology or know-how or manufacturing or manufacturing rights related to aspects of such technologies outside of Israel may involve the payment of significant penalties and other amounts, depending upon the value of the transferred technology or know-how, the amount of IIA support, the time of completion of the IIA-supported research project and other factors.
Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel. 40 The transfer of IIA-supported technology or know-how or manufacturing or manufacturing rights related to aspects of such technologies outside of Israel may involve the payment of significant penalties and other amounts, depending upon the value of the transferred technology or know-how, the amount of IIA support, the time of completion of the IIA-supported research project and other factors.
Government entities and highly regulated organizations typically have longer implementation cycles, sometimes require acceptance provisions that can lead to a delay in revenue recognition, can have more complex IT and data environments and may expect greater payment flexibility from vendors. 22 Contracts with governmental entities may also include preferential pricing terms, such as “most favored customer” pricing.
Government entities and highly regulated organizations typically have longer implementation cycles, sometimes require acceptance provisions that can lead to a delay in revenue recognition, can have more complex IT and data environments and may expect greater payment flexibility from vendors. 21 Contracts with governmental entities may also include preferential pricing terms, such as “most favored customer” pricing.
Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations. ● It is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably. ● Backlog may not be realized or may not result in revenue or profit. ● Our sales cycles are long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to predict when, if at all, we will obtain new customers and when we will generate revenue from those customers. ● Our future growth and success are highly dependent upon large-scale adoption of the Odysight TruVision solution in the markets in which we compete. ● If we are unable to establish sales, marketing and distribution capabilities or enter into successful relationships with business targets and third parties to perform these services, we may not be successful in commercializing our products and technology. ● Sales to government entities and highly regulated organizations are subject to a number of challenges and risks. ● An agreement with one of our customers includes exclusivity provisions, and other agreements include limitations on our ability to sell products to other customers, and restrictions on the use of intellectual property.
Failure to obtain the necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations. ● It is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably. ● Backlog may not be realized or may not result in revenue or profit. ● Our sales cycles are long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to predict when, if at all, we will obtain new customers and when we will generate revenue from those customers. ● Our future growth and success are highly dependent upon large-scale adoption of our solutions in the markets in which we compete. ● If we are unable to establish sales, marketing and distribution capabilities or enter into successful relationships with business targets and third parties to perform these services, we may not be successful in commercializing our products and technology. ● Sales to government entities and highly regulated organizations are subject to a number of challenges and risks. ● An agreement with one of our customers includes exclusivity provisions, and other agreements include limitations on our ability to sell products to other customers, and restrictions on the use of intellectual property.
In addition, if we lose this or any of our other customers or we receive lower than expected purchase orders, our revenues would decline significantly, and our business would be harmed. 24 Our reliance on third-party suppliers for most of the components of our products could harm our ability to meet demand for our products in a timely and cost-effective manner.
In addition, if we lose this or any of our other customers or we receive lower than expected purchase orders, our revenues would decline significantly, and our business would be harmed. 23 Our reliance on third-party suppliers for most of the components of our products could harm our ability to meet demand for our products in a timely and cost-effective manner.
In addition, our competitors could enter into exclusive arrangements with our existing or potential customers or suppliers, which could limit our ability, or make it significantly more expensive, to produce our products or to generate sales. 25 Some of our competitors may have greater financial, technical and marketing resources than we do and may be able to devote greater resources to promoting and selling their products.
In addition, our competitors could enter into exclusive arrangements with our existing or potential customers or suppliers, which could limit our ability, or make it significantly more expensive, to produce our products or to generate sales. 24 Some of our competitors may have greater financial, technical and marketing resources than we do and may be able to devote greater resources to promoting and selling their products.
Our long-term incentive programs may not be attractive enough or perform sufficiently to attract or retain qualified personnel. 26 If a significant portion of our employees leave us, we might fail to effectively manage a transition to new personnel, or if we fail to attract and retain qualified and experienced professionals on acceptable terms, our business, financial condition and results of operations could be adversely affected.
Our long-term incentive programs may not be attractive enough or perform sufficiently to attract or retain qualified personnel. 25 If a significant portion of our employees leave us, we might fail to effectively manage a transition to new personnel, or, if we fail to attract and retain qualified and experienced professionals on acceptable terms, our business, financial condition and results of operations could be adversely affected.
Inability to realize revenue from our backlog could have an adverse effect on our business. 20 Our sales cycles are long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to predict when, if at all, we will obtain new customers and when we will generate revenue from those customers.
Inability to realize revenue from our backlog could have an adverse effect on our business. 19 Our sales cycles are long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to predict when, if at all, we will obtain new customers and when we will generate revenue from those customers.
If there is an unanticipated or onerous new law or regulation that significantly impacts our use of various components or requires more expensive components, such law or regulation could materially adversely affect our business, results of operations and financial condition. 29 In addition, some of our customers may require that we comply with unique requirements specific to their operations.
If there is an unanticipated or onerous new law or regulation that significantly impacts our use of various components or requires more expensive components, such law or regulation could materially adversely affect our business, results of operations and financial condition. 28 In addition, some of our customers may require that we comply with unique requirements specific to their operations.
If we cannot obtain required government approvals under applicable regulations, we may not be able to sell our solution in certain international jurisdictions, which could adversely affect our financial condition and results of operations. 30 If we fail to comply with anti-bribery, anti-corruption and anti-money laundering laws, we could be subject to penalties and other adverse consequences.
If we cannot obtain required government approvals under applicable regulations, we may not be able to sell our solution in certain international jurisdictions, which could adversely affect our financial condition and results of operations. 29 If we fail to comply with anti-bribery, anti-corruption and anti-money laundering laws, we could be subject to penalties and other adverse consequences.
Any such discontinuation or limitation could have a material adverse impact on our business, financial condition and results of operation 36 Risks Related to Our Common Stock The market price of our shares of common stock may be volatile or may decline steeply or suddenly regardless of our operating performance, and we may not be able to meet investor or analyst expectations.
Any such discontinuation or limitation could have a material adverse impact on our business, financial condition and results of operation 35 Risks Related to Our Common Stock The market price of our shares of common stock may be volatile or may decline steeply or suddenly regardless of our operating performance, and we may not be able to meet investor or analyst expectations.
Such efforts to educate the marketplace may require more resources than are required by conventional sensing technologies, and these resources may not available to us.
Such efforts to educate the marketplace may require more resources than are required by conventional sensing technologies, and these resources may not be available to us.
One of our commercial agreements with a customer includes exclusivity provisions affecting our ability to sell the underlying product to third parties in the same segment, while certain other commercial agreements, with the Israeli Ministry of Defense for example, include restrictions on the sale of the products developed under these agreements, and limitations on the use of certain elements of intellectual property.
A commercial agreements with one of our customers includes exclusivity provisions affecting our ability to sell the underlying product to third parties in the same segment, while certain other commercial agreements, with the Israeli Ministry of Defense for example, include restrictions on the sale of the products developed under these agreements, and limitations on the use of certain elements of intellectual property.
Under the Israeli Patent Law, 5727-1967, or the “Patent Law”, inventions conceived by an employee in the course and as a result of or arising from his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights.
Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee in the course and as a result of or arising from his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights.
Often, their share prices have fluctuated in ways unrelated or disproportionate to their operating performance. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.
Often, their share prices have fluctuated in ways unrelated or disproportionate to their operating performance. In the past, securities class action litigation hasoften been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.
Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business, financial condition, cash flows and results of operations. 18 Risks Related to Our Business and Financial Condition We have a limited operating history and may not be able to successfully operate our business or execute our business plan.
Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business, financial condition, cash flows and results of operations. 17 Risks Related to Our Business and Financial Condition We have a limited operating history and may not be able to successfully operate our business or execute our business plan.
Any perception that the confidentiality or privacy of information is unsafe or vulnerable when using our services could damage our reputation and substantially harm our business, financial condition and results of operations. 32 The secure processing, storage, maintenance and transmission of critical customer and business information are vital to our operations and our business strategy.
Any perception that the confidentiality or privacy of information is unsafe or vulnerable when using our services could damage our reputation and substantially harm our business, financial condition and results of operations. 31 The secure processing, storage, maintenance and transmission of critical customer and business information are vital to our operations and our business strategy.
In addition, this concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders. 38 We do not anticipate paying any cash dividends in the foreseeable future.
In addition, this concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders. 37 We do not anticipate paying any cash dividends in the foreseeable future.
For example, the State of Israel has implemented data protection laws and regulations, including the Israeli Protection of Privacy Law of 1981.
For example, the State of Israel has implemented data protection laws and regulations, including the Israeli Protection of Privacy Law, 5741-1981.
Accordingly, our business and operations may be affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and Muslim based terrorist organizations active in the region.
Accordingly, our business and operations may be affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region.
Changes in the law or adverse court rulings may also negatively affect our ability to prevent others from using our technology. 35 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Changes in the law or adverse court rulings may also negatively affect our ability to prevent others from using our technology. 34 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
No assurances can be given that a license will be available on commercially reasonable terms, if at all. 33 It is also possible that we have failed to identify relevant third-party patents or applications.
No assurances can be given that a license will be available on commercially reasonable terms, if at all. 32 It is also possible that we have failed to identify relevant third-party patents or applications.
Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, additional supply disruptions, lower consumer demand and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.
Further escalation of geopolitical tensions related to military conflicts, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, additional supply disruptions, lower consumer demand and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.
We anticipate that our expenses will increase substantially if and as we: ● continue the development of our products for a wider portfolio of products; ● establish a sales, marketing, distribution and technical support infrastructure to support the ramp up of our operations; ● seek to maintain, protect and expand our intellectual property portfolio; ● seek to attract and retain skilled personnel; and ● create additional infrastructure to support our operations as a public company and our product development. 19 We may need to raise additional capital before we can expect to become profitable from sales of Odysight solutions.
We anticipate that our expenses will increase substantially if and as we: ● continue the development of our products for a wider portfolio of products; ● establish a sales, marketing, distribution and technical support infrastructure to support the ramp up of our operations; ● seek to maintain, protect and expand our intellectual property portfolio; ● seek to attract and retain skilled personnel; and ● create additional infrastructure to support our operations as a public company and our product development. 18 We expect that we will need to raise additional capital before we can expect to become profitable from sales of our solutions.
Such limitations may prevent us from selling certain products to third parties without the prior consent of the customers, and may limit our ability to use certain elements of intellectual property developed by funds received under these agreements. ● If we are unable to ensure that the Odysight TruVision solution interoperates with a variety of hardware and software platforms that are developed by others, including our partners, we may become less competitive and our business may be harmed. ● If we fail to scale our business operations or otherwise manage our future growth effectively as we attempt to grow our company, we may not be able to produce, market, service and sell the Odysight TruVision solution successfully. ● We incorporate artificial intelligence, or AI, and machine learning, or ML, into some of our products.
Such limitations may prevent us from selling certain products to third parties without prior consent of the customers, and may limit our ability to use certain elements of intellectual property developed by funds received under these agreements. ● If we are unable to ensure that our solutions interoperate with a variety of hardware and software platforms that are developed by others, including our partners, we may become less competitive and our business may be harmed. ● If we fail to scale our business operations or otherwise manage our future growth effectively as we attempt to grow our company, we may not be able to produce, market, service and sell our solutions successfully. ● We incorporate artificial intelligence, or AI, and machine learning, or ML, into some of our products.
Our patent portfolio consists of an aggregate of 16 patents and 46 pending patent applications (including provisional patent applications) filed or registered in various jurisdictions worldwide, as described in “ Business — Intellectual Property. ” Competitors may use our technologies to develop their own products in jurisdictions where we have not obtained patent protection, and may also export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.
Our patent portfolio consists of an aggregate of 18 patents and 63 pending patent applications (including provisional patent applications) filed or registered in various jurisdictions worldwide, as described in “ Business — Intellectual Property. ” Competitors may use our technologies to develop their own products in jurisdictions where we have not obtained patent protection, and may also export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.
Furthermore, we have no experience to date in high-volume manufacturing of our products and we cannot assure that we will be able to develop efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply, that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market the Odysight TruVision solution as our operations expand.
Furthermore, we have no experience to date in high-volume manufacturing of our products and we cannot assure that we will be able to develop efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply, that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market our solutions as our operations expand.
The market price of our shares may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our revenues or other operating results; ● variations between our actual operating results and the expectations of securities analysts, investors and the financial community; ● any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; ● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; ● additional shares being sold into the market by us or our stockholders, or the anticipation of such sales, including if certain of our stockholders sell shares into the market when the applicable “lock-up” period ends for such stockholders; ● announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions; ● loss of relationships with significant customers; ● changes in operating performance and stock market valuations of companies in our industry, including our competitors; ● loss of services from members of management or employees or difficulty in recruiting additional employees; ● future issuances of common stock or other securities; ● worsening of global economic conditions and reduction in demand for our products; ● price and volume fluctuations in the overall stock market, including as a result of general economic trends; ● lawsuits threatened or filed against us, or events that negatively impact our reputation; ● current or anticipated impact of military conflict, including the conflict between Russia and Ukraine, Israel’s war or conflicts with Hamas or Hezbollah or other geopolitical events; ● sanctions imposed by the United States and other countries in response to global conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by affected countries and others could exacerbate market and economic instability; ● the impact of any resurgence of COVID-19 or any of its variants or any other pandemic on us and the national and global economies; ● developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and ● general market conditions and other events or factors, many of which are beyond our control. 37 In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect the stock prices of many companies.
The market price of our shares may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our revenues or other operating results; ● variations between our actual operating results and the expectations of securities analysts, investors and the financial community; ● any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; ● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; ● additional shares being sold into the market by us or our stockholders, or the anticipation of such sales, including if certain of our stockholders sell shares into the market when the applicable “lock-up” period ends for such stockholders; ● announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions; ● loss of relationships with significant customers; ● changes in operating performance and stock market valuations of companies in our industry, including our competitors; ● loss of services from members of management or employees or difficulty in recruiting additional employees; ● future issuances of common stock or other securities; ● worsening of global economic conditions and reduction in demand for our products; ● price and volume fluctuations in the overall stock market, including as a result of general economic trends; ● lawsuits threatened or filed against us, or events that negatively impact our reputation; ● current or anticipated impact of military conflict, including Israel’s war or conflicts with Iran and terrorist organizations in the Middle East or other geopolitical events; ● sanctions imposed by the United States and other countries in response to global conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by affected countries and others could exacerbate market and economic instability; ● the impact of a pandemic on us and the national and global economies; ● developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and ● general market conditions and other events or factors, many of which are beyond our control. 36 In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect the stock prices of many companies.
Our patent portfolio consists of an aggregate of 17 patents and 55 pending patent applications, as described in “ Business — Intellectual Property .” We cannot offer any assurances about which, if any, patent applications will issue, the breadth of any such patent or whether any issued patents will be found invalid or otherwise unenforceable or will be threatened by third parties.
Our patent portfolio consists of an aggregate of 18 patents and 63 pending patent applications, as described in “ Business — Intellectual Property .” We cannot offer any assurances about which, if any, patent applications will issue, the breadth of any such patent or whether any issued patents will be found invalid or otherwise unenforceable, or will be threatened by third parties.
If our sales cycles lengthen, our future revenue could be lower than expected, which would have an adverse impact on our operating results and could cause our stock price to decline. Our future growth and success are highly dependent upon large-scale adoption of the Odysight TruVision solution in the markets we compete.
If our sales cycles lengthen, our future revenue could be lower than expected, which would have an adverse impact on our operating results and could cause our stock price to decline. Our future growth and success are highly dependent upon large-scale adoption of our solutions in the markets in which we compete.
Should any of our competitors modify their products or standards in a manner that degrades the functionality of the Odysight TruVision solution or gives preferential treatment to our competitors or competitive products, whether to enhance their competitive position or for any other reason, the interoperability of the Odysight TruVision solution with these products could decrease and our business, results of operations and financial condition would be harmed.
Should any of our competitors modify their products or standards in a manner that degrades the functionality of our solutions or gives preferential treatment to our competitors or to competitive products, whether to enhance their competitive position or for any other reason, the interoperability of our solutions with these products could decrease, and our business, results of operations and financial condition would be harmed.
If the data is incomplete, inadequate, or biased, it could lead to suboptimal model performance, impairing the functionality of the Odysight TruVision solution. Any malfunction or unexpected behavior in our AI-driven systems could disrupt our operations, leading to increased downtime and higher maintenance costs for our customers, and potential loss of revenue.
If the data is incomplete, inadequate, or biased, it could lead to suboptimal model performance, impairing the functionality of our solutions. Any malfunction or unexpected behavior in our AI-driven systems could disrupt our operations, leading to increased downtime and higher maintenance costs for our customers, and potential loss of revenue.
Scrutiny of, and evolving expectations for, sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs or otherwise adversely impact our business. Public companies have recently faced scrutiny related to ESG practices and disclosures from certain investors, capital providers, shareholder advocacy groups, other market participants and other stakeholder groups.
Scrutiny of, and evolving expectations for, sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs or otherwise adversely impact our business. Public companies have in recent years faced scrutiny related to ESG practices and disclosures from certain investors, capital providers, shareholder advocacy groups, other market participants and other stakeholder groups.
If our AI models are incorrectly designed or implemented or do not receive pictures or visual data, they may produce inaccurate or unreliable results, negatively impacting the performance and reliability of the Odysight TruVision solution. The effectiveness of our AI models depends on the quality and completeness of the data used for training.
If our AI models are incorrectly designed or implemented or do not receive pictures or visual data, they may produce inaccurate or unreliable results, negatively impacting the performance and reliability of our solutions. The effectiveness of our AI models depends on the quality and completeness of the data used for training.
For example, there exist U.S. Federal Aviation Administration and International Civil Aviation Organization requirements for certain airplane models to be subject to CE certification, a regulatory standard that verifies certain products are safe for sale and use in much of Europe, These and other requirements are applicable for the Odysight TruVision solution in various jurisdictions across the globe.
For example, there exist U.S. Federal Aviation Administration and International Civil Aviation Organization requirements for certain airplane models to be subject to CE certification, a regulatory standard that verifies certain products are safe for sale and use in much of Europe. These and other requirements are applicable for our solutions in various jurisdictions across the globe.
Government demand and payment for the Odysight TruVision solution is affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products. Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and may be less favorable than terms agreed to with other customers.
Government demand and payment for our solutions is affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products. Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and may be less favorable than terms agreed to with other customers.
This technology is new and developing and may present both compliance and reputational risks. ● Failure to make competitive technological advances will put us at a disadvantage and may lead to negative operational and financial outcomes. ● We have four customers that account for a substantial portion of our revenues, and our result of our operation could be harmed were we to lose these customers or receive lower than expected purchase orders. 17 ● Our reliance on third-party suppliers for most of the components of our products could harm our ability to meet demand for our products in a timely and cost-effective manner. ● We may not be able to manage our strategic partners effectively. ● We face competition from providers of sensing solutions.
This technology is new and developing and may present both compliance and reputational risks. ● Failure to make competitive technological advances will put us at a disadvantage and may lead to negative operational and financial outcomes. ● We have three customers that account for a substantial portion of our revenues, and the results of our operations could be harmed were we to lose these customers or receive lower than expected purchase orders. 16 ● Our reliance on third-party suppliers for most of the components of our products could harm our ability to meet demand for our products in a timely and cost-effective manner. ● We may not be able to manage our strategic partners effectively. ● We face competition from providers of sensing, PdM and CBM solutions.
Such agreements may also require payment of royalties to the Ministry of Defense in the event of sale of such products to third parties. We believe that such exclusivity provisions and limitations promote the development, trust and help facilitate the penetration of innovative new products and solutions.
Such agreements may also require payment of royalties to the Ministry of Defense in the event of sale of such products to third parties. We believe that such exclusivity provisions and limitations promote trust with our customers and help facilitate the penetration of innovative new products and solutions.
In some cases, explicit authorization from the Israeli may be needed to export our products. We cannot provide assurance that such export authorizations will be available in the future for the Odysight TruVision solution. If and when our operations expand into other markets, we may have to comply with other governments’ regulations regarding the export of our products.
In some cases, explicit authorization from the Israeli government may be needed to export our products. We cannot provide assurance that such export authorizations will be available in the future for our solutions. If and when our operations expand into other markets, we may have to comply with other governments’ regulations regarding the export of our products.
While we are establishing ourselves as a leading vision-based sensor technology company, our future growth depends upon large-scale adoption of the Odysight TruVision solution. Although we anticipate continued market penetration for the Odysight TruVision solution, there is no guarantee of such future demand, or that our products will remain competitive.
While we are establishing ourselves as a leading vision-based sensor technology company, our future growth depends upon large-scale adoption of our solutions. Although we anticipate continued market penetration for our solutions, there is no guarantee of such future demand, or that our products will remain competitive.
Third-party services and products are constantly evolving, and we may not be able to modify Odysight TruVision solution to assure their compatibility with that of other third parties as they continue to develop or emerge in the future, or we may not be able to make such modifications in a timely and cost-effective manner.
Third-party services and products are constantly evolving, and we may not be able to modify our solutions to assure their compatibility with that of other third parties as they continue to develop or emerge in the future, or we may not be able to make such modifications in a timely and cost-effective manner.
As we expand our operations internationally, we may be prohibited from selling the Odysight TruVision solution to certain countries if we are unable to obtain certain governmental authorizations required to comply with Israeli laws regulating the export of our products from Israel. The export regulations and the governing policies applicable to our business are subject to change.
As we expand our operations internationally, we may be prohibited from selling our solutions in certain countries if we are unable to obtain certain governmental authorizations required to comply with Israeli laws regulating the export of our products from Israel. The export regulations and the governing policies applicable to our business are subject to change.
We may need to raise additional capital before we can expect to become profitable from sales of Odysight solutions and may raise additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons.
We nevertheless expect that we will need to raise additional capital before we can expect to become profitable from sales of our solutions and may raise additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons.
In addition, some of our competitors may be able to disrupt the operations or compatibility of the Odysight TruVision solution with their products or services, or exert strong business influence on our ability to, and terms on which we, operate the Odysight TruVision solution.
In addition, some of our competitors may be able to disrupt the operations or compatibility of our solutions with their products or services, or exert strong business influence on our ability to, and terms on which we operate our solutions.
We rely on systems and websites, including some that are managed by third parties, that allow for the storage and transmission of proprietary or confidential information regarding our customers, employees and others, including personal information.
We rely on systems and websites, including some that are managed by third parties, such as cloud infrastructure, that allow for the storage and transmission of proprietary or confidential information regarding our customers, employees and others, including personal information.
We may be prohibited from selling the Odysight TruVision to certain countries if we are unable to obtain Israeli authorization regarding the export of our products, or if current or future export laws limit or otherwise restrict our business.
We may be prohibited from selling our solutions in certain countries if we are unable to obtain Israeli authorization regarding the export of our products, or if current or future export laws limit or otherwise restrict our business.
Delays in introducing the Odysight TruVision solution and enhancements, the failure to choose correctly among technical alternatives or the failure to offer innovative products or enhancements at competitive prices may cause existing and potential customers to purchase our competitors’ products.
Delays in introducing solutions and enhancements, the failure to choose correctly among technical alternatives or the failure to offer innovative products or enhancements at competitive prices may cause existing and potential customers to purchase our competitors’ products.
If we are not permitted or able to integrate with these and other third-party applications in the future, our business, results of operations and financial condition would be harmed. 23 If we fail to scale our business operations or otherwise manage our future growth effectively as we attempt to grow our company, we may not be able to produce, market, service and sell the Odysight TruVision solution successfully.
If we are not permitted or are unable to integrate with these or with other third-party applications in the future, our business, results of operations and financial condition would be harmed. 22 If we fail to scale our business operations or otherwise manage our future growth effectively as we attempt to grow our company, we may not be able to produce, market, service and sell our solutions successfully.
If we are unable to maintain the quality and performance of the Odysight TruVision solution at acceptable costs, our brand, the market acceptance of our products and our results of operations would suffer.
If we are unable to maintain the quality and performance of our solutions at acceptable costs, our brand, the market acceptance of our products and our results of operations would suffer.
As of March 20, 2025, Moshe (Mori) Arkin, a member of our board of directors, beneficially owns approximately 42% of our common stock, holds approximately 33% of our current voting power and may exercise warrants and options which could increase his voting power to 42%. As a result, Mr.
As of March 18, 2026, Moshe (Mori) Arkin, a member of our board of directors, beneficially owns approximately 42% of our common stock, holds approximately 32% of our current voting power and may exercise warrants and options which could increase his voting power to 42%. As a result, Mr.
We may find that we need to give higher than normal raises to employees or start new employees at higher wage and/or benefit rates, while not be able to price the higher costs through to customers.
We may find that we need to give higher than normal raises to employees or to start new employees at higher wage and/or benefit rates, while being unable to price the higher costs through to customers.
Continuing technological changes in the market for the Odysight TruVision solution could make our products less competitive or obsolete, either generally or for particular applications.
Continuing technological changes in the market for our solutions could make our products less competitive or obsolete, either generally or for particular applications.
As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could adversely affect our business, results of operation and financial condition. Item 1b. unresolved staff comments Not applicable.
As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could adversely affect our business, results of operation and financial condition.
As of March 20 , 2025, our directors, executive officers, principal stockholders, and affiliated entities may be deemed to beneficially own, in the aggregate, approximately 78% of our outstanding voting securities.
As of March 18, 2026, our directors, executive officers, principal stockholders, and affiliated entities may be deemed to beneficially own, in the aggregate, approximately 75% of our outstanding voting securities.
Furthermore, because we do not yet have an established commercial operating history, and because the market for our products may rapidly evolve, it is hard for us to predict our future performance. Therefore, it may be difficult to evaluate our business and prospects and any predictions about our future performance may not be accurate.
Furthermore, because of our short commercial operating history, and because the market for our products may rapidly evolve, it is hard for us to predict our future performance. Therefore, it may be difficult to evaluate our business and prospects and any predictions about our future performance may not be accurate.
If we are unable to ensure that the Odysight TruVision solution interoperates with a variety of hardware and software platforms that are developed by others, including our partners, we may become less competitive and our business may be harmed.
If we are unable to ensure that our solutions interoperate with a variety of hardware and software platforms that are developed by others, including our partners, we may become less competitive and our business may be harmed.
In addition, the Odysight TruVision solution uses machine learning, artificial intelligence, and automated decision making technologies, including proprietary artificial intelligence or machine learning algorithms relying in part on open-source third-party software, and is making significant investments to continuously improve the use of such technologies.
In addition, our solutions use machine learning, artificial intelligence and automated decision making technologies, including proprietary artificial intelligence or machine learning algorithms relying in part on open-source third-party software, and we make significant investments to continuously improve the use of such technologies.
The Odysight TruVision solution must integrate with a variety of hardware and software platforms, and we need to continuously modify and enhance the Odysight TruVision solution to adapt to changes in hardware and software technologies.
Our solutions must integrate with a variety of hardware and software platforms, and we need to continuously modify and enhance our solutions to adapt to changes in hardware and software technologies.
General macro-economic conditions, such as a rise in interest rates, inflation in the cost of goods and services including labor, a recession or an economic slowdown in the United States or internationally, including as a result of continuing uncertainty from any resurgence of the COVID-19 or other pandemic outbreaks, the ongoing Russia-Ukraine military conflict or conflicts in the Middle East, could adversely affect demand for the Odysight TruVision solution and make it difficult to accurately forecast and plan our future business activities. 28 Global markets have been experiencing volatility and disruption due to interest rate and inflation increases as well as the continued escalation of geopolitical tensions.
General macro-economic conditions, such as a rise in interest rates, inflation in the cost of goods and services including labor, a recession or an economic slowdown in the United States or internationally, including as a result of a pandemic, the ongoing Russia-Ukraine military conflict or conflicts in the Middle East, could adversely affect demand for our solutions and make it difficult to accurately forecast and plan our future business activities. 27 Global markets have in recent years experienced volatility and disruption due to interest rate and inflation increases as well as the continued escalation of geopolitical tensions.
In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States or the laws of the State of Israel.
Therefore, our intellectual property rights in some countries can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States or the laws of the State of Israel.
We have incurred an accumulated deficit of approximately $46 million as of December 31, 2024. For the years ended December 31, 2024 and 2023, we had net losses of $11.8 million and $9.4 million, respectively. We have devoted substantially all of our financial resources to the Odysight TruVision solution.
We have incurred an accumulated deficit of approximately $63 million as of December 31, 2025. For the years ended December 31, 2025 and 2024, we had net losses of $17 million and $11.8 million, respectively. We have devoted substantially all of our financial resources to the development of our solutions.
Our future success depends substantially on the continued services of our executive officers and certain other key employees, including, but not limited to, Yehu Ofer, our Chief Executive Officer, Einav Brenner, our Chief Financial Officer, Eli Israeli, our Chief Technology Officer and Jacob Avinu, our Senior VP of Product Portfolio.
Our future success depends substantially on the continued services of our executive officers and certain other key employees, including, but not limited to, Yehu Ofer, our Chief Executive Officer, Einav Brenner, our Chief Financial Officer, and Eilam Sagi, our Chief Business Officer.
Negotiating and performing under these arrangements involves significant time and expense, and we may not have sufficient resources to devote to our strategic alliances, particularly those with companies that have significantly greater financial and other resources than we do. The anticipated benefits of these arrangements may never materialize and performing under these arrangements may adversely affect our results of operations.
Negotiation of and performance under these arrangements involves significant time and expense, and we may not have sufficient resources to devote to our strategic alliances, particularly those with companies that have significantly greater financial and other resources than we do.
There may also be pending patent applications that, if they result in issued patents, could be alleged to be infringed by our new products. If such an infringement claim should be brought against us and be successful, we may be required to pay substantial damages, be forced to abandon our new products or seek a license from any patent holders.
If such an infringement claim should be brought against us and be successful, we may be required to pay substantial damages, be forced to abandon our new products or seek a license from any patent holders.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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This collaborative approach allows us to leverage both internal oversight and external expertise to enhance our cybersecurity posture. 43 Our information security policies and procedures are required to be reviewed on a regular basis We have not experienced a cybersecurity incident that resulted in a material adverse impact to our business or operations; however, there can be no guarantee that we will not experience such an incident in the future.
This collaborative approach allows us to leverage both internal oversight and external expertise to enhance our cybersecurity posture. 41 Our information security policies and procedures are required to be reviewed on a regular basis We have not experienced a cybersecurity incident that resulted in a material adverse impact to our business or operations; however, there can be no guarantee that we will not experience such an incident in the future.
For a description of the risks from cybersecurity threats that may materially affect our Company, see “Item 1A. – Risk Factors” included elsewhere this Annual Report on Form 10-K, including “Our data and information systems and network infrastructure may be subject to hacking or other cybersecurity threats.
For a description of the risks from cybersecurity threats that may materially affect our Company, see “Item 1A. – Risk Factors ” included elsewhere this Annual Report on Form 10-K, including “Our data and information systems and network infrastructure may be subject to hacking or other cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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We believe that our Omer and Ramat Gan leases are adequate for our current needs and, should we need additional space, we believe we will be able to obtain additional space on commercially reasonable terms.
We believe that our Ramat Gan and Omer leases are adequate for our current needs and, should we need additional space, we believe we will be able to obtain additional space on commercially reasonable terms.
The office space in Ramat Gan is leased pursuant to a lease that expires in June 2027. with an option to extend for an additional two years. Our office space in Ramat Gan contains engineering, research and development and administrative functions of the company.
Item 2. properties Our corporate headquarters are located in Ramat Gan, Israel, which includes approximately 1,000 square meters of office space to accommodate our engineering, research and development and administrative operations. We lease our Ramat Gan facility pursuant to a lease that expires in June 2027, with an option to extend for an additional two years.
Item 2. properties Our corporate headquarters is located in Omer, which includes approximately 800 square meters of office, manufacturing and laboratory space. The lease agreement for this facility is set to expire in December 2028; however, we retain the right to terminate the lease after three years (in December 2026). We also lease approximately 1,000 square meters in Ramat Gan.
We also lease approximately 800 square meters of office space in Omer, Israel. The lease agreement for this facility is set to expire in May 2026, at which time we have leased an alternative location in Omer consisting of approximately 286 square meters of space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Following appeal hearings held in early 2024, the Board of Appeals revoked all three patents, with formal written decisions issued in July 2024. We have filed a petition for review of the decision regarding two of the three European patents (EP 2.478.693 and EP 2.621.159) and are not appealing the decision regarding the third European patent (EP 2.621.158).
Following appeal hearings held in early 2024, the Board of Appeals revoked all three patents, with formal written decisions issued in July 2024. We filed a petition for review of the decision regarding two of the three European patents (EP 2.478.693 and EP 2.621.159) and did not appeal the decision regarding the third European patent (EP 2.621.158).
The revocations are not expected to have a material impact on our current business operations. item 4. mine safety disclosures. Not applicable. 44 part II
In 2025, all three patents were finally revoked. The revocations are not expected to have a material impact on our current business operations. item 4. mine safety disclosures. Not applicable. 42 part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report. Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the period from January 1, 2024, to December 31, 2024, we did not purchase any of our equity securities. 45 Item 6. [Reserved]
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report. Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the period from January 1, 2025, to December 31, 2025, we did not purchase any of our equity securities. 43 Item 6. [Reserved]
Prior to such date, our common stock was quoted on the OTCQB under the same symbol, and, until February 13, 2024, was quoted on the OTCQB under the symbol “SCTC”. Holders As of December 31, 2024, there were 47 stockholders of record of our common stock and 12,612,517 shares of our common stock outstanding.
Prior to such date, our common stock was quoted on the OTCQB under the same symbol, and, until February 13, 2024, was quoted on the OTCQB under the symbol “SCTC”. Holders As of December 31, 2025, there were 38 stockholders of record of our common stock and 16,357,327 shares of our common stock outstanding.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. [ RESERVED ] 46 item 7. management’s discussion and analysis of financial condition and results of operations 46 item 7a. quantitative and qualitative disclosures about market risk 53 item 8. financial statements and supplementary data 53 item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 53 item 9a. controls and Procedures 53 Item 9b.
Item 6. [ RESERVED ] 44 item 7. management’s discussion and analysis of financial condition and results of operations 44 item 7a. quantitative and qualitative disclosures about market risk 51 item 8. financial statements and supplementary data 51 item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 51 item 9a. controls and Procedures 51 Item 9b.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. 51 Cash Flows Our primary uses of cash from operating activities have been for headcount-related expenditures, research and development costs, manufacturing costs, marketing and promotional expenses, professional services cost, and costs related to our facilities.
If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. 49 Cash Flows Our primary uses of cash from operating activities have been for headcount-related expenditures, research and development costs, manufacturing costs, marketing and promotional expenses, professional services cost, and costs related to our facilities.
Additional Cash Requirements We plan to continue to invest in long-term growth, and therefore we expect that our expenses will grow. We currently believe that our existing cash and cash equivalents and short-term deposits will allow us to fund our operating plan through at least the next 12 months from the date of this Annual Report.
Additional Cash Requirements W e plan to continue to invest in long-term growth, and therefore we expect that our expenses will continue to grow. We currently believe that our existing cash and cash equivalents and short-term deposits will allow us to fund our operating plan through the at least the next 12 months from the date of this Annual Report.
The rich and informative data, continuously collected and analyzed by our solution on our secured cloud, provides customers with real-time failure / anomaly detection, events and data recordings, interfacing with platform mission systems and providing real-time alerts and streaming video or images, all while training our algorithms for ongoing improved accuracy and prediction capabilities.
The data, continuously collected and analyzed by our solution on our secured cloud, provides customers with real-time failure / anomaly detection, events and data recordings, interfacing with platform mission systems and providing real-time alerts and streaming video or images, all while training our algorithms for ongoing improved accuracy and prediction capabilities.
Revenues Ours revenues are measured according to the ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are measured according to the amount of consideration that the Company expects to be entitled to receive in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
Revenues Our revenues are measured according to the ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, revenues are measured according to the amount of consideration that the Company expects to be entitled to receive in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
In the aggregate, we issued 3,653,124 shares of common stock, generating gross proceeds of approximately $23.7 million, prior to the deduction of underwriting discounts, commissions and estimated offering expenses. Our primary sources of liquidity to date have been from fund-raising, revenues of customers and warrant exercises.
In the aggregate, we issued 3,653,124 shares of common stock, generating gross proceeds of approximately $23.7 million, prior to the deduction of underwriting discounts, commissions and estimated offering expenses. Our primary sources of liquidity to date have been from fundraising, revenues from customers and warrant exercises.
On December 30, 2019, we acquired all of the issued and outstanding share capital of ScoutCam Ltd. and, on December 31, 2029, we changed our name to ScoutCam Inc. Following this acquisition, we integrated and fully adopted the acquired miniaturized imaging business into us as our primary business activity. On June 5, 2023, we changed our name to Odysight.ai Inc.
On December 30, 2019, we acquired all of the issued and outstanding share capital of ScoutCam Ltd. and, on December 31, 2019, we changed our name to ScoutCam Inc. Following this acquisition, we integrated and fully adopted the acquired miniaturized imaging business as our primary business activity. On June 5, 2023, we changed our name to Odysight.ai Inc.
Our non-cash benefit consisted primarily of non-cash charges of $2.4 million for stock-based compensation. The favorable net change in our operating assets and liabilities was primarily due to an increase in accrued compensation expenses of $0.6 million and decrease in inventory of $0.3 million.
Our non-cash benefit consisted primarily of non-cash charges of $3.1 million for stock-based compensation. The favorable net change in our operating assets and liabilities was primarily due to an increase in accrued compensation expenses of $0.1 million and decrease in inventory of $0.2 million.
The increase in research and development expenses was mainly due to the development of new products and the resulting increase in payroll and related expenses for new employee recruitment, an increase in stock-based compensation from new option grants and procuring materials and services of subcontractors for Industry 4.0 projects.
The increase in research and development expenses was mainly due to the development of new products and the increase in payroll and related expenses related to the recruitment of new employees, an increase in stock-based compensation from new option grants and procuring materials and services of subcontractors for Industry 4.0 projects.
We expect our expenses will increase in connection with our ongoing activities, particularly as we continue the research and development and the scale up Odysight solutions . We expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. Furthermore, we will continue to incur additional costs associated with operating as a public company.
Our expenses may increase in connection with our ongoing activities, particularly as we continue our commercialization efforts, research and development and the scale up of our solutions . We expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Furthermore, we will continue to incur additional costs associated with operating as a public company.
In addition, as of December 31, 2024, we incurred an accumulated deficit of approximately $46 million, as compared to $34.2 million as of December 31, 2023. In February 2025, we closed a public offering, including the exercise of an over-allotment option granted to the underwriter in the public offering, at a price of $6.50 per share.
In addition, as of December 31, 2025, we incurred an accumulated deficit of approximately $63 million, as compared to $46 million as of December 31, 2024. In February 2025, we closed a public offering, including the exercise of an over-allotment option granted to the underwriter in the public offering, at a price of $6.50 per share.
The total future payments for our operating lease obligation as of December 31, 2024 were approximately $1.2 million. For additional details regarding our lease, see Note 10 to our consolidated financial statements for the year ended December 31, 2024 included in this Annual Report on Form 10-K.
The total future payments for our operating lease obligation as of December 31, 2025 were approximately $770 million. For additional details regarding our lease, see Note 10 to our consolidated financial statements for the year ended December 31, 2025 included in this Annual Report on Form 10-K.
During the year ended December 31, 2023, cash provided by financing activities was $13.8 million, consisting of cash proceeds from issuance of shares and warrants in a private placement, net of issuance costs. 52 Contractual Obligations and Commitments Operating lease payments represent our commitment for future rent made leases for our offices in Israel and for vehicle leasing.
During the year ended December 31, 2024, cash provided by financing activities was $9.8 million, consisting of cash proceeds from issuance of shares in a private placement, net of issuance costs. 50 Contractual Obligations and Commitments Operating lease payments represent our commitment for future rent made leases for our offices in Israel and for vehicle leasing.
Orders included in backlog may be cancelled or rescheduled by customers. A variety of conditions, both specific to the individual customer and generally affecting the customer’s industry, may cause customers to cancel, reduce or delay orders that were previously made or anticipated. We cannot assure the timely replacement of cancelled, delayed or reduced orders.
A variety of conditions, both specific to the individual customer and generally affecting the customer’s industry, may cause customers to cancel, reduce or delay orders that were previously made or anticipated. We cannot assure the timely replacement of cancelled, delayed or reduced orders.
The weighted average expected life of options was estimated individually in respect of each grant. 48 Comparison of the Year Ended December 31, 2024 and the Year Ended December 31, 2023 Overview Our primary business activity in 2024 was enlarging our focus on R&D activities in the domain of Industry 4.0, including PdM and CBM in sectors such as aerospace, maritime energy and other heavy machinery, engines and complicated mechanics which require ongoing monitoring and predictive maintenance applications.
The weighted average expected life of options was estimated individually in respect of each grant. 46 Comparison of the Year Ended December 31, 2025 and the Year Ended December 31, 2024 Overview Our primary business activity in 2025 was enlarging our focus on activities in the domain of Industry 4.0, including PdM and CBM in sectors such as aerospace, transportation and other heavy machinery, engines and complicated mechanics that require ongoing monitoring and predictive maintenance applications.
The Odysight TruVision solution streams visual information to our processing unit, an in-platform, high-performance AI/machine learning computer, allowing maintenance and operations teams, on the ground and during operations, visibility into areas that are inaccessible under normal operating conditions or where conditions are not suitable for continuous real-time monitoring.
Our solutions stream visual information to our processing unit, an in-platform, high-performance AI/ML (machine learning) computer, allowing maintenance and operations teams, on the ground and during operations, visibility into areas that are inaccessible under normal operating conditions or where conditions are not suitable for continuous monitoring.
During the year ended December 31, 2023, cash used in operating activities was $10 million, consisting of net loss of $9.4 million, partially offset by a non-cash benefit of $1.8 million and an unfavorable net change in operating assets and liabilities of $2.4 million. Our non-cash benefit consisted primarily of non-cash charges of $1.7 million for stock-based compensation.
During the year ended December 31, 2024, cash used in operating activities was $8.2 million, consisting of net loss of $11.8 million, partially offset by a non-cash benefit of $2.4 million and a favorable net change in operating assets and liabilities of $1.2 million. Our non-cash benefit consisted primarily of non-cash charges of $2.4 million for stock-based compensation.
Treasury yield as determined by the U.S. Federal Reserve. We have not paid dividends and does not anticipate paying dividends in the foreseeable future. Accordingly, no dividend yield was assumed for purposes of estimating the fair value of our stock-based compensation.
The risk-free interest rates used in the Black-Scholes calculations are based on the prevailing U.S. Treasury yield as determined by the U.S. Federal Reserve. We have not paid dividends and does not anticipate paying dividends in the foreseeable future. Accordingly, no dividend yield was assumed for purposes of estimating the fair value of our stock-based compensation.
Comparison of the Year Ended December 31, 2024 and the Year Ended December 31, 2023 The following table sets forth the significant sources and uses of cash for the years ended December 31, 2024 and December 31, 2023 (in dollars): 2024 2023 Cash used in Operating Activities (8,217,000 ) (10,009,000 ) Cash provided by (used in) Investing Activities 7,637,000 (5,113,000 ) Cash provided by Financing Activities 9,818,000 13,809,000 Operating Activities During the year ended December 31, 2024, cash used in operating activities was $8.2 million, consisting of net loss of $11.8 million, partially offset by a non-cash benefit of $2.4 million and a favorable net change in operating assets and liabilities of $1.2 million.
Comparison of the Year Ended December 31, 2025 and the Year Ended December 31, 2024 The following table sets forth the significant sources and uses of cash for the years ended December 31, 2025 and December 31, 2024 (in dollars): 2025 2024 Cash used in Operating Activities (13,703,000 ) (8,217,000 ) Cash provided by Investing Activities 254,000 7,637,000 Cash provided by Financing Activities 21,139,000 9,818,000 Operating Activities During the year ended December 31, 2025, cash used in operating activities was $13.7 million, consisting of net loss of $17 million, partially offset by a non-cash benefit of $3.2 million and a favorable net change in operating assets and liabilities of $0.1 million.
We are a pioneer in the development, production and marketing of an innovative visualization and artificial intelligence, or AI, solution that deploys small cameras to monitor critical safety components in hard-to-reach locations and harsh environments, across various Predictive Maintenance, or PdM, and Condition Based Monitoring, or CBM, use cases.
We are a pioneer in the development, production and marketing of innovative visual monitoring artificial intelligence, or AI, solutions that deploys small visual sensors to monitor critical safety components in hard-to-reach locations and harsh environments, across various Predictive Maintenance, or PdM, and Condition Based Monitoring, or CBM, use cases applied both for the civil and defense sectors.
The unfavorable net change in our operating assets and liabilities was primarily due to an increase in accounts receivable of $1.3 million and decrease in contract liabilities of $1.3 million. Investing Activities During the year ended December 31, 2024, cash provided by investing activities was $7.6 million, consisting mainly of withdrawal of short terms deposits, net.
The favorable net change in our operating assets and liabilities was primarily due to decrease in accounts receivable and decrease in fulfillment asset partially offset by decrease in contract liabilities. Investing Activities During the year ended December 31, 2025, cash provided by investing activities was $0.3 million, consisting mainly of withdrawal of short terms deposits, net.
Backlog as of December 31, 2024 was approximately $15 million compared to approximately $2.6 million as of December 31, 2023. Liquidity and Capital Resources Overview As of December 31, 2024, we had cash, cash equivalents and restricted deposit of $18.5 million compared to cash and cash equivalents and short-term deposits of $17 million as of December 31, 2023.
Backlog as of December 31, 2025 was approximately $13.8 million compared to approximately $15 million as of December 31, 2024. Liquidity and Capital Resources Overview As of December 31, 2025, we had cash, cash equivalents and restricted cash of $26 million, compared to cash and cash equivalents and restricted deposits of $18.5 million as of December 31, 2024.
The following table summarizes our results of operations for the years ended December 31, 2024 and 2023, together with the changes in those items in dollars and as a percentage: 2024 2023 % Change Revenues 3,964,000 3,033,000 31 % Cost of Revenues 2,807,000 2,524,000 11 % Gross Profit (Loss) 1,157,000 509,000 127 % Research and development expenses 6,884,000 5,602,000 23 % Sales and marketing expense 1,218,000 1,109,000 10 % General and administrative expenses 5,562,000 4,431,000 26 % Operating Loss (12,507,000 ) (10,633,000 ) 18 % Revenues As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of customers.
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024, together with the changes in those items in dollars and as a percentage: 2025 2024 % Change Revenues 3,015,000 3,964,000 (24 )% Cost of Revenues 2,144,000 2,807,000 (24 )% Gross Profit 871,000 1,157,000 (25 )% Research and development expenses 9,639,000 6,884,000 40 % Sales and marketing expense 2,327,000 1,218,000 91 % General and administrative expenses 7,040,000 5,562,000 27 % Operating Loss (18,135,000 ) (12,507,000 ) 45 % Revenues As a result of the nature of our target market and the current stage of the deployment of our solutions, a substantial portion of our revenue comes from a limited number of customers.
We recognize stock-based compensation cost for option awards on an accelerated basis over the employee’s requisite service period, and forfeitures are accounted for as they occur. Volatility is derived from the historical volatility of publicly traded set of peer companies. The risk-free interest rates used in the Black-Scholes calculations are based on the prevailing U.S.
We recognize stock-based compensation cost for option awards on an accelerated basis over the employee’s requisite service period, and forfeitures are accounted for as they occur. Volatility is derived from a blend of the Company’s volatility and historic volatility of a publicly traded set of peer companies.
We expense research and development costs as incurred. 49 Research and development expenses for the year ended December 31, 2024 were $6,884,000, an increase of $1,282,000, or 23%, compared to $5,602,000 for the year ended December 31, 2023.
We expense research and development costs as incurred. 47 Research and development expenses for the year ended December 31, 2025 were $9,639,000, an increase of $2,755,000, or 40%, compared to $6,884,000 for the year ended December 31, 2024.
The increase was primarily due to: - an increase in professional services expenses including financial consultant, IR consultant, HR consultant and the appointment of new directors; - an increase in payroll and related expenses due to the recruitment of a new CFO and cash compensation bonuses paid to senior executives; and - an increase in stock-based compensation from new option grants. 50 Operating loss We incurred an operating loss of $12,507,000 for the year ended December 31, 2024, an increase of $1,874,000, or 18%, compared to operating loss of $10,633,000 for the year ended December 31, 2023.
The increase/decrease was primarily due to: - an increase in payroll and related expenses due to the recruitment of new employees, including a CFO, and cash compensation bonuses paid to senior executives; - expenses related to our fundraising and uplisting to Nasdaq; and - an increase in stock-based compensation from new option grants. 48 Operating loss We incurred operating loss of $18,135,000 for the year ended December 31, 2025, an increase of $5,628,000, or 45%, compared to operating loss of $12,507,000 for the year ended December 31, 2024.
Our customers benefit from increased safety, a reduction in downtime and lower maintenance costs for their monitored platforms, using the prediction capabilities of our solution to efficiently plan maintenance work on monitored components. Our solution aims to enhance safety and minimizes downtime by enabling real-time visual analysis of any failure occurrences.
Our customers benefit from increased safety, a reduction in downtime, a more efficient data driven operation, increased mission readiness and lower maintenance costs for their monitored platforms, using the prediction capabilities of our solution to efficiently plan maintenance work on monitored components.
During the year ended December 31, 2023, cash used in investing activities was $5.1 million, consisting mainly of investment of short-term deposits, net. Financing Activities During the year ended December 31, 2024, cash provided by financing activities was $9.8 million, consisting of cash proceeds from issuance of shares in a private placement, net of issuance costs.
Financing Activities During the year ended December 31, 2025, net cash provided by financing activities was $21.1 million, consisting of cash proceeds from issuance of shares in a private placement, net of issuance costs and proceeds from options exercise.
Gross Profit Gross profit for the year ended December 31, 2024 was $1,157,000, an increase of $648,000, or 127%, compared to a gross profit of $509,000 for the year ended December 31, 2023. The change was due both to an increase in revenues and to an increase in cost of revenues, as described above.
The decrease in cost of revenues is consistent with the decrease in revenues, as described above. Gross Profit Gross profit for the year ended December 31, 2025 was $871,000, a decrease of $286,000, or 25%, compared to a gross profit of $1,157,000 for the year ended December 31, 2024.
Conversely, as a result of the intensive flight hours flown by all Israeli Air Force platforms as a result of the war and an enhanced Israel Ministry of Defense budget, we have experienced a growing interest in our technology from Israeli government agencies and R&D programs, which may lead to more rapid assimilation of our technology into relevant platforms than we had anticipated prior to the commencement of the war, positively affecting on our business activity.
These delays have had a temporary impact on our business. ● Defense Technology Interest : Conversely, due to intensive flight hours flown by the Israeli Air Force and an enhanced Ministry of Defense budget, we have seen growing interest in our technology from Israeli government agencies and R&D programs.
In the aggregate, we sold a total of 3,653,124 shares of common stock, generating gross proceeds of approximately $23.7 million, prior to the deduction of underwriting discounts, commissions and estimated offering expenses. Also in February 2025, listing was approved for our common stock, which began trading on the Nasdaq Capital Market under the symbol “ODYS”.
In the aggregate, we sold a total of 3,653,124 shares of common stock, generating gross proceeds of approximately $23.7 million, prior to the deduction of underwriting discounts, commissions and estimated offering expenses. After deducting issuance costs, we received proceeds of approximately $20.9 million.
Impact of the Ongoing War in Israel on Our Business On October 7, 2023, the Hamas terrorist organization launched a series of deadly terror attacks on civilian and military targets skirting the Gaza Strip in the southern part of Israel and fired rockets on many of the communities in southern and central Israel.
Also in February 2025, our common stock began trading on the Nasdaq Capital Market under the symbol “ODYS”. Impact of the Ongoing War in Israel on Our Business On October 7, 2023, the Hamas terrorist organization launched a series of terror attacks on civilian and military targets in southern Israel.
Our customers include the Israeli Air Force, the Israeli Ministry of Defense, France-based Safran Aircraft Engines, a global international defense contractor, a leading Fortune 500 medical company as well as NASA, who came back to us for a repeat order. Historically, our revenue stream has been derived mainly from the medical sector.
Our customers include the Israeli Air Force, the Israeli Ministry of Defense, a global international defense contractor, NASA and Israel Railways Ltd., as well as a leading European provider of elevator monitoring solutions. Historically, our revenue stream has been derived mainly from the medical sector.
The main effect of this activity enabled us to accelerate our growth and support an increased workload and solution development for customers.
The main effect of this activity was to support our planned accelerated growth, and solution quality and development.
Risk Factors – Risks Related to our Operations in Israel – Our headquarters and other significant operations are located in Israel and, therefore, our results may be adversely affected by political, economic and military instability in Israel .” 47 Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States, or U.S.
Any renewed military actions, intensified boycotts or government-imposed measures could adversely affect our operations, supply chains and financial condition. 45 Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States, or U.S.
Research and Development Expenses Research and development efforts are focused on new product development and on developing additional functionality for our new and existing products.
The decrease in gross profit was due to the decrease in revenues partially offset by the decrease in cost of revenues, as described above. Research and Development Expenses Research and development efforts are focused on new product development and on developing additional functionality for our new and existing products.
For the year ended December 31, 2024, we generated revenues of $3,964,000, an increase of $931,000, or 31%, from 2023 revenues. The increase in revenues was primarily due to an increase in revenues from our vision-based platform solutions for PdM and CBM.
Revenues for the year ended December 31, 2024 were primarily comprised of: - $3.0 million in revenues from products sold to the Fortune 500 medical company customer, and - $0.9 million in revenues from our vision-based platform solutions for PdM and CBM.
The increase in operating loss was due to increases in research and development expenses, general and administrative expenses and sales and marketing expense, each as described above, partially offset by an increase in gross profit. Backlog Backlog represents booked orders based on purchase orders or hard commitments but not yet recognized as revenue.
The increase in operating loss was due to increases in research and development expenses, general and administrative expenses and sales and marketing expenses, each as described above.
General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor, public relations, accounting, auditing, tax services, and insurance costs. General and administrative expenses for the year ended December 31, 2024 were $5,562,000, an increase of $1,131,000, or 26%, compared to $4,431,000 for the year ended December 31, 2023.
General and Administrative Expenses General and administrative expenses primarily consist of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor, public relations, accounting, auditing, tax services, and insurance costs.
Nevertheless, we have experienced some minor disruptions to our routine work, including some difficulties in traveling outside of Israel and occasional rocket fire on the municipalities where our offices are located, requiring our employees to take temporarily shelter for a few minutes at a time in on-site safe rooms.
While the conflict has not had a material adverse effect on our business to date, we have experienced disruptions to our routine work, including travel limitations and occasional rocket fire requiring employees at our Omer and Ramat Gan offices to take temporary shelter in on-site safe rooms.
Additionally, we leverage advanced big data analytics to offer predictive insights throughout the entire system lifecycle.
Our solution aims to enhance safety and minimize costly downtime by enabling real-time visual analysis of any failure occurrences and to leverage advanced big data analytics to offer predictive insights throughout the entire system lifecycle.
Cost of Revenues Cost of revenues for the year ended December 31, 2024, were $2,807,000 an increase of $283,000, or 11%, compared to cost of revenues of $2,524,000 for the year ended December 31, 2023. The increase in cost of revenues was primarily due to an increase in revenues.
Cost of Revenues Cost of revenues is primarily comprised of cost of personnel, certain allocated expenses related to facilities, logistics and quality control. Cost of revenues for the year ended December 31, 2025, were $2,144,000, a decrease of $663,000, or 24%, compared to cost of revenues of $2,807,000 for the year ended December 31, 2024.
In addition, several of our executives and employees, including company officers such as our CEO, were called up to military reserve duty. As of the date of this Annual Report, our CEO is subject to military reserve duty a few days a month.
Pursuant to instructions from Israel’s Home Front Command, our offices were closed on certain days during the current conflict with Iran and Hezbollah. Additionally, several of our executives and employees have been called up to military reserve duty, including our CEO, who was subject to reserve duty a few days a month until recent months.
Sales and Marketing Expenses Sales and marketing expenses primarily consist of payroll expenses, consulting services, promotional materials, exhibitions, demonstration equipment, and certain allocated facility infrastructure costs. Sales and marketing expenses for the year ended December 31, 2024 were $1,218,000, an increase of $109,0000, or 10%, compared to $1,109,000 for the year ended December 31, 2023.
General and administrative expenses for the year ended December 31, 2025 were $7,040,000, an increase of $1,478,000, or 27%, compared to $5,562,000 for the year ended December 31, 2024.
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This includes efficient spare parts management and intelligent performance predictions, ensuring optimal system reliability and efficiency. 46 The Odysight TruVision solution is successfully used by NASA as we seek to reshape the aerospace, Industry 4.0, transportation and energy markets with a vison-based technology leveraging AI and machine learning to deliver innovative solutions that transform maintenance practices.
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On February 11, 2025, our common stock began trading on the Nasdaq Capital Market under the symbol “ODYS”.
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As used in this Annual Report, Industry 4.0, or I4.0, refers to the integration of advanced technologies into manufacturing and industrial processes to create smart, interconnected systems for improved efficiency and productivity. Odysight solutions are already deployed in the aviation and medical sectors.
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We aim to be the industry benchmark for real-time, visual-based machine and infrastructure health monitoring and predictive maintenance analysis through AI and machine learning data analytics.
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Our 2024 financial results reflect orders and agreements from both the medical and aerospace sectors.
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This includes efficient spare parts management and intelligent performance predictions, ensuring optimal system reliability and efficiency. 44 Our solutions are already deployed in the industrial, automotive and aviation sectors.
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We have recently secured several contracts for our PdM and CBM systems with major government clients and defense and aviation companies and our backlog as of December 2024 of approximately $15 million (compared to approximately $2.6 million as of December 31, 2023) reflects mostly those contracts.
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Since then, Israel has been involved in an ongoing military campaign and has faced hostilities on multiple fronts, including regular rocket and drone attacks and threats from Hamas in the Gaza Strip, Hezbollah in Lebanon, the Houthi movement in Yemen and other terrorist organizations active in the region.
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Following the attack, Israel’s security cabinet declared war and commenced a military campaign in Gaza against Hamas. Since the outbreak of the war, the Hezbollah terrorist organization has regularly fired rockets into northern Israel and, in October 2024, Israel invaded southern Lebanon in response to these attacks.
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While Israel and Hamas reached a ceasefire framework in October 2025 contemplating a permanent end to that conflict, there is no assurance the agreement will hold. Furthermore, the regional security situation escalated significantly in late February 2026, following preemptive strikes by Israel and the United States against Iranian nuclear and ballistic capabilities.
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On November 27, 2024, Israel and Lebanon agreed to a ceasefire, the result of which is uncertain. During the course of the war, other terrorist organizations have fired rockets into Israel, such as various rebel militia groups in Syria and Iraq and the Houthi movement, which controls parts of Yemen.
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In response, Iran launched missile and drone attacks toward population centers and military installations in Israel, Europe and neighboring countries in the Gulf region, and also launched counter-strikes against U.S. forces and allied bases throughout the Gulf region.
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The Houthis movement has also attacked commercial shipping vessels in the Gulf of Aden and Red Sea. In April and October 2024, the Islamic Republic of Iran targeted various sites in Israel with waves of drones, cruise missiles and ballistic missiles. Israel responded on both occasions with air defenses and retaliatory strikes against Iran.
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In addition, in early March 2026, Hezbollah initiated further missile strikes against Israel, leading to retaliatory strikes and limited ground incursions into Lebanon. The war has had economic, military and social consequences for Israel.
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The war has had significant economic, military and social consequences to Israel. To date the war has not had a material adverse effect on our business. While we have offices in Omer and Ramat Gan, Israel, neither of our sites is located near Israel’s relevant borders where the main impact of the war has been felt.
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To mitigate these effects, we have adopted work-from-home measures, increased employee overtime and utilized third-party outsourcing where necessary. The ongoing conflict has influenced our commercial environment in the following ways: ● Customer Prioritization : During more intense periods of the conflict, some Israeli clients have prioritized other matters, which has caused occasional delays in finalizing purchase orders.
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We have taken various measures to mitigate the effects of the war, including adopting work-from-home measures, increased employee overtime and third-party outsourcing where needed, and reviewing our business continuity plan.
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This may lead to a more rapid assimilation of our technology into relevant platforms than previously anticipated. ● International Sentiment : The war has increased negative sentiments regarding Israel and Israeli companies internationally, including efforts to boycott Israeli goods and services and specific efforts targeting Israeli defense firms.
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In addition, with the backdrop of the ongoing conflict, some of our Israeli clients and potential clients have not prioritized conducting transactions with us, and the war may have caused some delays in their finalizing purchase orders. We do not believe that such delays have had a material impact on our business.
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While we have faced challenges, such as initial bans from industry conferences that were later overturned, these efforts have not impacted our participation in such events to date. The security situation remains fluid.
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The war has also increased negative sentiments regarding Israel and Israeli companies in the international community. For example, Israeli defense companies were initially banned from participating in two prestigious industry conferences in France during 2024; however, both bans were later overturned by French courts and did not impact our participation in such conferences.
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For the year ended December 31, 2025, we generated revenues of $3,015,000, a decrease of $949,000, or 24%, from 2024 revenues.
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We expect that our research and development expenses will increase as we continue to develop our products and services and recruit additional research and development employees due to increased focus on R&D activities in the domain of I4.0.
Added
Revenues for the year ended December 31, 2025 were primarily comprised of: - Full derecognition of the contract liability associated with the Fortune 500 medical company customer, in the amount of $1.7 million, as described in Note 9(a)(1) to financial statements, and - $1.2 million in revenues from our vision-based platform solutions for PdM and CBM.
Removed
The increase was mainly due to an increase in payroll and related expenses for new employee recruitment and an increase in stock-based compensation, partially offset by one-time expenses incurred during the year ended December 31, 2023 related to rebranding activities.
Added
We expect our research and development expenses may modestly grow as we continue to develop our products and services and recruit additional experts to support our focus on Industry 4.0 solutions. Sales and Marketing Expenses Sales and marketing expenses primarily consist of payroll expenses, consulting services, promotional materials, exhibitions, demonstration equipment, and certain allocated facility infrastructure costs.
Removed
We expect that our sales and marketing expenses will increase as we expand our selling and marketing efforts in the I4.0 domain. General and Administrative Expenses General and administrative expenses primarily consist of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, and administrative functions.
Added
Sales and marketing expenses for the year ended December 31, 2025 were $2,327,000, an increase of $1,109,000, or 91%, compared to $1,218,000 for the year ended December 31, 2024. The increase in sales and marketing expenses was primarily driven by our enhanced global selling and marketing activity, including efforts to penetrate new territories and market verticals and enhance product visibility.
Added
This led to higher expenses associated with the recruitment of new workforce and marketing consultants. We expect that our sales and marketing expenses will increase as we expand our global selling and marketing efforts.
Added
Key Business Metrics and Non-GAAP Financial Measures We monitor the key business metric set forth below to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies. Our key business metric is backlog.
Added
Increases or decreases in our key performance metric may not correspond with increases or decreases in our revenue. Backlog Backlog is a key business metric that we define as booked orders based on purchase orders or hard commitments but not yet recognized as revenue. Orders included in backlog may be cancelled or rescheduled by customers.
Added
During the year ended December 31, 2024, cash provided by investing activities was $7.6 million, consisting mainly of withdrawal of short terms deposits, net.
Added
Our lease for proximately 800 square meters of office, manufacturing and laboratory space in Omer, Israel is set to expire in May 2026, at which time we have leased an alternative location in Omer consisting of approximately 286 square meters of space.

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