What changed in this filing

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Item 1A. Risk Factors

2021-03-31 compared with 2020-03-16 · 103 added, 116 removed, 419 unchanged (34% of the section changed)

Related to Our Business, Operations and Financial Condition

COVID-19 pandemic has adversely affected, and will continue to adversely affect, our business, financial condition, liquidity

and results of operations.

COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected businesses, economies and financial markets

worldwide, placed constraints on the operations of businesses, decreased consumer mobility and activity, and caused significant

economic volatility in the United States, Israel and international capital markets.

Our business has been affected in various

ways, as discussed below, including in our operations, and we cannot predict the length and severity of the pandemic or its effects

on us and our customers.

We have followed guidance by the U.S.

and Israeli governments and the other local governments in which

we operate to protect our employees and our operations during the pandemic and have implemented a remote environment for certain

of our employees, and, as a result, may experience inefficiencies in our employees’

ability to collaborate.

experienced difficulty in our efforts to recruit and hire qualified personnel during this time.

In addition, the COVID-19 pandemic

has caused an economic recession, high unemployment rates and other disruptions, both in the United States, Israel and the rest

of the world.

Any of these impacts, including the prolonged continuation of these impacts, could adversely affect our business.

cannot predict the other potential impacts of the COVID-19 pandemic on our business or operations, and there is no guarantee that

any near-term trends in our results of operations will continue, particularly if the COVID-19 pandemic and the adverse consequences

thereof continue for a long period of time.

Additional waves of infections, a continuation of the current environment, or any

further adverse impacts caused by the COVID-19 pandemic could further deteriorate employment rates and the economy, detrimentally

affecting our consumer base and divert consumers’

discretionary income to other uses, including for essential items.

events could adversely impact our cash flows, results of operations and financial conditions and heighten many of the other risks

described in these “Risk Factors.”

reliance on third-party suppliers for most of the components of our products could harm our ability to meet demand for our products

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we have a history of losses, and we may not be able to generate sufficient revenues to achieve and sustain profitability, and

as a result, there is substantial doubt about our ability to continue as a going concern within the first year following the fiscal

year ended December 31, 2019.

as a result, there is substantial doubt about our ability to continue as a going concern following the fiscal year ended December

we are subject to these risks, evaluating our business may be difficult, our business strategy may be unsuccessful and we may

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may require substantial additional funding, which may not be available to us on acceptable terms, or at all.

cash balance as of December 31, 2019 was $3,245,000.

We may require additional funding to fund and grow our operations

and to develop certain products.

There can be no assurance that financing will be available in amounts or on terms acceptable

to us, if at all.

In the event we required additional capital, the inability to obtain additional capital will restrict our ability

to grow and may reduce our ability to continue to conduct business operations.

cash balance as of December 31, 2020 was $3.4 million.

We may require additional funding to fund and grow our operations and to

develop certain products.

There can be no assurance that financing will be available in amounts or on terms acceptable to us,

In the event we required additional capital, the inability to obtain additional capital will restrict our ability to

grow and may reduce our ability to continue to conduct business operations.

If we require and are unable to obtain additional

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financial condition and results of operation.

We may not realize the anticipated benefits of any or all partnerships, or

may not realize them in the time frame expected.

We may not realize the anticipated benefits of any or all partnerships, or may not

realize them in the time frame expected.

may not have sufficient manufacturing capabilities to satisfy any growing demand for our commissioned products.

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that we will be able to respond successfully to technological change.

have identified a material weakness in our internal control over financial reporting.

If we fail to maintain effective internal

control over financial reporting, we may be unable to report our financial results accurately or meet our reporting obligations.

connection with the issuance of our consolidated financial statements for the year ended December 31, 2019, we identified a material

weakness in our internal control over financial reporting as of December 31, 2019.

A “material weakness”

is a deficiency,

or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that

a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

have initiated actions toward remediating this material weakness by identifying our staffing requirements and commencing the process

of hiring additional personnel for our finance team with the appropriate level of training and expertise.

However, the implementation

of these initiatives may not fully address this or any other material weakness or other deficiencies that we may have in our internal

control over financial reporting.

will continue to assess our internal control environment and the potential remediation of this material weakness.

If we are unable

to certify that our internal control over financial reporting is effective pursuant to Section 404 of the Sarbanes-Oxley Act of

2002, we could lose investor confidence in the accuracy and completeness of our financial reports, which could harm our business,

the price of our ordinary shares and our ability to access the capital markets.

may incur losses as a result of unforeseen or catastrophic events, including the recent outbreak of the novel coronavirus (COVID-19) .

occurrence of unforeseen or catastrophic events such as terrorist attacks, extreme terrestrial or solar weather events or other

natural disasters, emergence of a pandemic, or other widespread health emergencies (or concerns over the possibility of such an

emergency), could create economic and financial disruptions, and could lead to operational difficulties that could impair our

ability to manage our business.

In particular, the current outbreak of novel coronavirus (COVID-19) that was first reported from

Wuhan, China, on December 31, 2019, including the resulting travel restrictions and quarantines already imposed by several countries,

present concerns that may dramatically affect our ability to conduct our business effectively.

The trajectory of the coronavirus

remains uncertain and it is becoming increasingly plausible that our business, including the livelihood of our employees and customers

upon both of which our business relies, may be directly afflicted .

Related to Our Common Stock

on the OTC Markets is volatile, sporadic and often thin, which could depress the market price of our common stock and make it

difficult for our stockholders to resell their common stock.

common stock is quoted on the OTCQB tier of the OTC Markets.

Trading in securities quoted on the OTC Markets is often thin and

characterized by wide fluctuations in trading prices, due to many factors, some of which may have little to do with our operations

or business prospects.

This volatility could depress the market price of our common stock for reasons unrelated to operating performance.

Moreover, the OTC Markets is not a stock exchange, and trading of securities on the OTC Markets is often more sporadic than the

trading of securities listed on a stock exchange like NASDAQ or the NYSE.

Our common stock has a history of thin trading.

the 52-week period ended December 31, 2020, trades were only reported on 103 trading days.

These factors may result in

investors having difficulty reselling any shares of our common stock.

we were a “shell company,”

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market price of our Common Stock may be highly volatile and such volatility could cause you to lose some or all of your investment.

market price of our common stock, par value $0.001 per share, or Common Stock, may fluctuate significantly in response

to numerous factors, some of which are beyond our control, such as:

market price of our common stock, par value $0.001 per share, or Common Stock, may fluctuate significantly in response to numerous

factors, some of which are beyond our control, such as:

announcement of new products or product enhancements by us or our competitors;

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Sales of shares of our Common Stock could also depress the then price of our shares.

investor’s ability to trade our common stock may be limited by trading volume.

Company’s shares are currently quoted on the OTCQB under the symbol “SCTC.”

An active trading market for our

common stock has not developed, and may not develop, on the OTCQB.

During the period subsequent to our upgrade from the OTC Pink

Market to the OTCQB, which occurred on September 14, 2020 and until December 31, 2020, trades were only reported on 46

trading days.

A limited trading volume may prevent our shareholders from selling shares at such times or in such amounts as

they may otherwise desire.

our Common Stock may be a “penny stock,”

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may make decisions that our stockholders do not consider to be in their best interests.

of December 31, 2019, our directors, executive officers, principal stockholders and affiliated entities may be deemed to

beneficially own, in the aggregate, approximately 66.91% of our outstanding voting securities as of the date hereof.

a result, if some or all of such parties acted together, they would have the ability to exert substantial influence over the election

of our board of directors and the outcome of issues requiring approval by our stockholders.

This concentration of ownership may

also have the effect of delaying or preventing a change in control of the Company that may be favored by other stockholders.

could prevent transactions in which stockholders might otherwise recover a premium for their shares over current market prices.

This concentration of ownership and influence in management and board decision-making could also harm the price of our capital

stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock (whether by

making a tender offer or otherwise) or otherwise attempting to obtain control of our Company.

of March 28, 2021, our directors, executive officers, principal stockholders and affiliated entities may be deemed to beneficially

own, in the aggregate, approximately 67.54% of our outstanding voting securities as of the date hereof.

if some or all of such parties acted together, they would have the ability to exert substantial influence over the election of

our board of directors and the outcome of issues requiring approval by our stockholders.

This concentration of ownership may also

have the effect of delaying or preventing a change in control of the Company that may be favored by other stockholders.

prevent transactions in which stockholders might otherwise recover a premium for their shares over current market prices.

concentration of ownership and influence in management and board decision-making could also harm the price of our capital stock

by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock (whether by making

a tender offer or otherwise) or otherwise attempting to obtain control of our Company.

Related to our Operations in Israel

economic and military instability in Israel may impede our ability to operate and harm our financial results.

principal executive offices are located in Israel.

offices and management team are located in Israel.

Accordingly, political, economic, and military conditions in Israel and the

surrounding region could directly affect our business.

Since the establishment of the State of Israel in 1948, a number of armed

conflicts have occurred between Israel and its Arab neighbors, Hamas (an Islamist militia and political group in the Gaza Strip)

and Hezbollah (an Islamist militia and political group in Lebanon).

surrounding region may directly affect our business and operations.

In recent years, Israel has been engaged in sporadic armed

conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that

controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria.

In addition, Iran has threatened

to attack Israel and may be developing nuclear weapons.

Some of these hostilities were accompanied by missiles being fired from

the Gaza Strip against civilian targets in various parts of Israel, including areas in which our employees and some of our consultants

are located, and negatively affected business conditions in Israel.

Any hostilities involving Israel or the interruption or curtailment

of trade between Israel and its present trading partners could adversely affect our operations.

Ongoing and revived hostilities

or other Israeli political or economic factors, could prevent or delay shipments of our products, harm our operations and product

development and cause any future sales to decrease.

In the event that hostilities disrupt the ongoing operation of our facilities

or the airports and seaports on which we depend to import and export our supplies and products, our operations may be materially

adverse affected.

Furthermore, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts.

Several countries, principally those in the Middle East, still restrict business with Israel and Israeli companies, and additional

countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability

in the region continues or increases.

These restrictive laws and policies may seriously limit our ability to sell our products

in these countries and may have an adverse impact on our operating results, financial conditions or the expansion of our business.

addition, political uprisings and conflicts in various countries in the Middle East are affecting the political stability of those

This instability has raised concerns regarding security in the region and the potential for armed conflict.

a country bordering Israel, a civil war is taking place.

In addition, there are concerns that Iran, which has previously threatened

to attack Israel, may step up its efforts to achieve nuclear capability.

Iran is also believed to have a strong influence among

extremist groups in the region, such as Hamas in Gaza and Hezbollah in Lebanon, as well as a growing presence in Syria.

Additionally,

the Islamic State of Iraq and Levant, or ISIL, a violent jihadist group whose stated purpose is to take control of the Middle

East, remains active in areas within close proximity to Israeli borders.

The tension between Israel and Iran and/or these groups

may escalate in the future and turn violent, which could affect the Israeli economy in general and us in particular.

Any potential

future conflict could also include missile strikes against parts of Israel, including our offices and facilities.

Such instability

may lead to deterioration in the political and trade relationships that exist between the State of Israel and certain other countries.

Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions, could

harm our results of operations and could make it more difficult for us to raise capital.

Parties with whom we do business may

be disinclined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements

when necessary in order to meet our business partners face to face.

In addition, the political and security situation in Israel

may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform

their commitments under those agreements pursuant to force majeure provisions in such agreements.

insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East

or for any resulting disruption in our operations.

Although the Israeli government has in the past covered the reinstatement value

of direct damages that were caused by terrorist attacks or acts of war, we cannot be assured that this government coverage will

be maintained or, if maintained, will be sufficient to compensate us fully for damages incurred and the government may cease providing

such coverage or the coverage might not suffice to cover potential damages.

Any losses or damages incurred by us could have a

material adverse effect on our business.

Any armed conflicts, political instability, terrorism, cyberattacks or any other hostilities

involving or threatening Israel would likely negatively affect business conditions generally and could harm our results of operations.

Israel’s domestic front, there is currently a level of unprecedented political instability.

The Israeli government has been

in a transitionary phase since December 2018, when the Israeli Parliament, or the Knesset, first resolved to dissolve itself and

call for new general elections.

In 2019, Israel held general elections twice, in April and September, and a third general election

was held on March 2, 2020.

The Knesset, for reasons related to this extended political transition, has failed to pass a budget

for the year 2020, and certain government ministries, which may be critical to the operation of our business, are without necessary

resources and may not receive sufficient funding moving forward.

Given the likelihood that the current political stalemate may

not be resolved during the next calendar year, our ability to conduct our business effectively may be adversely materially affected.

of trade between Israel and its trading partners could adversely affect our operations and results of operations.

commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism.

Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of

war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages.

Any losses or damages incurred by us could have a material adverse effect on our business.

Any armed conflicts or political instability

in the region would likely negatively affect business conditions and could harm our results of operations.

in the past, the State of Israel and Israeli companies have been subjected to economic boycotts.

Several countries still restrict

business with the State of Israel and with Israeli companies.

These restrictive laws and policies may have an adverse impact on

our operating results, financial condition or the expansion of our business.

A campaign of boycotts, divestment and sanctions

has been undertaken against Israel, which could also adversely impact our business.

addition, many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty

each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations)

and, in the event of a military conflict, may be called to active duty.

In response to increases in terrorist activity, there

have been periods of significant call-ups of military reservists.

It is possible that there will be military reserve duty call-ups

in the future.

Our operations could be disrupted by such call-ups, which may include the call-up of members of our management.

Such disruption could materially adversely affect our business, prospects, financial condition and results of operations.

rate fluctuations between foreign currencies and the U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors