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Item 1. Business

2023-03-28 compared with 2022-03-30 · 238 added, 329 removed, 116 unchanged (83% of the section changed)

are engaged in the development, production and marketing of innovative visual solutions composed of imaging equipment, cloud and software

based image processing (artificial intelligence (AI), machine learning (ML), and additional algorithm methodologies).

Some of our products

that utilize our micro ScoutCam™ technology are used in medical procedures as well as various applications in other industries.

Our current business model is a business-to-business (B2B) approach in which we seek to identify target businesses interested in integrating

our micro ScoutCam™ technology, or commissioning individual projects using our technology.

We derive a substantial portion of our

revenue from applications of our micro ScoutCam™ technology within the medical, defense and aerospace fields.

We have recently

begun examining additional applications for our visual solutions portfolio (composed of image acquisition, data collection and storage

and image processing), including Predictive Maintenance (PdM) and Condition Based Monitoring (CBM), as well as additional industry sectors

such as aviation, automotive, industrial non-destructing-testing industries energy and maritime (we refer to these applications and sectors

as I4.0) We plan to further expand our activity in these non-medical spaces.

above (from left to right) are the Company’s micro ScoutCam TM 1.0 Lum and micro ScoutCam™ 1.2.

Company’s eye-endoscope, which includes a camera at the distal tip, integrated illumination and embedded irrigation, which is only

1.2 mm in outer diameter.

Corporate History and Background

are a pioneer in the development, production, and marketing of innovative Predictive Maintenance (PdM) and Condition Based Monitoring

(CBM) technologies, providing visual sensing and AI-based video analytics solutions for critical systems in the aviation, maritime, industrial

non-destructing-testing industries, transportation, and energy industries.

Some of our products utilize our unique micro visualization

technology in medical devices for complex and minimally invasive medical procedures.

Our technology includes proven video technologies

and products amalgamated into a first-of-its-kind, FDA-cleared minimally invasive surgical device.

At the present time, we derive a substantial

portion of our revenue from applications of our micro visualization technology within the medical field.

Business Model

unique video-based sensors, embedded software, and AI algorithms are being deployed in hard-to-reach locations and harsh

environments across a variety of PdM and CBM use cases.

Our solution allows maintenance and operations teams visibility into areas

which are inaccessible under normal circumstances, or where the operating ambience otherwise is not suitable for continuous

real-time monitoring, and has various applications which have relevancy in a wide range of industry segments that utilize

complicated mechanics requiring ongoing monitoring and predictive maintenance applications.

Our current business model is a

business-to-business (B2B) approach in which we seek to identify target businesses interested in integrating our micro visualization

technology or commissioning individual projects using our technology.

We have several successful proof of concepts in airborne

platforms of various OEM’s in aerospace and have completed a successful demonstration project for a top global elevator

systems manufacturer.

As provided above, we are developing additional applications for our visual solutions portfolio (composed of

image acquisition, data collection, and storage and image processing), including PdM and CBM (we refer to these applications and

sectors as Industry 4.0, or I4.0), which generate a number of potential benefits for our customers.

following graphic demonstrates ScoutCam’s value proposition, starting with increased safety and reduced down time due to our ability

to visually analyze any failure occurrence in real time, and including more sophisticated benefits like big data analytics that provide

predictive insights regarding to an entire system life cycle, spare parts management and smart prediction regrading system performance.

History and Background

were incorporated as a corporation under the laws of the State of Nevada on March 22, 2013, under the name Intellisense Solutions Inc.

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(as defined herein).

For additional information about the Exchange Agreement, refer to – “ CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR INDEPENDENCE” below.

December 30, 2019, we acquired ScoutCam Ltd.

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intellectual property rights related to its miniaturized imaging business.

For additional information about the Amended and Restated

Asset Transfer Agreement, refer to – “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE” below.

On May 18, 2020, in connection with the Arkin Transaction (as defined below), the Company and Medigus entered into a certain Side Letter

Agreement (the “Letter Agreement”), whereby the parties agreed to amend certain terms of the Amended and Restated Asset Transfer

Agreement and the License Agreement.

For additional information about the Letter Agreement, refer to – “CERTAIN RELATIONSHIPS

AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE” below.

On May 18, 2020, in connection with the Arkin Transaction

(as defined below), the Company and Medigus entered into a certain Side Letter Agreement (the “Letter Agreement”), whereby

the parties agreed to amend certain terms of the Amended and Restated Asset Transfer Agreement and the License Agreement.

April 20, 2020, ScoutCam Ltd.

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Services Agreement”), which effectively amended and restated an intercompany services agreement dated May 30, 2019.

For additional

information about the Intercompany Services Agreement, refer to – “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE” below.

additional information about the Exchange Agreement, the Amended and Restated Asset Transfer Agreement, the Letter Agreement and the

Intercompany Services Agreement, refer to – “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE”

and Marketing

vision is to improve the performance of organizations by offering prestigious tools that enhance the visual technological capabilities

and maximize AI analysis capabilities for companies across a variety of industries.

Our mission is to become a global leader providing

innovative, off-the-shelf and custom-tailored visualization and analysis solutions to organizations across a variety of industries based

on highly resistant cameras and supplementary technologies.

We are currently focused on custom-tailored solutions, and as a result have

a very limited offering of off-the-shelf products, which are used mainly as models for new uses of our technology and capabilities rather

than as a major source of revenue.

Moreover, as we focus only on the visualization apparatus and supporting components, including for

example a small camera (that consists of a miniature Complementary Metal Oxide Semiconductor or CMOS video sensor, optics, filters, electronics,

housing and cables), illumination, cleaning methods (e.g., irrigation), and/or a mechanical structure based on the customer’s needs,

in most cases our products are components of the customer’s end-user products rather than independent end-user products.

illustrative examples of our component parts that have been previously integrated into our clients’ end-user products include:

Company’s micro ScoutCam™ 6.5 Lum, pictured above, was integrated into a NASA-commissioned project, and as a result it became

the first micro camera utilized in orbit when it was successfully operated outside the International Space Station in May 2015.

above is a single-use visualization solution that was developed and sold to A.M.

Surgical, which was designed to replace expensive and

bulky reusable endoscopes used in carpal tunnel surgery by their Stratos surgical device.

We prepared both wired and wireless versions.

Our wireless device was cleared for marketing by the US Food and Drug Administration (FDA) and is compliant with FCC regulations.

business model in the medical domain includes engaging companies seeking to add video visualization to their existing or new product(s)

or considering the development of new products that include micro video visualization.

Accordingly, our customer base is exclusively

comprised of businesses, and therefore we are entirely removed from marketing, manufacturing, selling and distributing end-user products

to consumers.

Our engagement with businesses is ordinarily conducted in two phases.

During the first phase, we conduct the research and

development that is required in order to specify, design, develop, and produce the designated visualization apparatus, all for an agreed-upon

compensation amount (e.g., a non-recurrent engineering fee).

During the second phase, we manufacture the apparatus and sell it to the

customer for an agreed-upon transfer price.

In some cases, by customer request, we offer complete ‘turn-key’ contracts in

which we are responsible for most or all product phases, from the specifications phase to the provision of completed components or products

that are packaged and ready for sale.

In such cases, we may conduct necessary regulatory tests and handle required regulatory approvals.

In addition, we may also be responsible, as necessary, for packaging, sterilization, labeling, and shipment.

the I4.0 domain, which target PdM and CBM applications, we intend to engage with companies who wish to increase the monitoring capabilities

of different elements of a device using our visual monitoring solutions (these include build of image acquisition, data collection and

storage, and image processing capabilities based on AI, ML and additional algorithm concepts).

vision is to become a leading provider of video analytics based, PdM solutions for the aerospace, other industry and medical critical

system markets.

engage companies seeking to add video visualization to their existing or new product(s) or considering the development of new products

that include micro video visualization.

Our approach to the medical market is ordinarily conducted in two phases.

During the first phase,

we conduct the research and development that is required in order to specify, design, develop, and produce the designated visualization

apparatus, for an agreed-upon compensation amount (e.g., a non-recurrent engineering fee).

During the second phase, we manufacture the

apparatus and offer it to the customer for an agreed-upon transfer price.

the I4.0 domain, which target PdM and CBM applications, we engage with companies that wish to increase the monitoring capabilities of

different elements of a device using our visual monitoring solutions (these include build of image acquisition, data collection and storage,

and image processing capabilities based on AI, ML, cloud, and additional algorithm concepts).

Based on our product portfolio with customized

solutions as needed, this will allow our customers to receive alerts on anomalies and failures as they are occur on the monitored component,

analyze and track trends and development of the anomaly and predict any impending failure of the component as a result of such anomaly

over time and usage.

a result, we expect customers to benefit from a reduction in downtime of their monitored equipment, using the prediction capabilities

of the platform to efficiently plan maintenance work on future faulty components.

Another outcome we expect is more cost effective management

of resources, since components will only need to be replaced as a result of their actual condition rather than a strict maintenance schedule.

use of an image based platform in the fields of PdM and CBM provides richer and more informative data and insights not available with

traditional sensing methods.

Together with the AI and ML models customized for the relevant use cases, we expect this will provide customers

with a clearer view of the status of their equipment, increasing revenues by saving on direct expenses and increasing the uptime of their

customers include technology-based companies and organizations, which are mainly large, well-established, international corporations.

Larger corporations provide financial stability, large purchased quantities, recurring revenue, and valid forecasts for extended durations.

In addition, we engage customers from various industries, such as biomedical, aerospace, energy, transportation, certain sensitive or

classified industries, security and defense, and research.

order to locate and secure new customers we employ both active and passive marketing strategies.

As part of our active approach, we employ

three business development managers, in addition to other consultants, who analyze target industries and assess whether visualization

solutions may add value to companies operating in those industries.

Once we have identified a potentially relevant industry, we approach

a variety of target companies and market the benefits of integrating our visualization solutions into their products.

In addition, in

order to assist us in identifying such industries and target companies, we consult with subject matter experts from various industries.

addition to the active marketing strategy described above, we also employ a multitude of other marketing channels in order to increase

the exposure of our services to relevant industries.

These marketing channels include advertising, participating in relevant tradeshows

and conferences, web-marketing, which includes a well maintained Company website, Search Engine Optimization (SEO), social media presence,

distribution of press-releases in target countries, as well as conventional marketing means, including brochures and presentations.

Additionally,

we issue industry-specific marketing materials that are tailored to highlight the relevant features of our technology to a specific target

marketing measures may include, but are not limited to, the following:

third party companies as territorial representatives in key markets;

business engagements based on leads received through our website, through active web based tools for lead generation, or via other

methods or means;

initial technical scopes and discussions together with such prospects in order to evaluate the feasibility of their contemplated

an updated and detailed website presenting our core competency, solutions, use cases and proven track record;

our website in different search engines and other digital forums through SEO campaigning as well as other proactive digital marketing

certain social media platforms for campaigning and advertising;

with our large database, which includes a multitude of past prospects;

and refining marketing communications materials, including digital and printed brochures;

solutions as needed, this will allow our customers to receive real time alerts on anomalies and failures of monitored components, analyze

and track trends and development of the anomaly, and predict any impending failure of the component as a result of such anomaly over

time and usage.

As a result, we expect customers to benefit from a reduction in downtime, lower maintenance expenses, and increased safety

of their monitored equipment, using the prediction capabilities of the platform to efficiently plan maintenance work on future faulty

Another outcome we expect is more cost effective management of resources, since components will only need to be replaced

as a result of their actual condition rather than a strict maintenance schedule.

use of an image based platform in the fields of PdM and CBM provides richer and more informative data and insights than traditional sensing

Together with the AI and ML models customized for the relevant use cases, we expect this will provide customers with a clearer

view of the status of their equipment, increasing revenues by saving on direct expenses, and increasing the uptime of their equipment.

February 6, 2023, we announced the completion of a major development stage in equipping Elbit Systems Ltd.’s leading defense UAS

aerial platforms with our real time video monitoring system.

Through the program, our unique video-based sensors, embedded software,

machine vision and algorithms support a variety of predictive maintenance and condition-based monitoring use cases for unmanned aerial

vehicles in harsh environments and hard-to-reach locations, as it features a modular open system architecture, enabling seamless integration

with advanced unmanned aerial platforms.

order to engage new customers, we employ various marketing strategies.

We employ several professional experienced 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.

marketing efforts include, but are not limited to, the following:

third party companies and local consultants as territorial representatives in key markets and leading companies in relevant industries;

business engagements based on leads received through our marketing efforts, through active interaction with key industry influencers,

providing financed proof of concept in order to generate tailored product orders, or via other methods or means;

proof of concept demonstrations in order to evaluate the feasibility of integration for monitoring their systems and to demonstrate

the significant value proposition of our technology to customers;

through personal contacts in the aerospace, critical industry, transportation, maritime, medical, and defense industries;

participating

in major vision technology exhibitions as well as industry specific events.

in major aerospace, maritime, and vision technology exhibitions as well as industry 4.0 specific events.

addition to our business development efforts that are mainly based on currently existing or future customer needs, we aim to identify

new market opportunities.

These efforts include systematical analysis of industrial fields as well as medical fields and procedures in

order to identify where visualization solutions, including image analysis, might benefit and attract value.

When a potential opportunity

is identified, we protect our rights by establishing relevant intellectual property safeguards, develop various prototypes that may be

relevant for the specific application and engage key opinion leaders in that field to validate the feasibility of our solutions.

medical domain, given that we are not a business-to-consumer, or B2C, company, our business model does not include commercialization

of end-user products;

nevertheless, we seek to partner with relevant companies to convert our innovative prototypes into market-ready

products, complete the required regulatory clearances, and commercialize them based on revenue share models.

Regarding the I4.0 domain,

we are in the process of transforming our products and projects into market ready solutions, aiming to commercialize our platform as

part of a SaaS model offering with multi-year contracts which include required hardware, software, cloud service and ongoing support

and maintenance.

project based solutions, we have certain internal procedures in place once a potential customer is identified which help provide a roadmap

for the ensuing working relationship.

Prior to any formal engagement with a potential customer, two of our departments – business

development and R&D – work in parallel to define an understanding with the customer that will ordinarily incorporate two phases:

(a) an R&D phase, during which the R&D team develops a custom-tailored visualization component that synthesizes our technology

and skill with the customer’s stated requirements, specifications, and business constraints, and which phase generally includes

a formal agreement with respect to a Non-Recurrent Engineering (NRE) fee that is typically payable according to a pre-defined set of

and (b) a production phase, during which we manufacture and supply the component parts for an agreed upon transfer price.

the years, we have offered and implemented tailor-made pricing schemes that allows us to separately price services rendered during the

previously described first phase.

Pricing of this first phase is typically prepared by the engineering team, which provides an assessment

of the anticipated costs associated with the R&D of the project, which price will depend on a given customer’s specifications

and project vision.

Such costs may include, inter alia, engineering labor, any contracts with sub-contractors, tooling, off-the-shelf

and newly designed components, materials, prototypes production, testing, management overhead, and travel costs.

Once we have completed

our cost estimation for the R&D phase, we issue a quote for such services to the customer.

order to develop a transfer price in connection with the aforementioned second phase, the expected Bill-Of Material (BOM) and Cost-Of-Good

Sold (COGS) are established and we develop a quotation accordingly.

Often times there are certain modifications to the original project

outlined and agreed upon in the R&D phase, which might necessitate an increase or decrease to the pricing of the overall project.

For that reason, we tend to include a certain margin of flexibility in the final target transfer price.

In addition, we usually link

the end transfer price with both annual and per-order Minimum Order Quantities (MOQ), in order to reflect the actual production quantity

of the COGS as well as to commercially incentivize the customer to order larger quantities.

the negotiation process and the contract drafting are usually done in collaboration with the customer, such that both sides can verify

throughout the process that the final agreement meets their technological and business expectations.

Furthermore, we seek to maintain

close contact with the customer throughout the two phases of our engagement, including for example, by way of teleconferences, virtual

and actual meetings, document exchanges, on-site visits, and reporting of any completion of predefined milestones.

our off the shelf products, the NRE phase in project based commercial interactions is not relevant, and the pricing model is set up front

based on the cost, margin and value that the product creates.

we have one major customer that is expected to generate most of our forecasted revenue in the near term:

a large international bio-med

company that is developing a visualization component for its minimally-invasive surgical device.

In addition to the foregoing

material customer, we are engaged in initial negotiations with multiple potential customers operating in a variety of sectors, including

biomedical, aerospace, aviation, automotive, energy, military and security, and others.

In the I4.0 segment, aviation industries (both

manned and unmanned) are currently the source of our greatest level of interest, with recent growing interest coming from the transportation

(specifically railway) and energy (specifically wind turbine) sectors.

We are pursuing these potential engagements with the goal of securing

proof of concepts and launching commercial pilots that may then materialize into multi-year production contracts.

We are in various stages

of engagement with a variety of customers in all the above mentioned industries.

the biomedical space, for example, we generally seek to partner with medical device and pharmaceutical companies that develop endoscopes

with or without additional functionality.

This variation allows the endoscope to be introduced into anatomical parts that were previously

(prior to adopting ScoutCam’s visualization solution) not accessible within the video-endoscope space either because of outer diameter

limitations and/or price.

To this end, we focus on single-use products that accommodate the global trend to transition from expensive,

multi-use products that require a thorough cleaning protocol, but which cannot be sterilized, to single-use products.

we have recently mobilized efforts to market the possibility of employing our visualization technology and solutions for the purposes

of monitoring sensitive mechanical structures and elements in the aviation sector, engaging on a pilot basis with the Israeli Air Force

regarding their helicopters and unmanned aerial vehicles and with several defense companies.

Such an application complements global market

trends associated with Industry 4.0 and Internet of Things, in which machines are programmed to test themselves and their production

output, which then automatically alerts the processor of any potential problems at the outset of an endeavor.

are currently several companies that offer small cameras, including, but not limited to, Opcom, Fujikura-Picoramedic, Awaiba, Fisba,

Unlike these competitors, we offer customized solutions, which include additional components as needed.

Other companies,

such as IntraVu, Medit, and SPI Engineering, offer complete, small diameter, off-the shelf endoscopes/borescopes.

Our focus, however,

is on customizing and integrating our solutions into a given customer’s device.

Certain companies, such as Enable, Myriad Fiber

Imaging Tech., Inc., and Precision Optics, act as our direct competitors, since they offer similar services to those that we offer.

addition, there are currently many companies that develop and provide monitoring solutions for PdM and CBM.

These monitoring solutions

can be the sensor itself, data collection and storage, AI processing, or a combination of these capabilities.

The CBM and PdM solutions

are usually based on traditional sensing solutions such as vibration, temperature, and acoustic sensors.

Based on our research and discussions

with customers, we believe these traditional sensing methods are limited in their ability to provide an in depth view of the condition

of the monitored components and usually alert on the occurrence of an anomaly when component failure has already occurred, which is too

These efforts include systematic analysis of various industrial and medical fields and procedures to identify

where visualization solutions, including image analysis, might add value.

When a potential opportunity is identified, we seek to protect

our rights by establishing relevant intellectual property safeguards, developing prototypes for the required application.

In the medical

domain, we currently sell our system to a fortune 500 corporation;

in this respect, we seek to partner with additional relevant companies

to progress our technology into prototypes which, in turn, will be developed into market-ready products.

January 2022, we entered into a patent cross-licensing arrangement with Japan-based Sumita Optical Glass, Inc.

(Sumita), a specialty

optical fiber technology company, pursuant to which we granted a non-exclusive license to Sumita to our patents related to “Small

Diameter Video Camera Heads and Medical Devices and Visualization Probes containing them” in return for payment of royalties and

a grant-back license to ScoutCam of Sumita’s patent and patent applications related to fiber optics illumination.

For additional

information on our patent portfolio, refer to – “PROPRIETARY RIGHTS AND TECHNOLOGY” below.

we have one major customer, a leading Fortune 500 multinational healthcare corporation, that is expected to generate most of our forecasted

revenue in the near term.

In June 2022, we announced that we completed the verification and validation stage of our miniature camera

solution with this client and, on January 26, 2023, we announced that we had received an order from this client for $1.45 million.

addition, we derive a substantial portion of our revenue from applications of our micro visualization technology within the medical field.

addition, we announced the completion of a major development stage to equip Elbit Systems Ltd.’s leading defense UAS aerial platforms

with our real time video monitoring system.

are currently several companies that develop and provide monitoring solutions for PdM and CBM.

These monitoring solutions can be the

sensor itself, data collection and storage, AI processing, or a combination of these capabilities.

The CBM and PdM solutions are usually

based on traditional sensing solutions such as vibration, temperature, and acoustic sensors.

Based on our research and discussions with

customers, we believe these traditional sensing methods are limited in their ability to provide an in depth view of the condition of

the monitored components and usually alert on the occurrence of an anomaly when component failure has already occurred, which is too

late in some cases.

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per market, use case, and/or data source.

Our more holistic approach and reliance on image based solutions creates richer and more informative

data, leveraged by AI and ML algorithms, enabling our customers to deploy predictive maintenance programs.

We believe that our more holistic approach and reliance on image-based solutions creates richer

and more informative data, leveraged by AI and ML algorithms, enabling our customers to deploy predictive maintenance programs.

Rights and Technology

we develop customized components and/or products per market needs or per specific customer requirements, our various projects are constantly

in different stages of development, including:

planning, early R&D for a proof of concept, R&D for a prototype, final product/component

development, engineering necessary for a production-ready version, and production of initial batches.

currently own a total of six patent families which we consider material to our business and operating success.

Our intellectual property

rights include patents and patent applications that were transferred to us by Medigus as part of the Addendum No.

1 to Amended and Restated

Asset Transfer Agreement (the “Addendum”), the License Agreement and the Letter Agreement, additional patent assets developed

by ScoutCam and an asset assigned to us from a third party.

For additional information about the License Agreement refer to – “CERTAIN

RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE” below.

Under the Addendum, and subject to certain limitations

as further set forth therein, Medigus transferred to us the following material patent families in exchange for a license in connection

with the marketing and sale of the Medigus Ultrasonic Surgical Endostapler:

solution for the market is based on our core intellectual property which we seek to review and patent on a regular basis, where applicable.

We are heavily invested in creating patents for our core technology.

patent portfolio currently contains patent families which we consider material to our business and operating success.

Our intellectual

property rights include patents and patent applications that were transferred to us by Medigus as part of the Addendum No.

and Restated Asset Transfer Agreement (the “Addendum”), the License Agreement and the Letter Agreement, and additional patent

assets developed by ScoutCam.

For additional information about the License Agreement refer to – “CERTAIN RELATIONSHIPS AND

RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE” below.

Under the Addendum, and subject to certain limitations as further set forth

therein, Medigus transferred to us the following material patent families in exchange for a license in connection with the marketing

and sale of the Medigus Ultrasonic Surgical Endostapler:

Patent family related to Integrated Endoscope Irrigation:

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This patent has been granted in Canada, Europe (validated in Germany, Spain, France, Great Britain and Italy),

Israel, Japan (original and divisional), and the United States, and has an allowed continuation patent application and an additional

pending continuation in the United States.

The expiration date for this patent in the United States is December 3, 2033, and in each

of the other aforementioned jurisdictions is February 28, 2033;

Israel, Japan (original and divisional), and the United States (two patents), and has two pending continuations in the United States.

The expiration dates for the two patents in the United States are November 28, 2033 and February 28, 2033;

Patent family related to Small Diameter Video Camera Heads and Medical Devices and Visualization Probes containing them:

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This patent has been granted in Japan, Korea, Israel, the United States (2 patents, original and continuation

in part), and Europe (3 patents, original and 2 divisionals, currently under opposition proceedings, validated in Germany, France, Great

Britain, and Italy) and also has patent assets pending an opposition appeal in Europe.

The expiration dates for these patents in the

United States are April 5, 2032 and March 10, 2031, and in each of the other aforementioned jurisdictions September 16, 2030.

in part), and Europe (3 patents, original and 2 divisionals, currently under appeal after opposition proceedings, validated in Germany,

France, Great Britain, and Italy).

The expiration dates for these patents are March 16, 2031 (for the patents in the United States),

and September 16, 2030 (for patents in each of the other aforementioned jurisdictions).

a result of oppositional proceedings initiated by a third party in 2018, the Opposition Division of the EU Patent Office decided in 2019

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Following appeals by Company and the third party of the 2019 and 2021 decisions, respectively, the Opposition Division of the EU Patent

Office is expected to hear and decide these matters in late 2022 or early 2023;

Patent family related to Camera Head:

this patent family relates to our ability to develop cameras, visualization components,

and endoscopes with a smaller total outer diameter, by reducing the outer diameter of the electronic board on which the sensor is mounted,

thus enabling the insertion of the camera into smaller cavities or leaving more space in the device for the use and application of other

functions, such as a working channel.

This patent has been granted in Israel and the United States, and is pending approval in Canada,

Europe, Japan (original and divisional applications), and a continuation in part patent application in the United States.

The expiration

date for this patent in Israel is June 11, 2035, and in each of the other aforementioned jurisdictions is June 9, 2036.

Office is expected to hear and decide these matters in early 2024;

a result of a supplemental examination filed by the Company regarding one of the U.S.

Patents (10,188,275), the U.S.

Patent Office decided

to open reexamination proceedings for 23 of the 24 granted claims.

Patent Office is expected to conduct the reexamination proceedings

during the course of 2024;

addition, our intellectual property rights further include the following material patent applications filed by ScoutCam:

Patent family related to Miniature Precision Medical Device:

these pending patent applications relate to our ability to develop a

miniature precision medical device comprising an endoscope with at least one camera, where at least one sensor of one camera is

distally located at a tip of a shaft of the endoscope.

Surrounding or next to the sensor, such shaft has sufficient space to

accommodate at least one accessory such as, for example, illumination source, irrigation tool, or suctioning tool.

family has pending patent application in the United States and its expected expiry dates, if issued, will be in

these pending patent applications relate to our ability to develop a miniature

precision medical device comprising an endoscope with at least one camera, where at least one sensor of one camera is distally located

at a tip of a shaft of the endoscope.

Surrounding or next to the sensor, such shaft has sufficient space to accommodate at least one

accessory such as, for example, illumination source, irrigation tool, or suctioning tool.

This patent family has pending patent application

in the United States and its expected expiry dates, if issued, will be in 2039-2040.

Patent family related to Medical Ophthalmic Device:

this patent family is related to a tool comprising a hand piece

having a flattened cannulated tip that is adapted to receive flow from a pumping unit, in order to generate a jet of fluid suitable for

procedures such as “hydro-dissecting” cells in the eye.

According to a representation of the invention, the tool comprises

a visualization probe with at least one camera, wherein the sensor of the camera is distally located at the tip of the tool to be inserted

into the eye for imaging from within the eye.

this patent family is related to a tool comprising a hand piece having a flattened

cannulated tip that is adapted to receive flow from a pumping unit, in order to generate a jet of fluid suitable for procedures such

as “hydro-dissecting” cells in the eye.

According to a representation of the invention, the tool comprises a visualization

probe with at least one camera, wherein the sensor of the camera is distally located at the tip of the tool to be inserted into the eye

for imaging from within the eye.

This patent family is pending in China, Europe, Japan, Korea, and the United States.

patent application’s expected expiry dates, if issued, will be in 2039-2040.

Patent family related to AI-Based and/or Electronic-Controlled Miniature Camera Sensor and Detector System this patent family

relates to sensor and detector systems for the development of very small size and resilient visualization capabilities.

systems can be used in extreme conditions and/or in conjunction with diagnostic software/hardware tools to display and analyze

changes in critical images that could not have been displayed or analyzed using existing systems.

This patent family includes a

pending Patent Cooperation Treaty patent application.

If ultimately issued by the United States Patent and Trademark Office, such

patent would be expected to expire in early 2042.

The patent application’s

expected expiry dates, if issued, will be in 2039-2040.

Patent family related to Systems and Methods for Monitoring Potential Failure in a Machine or a Component Thereof.

This patent family

relates to system and methods for monitoring potential failure in a machine or a component thereof using at least one optical sensor.

Such sensors can be used in conjunction with diagnostic software/hardware tools to display and analyze changes in critical images that

could not have been displayed or analyzed using existing systems.

This patent family includes a pending Patent Cooperation Treaty patent

application and national phase applications filed in Israel and the U.S.

If ultimately issued by the United States Patent and Trademark

Office, such patent would be expected to expire in early 2042.

Additional national phase patent application can be filed in other jurisdictions

by the end of July 2023.

have also applied for provisional applications relating to our predictive maintenance innovative technology and developments.

these applications are expected to have a lifetime of 20 years from filing.

our efforts to protect our intellectual property, unauthorized parties may still copy or otherwise obtain and use our technology.

additional information, refer to – “WE MAY NOT BE SUCCESSFUL IN ENFORCING OUR INTELLECTUAL PROPERTY RIGHTS AGAINST THIRD

PARTIES” below.

currently have approximately 45 full-time (or near full-time) employees.

This number is expected to grow.

We may recruit additional employees

to the R&D team.

We may recruit additional

employees to the R&D team.

and Development

5 unchanged sentences

and development capabilities.

R&D efforts are focused on the following areas:

(i) maturing our multi camera solution based on advanced visualization sensor technologies

focusing on sensing, computing, and prediction, cooperating with customers for mutual development projects that demonstrate our technology

by reaching customer KPIs and (ii) our industrial cloud-based product, which leverages our already in place cloud environment to develop

mutual proof of concept and minimal valuable product for our customers that enable cloud base solutions for customer KPIs.

approach to regulation is generally determined based on a given project.

11 unchanged sentences

that we do not manufacture or distribute end-user products to the medical sector, and instead service businesses pursuant to a B2B model,

we are subject to far fewer regulatory standards commonly associated with medical device manufacturers or distributors.

We develop and

manufacture components for other companies, and therefore our involvement in the regulatory submission demands comparatively less responsibility

This notwithstanding, we are careful to communicate with the business customer in order to identify certain regulatory dimensions inherent

to the project, to which we should pay additional attention.

For example, when a component of ours is integrated into a business’s

end-user product, such as for the purpose of touching human tissue, we develop and manufacture our parts and components while taking

into account certain applicable regulatory standards.

we are subject to fewer regulatory standards commonly associated with medical device manufacturers or distributors.

We develop and manufacture

components for other companies, and therefore our involvement in the regulatory submission demands comparatively less responsibility.

This notwithstanding, we communicate with business customers in order to identify certain regulatory dimensions inherent to a project,

to which we should pay additional attention.

For example, when a component of ours is integrated into a business’s end-user product,

such as for the purpose of touching human tissue, we develop and manufacture our parts and components while taking into account certain

applicable regulatory standards.

These standards might include, inter alia, relevant FDA regulations (e.g.

part 820, the medical device reporting requirements (MDR), among others) as well as ISO regulations (e.g.

ISO 14644-1, specifically in

connection with cleanrooms and associated controlled environments, among other items, or ISO 10993, in connection with the biological

evaluation of medical devices).

Furthermore, we prioritize our team’s compliance with the Restriction of Hazardous Substances Directives

(RoHS) and REACH (EC 1907/2006).

if a component part of ours is incorporated into an electronic device for the purpose of being used inside a human body, we ensure compliance

with certain FDA requirements as well as IEC 60601 for safety and Electrostatic discharge, including the heating of parts at more than

42 degrees Celsius, as well as a variety of additional technical standards designed for the safety and essential performance of medical

electrical equipment.

CFR 21 part 820, the medical

device reporting requirements (MDR), among others) as well as ISO regulations (e.g.

ISO 14644-1, specifically in connection with cleanrooms

and associated controlled environments, among other items, or ISO 10993, in connection with the biological evaluation of medical devices).

Furthermore, we prioritize our team’s compliance with the Restriction of Hazardous Substances Directives (RoHS) and REACH (EC 1907/2006).

if a component part of ours is incorporated into an electronic device for the purpose of being used inside a human body, we comply with

certain FDA requirements as well as IEC 60601 for safety and electrostatic discharge, including the heating of parts at more than 42

degrees Celsius and a variety of additional technical standards designed for the safety and essential performance of electronic medical

Moreover, we perform risk management assessments in accordance with EN ISO 14971:2019 and ISO/TR 24971:2020.

certain instances, our customers prefer that we conduct the testing of its products in internationally certified labs in order to further

guarantee our component parts satisfy the applicable regulatory standards.

guarantee that our component parts satisfy applicable regulatory standards.

In this scenario, we perform the required tests as a service

1 unchanged sentence

customer can later use in order to apply for the required marketing clearance of its end-user product.

we are targeting to sell our products to customers in the aviation sector, we are in the process of implementing the AS9100D Standard

we are seeking to sell our products to customers in the aviation sector, we have completed the process of implementing the AS9100D Standard

to comply with aerospace industry requirements.

Once achieved, this standard will allow us to operate with an aerospace compatible quality

management system.

company with foreign offices, we are subject to a variety of foreign laws governing our foreign operations, as well as U.S.

that restrict trade and certain practices, such as the Foreign Corrupt Practices Act.

Government Programs

4 unchanged sentences

Consortium, to ScoutCam Ltd.

all rights and obligations with regard to the IIA under the 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 ScoutCam Ltd.

all rights and obligations with regard to the IIA under the 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 ScoutCam Ltd.

following are details regarding the rights and obligations within the framework of ScoutCam Ltd.’s activity in the Medigus Consortium,

23 unchanged sentences

a notice should be provided to the IIA).

In general, due to manufacturing outside

Israel, with respect to royalties bearing grants we would be required to pay royalties at

an increased rate, usually 1% in addition to the standard rate and increased royalties cap

(between 120% and 300% of the grants, depending on the manufacturing volume that is performed

outside Israel).

In general, due to manufacturing outside Israel,

with respect to royalties bearing grants we would be required to pay royalties at an increased

rate, usually 1% in addition to the standard rate and increased royalties cap (between 120%

and 300% of the grants, depending on the manufacturing volume that is performed outside Israel).

Transfer Limitation.

The Innovation Law restricts the ability to transfer, in any manner, know-how funded directly or indirectly by the

IIA (sale of products is not prohibited), unless the IIA approves doing so and subject to the terms of the Innovation Law and of the

IIA’s approval.

Among other things, transfer

of IIA funded know-how outside of Israel requires prior approval of IIA and in certain circumstances is subject to certain payments

to the IIA, calculated according to a formula provided under the Innovation Law.

If we wish to transfer IIA funded know-how

outside of Israel, the terms for approval will be determined according to the character of the transaction and the consideration

The Innovation Law restricts the ability to transfer, in any manner,

know-how funded directly or indirectly by the IIA (sale of products is not prohibited), unless

the IIA approves doing so and subject to the terms of the Innovation Law and of the IIA’s

other things, transfer of IIA funded know-how outside of Israel requires prior approval of IIA and in certain circumstances is subject

to certain payments to the IIA, calculated according to a formula provided under the Innovation Law.

If we wish to transfer IIA funded

know-how outside of Israel, the terms for approval will be determined according to the character of the transaction and the consideration

paid to us for such transfer.

The IIA approval to transfer know-how created, in whole or in part, in connection with a IIA-funded project

to third party outside Israel where the transferring company remains an operating Israeli entity is subject to payment of a redemption

fee to the IIA calculated according to a formula provided under the Innovation Law that is based, in general, on the ratio between the

aggregate IIA grants to the company’s aggregate investments in the project that was funded by these IIA grants, multiplied by the

transaction consideration, considering statutory depreciation and less royalties already paid to the IIA.

The transfer of such

know-how to a party outside Israel where the transferring company ceases to exist as an Israeli entity is subject to a redemption fee

formula that is based, in general, on the ratio between aggregate IIA grants received by the company and the company’s aggregate

research and development expenses, multiplied by the transaction consideration considering statutory depreciation and less royalties

already paid to the IIA.

The regulations promulgated under the Innovation Law establish a maximum payment of the redemption fee paid

to the IIA under the above mentioned formulas and differentiates between two situations:

(i) in the event that the company transfers

its IIA funded know-how, in whole or in part, or is sold as part of an M&A transaction, and subsequently ceases to conduct business

in Israel, the maximum redemption fee under the above mentioned formulas will be no more than six times the amount received (plus annual

interest) for the applicable know-how being transferred, or the entire amount received from the IIA, as applicable;

(ii) in the event

that following the transactions described above (e.g.

asset sale of IIA funded know-how or transfer as part of an M&A transaction)

the company continues to conduct its research and development activity in Israel (for at least three years following such transfer and

maintain staff of at least 75% of the number of research and development employees it had for the six months before the know-how was

transferred and keeps the same scope of employment for such research and development staff), then the company is eligible for a reduced

cap of the redemption fee of no more than three times the amounts received (plus annual interest) for the applicable know-how being transferred.

In addition, special rules and payment formulas apply for certain kinds of transfers of know-how outside of Israel, such as R&D

Transfer of IIA-funded know-how outside of Israel not according to the R&D Law may give rise to financial exposure as well

as criminal liability.

of the transfer of IIA funded technology to another Israeli company may be granted only if the recipient assumes and abides

by the provisions of the Innovation Law and related regulations, including the restrictions on the transfer of know-how and

manufacturing rights outside of Israel (in addition, there will be an obligation to pay royalties to the IIA from the income of such

sale transaction as part of the royalty payment obligation).

to manufacture products outside of Israel or consent to the transfer of technology, if requested, might not be granted.

the IIA may impose certain conditions on any arrangement under which it permits ScoutCam Ltd.

to transfer technology or development

out of Israel.

do not own property and currently lease our principal corporate office, which is located at Suites 7A and 3B, Industrial Park, P.O.

3030, Omer, Israel 8496500.

We believe our leased office sufficiently meets our current needs.

The IIA approval to transfer know-how created, in whole or in part, in connection with a IIA-funded

project to third party outside Israel where the transferring company remains an operating Israeli entity is subject to payment of

a redemption fee to the IIA calculated according to a formula provided under the Innovation Law that is based, in general, on the

ratio between the aggregate IIA grants to the company’s aggregate investments in the project that was funded by these IIA grants,

multiplied by the transaction consideration, considering statutory depreciation and less royalties already paid to the IIA.

of such know-how to a party outside Israel where the transferring company ceases to exist as an Israeli entity is subject to a redemption

fee formula that is based, in general, on the ratio between aggregate IIA grants received by the company and the company’s

aggregate research and development expenses, multiplied by the transaction consideration considering statutory depreciation and less

royalties already paid to the IIA.

The regulations promulgated

under the Innovation Law establish a maximum payment of the redemption fee paid to the IIA under the above mentioned formulas and

differentiates between two situations:

(i) in the event that the company transfers its IIA funded know-how, in whole or in part,

or is sold as part of an M&A transaction, and subsequently ceases to conduct business in Israel, the maximum redemption fee under

the above mentioned formulas will be no more than six times the amount received (plus annual interest) for the applicable know-how

being transferred, or the entire amount received from the IIA, as applicable;

(ii) in the event that following the transactions described

asset sale of IIA funded know-how or transfer as part of an M&A transaction) the company continues to conduct its

research and development activity in Israel (for at least three years following such transfer and maintain staff of at least 75%

of the number of research and development employees it had for the six months before the know-how was transferred and keeps the same

scope of employment for such research and development staff), then the company is eligible for a reduced cap of the redemption fee

of no more than three times the amounts received (plus annual interest) for the applicable know-how being transferred.

special rules and payment formulas apply for certain kinds of transfers of know-how outside of Israel, such as R&D licenses.

Transfer of IIA-funded know-how outside of Israel not according to the R&D Law may give rise to financial exposure as well as

criminal liability.

Approval of the transfer

of IIA funded technology to another Israeli company may be granted only if the recipient assumes and abides by the provisions of

the Innovation Law and related regulations, including the restrictions on the transfer of know-how and manufacturing rights outside

of Israel (in addition, there will be an obligation to pay royalties to the IIA from the income of such sale transaction as part

of the royalty payment obligation).

Approval to manufacture

products outside of Israel or consent to the transfer of technology, if requested, might not be granted.

Furthermore, the IIA may

impose certain conditions on any arrangement under which it permits ScoutCam Ltd.

to transfer technology or development out of Israel.

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 1. Business