What changed in this filing

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Item 9A. Controls and Procedures

2023-03-28 compared with 2022-03-30 · 771 added, 640 removed, 814 unchanged (63% of the section changed)

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of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the

effectiveness of our internal control over financial reporting on December 31, 2021.

In making this assessment, management used the criteria

set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, in Internal Control—Integrated

assessed the effectiveness of our internal control over financial reporting on December 31, 2022.

In making this assessment, management

used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, in Internal Control—Integrated

Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

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of Research and Development

of Business Development

VP of Product Portfolio

Benad Goldwasser has served as chairman of our board of directors since December 26, 2019, and has served as chairman of ScoutCam

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committee and the Prohibition of Money Laundering Committee of the Tel Aviv District, both of the Israel Bar Association.

Rosenbloom serves on the board of directors of Medigus Ltd.

previously served as a police prosecutor in the Tel Aviv District.

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entrepreneur and serves as the chairman of Arkin Holdings, which he founded in 2009.

Arkin has served as chairman of the board

of directors of Sol Gel Technologies Ltd.

Arkin has served as chairman of the board of

directors of Sol Gel Technologies Ltd.

SLGL) since 2014 and sits on the board of directors of several private pharmaceutical

and medical device companies, including Digma Medical, a company developing systems to treat insulin resistance present in type 2 diabetes and other metabolic syndrome diseases,

and Valcare Medical, a company developing heart valve devices.

and medical device companies, including Digma Medical, a company developing systems to treat insulin resistance present in type 2 diabetes

and other metabolic syndrome diseases, and Valcare Medical, a company developing heart valve devices.

From 2005 to 2008, Mr.

Arkin served as the head of generics at Perrigo

Company, and from 2005 until 2011, as a member of its board of directors.

Prior to joining Sol Gel Technologies Ltd., Mr.

as a director of cCAM Biotherapeutics Ltd., a company focused on the discovery and development of novel immunotherapies to treat cancer

from 2012 until its acquisition in 2015 by Merck & Co., Inc.

Arkin served as chairman of Agis Industries Ltd.

from 1972 until

its acquisition by Perrigo Company in 2005.

as the head of generics at Perrigo Company, and from 2005 until 2011, as a member of its board of directors.

Prior to joining Sol Gel

Technologies Ltd., Mr.

Arkin served as a director of cCAM Biotherapeutics Ltd., a company focused on the discovery and development of

novel immunotherapies to treat cancer from 2012 until its acquisition in 2015 by Merck & Co., Inc.

Arkin served as chairman of

Agis Industries Ltd.

from 1972 until its acquisition by Perrigo Company in 2005.

Arkin holds a B.A.

in psychology from the Tel Aviv University, Israel.

in psychology from the Tel Aviv

University, Israel.

Kreiss has served on our board of directors since April 9, 2021.

Kreiss is currently the Head of Innovation at the Systems, Missiles

and Space Division of the Israeli Aerospace Industries Ltd.

(IAI) and Chairwoman of RAKIA, Israel’s 2nd Scientific and Technological

Mission to the International Space Station.

Kreiss is currently the Head of Innovation at the Systems,

Missiles and Space Division of the Israeli Aerospace Industries Ltd.

(IAI) and Chairwoman of RAKIA, Israel’s 2nd Scientific

and Technological Mission to the International Space Station.

Since 2013, Ms.

Kreiss has served as Deputy Director of the Space Division at IAI, leading

the development, construction, launch and operation of observation and communication satellites for both Israeli and foreign users.

Kreiss held various leadership positions within IAI, including chief engineer of Israel’s Arrow 2 anti-ballistic missile

defense system from 2000 to 2006, and project manager of the Arrow 3 exo-atmospheric interceptor from 2007 to 2013.

a B.Sc in chemical engineering from the Technion, Israeli Institute of Technology, an Executive Masters in Business Administration from

Tel Aviv University, and completed a visiting research fellowship at the Aeronautics & Astronautics Department of the Massachusetts

Kreiss has served as Deputy Director of the Space

Division at IAI, leading the development, construction, launch and operation of observation and communication satellites for both

Israeli and foreign users.

Prior to that, Ms.

Kreiss held various leadership positions within IAI, including chief engineer of

Israel’s Arrow 2 anti-ballistic missile defense system from 2000 to 2006, and project manager of the Arrow 3 exo-atmospheric

interceptor from 2007 to 2013.

Kreiss serves on the board of directors or Rail Vision Ltd.

Kreiss holds a B.Sc in chemical

engineering from the Technion, Israeli Institute of Technology, an Executive Masters in Business Administration from Tel Aviv

University, and completed a visiting research fellowship at the Aeronautics & Astronautics Department of the Massachusetts

Institute of Technology (MIT).

Vurembrand has served on our board of directors since May 13, 2021.

Vurembrand is currently the Chief Executive Officer and

Owner of Vurembrand Management & Innovation Ltd.

and a member of the board of directors of Isras Investment Company Ltd.

ISRS) since 2016 and of Bezeq the Israeli Telecommunication Corp.

Vurembrand is currently the Chief Executive Officer and Owner

of Vurembrand Management & Innovation Ltd.

and a member of the board of Bezeq the Israeli Telecommunication Corp.

BEZQ) since 2017.

Vurembrand has also

served as chairman of the board of Lageen Ltd.

Vurembrand has also served as chairman of the

board of Lageen Ltd.

From 2013 until 2019, Mr.

Vurembrand was the Chief Executive Officer

of Kupat Holim Meuhedet, Israel’s third largest health care organization.

From 2008 until 2013, he was the Chief Executive

Officer of Alon Holding Blue Square – Israel Ltd., and prior to that, from 2007 until 2008, he was the Chief Executive Officer

of Phoenix Investments and Finance Ltd.

Earlier in his career, from 2002 until 2007, Mr.

Vurembrand was the Chief Executive Officer

of Clalit Health Services Group, Israel’s largest health care organization.

Vurembrand has served on numerous boards of

directors, including Africa Israel Resedence LTD.

AFRE) from 2014 until 2016, Discount Bank (TASE:DSCT) 2006 until 2007,

U-Bank from 2005 until 2006, Blue Square Israel (TASE:

BSI) from 2001 until 2006, and Dikla Medical Insurance Ltd.

Vurembrand was the Chief Executive Officer of Kupat Holim Meuhedet, Israel’s

third largest health care organization.

From 2008 until 2013, he was the Chief Executive Officer of Alon Holding Blue Square –

Israel Ltd., and prior to that, from 2007 until 2008, he was the Chief Executive Officer of Phoenix Investments and Finance Ltd.

in his career, from 2002 until 2007, Mr.

Vurembrand was the Chief Executive Officer of Clalit Health Services Group, Israel’s largest

health care organization.

Vurembrand has served on numerous boards of directors, including Africa Israel Resedence LTD.

from 2014 until 2016, Discount Bank (TASE:DSCT) 2006 until 2007, U-Bank from 2005 until 2006, Blue Square Israel (TASE:

BSI) from 2001

until 2006, and Dikla Medical Insurance Ltd.

from 1995 until 2002.

Vurembrand has also served on the board of trustees of Bar Ilan University since 2019.

Vurembrand holds a B.Sc in

industrial engineering and management from the Technion, Israeli Institute of Technology.

Sameah has served as Chief Executive Officer of the Company since April 15, 2021.

Prior to his position with the Company, Mr.

was the Chief Executive Officer of Frontline PCB Solutions, a non-public worldwide leading provider of Pre-Production and Industry 4.0

SW solutions in the PCB industry, and the subsidiary of KLA-Tencor Corp.

From September 2013 until July of 2015, Mr.

Sameah was the Corporate Vice President and Chief Products Officer at Orbotech Ltd.

(acquired by KLA-Tencor in February of 2019).

Sameah held a variety of roles at Orbotech, including Vice President of Electronic Components Manufacturers Business (PCB

Division) from September 2012 until September 2013, and Vice President AOI & Repair Product Line (PCB Division) from March 2008 until

Sameah holds both a BSc in chemical engineering and an MBA from Ben-Gurion University, Israel.

Vurembrand has also served on the board of trustees of Bar Ilan

University since 2019.

Vurembrand holds a B.Sc in industrial engineering and management from the Technion, Israeli Institute of Technology.

Ofer has served as Chief Executive Officer of the Company since October 18, 2022.

Ofer served as a colonel (now retired) in the

IAF, commanding two operational squadrons before commanding “Wing 15”, the optic and electronic intelligence wing of the

In his last position, Mr.

Ofer served as Israel Defense Attaché to Italy, Greece, Serbia, and Croatia, where he oversaw the

largest ever government-to-government transaction between Israel and Italy.

Upon his retirement from the Israel Defense Forces in 2013,

Ofer joined Elbit Systems Ltd.

in its electro-optics unit as a technology development and program manager in airborne optic and laser

Ofer also managed Elbit System’s aerospace division as VP of large-scale development programs and VP of the Brazil

business unit.

In his last position at Elbit Systems, Mr.

Ofer served as VP of Global Business Development, Marketing and Sales, a position

he held since 2020.

Ofer holds an MBA from the University of Haifa, a Bachelor of Economics and Logistics (cum laude) from Bar Ilan

University in Tel Aviv, and a degree from the National Security College in Tel Aviv.

Yosef has served as our Chief Financial Officer since December 27, 2019.

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University, Israel.

Peled has served as our VP of Business Development since October 17, 2021.

Prior to joining ScoutCam and since 2017, Mr.

the VP Global Sales & Business Development at PointGrab.

From 2016 until 2017, Mr.

Peled was VP Business Development at imVision

Technologies.

Prior to that, Mr.

Peled held various managerial sales positions, including from 2012 until 2016 at Director of Global

Sales at Mantis Visio, and from 2010 until 2012 at Technical Sales Manager at Orckit Systems.

Peled holds a B.Sc in Electrical and

Electronic Engineering from Tel Aviv University and an MBA from Bar-Ilan University.

Avinu has served as our Senior VP of Product Portfolio since November 15, 2022.

Avinu has more than 15 years of experience

in development, operations, and leadership in a variety of industries, including aviation and aerospace.

He joined ScoutCam from

Elbit Systems, where since 2018 he led the advanced capabilities R&D group in helmet-mounted displays and sensors, a key segment

within the company’s aerospace division.

Before joining Elbit Systems, Mr.

Avinu served for six years in the Israeli Air Force

as a computer vision system engineer and commander of the electronic systems development group.

Avinu holds a Master of Science

degree from Ben-Gurion University of the Negev in Beer-Sheva, Israel with a focus on electro-optical engineering, and a Bachelor of

Science in electrical engineering from Ort Braude College of Engineering in Karmiel Israel.

Avinu also studied practical

engineering and electronics at the Israeli Air Force Academy.

Priel has served as our Chief SW Architect since November 1, 2021.

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are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.

currently do not have a code of ethics applicable to our principal executive officer, principal financial officer, principal accounting

officer or controller, or persons performing similar functions as required by the Sarbanes-Oxley Act of 2002 due to our small size and

limited resources and because management’s attention has been focused on matters pertaining to raising capital and the operation

of the business.

However, we adopted a Conflict Minerals Policy that is available on our website at https://www.scoutcam.com/.

contained on, or that can be accessed through, our website does not constitute a part of this Annual Report.

our board of directors does not have any audit, nominating or compensation committees, or committees performing similar functions.

have adopted a code of business conduct and ethics that applies to all of our directors, officers, and employees (including our principal

executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions).

We have made the code of business conduct and ethics available on our website at www.scoutcam.com.

We will disclose promptly by posting

such disclosure on our website any amendment to or waiver from the code of business conduct and ethics for our principal executive officer,

principal financial officer, principal accounting officer or controller, or persons performing similar functions, as required by law

or SEC regulations.

Information contained on, or that can be accessed through, our website does not constitute a part of this Annual

are not currently subject to listing requirements of any national securities exchange, which generally require the creation of an audit

committee, compensation committee or process, and nominations committee or process, and that each of these committees or processes be

comprised of independent directors and tasked with performing certain responsibilities for the board of directors.

Notwithstanding the

foregoing, we have voluntarily created an audit committee and compensation committee with responsibilities consistent with those required

under SEC and Nasdaq rules.

The members of the audit committee are Ms.

Amit, and Mr.

Vurembrand, with Mr.

Vurembrand as its designated

The audit committee is governed by a written charter approved by the board of directors and available on our website at

www.scoutcam.com.

The board of directors has determined that all current audit committee members are financially literate under the Nasdaq

listing requirements and that Mr.

Vurembrand qualifies as an “audit committee financial expert” as defined by the SEC rules

adopted pursuant to the Exchange Act.

The Nasdaq listing requirements require that audit committees have at least three directors and

that all directors be independent, as defined in the Nasdaq listing requirements and Rule 10A-3 under the Exchange Act.

The Board has

determined that Ms.

Amit, and Mr.

Vurembrand meet the independence criteria established in the Nasdaq listing requirements

and the Exchange Act.

audit committee assists the board of directors in its oversight of financial reporting practices and the quality and integrity of the

financial reports of ScoutCam including compliance with legal and regulatory requirements, the independent auditors’ qualifications

and independence, and the performance of ScoutCam’s internal control function.

The audit committee is responsible for the appointment

of ScoutCam’s independent auditors.

The audit committee oversees our internal controls and risk assessment and management policies

and meets with our independent auditor and management regarding our internal controls and other matters.

The audit committee is responsible

for periodically reviewing ScoutCam’s code of business conduct and ethics and has established procedures for the receipt, retention,

and treatment of complaints received by ScoutCam regarding accounting controls or auditing matters and the confidential, anonymous submission

by ScoutCam employees of concerns regarding questionable accounting or auditing matters.

The audit committee is also responsible for

approving or ratifying related person transactions pursuant to ScoutCam’s related person transaction approval policy contained

in the audit committee charter.

The members of the compensation committee are Ms.

Amit, and Mr.

Vurembrand, with Ms.

Kreiss as its designated

chairperson., all of whom meet the independence criteria established by the Nasdaq listing requirements.

The compensation committee is

governed by a written charter approved by the board of directors and available on our website at www.scoutcam.com.

The compensation committee

is charged with the responsibility for setting executive compensation, reviewing certain compensation programs, administering our equity

incentive plans, reviewing and discussing with management the compensation discussion and analysis required in proxy statements (if and

when applicable), preparing a report on executive compensation required by SEC rules to be included in proxy statements (if and when

applicable), and making other recommendations to the board of directors.

Executive Compensation

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and Principal Position

Awards (7) (8)

Other Compensation

Yaron Silberman,

Former Chief Executive Officer (1)

Yovav Sameah,

Executive Officer (2)

Former Chief Executive Officer

Chief Executive Officer (2)

Senior VP Product (3)

Chief Technology Officer (4)

Silberman’s compensation earned in his capacity as the Chief Executive Officer of wholly-owned subsidiary, ScoutCam

Silberman did not earn any compensation in his capacity as the Chief Executive Officer of ScoutCam Inc.

employment terminated on March 31, 2021.

Sameah’s compensation earned in his capacity as the Chief Executive Officer of our wholly-owned subsidiary, ScoutCam

Sameah’s s compensation earned in his capacity as the Chief Executive Officer of wholly-owned subsidiary, ScoutCam Ltd.

Sameah did not earn any compensation in his capacity as the Chief Executive Officer of ScoutCam Inc.

employment commenced on April 15, 2021.

Govrin’s compensation earned in his capacity as the Chief Technology Officer of our wholly-owned subsidiary, ScoutCam

Govrin did not earn any compensation in his capacity as the Chief Technology Officer of ScoutCam Inc.

Katrin Dlugach compensation earned in his capacity as the VP R&D of our wholly-owned subsidiary, ScoutCam Ltd.

did not earn any compensation in her capacity as the VP R&D of ScoutCam Inc.

Sameah’s employment

terminated on October 18, 2022.

Ofer’s compensation earned in his capacity as the Chief Executive Officer of

our wholly-owned subsidiary, ScoutCam Ltd.

Ofer did not earn any compensation in his

capacity as the Chief Executive Officer of ScoutCam Inc.

Ofer’s employment commenced

on October 18, 2022.

connection with the appointment of Mr.

Ofer as the Company’s Chief Executive Officer, the Company entered into an employment

agreement with Mr.

Ofer that provides for the terms and conditions of his employment as the Company’s Chief Executive Officer.

The agreement provides for a monthly base salary of NIS 70,000, subject to adjustments for inflation as announced from time to time

in accordance with Israeli law.

The agreement also provides that Mr.

Ofer is entitled to receive an equity grant of options to purchase

a total of 300,000 shares of the Company’s common stock, par value $0.001 per share, at an exercise price of $4.50 per share,

which shall vest and become exercisable as follows:

33.33% of the shares covered by Mr.

Ofer’s options on the first anniversary

of his service as CEO, and 8.33% of the shares covered by Mr.

Ofer’s options at the end of each subsequent three-month period

thereafter over the course of the subsequent two years.

Furthermore, Mr.

Ofer’s options will immediately vest upon the occurrence

of the following (i) the sale of all or substantially all of the assets of the Company, (ii) the sale of more than 50% of the common

stock of the Company in a non-public sale, (iii) the dissolution or liquidation of the Company or (iv) any merger, share exchange,

consolidation or other reorganization or business combination if immediately after such transaction either (A) the persons who were

directors of the Company immediately prior to such transaction do not constitute at least a majority of the directors of the surviving

entity or (B) the persons who hold a majority of the voting capital stock of the surviving entity are not the persons who held a

majority of the voting capital stock of the Company immediately prior to such transaction.

Additionally, the Company agreed to pay

Ofer both (i) a signing bonus in the aggregate amount of NIS 70,000 and (ii) an annual bonus pursuant to certain pre-determined

measurable objectives agreed to with Mr.

Ofer and approved by the board of directors by January 31 with respect to each calendar

year, with the Company agreeing to recommend to the board of directors a grant of restricted stock in lieu of Mr.

through such time the Company is profitable and subject to meeting applicable objectives.

In accordance with the terms of Mr.

employment agreement, he will also receive additional benefits customary for an executive officer of his experience and for companies

of similar stature and standing to that of the Company.

Avinu’s compensation earned in his capacity as the Senior VP Product of our

wholly-owned subsidiary, ScoutCam Ltd.

Avinu’s employment commenced on November

connection with the appointment of Mr.

Avinu as the Company’s Senior VP Product, the Company entered into an employment agreement

Avinu that provides for the terms and conditions of his employment as the Company’s Senior VP Product.

The agreement

provides for a monthly salary of NIS 60,000.

The agreement also provides that Mr.

Avinu is entitled to receive an equity grant of

options to purchase a total of 100,000 shares of the Company’s common stock, par value $0.001 per share, at an exercise price

of $4.50 per share, which shall vest and become exercisable as follows:

33.33% of the shares covered by Mr.

Avinu’s options

on the first anniversary of his service as SVP Product, and 8.33% of the shares covered by Mr.

Avinu’s options at the end of

each subsequent three-month period thereafter over the course of the subsequent two years.

Additionally, the agreement provides to

(i) a signing bonus in the aggregate amount of NIS 50,000 (ii) a performance bonus in the aggregate amount of NIS 120,000

pursuant to certain objectives and (iii) the Company will consider, at to its sole discretion, after the first and second years following

his employment, granting Mr.

Avinu additional options / RSUs pursuant to certain objectives, subject to the approval of such grant

by the CEO and board of directors of the Company.

In accordance with the terms of Mr.

Avinu’s employment agreement, he will

also receive additional benefits customary for an executive officer of his experience and for companies of similar stature and standing

to that of the Company.

Govrin’s compensation earned in his capacity as the Chief Technology Officer

of our wholly-owned subsidiary, ScoutCam Ltd.

Govrin did not earn any compensation in

his capacity as the Chief Technology Officer of ScoutCam Inc.

connection with the appointment of Mr.

Govrin as the Company’s Senior VP Product in May 2019, the Company entered into an employment

agreement with Mr.

Govrin that provides for a monthly base salary of NIS 37,000.

In accordance with the terms of Mr.

employment agreement, he will also receive additional benefits customary for an executive officer of his experience and for companies

of similar stature and standing to that of the Company.

Effective April 1, 2022, Mr.

Govrin received an increase in his monthly base

salary to NIS 41,000.

salaries are intended to provide a level of compensation sufficient to attract and retain an effective management team, when considered

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executive officers are designed to reflect each named executive officer’s scope of responsibility and accountability.

salary amounts include management insurance (which includes pension, disability insurance and severance pay), payments towards such

employee’s education fund, Israeli social security and amounts paid for use of a Company car.

Each named executive officer

also receives gross-up payments for the taxes on these benefits.

amounts shown in the “Option Awards” column represents

the equity-based compensation expenses recorded in the Company’s consolidated financial statements for the years ended December

31, 2021 and December 31, 2020, in accordance with ASC 718, not the actual amounts paid to

or realized by the named executive officer during fiscal 2021 and fiscal 2020 .

fair value of each stock option award is estimated as of the date of grant using the Black-Scholes valuation model.

Additional information

regarding the assumptions used to estimate the fair value of all stock option awards is included in Note 9 to Consolidated Financial

salary amounts include management insurance (which includes pension, disability insurance and severance pay) and payments towards

such employee’s education fund, and Israeli social security.

Each named executive officer also receives gross-up payments for

the taxes on these benefits.

The amounts included here are the U.S.

dollar equivalent from NIS.

The conversion rate used was the

average of the 2021 and 2022 rates between the U.S.

dollar and NIS, as published by the Bank of Israel.

a signing bonus.

amount shown in the “Option Awards” and “Stock Awards” columns represents the aggregate grant date fair value

of awards computed in accordance with ASC 718, not the actual amounts paid to or realized by the Named Executive Officer during 2022

The ASC 718 fair value amount as of the grant date for stock options generally is spread over the number of months of service

required for the grant to vest..

The fair value of each stock option award is estimated as of the date of

grant using the Black-Scholes valuation model.

Additional information regarding the assumptions used to estimate the fair value of all

stock option awards is included in Note 9b-c to Consolidated Financial Statements.

and through our Israeli subsidiary, have entered into written employment agreements with each of our executive officers.

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Equity Awards

following table provides information concerning unexercised options for each of our named executive officers, as that term is defined

in Item 402(m)(2) of Regulation S-K as of our fiscal year end of December 31, 2021.

following table provides information regarding equity awards for each of our named executive officers, as that term is defined in Item

402(m)(2) of Regulation S-K as of our fiscal year end of December 31, 2022.

Options Award

Restricted Stock Awards

Name and Position

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Expiration Date

Yaron Silberman,

March 31, 2022

Former Chief Executive Officer

Number of Units of Stock That Have Not Vested

Market Value of Units of Stock That Have Not Vested

Yovav Sameah,

October 18, 2025

Former Chief Executive Officer

Chief Executive Officer

April 15, 2028

November 14, 2029

Senior VP Product Portfolio

November 14, 2029

February 12, 2027

Chief Technology Officer

Katrin Dlugach

February 12, 2027

25% of the options granted will vest on the first anniversary, and 6.25% of the options will vest at the end of each subsequent three-month

period thereafter over the course of the following three (3) years;

and (iii) an acceleration mechanism pursuant to which any outstanding

and unvested option shall immediately accelerate and vest upon the occurrence of certain events, including, inter alia, a merger or sale

of all assets of the Company.

33.33% of the options granted will vest on the first, and 8.33% of the options will vest at the end of each subsequent three-month period

thereafter over the course of the following two (2) years;

and (iii) an acceleration mechanism pursuant to which any outstanding and

unvested option shall immediately accelerate and vest upon the occurrence of certain events, including, inter alia, a merger or sale

of all assets of the Company.

(1) Based on the fair

market value of our Common Stock on December 31, 2022 ($5.00 per share).

(2) 25% of the options

granted will vest on the first anniversary date of the option grant, and 6.25% of the options will vest at the end of each subsequent

three-month period thereafter over the course of the following three (3) years.

Pursuant to an acceleration mechanism, any outstanding

and unvested options shall immediately accelerate and vest upon the occurrence of certain events, including, inter alia, a merger or

sale of all assets of the Company.

(3) 33.33% of the options

granted will vest on the first anniversary date of the option grant, and 8.33% of the options will vest at the end of each subsequent

three-month period thereafter over the course of the following two (2) years.

Pursuant to an acceleration mechanism, any outstanding

and unvested options shall immediately accelerate and vest upon the occurrence of certain events, including, inter alia, a merger or

sale of all assets of the Company.

or Similar Benefit Plans

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Fees Earned or

Stock Awards (*)

Option Awards (*)

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Moshe (Mori) Arkin

Inbal Kreiss (2)

Zeev Vurembrand

as a director of ScoutCam Inc.

on February 15, 2021.

as a director of ScoutCam Inc.

on April 9, 2021.

as a director of ScoutCam Inc.

on May 13, 2021.

the equity-based compensation expenses recorded in the Company’s consolidated financial statements for the year ended December

31, 2021, based on the option’s fair value, calculated in accordance with accounting guidance for equity-based compensation.

amount shown in the “Stock Awards” and “Option Awards” columns represents the aggregate grant date fair value

of awards computed in accordance with ASC 718, not the actual amounts paid to or realized by the directors during fiscal 2021.

fair value of each stock option award is estimated as of the date of grant using the Black-Scholes valuation model.

Additional information

regarding the assumptions used to estimate the fair value of all stock option awards is included in Note 9b-c Consolidated Financial

March 15, 2020, our board of directors approved a quarterly fee of $4,000 payable to each of our currently serving directors, excluding

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appointed subsequent to March 15, 2020.

On May 15, 2022, the board of directors approved a quarterly fee in the amount of $2,000 payable

to a director for each committee on which such director serves, if any, with such fee in addition to any other fees to which such director

is entitled as a member of the board of directors or any other committee.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder matters

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that are currently exercisable or will become exercisable within 60 days of March 28, 2023.

However, these shares are not deemed to be

outstanding for the purpose of computing the percentage of shares beneficially owned of any other person or entity.

However, these shares are not deemed to

be outstanding for the purpose of computing the percentage of shares beneficially owned of any other person or entity.

otherwise indicated below, the address for each beneficial owner listed in the table below is c/o ScoutCam Inc., Suite 7A and 3B, Industrial

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Zeev Vurembrand (8)

Yovav Sameah (8)

Tanya Yosef (9)

1 unchanged sentence

Katrin Dlugach (11)

Arik Priel (12)

Directors and officers as a group (13 individuals)

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The Meitav Dash Group (15)

Noked Long Limited Partnership

Less than 1%.

ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to

Each of the beneficial owners named in the table have, to our knowledge, direct ownership of and sole voting and investment

power with respect to the shares of common stock beneficially owned by them.

options to purchase 316,898 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 32,890 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 12,534 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 20,546 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 5,341 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

Moshe Arkin is the sole shareholder and sole director of M.

Arkin (1999) Ltd.

and may therefore be deemed to be the indirect beneficial

owner of the shares of common stock and warrants to purchase shares of common stock owned directly by M.

Arkin (1999) Ltd.

warrants to purchase 681,360 shares of common stock and options to purchase 8,527 shares of common stock which are currently exercisable

or will become exercisable within 60 days of March 28, 2022.

options to purchase 66,988 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 28,131 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 53,116 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 29,059 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

on information provided to or available to the Company, consists of warrants to purchase 470,159 shares of common stock.

address of the More Group is BSR Tower 1, 2 Ben Gurion Street, Ramat Gan, Israel.

on the Schedule 13G/A filed by The Phoenix Holdings with the SEC on February 7, 2022 and information provided to or available to

the Company, consists of 679,013 warrants to purchase shares of common stock, which are currently exercisable or will become exercisable

within 60 days of March 28, 2022.

Beneficial ownership is

determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.

Each of the beneficial owners named in the table have, to our knowledge, direct ownership of and sole voting and investment power

with respect to the shares of common stock beneficially owned by them.

Includes options to purchase

386,692 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase

51,717 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase

19,728 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase

33,082 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase

10,683 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

included herein are held directly by Mr.

Moshe Arkin, Mr.

Arkin through his individual retirement account, or by M.

Ltd, a company wholly-owned by Mr.

These securities include warrants to purchase 2,575,164 shares of common stock and options

to purchase 15,721 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28,

Includes options to purchase

9,347 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase 41,460 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase 82,874 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase 51,414 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Includes options to purchase 19,999 shares of common stock which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

Based on information provided to or available to the Company, consists of warrants to purchase 485,343 shares of common stock.

The business address of the More Group is BSR Tower 1, 2 Ben Gurion Street, Ramat Gan, Israel.

Based on information provided to or available to the Company and on the Schedule 13G/A filed by The Phoenix Holdings with the SEC on February 14, 2023, which provides that the securities are beneficially owned by various direct or indirect, majority or wholly-owned subsidiaries of the Phoenix Holdings Ltd.

(the “Subsidiaries”).

The Subsidiaries manage their own funds and/or the funds of others, including for holders of exchange-traded notes or various insurance policies, members of pension or provident funds, unit holders of mutual funds, and portfolio management clients.

Each of the Subsidiaries operates under independent management and makes its own independent voting and investment decisions.

These securities include 1,620,189 warrants to purchase shares of common stock, which are currently exercisable or will become exercisable within 60 days of March 28, 2023.

The business address of the Phoenix Holdings Ltd.

is Derech Hashalom 53, Givataim 53454, Israel.

on information provided to or available to the Company, consists of warrants to purchase 445,750 shares of common stock.

on information provided to or available to the Company, consists of warrants to purchase shares 185,185 of common stock.

business address of Noked Long Limited Partnership is 30 Haarbaa’a street, Tel Aviv, Israel

Based on information provided to or available to the Company, consists of warrants to purchase 455,068 shares of common stock.

Certain relationships and related transactions, and director independence

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Arkin (1999) Ltd.

(“Arkin Ltd.”) in

connection with the sale and issuance of 229,569 units (“Arkin Units”), at a purchase price of $8.712 per Arkin Unit, and

for an aggregate purchase price of $2,000,000 (the “Arkin Transaction”).

(“Arkin Ltd.”), a

company wholly-owned by Moshe Arkin, a major shareholder of our Company and member of our board of directors, in connection with the

sale and issuance of 229,569 units (“Arkin Units”), at a purchase price of $8.712 per Arkin Unit, and for an aggregate purchase

price of $2,000,000 (the “Arkin Transaction”).

Each Arkin Unit consists of:

(i) two shares of common

stock and (ii) (a) one warrant to purchase one share of common stock with an exercise price of $5.355 (“Arkin Warrant A”)

and (b) two warrants, each to purchase one share of common stock with an exercise price of $8.037 (“Arkin Warrant B”, and

together with Arkin Warrant A, the “Arkin Warrants”).

The shares of common stock and Arkin Warrants were issued to Arkin

pursuant to Regulation S of the Securities Act of 1933, as amended.

(i) two shares of common stock and (ii) (a) one

warrant to purchase one share of common stock with an exercise price of $5.355 (“Warrant A”) and (b) two warrants, each to

purchase one share of common stock with an exercise price of $8.037 (“Warrant B”, and together with Warrant A, the “Arkin

The shares of common stock and Arkin Warrants were issued to Arkin Ltd.

pursuant to Regulation S of the Securities

Act of 1933, as amended.

on May 18, 2020, and in connection with the Arkin Transaction, we, Medigus and Arkin Ltd.

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in order to reflect and effect the amendments agreed upon in the Letter Agreement.

June 23, 2020, we and Medigus entered into a Conversion Side Letter, pursuant to which Medigus converted $381,136 worth of outstanding

credit previously extended to us, including interest by Medigus, into (a) 87,497 shares of our common stock, (b) warrants to purchase

43,749 shares of common stock at an exercise price of $5.355, and (c) warrants to purchase 87,497 shares of our common stock at an exercise

price of $8.037.

November 2020, we and certain of our warrant holders, including Professor Benad Goldwasser and Arkin Ltd., executed an amendment in connection

with previously issued warrants to purchase shares of common stock, pursuant to which the parties agreed to remove the restrictions on

transferability originally imposed on such warrants.

As of December 31, 2020, warrants to purchase 100,257 shares of common stock were

transferred in accordance with the foregoing amendment.

on January 1, 2021 and as of the date hereof, our board of directors authorized the allotment of options and RSU to purchase 128,334

shares of common stock to Prof.

Benad Goldwasser and an aggregate of 501,842 options to purchase shares of common stock to additional

on January 1, 2021 and as of the date hereof, our board of directors authorized the allotment of options to purchase 128,334 shares of

common stock to Prof.

Benad Goldwasser and an aggregate of 901,842 options and RSUs to purchase shares of common stock to additional

directors and certain officers of our company.

March 29, 2021, we issued to certain investors, including M.

Arkin (1999) Ltd., a major stockholder of our company, of which Mori Arkin,

a director of our company, is the owner, 2,469,156 units in exchange for an aggregate purchase price of $20 million.

Each such unit consists

of (i) one share of common stock and (ii) one warrant to purchase one share of common stock with an exercise price of $10.35 per share.

Arkin (1999) Ltd., 2,469,156 units in exchange for an aggregate purchase

price of $20 million.

Each such unit consists of (i) one share of common stock and (ii) one warrant to purchase one share of common stock

with an exercise price of $10.35 per share.

Each such warrant is exercisable until the close of business on March 31, 2026.

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with the foregoing investment were registered by us for resale under a registration statement on Form S-1 declared effective on May 10,

On March 16, 2023, we entered

into and consummated securities purchase agreements with (i) Moshe Arkin through his individual retirement account and (ii) The Phoenix

Insurance Company Ltd.

(“Phoenix Insurance”) and Shotfut Menayot Israel – Phoenix Amitim (“Phoenix Amitim”),

in connection with the sale and issuance of an aggregate of 3,294,117 units, at a purchase price of $4.25 per unit, and for an aggregate

purchase price of $14,000,000.

Each unit consists of:

(i) one share of common stock and (ii) one warrant to purchase one share of common

stock with an exercise price of $5.50.

Arkin, Phoenix Insurance and Phoenix Amitim are existing shareholders of the Company.

The shares of common stock and warrants were issued pursuant to Regulation S of the Securities Act of 1933, as amended.

and Procedures for Related Party Transactions

board of directors is responsible for approving all related party transactions.

Given our small size and limited financial resources,

we have not adopted formal policies and procedures for the review, approval, or ratification of transactions with our related persons.

We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional

directors, so that such transactions will be subject to the review, approval, or ratification of our board of directors, or an appropriate

committee thereof.

audit committee is responsible for approving or ratifying related person transactions pursuant to ScoutCam’s related person transaction

approval policy contained in the audit committee charter.

In reviewing and approving any such related person transactions, the audit

committee shall consider all relevant facts and circumstances, including whether the transaction is on terms comparable to those that

could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction.

audit committee shall have the authority to establish guidelines for related person transactions and intercompany arrangements where

it deems it to be appropriate.

board of directors has determined that Professor Benad Goldwasser, Mr.

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of a director and that each of these directors is “independent”.

are not currently subject to listing requirements of any national securities exchange, which generally stipulates certain requirements

that a majority of a company’s board of directors be classified as “independent”.

As a result, we are not at this time

required to have our board of directors comprised of a majority of “independent directors”.

Notwithstanding the foregoing,

we have voluntarily adopted the definition of “independent” as defined under Nasdaq Rule 5605(a)(2), and believe Professor

Goldwasser, Mr.

We are not currently subject to listing requirements of

any national securities exchange, which generally stipulate certain requirements that a majority of a company’s board of directors

be classified as “independent”.

As a result, we are not at this time required to have our board of directors comprised of

a majority of “independent directors”.

Notwithstanding the foregoing, we have voluntarily adopted the definition of “independent”

as defined under Nasdaq Rule 5605(a)(2), and believe Professor Goldwasser, Mr.

Donnerstein, Ms.

Vurembrand qualify accordingly.

Vurembrand qualify

Principal accounting fees and services

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following table sets forth the fees billed to our Company for professional services rendered by Brightman Almagor Zohar & Co., a

firm in the Deloitte global network, and Kesselman & Kesselman, a member of PricwaterhouseCoopers International Limited,

for the fiscal years ended December 31, 2020 and December 31, 2021:

firm in the Deloitte global network, and Kesselman & Kesselman, a member of PricwaterhouseCoopers International Limited, for the

fiscal years ended December 31, 2021 and December 31, 2022:

December 31, 2022

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Audit fees (1)

All other fees

fees consist of audit and review services, consents and review of documents filed with the

fees consist of services related to representing the Company before the Israel Tax Authority

in a VAT assessment.

Fees consists of $123,000 in connection with the services rendered by Brightman Almagor

Zohar & Co., a firm in the Deloitte global network, and $117,000 in connection

with the services rendered by Kesselman & Kesselman, a member of PricwaterhouseCoopers

fees consist of audit and review services, consents and review of documents filed with the SEC.

fees consist of services related to representing the Company before the Israel Tax Authority in a VAT assessment.

Fees in 2022 were for services rendered by Brightman Almagor Zohar & Co., a firm in the Deloitte global network.

Fees in 2021 consist of $123,000 in connection with the services rendered by Brightman Almagor Zohar & Co., a firm in the Deloitte

global network, and $117,000in connection with the services rendered by Kesselman & Kesselman, a member of PricwaterhouseCoopers

International Limited.

Audit Fees consists of $65,000 in connection with

the services rendered by Brightman Almagor Zohar & Co., a firm in the Deloitte global network, and $105,000 in

connection with the services rendered by Kesselman & Kesselman, a member of PricwaterhouseCoopers International Limited.

Committee Administration of Engagement

have not yet established an audit committee.

Until then, there are no formal pre-approval policies and procedures with respect to the

engagement of an accountant for audit or non-audit services.

Nonetheless, the auditors engaged for these services are required to provide

and uphold estimates for the cost of services to be rendered.

exhibits, financial statement schedules

audit committee maintains a pre-approval policy that provides guidelines for the audit, audit-related, tax, and other permissible non-audit

services that may be provided by the independent registered public accounting firm (the independent auditors) in order to ensure that

the provision of such services does not impair the auditor’s independence.

Under this policy, the audit committee annually pre-approves

the audit fee and terms of the engagement, as set forth in the engagement letter, along with a specified list of audit-related and tax

If any service to be provided by the independent auditors has not received pre-approval during this annual process, it will

require specific pre-approval by the audit committee.

exhibits AND financial statement schedules

Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1.4 to our Quarterly Report on Form 10-Q filed with the SEC on August 12, 2021)

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2.2 to our Quarterly Report on Form 10-Q filed with the SEC on August 12, 2021)

Description of the Registrant’s Securities (incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K filed with the SEC on March 16, 2020)

Securities Exchange Agreement, dated September 16, 2019, by and between our Company and Medigus Ltd.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on September 17, 2019)

Amended and Restated Bylaws

Description of the Registrant’s Securities

Amended and Restated Asset Transfer Agreement, by and between ScoutCam Ltd.

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Benad Goldwasser, dated July 31, 2019 (incorporated by reference to Exhibit 10.8 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)

2020 Share Incentive Plan (incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K filed with the SEC on March 16, 2020)

Form of Notice of Option Grant and Option Agreement (incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K filed with the SEC on March 16, 2020)

Amended and Restated Intercompany Services Agreement, by and between Medigus Ltd.

and ScoutCam Ltd., dated April 20, 2020 (incorporated by reference to Exhibit 10.17 to our Form S-1 filed with the SEC on May 12, 2020)

Patent License Agreement, by and between Medigus Ltd.

and ScoutCam Ltd., dated December 1, 2019 (incorporated by reference to Exhibit 10.18 to our Form S-1 filed with the SEC on May 12, 2020)

Employment Agreement, by and between ScoutCam Ltd.

and Yaron Silberman, dated February 28, 2019 (incorporated by reference to Exhibit 10.19 to our Form S-1 filed with the SEC on May 12, 2020)

2020 Share Incentive Plan

Form of Notice of Option Grant and Option Agreement

Form of Notice of RSU Grant and RSU Agreement

Employment Agreement, by and between ScoutCam Ltd.

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and Katrin Dlugach, dated July 1, 2019 (incorporated by reference to Exhibit 10.22 to our Annual Report on Form 10-K filed with the SEC on March 31, 2021)

Securities Purchase Agreement, dated May 18, 2020, by and between ScoutCam Inc.

Arkin (1999) Ltd.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on May 19, 2020)

Voting Agreement, dated May 18, 2020, by and among ScoutCam Inc.

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(incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on May 19, 2020)

Letter Agreement, dated May 18, 2020, by and among ScoutCam Inc., ScoutCam Ltd., Medigus Ltd.

Arkin (1999) Ltd.

(incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed with the SEC on May 19, 2020)

Form of Warrant B by and between ScoutCam Inc.

Arkin (1999) Ltd.

(incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K filed with the SEC on May 19, 2020)

1 to the Amended and Restated Asset Transfer Agreement, dated July 27, 2020, by and between ScoutCam Ltd.

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(incorporated by reference to Exhibit 10.30 to our Registration Statement on Form S-1/A filed with the SEC on October 19, 2021)

Patent License Agreement Termination, dated July 27, 2020, by and between ScoutCam Ltd.

and Medigus Ltd.

(incorporated by reference to Exhibit 10.31 to our Registration Statement on Form S-1/A filed with the SEC on October 19, 2021)

Form of Amendment to Warrant to Purchase Shares of Common Stock (incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K filed with the SEC on March 31, 2021)

Employment Agreement, by and between Yovav Sameah and ScoutCam Ltd.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on March 8, 2021)

Purchase Order Form, between ScoutCam Inc.

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Form of Warrant (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed with the SEC on March 24, 2021)

Employment Agreement, dated August 31, 2021, by and between ScoutCam Ltd.

and Roee Peled, (incorporated by reference to Exhibit 10.38 to our Registration Statement on Form S-1/A filed with the SEC on October 19, 2021)

Employment Agreement, dated October 26 , 2021, by and between ScoutCam Ltd.

and Arik Priel

and Arik Priel (incorporated by reference to Exhibit 10.23 to our Annual Report on Form 10-K filed with the SEC on March 30, 2022)

Employment Agreement, dated July 13, 2022, by and between ScoutCam Ltd.

and Yehu Ofer (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on October 18, 2022)

Employment Agreement dated September 20, 2022, by and between ScoutCam Ltd.

and Jacob Avinu.

Form of Warrant to Purchase Shares of Common Stock (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on March 17, 2023)

Stock Purchase Agreement, dated March 16, 2023 by and between ScoutCam Inc.

and the Investors defined therein .

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on March 17, 2023)

Stock Purchase Agreement, dated March 16, 2023 by and between ScoutCam Inc.

and the Investors defined therein.

(incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on March 17, 2023)

Registration Rights Agreement, dated March 16, 2023, among ScoutCam Inc.

and the Investor defined therein (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on March 17, 2023)

Registration Rights Agreement, dated March 16, 2023, among ScoutCam Inc.

and the Investor defined therein (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed with the SEC on March 17, 2023)

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)

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in the financial statements or notes thereto.

Form 10-K summary

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

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and its Subsidiary (the “Company”) as of December

31, 2021 and 2020, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the two years

in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended

December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

31, 2022 and 2021, the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of

the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the

period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

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disclosures to which it relates.

Services Revenue and Contract Liabilities – Refer to Note 2k.

and Note 10 to the consolidated financial statements

Compensation to Employees, Directors and Service Providers – Stock Options — Refer to Notes 2i and 9b to the consolidated

financial statements

Audit Matter Description

Company generates revenues from development services.

The Company determines at contract inception whether development services are distinct

from the performance obligation to manufacture the product under development.

Revenues from development services that are determined

as not distinct from the performance obligation to manufacture the product under development are deferred until commencement of manufacturing

and are recognized over the manufacturing term.

During 2021, all development services revenues billed have been deferred and recorded

as contract liabilities (representing the contract liabilities balance of $2,420,000 as of December 31, 2021) and the respective service

costs have been deferred and recorded as contract fulfillment assets ($1,675,000 as of December 31, 2021), as the development services

were determined as not distinct from the performance obligation to manufacture the product under development.

identified the assessment of whether development services were a distinct performance obligation and the impact on the timing of revenue

recognition as a critical audit matter.

Evaluating whether development services should be accounted for separately required judgment

and increased audit effort in comparison to our audit as a whole, because of the complexity of the technical accounting analysis and

due to the magnitude of the related contract liabilities as of December 31, 2021.

Company issues various types of equity awards, including stock options.

During the year ended December 31, 2022, the Company recorded

stock options related compensation expense of $1.49 million.

The Company estimated the fair value of these stock options granted using

the Black-Scholes option pricing model.

The Black-Scholes option-pricing model required management to make a number of assumptions, of

which the most significant are the stock price volatility and the expected option term.

the Company’s accounting of stock-based options required auditor judgment due to the subjectivity of assumptions used to estimate the

fair value of stock-based options granted.

the Critical Audit Matter Was Addressed in the Audit

audit procedures related to the Company’s determination of the performance obligations and the timing of revenue recognition for

development service contracts included the following, among others:

read the agreements and analyzed the terms of the Company’s development service contracts.

read communications between the Company and its clients relating to development services

inquired of Company research and development personnel to understand the commercial facts

and circumstances relating to development services contracts.

evaluated the Company’s interpretation and application of the relevant requirements

of generally accepted accounting principles in relation to the development services contracts

and the related contract liabilities.

audit procedures related to the stock-based compensation included the following, among others:

assessed the accuracy and completeness of the awards granted during the year by reading the

relevant Board of Directors minutes and grant documents.

evaluated the appropriateness of the valuation method used for the stock option grants and

whether the method used for determining fair value was applied consistently with the valuation

of similar grants in prior periods.

evaluated the significant assumptions used by management to calculate the fair value of stock

options granted.

Such evaluation included independent calculation of the expected volatility.

developed an independent estimate of the fair value for all the grants during the year and

compared our estimate of fair value to the fair value used by management.

Brightman Almagor Zohar & Co.

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SHAREHOLDERS’

Common stock, $ 0.001

300,000,000 and 75,000,000 shares authorized as of December 31, 2021 and December 31, 2020, 7,121,737 and 4,084,122 shares

issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

stock, $ 0.001 par

300,000,000 shares authorized

as of December 31, 2022 and December 31, 2021, 7,121,737

shares issued and outstanding as of December 31, 2022 and December 31, 2021

paid-in capital

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at January 1, 2022

Issuance of shares

and warrants (see note 9)

Exercise of warrants

based compensation (see note 9)

up of shares due to reverse stock split (see note 9)

Conversion of a loan from Medigus

Conversion of a loan from Medigus, shares

at December 31, 2022

paid-in capital

Shareholders’

Shareholders’ equity

at January 1, 2021

Issuance of shares

and warrants (see note 9)

Exercise of warrants

of shares and warrants (see note 9)

of warrants (see note 9)

based compensation (see note 9)

of loan from Medigus (see note 8)

Balance at December

up of shares due to reverse stock split (see note 9)

at December 31, 2021

an amount less than $1 thousand

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to reconcile net loss to net cash used in operating activities:

Share based compensation

from exchange differences on cash and cash equivalents

Severance pay asset and liability

based compensation

(loss) from exchange differences on cash and cash equivalents

from exchange differences from operating lease liabilities

pay asset and liability

income in respect of deposits

IN OPERATING ASSET AND LIABILITY:

in accounts receivable

Increase in operating lease liability

(increase) in accounts receivable

(increase) in inventory

(decrease) in operating lease liability

(increase) in ROU asset

in other current assets

(increase) in other current assets

in account payables

in contract fulfillment assets

(decrease) in contract fulfillment assets

in contract liabilities

(decrease) in accrued compensation expenses

(decrease) in Medigus receivable / payable

(decrease) in other accrued expenses

in related parties

in other accrued expenses

cash flows used in operating activities

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of property and equipment

of short terms deposits

in short terms deposits

cash flows used in investing activities

cash flows provided by (used in) investing activities

FLOWS FROM FINANCING ACTIVITIES:

from issuance of shares and warrants

Proceeds from exercise

Issuance expenses

repayment to Medigus

from exercise of warrants

cash flows provided by financing activities

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in property and equipment through a decrease in advances to suppliers

from Medigus settled against receivable from Medigus

of loan from Medigus

accompanying notes are an integral part of these consolidated financial statements.

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ScoutCam Inc.

(the “Company”), formerly

known as Intellisense Solutions Inc., (“Intellisense”), was incorporated under the laws of the State of Nevada on March

(the “Company”),

formerly known as Intellisense Solutions Inc., (“Intellisense”), was incorporated under the laws of the State of Nevada

on March 22, 2013.

Prior to the closing of the Exchange Agreement (as defined below), the Company was a non-operating “shell

The Company’s wholly owned subsidiary,

ScoutCam Ltd.

The Company’s wholly-owned

subsidiary, ScoutCam Ltd.

(“ScoutCam”), was formed in the State of Israel on January 3, 2019, as a wholly-owned subsidiary

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(“Medigus”), an Israeli company traded on the Nasdaq Capital Market, and commenced operations on March

In December 2019, Medigus and ScoutCam consummated

an asset transfer agreement, under which Medigus transferred and assigned certain assets and intellectual property rights

related to its miniaturized imaging business to ScoutCam.

On December 30, 2019, Intellisense and

Medigus consummated a securities exchange agreement (the “Exchange Agreement”), pursuant to which

Medigus delivered 100% of its holdings in ScoutCam to Intellisense in exchange for shares of Intellisense’s common stock representing

60% of the issued and outstanding share capital of Intellisense immediately upon the consummation of the Exchange Agreement.

As of December 31, 2021, Medigus beneficially owned

27.01% of the Company’s outstanding common stock.

The Company, through ScoutCam, provides

image-based platforms.

Through the use of its proprietary visualization technology, ScoutCam offers solutions across predictive

maintenance and condition-based monitoring markets, in sectors such as energy, automotive and aviation.

solutions are based on small and highly resilient cameras, specialized AI analysis and supplementary technologies.

In December 2019, Medigus

and ScoutCam consummated an asset transfer agreement, under which Medigus transferred and assigned certain assets and intellectual

property rights related to its miniaturized imaging business to ScoutCam.

On December 30, 2019, Intellisense

and Medigus consummated a securities exchange agreement (the “Exchange Agreement”), pursuant to which Medigus delivered

100% of its holdings in ScoutCam to Intellisense in exchange for shares of Intellisense’s common stock representing 60% of

the issued and outstanding share capital of Intellisense immediately upon the consummation of the Exchange Agreement.

As of December 31, 2022,

Medigus beneficially owned 27.02% of the Company’s outstanding common stock.

Company, through ScoutCam, is engaged 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.

Company’s products utilize our micro visualization technology in medical devices for complex and minimally invasive medical

Company’s technology includes proven video technologies and products amalgamated into a first-of-its-kind,

FDA-cleared minimally invasive surgical device.

The Company’s 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.

The Company’s

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 wide range of industry segments, that utilize complicated mechanics requiring ongoing monitoring and

predictive maintenance applications.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

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reverse stock split of its outstanding Common Stock.

a result of the reverse stock split, every nine shares of the Company’s outstanding Common Stock was combined and reclassified

a result of the reverse stock split, every nine shares of the Company’s outstanding Common Stock were combined and reclassified

into one share of the Company’s Common Stock.

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stock split on a retroactive basis.

incorporation of ScoutCam and through December 31, 2021, the Company accumulated

a deficit of approximately $ 15.3 million

incorporation of ScoutCam and through December 31, 2022, the Company accumulated a deficit of approximately $ 25 million

and its activities have been funded mainly by its shareholders.

The Company’s management

believes the Company’ cash and cash resources as of December 31, 2021 will enable

the Company to fund its operating plan for more than 12 months from the date of issuance

of these financial statements.

The Company expects to continue to incur significant

research and development expenses and other costs related to its ongoing operations and,

as a result, will need to obtain additional funding in order to continue its future operations.

early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic.

pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus.

considered the impact of COVID-19 on its operations and determined that there were no material adverse impacts on the Company’s

results of operations and financial position as of December 31, 2021.

These estimates may change, as new events occur and additional

information is obtained.

The Company’s management believes the Company’ cash and

cash resources as of December 31, 2022 as well as its proceeds from issuance of common stock and warrants in the private offering as

detailed in Note 14, will allow the Company to fund its operating plan through at least the

next 12 months.

However, the Company expects to continue to incur significant research and development and other costs related to its

ongoing operations and in order to continue its future operations, the Company will need to obtain additional funding until becoming profitable.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 – SIGNIFICANT ACCOUNTING POLICIES :

Basis of preparation :

consolidated financial statements reflect the Company’s financial position, results of operations, changes in shareholders equity

(capital deficiency) and cash flows in accordance with generally accepted accounting principles in the United States (“U.S.

Use of estimates

of preparation :

consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles in the

United States (“U.S.

GAAP”) applied on a consistent basis.

preparation of financial statements in conformity with U.S.

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The Company evaluates its assumptions on an

ongoing basis, including those related to contingencies, deferred taxes and inventory impairment, as well as estimates used in applying

ongoing basis, including those related to contingencies and inventory impairment, as well as estimates used in applying

its revenue recognition policy.

Actual results may differ from these estimates.

Functional currency

majority of ScoutCam’s revenues are generated in U.S.

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Currency transaction gains and losses are presented in financial income or expenses, as

Cash and Cash Equivalents

and Cash Equivalents

Company considers as cash equivalents all short-term, highly liquid investments, which include short-term bank deposits with original

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to known amounts of cash.

Short-term bank deposits

bank deposits

deposits with maturities of more than three months but less than one year are included in short-term bank deposits.

3 unchanged sentences

2 - SIGNIFICANT ACCOUNTING POLICIES (continued) :

Accounts receivable

receivable are presented in the Company’s consolidated balance sheets net of allowance for doubtful accounts.

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of December 31, 2022 and 2021, no allowance for doubtful accounts was recorded.

Property and equipment

and equipment

and equipment are stated at cost, net of accumulated depreciation and amortization.

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annual depreciation rates are as follows:

OF PROPERTY AND EQUIPMENT ANNUAL DEPRECIATION RATES

SCHEDULE OF PROPERTY AND EQUIPMENT ANNUAL DEPRECIATION RATES

and laboratory equipment

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the shorter of the lease term (including options if any) or useful life

Severance pay

labor law generally requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain other

1 unchanged sentence

Pursuant to Section 14 of the Severance Compensation Act, 1963 (“Section 14”), all of the ScoutCam’s

employees in Israel are entitled to a monthly contribution, at a rate of 8.33 %

of their monthly salary, made in their name with insurance companies.

Contributions under Section 14 relieve the ScoutCam from any future

severance payment obligation with respect to those employees.

The aforementioned contributions are not recorded as an asset on the Company’s

balance sheet, and there is no liability recorded as the Company does not have a future obligation to make any additional payments.

employees in Israel are entitled to a monthly contribution, at a rate of 8.33 % of their monthly salary, made in their name with insurance

Contributions under Section 14 relieve ScoutCam from any future severance payment obligation with respect to those employees.

The aforementioned contributions are not recorded as an asset on the Company’s balance sheet and there is no liability recorded,

as the Company does not have a future obligation to make any additional payments.

asset and the liability for severance pay presented in the balance sheets reflects employees that began employment prior to automatic

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2 - SIGNIFICANT ACCOUNTING POLICIES (continued) :

Stock-Based Compensation

Company measures and recognizes compensation expense for its equity classified stock-based awards granted under its plan based on estimated

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The Company recognizes

stock-based compensation cost for option awards on a accelerated basis over the employee’s requisite service period, net of estimated

stock-based compensation cost for option awards on an accelerated basis over the employee’s requisite service period, net of estimated

include raw materials, inventory in process and finished products and are valued at the lower of cost or net realizable value.

cost is determined a “first in-first out” basis.

Cost of purchased raw materials and inventory in process includes costs

of design, raw materials, direct labor, other direct costs and fixed production overheads.

Materials and other supplies held for use

in the production of inventories are not written down if the finished products in which they will be incorporated are expected to be

sold at or above cost.

Company regularly evaluates its ability to realize the value of inventory based on a combination of factors including the following:

forecasted sales or usage and estimated current and future market values.

Revenue recognition

The Company’s 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 in exchange for transferring promised goods

or services to a customer, excluding amounts collected on behalf of third parties, such as VAT taxes.

are stated at a lower of cost, determined by the first-in, first-out method, or market based on net realizable value .

Costs of purchased raw materials and inventory in process include costs of design, raw materials, direct labor, other direct costs and

fixed production overheads.

inventories are adjusted for estimated excess and obsolescence and written down to net realizable value based upon estimates of future

demand, technology developments and market conditions.

Company’s revenues are measured according to the ASC 606, “Revenue from Contracts with Customers” (“ASC

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

Revenues are presented net of VAT.

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(b) the Company’s performance

creates or enhances an asset that the customer

as the asset is created or enhanced;

or (c) the Company’s performance does not create an asset with an alternative use to the Company

and the Company has an enforceable right to payment for performance completed to date.

creates or enhances an asset that the customer controls as the asset is created or enhanced;

or (c) the Company’s performance does

not create an asset with an alternative use for the Company and the Company has an enforceable right to payment for performance completed

a performance obligation is not satisfied over time, a Company satisfies the performance obligation at a point in time.

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production phase of the prototype under development, revenue from these services is deferred until commencement of the production phase

of the project.

of the project and are then recognized over the expected term production.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

2 - SIGNIFICANT ACCOUNTING POLICIES (continued) :

Cost of revenues

of revenue consists of products purchased from sub-contractors, raw materials for in-house assembly line, shipping and handling costs

4 unchanged sentences

to incur losses.

Research and development costs

and development costs are expensed as incurred and includes salaries and employee-related expenses, overhead expenses, material and third-party

contractors’ charges.

and development costs

and development costs are expensed as incurred and includes salaries and employee-related expenses, overhead expenses, material, and

third-party contractors’ charges.

taxes are accounted for using the asset and liability approach under ASC-740, “Income Taxes”.

The asset and liability approach

require the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax

requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax

consequences of events that have been recognized in the Company’s financial statements or tax returns.

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tax positions are accounted for in accordance with the provisions of ASC 740-10, under which a company may recognize the tax benefit

from an uncertain tax position claimed or expected to be claimed on a tax return only if it is more likely than not that the tax position

will be sustained on examination by the taxation authorities, based on the technical merits of the position, at the largest benefit that

has a greater than fifty percent likelihood of being realized upon ultimate settlement.

Interest and penalties, if any, related to unrecognized

tax benefits, are recognized in tax expense.

Legal contingencies

from an uncertain tax position claimed or expected to be claimed on a tax return only if it is more likely than not that the tax

position will be sustained on examination by the taxation authorities, based on the technical merits of the position, at the largest

benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

Interest and penalties, if any,

related to unrecognized tax benefits are recognized in tax expense.

The Company and ScoutCam provide a valuation allowance,

if necessary, to reduce deferred tax assets to their estimated realizable value.

contingencies

time to time, the Company and its subsidiary become involved in legal proceedings or are subject to claims arising in their ordinary

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2 — SIGNIFICANT ACCOUNTING POLICIES (continued):

Basic and diluted net loss per common stock :

and diluted net loss per common stock :

net loss per common stock is computed by dividing net loss, as adjusted, to include the weighted average number of shares of common stock

5 unchanged sentences

31, 2022 and December 31, 2021, since all such securities have an anti-dilutive effect.

In accordance with ASC 842,

leases, at inception of an arrangement, the Company determines whether an arrangement is or contains a lease based on the

facts and circumstances present in the arrangement.

An arrangement is or contains a lease if the arrangement conveys the right to control

the use of an identified asset for a period of time in exchange for consideration.

Arrangements that are determined to

be leases at inception are recognized in long-term right-of-use assets (“ROU”) assets and short and long-term lease liabilities

in the consolidated balance sheet at lease commencement.

Operating lease ROU assets and operating lease liabilities are recognized based

on the present value of the future fixed lease payments over the lease term at commencement date.

As most of the Company’s

leases do not provide an implicit rate, the Company applies its incremental borrowing rate based on the economic environment at commencement

date in determining the present value of future payments.

Lease terms may include options to extend or terminate the lease when it is

reasonably certain that the Company will exercise that option.

Lease expense for operating leases or payments are recognized on

a straight-line basis over the lease term.

accordance with ASC 842, the Company determines whether an arrangement is or contains a lease

based on the facts and circumstances present at inception of an arrangement.

An arrangement is or contains a lease if the arrangement conveys the

right to control the use of an identified asset for a period of time in exchange for consideration.

that are determined to be leases at inception are recognized in long-term right-of-use assets (“ROU”) assets and short and

long-term lease liabilities in the consolidated balance sheet at lease commencement.

Operating lease ROU assets and operating lease liabilities

are recognized based on the present value of the future fixed lease payments over the lease term at commencement date.

As most of the

Company’s leases do not provide an implicit rate, the Company applies its incremental borrowing rate based on the economic environment

at commencement date in determining the present value of future payments.

Lease terms may include options to extend or terminate the

lease when it is reasonably certain that the Company will exercise that option.

Lease expense for operating leases or payments are recognized

on a straight-line basis over the lease term.

Company has elected not to recognize on the balance sheet leases with terms of 12 months or less.

Recent Accounting Standards:

for Income Taxes

December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No.

ASU 2019-12, “Simplifying the Accounting

for Income Taxes”.

This ASU amends Accounting Standards Codification (“ASC”) 740 by removing certain exceptions to

the general principles, clarifying and amending existing guidance.

This guidance is effective for fiscal years, and interim periods within

those years, beginning after December 15, 2020.

The Company adopted this standard in the first quarter of 2021.

The adoption of this

ASU did not impact on the Company’s financial statements or the related disclosures.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 - SHORT-TERM DEPOSITS

term investments as of December 31, 2021 include bank deposits bearing annual interest rates varying from 0.3 %

with maturities of up to 12 months .

term investments as of December 31, 2022 include bank deposit bearing annual interest rates of 4 %, with maturities of up to 12 months.

4 - INVENTORY :

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materials and supplies

the year ended 2021, no impairment occurred.

the year ended 2020, the Company recognized an inventory impairment of $ 79

the years 2022 and 2021, no impairment occurred.

5 - PROPERTY AND EQUIPMENT, NET :

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property and equipment, net

expenses were $ 114 thousand

and $ 66 thousand

for the years ended December 31, 2021 and 2020, respectively.

expenses were $ 251 thousand and $ 114 thousand for the years ended December 31, 2022 and 2021, respectively.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

SCHEDULE OF OTHER ACCRUED EXPENSES

(see note 7b)

Revenue Services

other accrued expenses

7 - INCOME TAXES :

Company and its subsidiary are taxed under the domestic tax laws of the jurisdiction of incorporation of each entity (United States and

Israel, respectively).

from Israel was taxed at the corporate tax rate of 23 %.

Company was incorporated in the United States and is subject to the federal and state tax laws established in the United States.

December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law.

The Act reduces the corporate tax rate to 21

percent from 35 percent, among other things .

Company did not timely file its tax return for 2013-2014 and therefore the IRS imposed penalties in the amount of $ 60 thousand (approximately

$ 73 thousands including interest).

As a result of a penalty abatement request by the Company, the IRS abated the penalty to approximately

to $ 40 thousand.

tax loss carry forwards

of December 31, 2021, ScoutCam has accumulated losses for tax purposes that were generated in Israel.

These losses may be carried forward

and offset against taxable income in the future for an indefinite period.

A full valuation allowance was created against the ScoutCam’s

deferred tax assets generated in Israel.

Management currently believes that it is more likely than not that the deferred taxes generated

in Israel will not be realized in the foreseeable future.

December 31, 2021, following a VAT audit in Israel for years 2019-2021, ScoutCam owed

approximately NIS 740

(which is approximately $ 229

additional taxes to the Israeli Tax Authorities.

As such, the financial statements as of December 31, 2021, include a provision of $ 229

included in general and administrative expenses.

On November 18, 2021, ScoutCam submitted

an appeal to the Israeli Tax Authority on the finding of this VAT audit.

Tax rates applicable to the income of the Israeli subsidiary:

ScoutCam is taxed according to Israeli tax laws.

The Israeli corporate tax rate from the year 2018 and

onwards is 23 %.

Tax rates applicable to the income of the U.S.

Company is taxed according to U.S.

corporate tax rate from the year 2018 and onwards

income taxes:

income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets

are as follows:

SCHEDULE OF COMPONENT OF DEFERRED TAX ASSET

USD in thousands

Operating loss carryforward

Net deferred tax asset before valuation allowance

Valuation allowance

Net deferred tax

of December 31, 2022, the Company has provided a full valuation allowance of $ 6,069 thousand in respect

of deferred tax assets resulting from tax loss carryforward and other temporary differences.

Management currently believes that because

the Company has a history of losses, it is more likely than not that the deferred tax regarding the loss carryforward and other temporary

differences will not be realized in the foreseeable future.

carryforward tax losses:

As of December 31, 2022, the Company has an accumulated tax loss carryforward of approximately $ 26,295 thousand.

Carryforward tax losses in Israel

are of unlimited duration.

Under the Tax Cut and Jobs Act of 2017, or the Tax Act (subject to modifications under the Coronavirus Aid,

Relief, and Economic Security Act), federal net operating losses (NOL) incurred in taxable years ending after December 31, 2017 and in

future years may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited.

It is uncertain

if and to what extent various states will conform to the newly enacted federal tax law.

addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation

undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change, by value, in its

equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change

tax attributes to offset its post-change income or taxes may be limited.

Such limitations may result in the expiration of net operating

losses before utilization.

The main reconciling item between the statutory tax rate of the Company

and the effective tax rate is the recognition of valuation allowance in respect of deferred taxes relating to accumulated net operating

losses carried forward due to the uncertainty of the realization of such deferred taxes.

of December 31, 2021, ScoutCam owed NIS 740 thousand, (approximately $ 229 thousand) in additional

taxes to the Israel Tax Authority following a VAT audit in Israel for 2019-2021.

November 18, 2021, ScoutCam filed an appeal to the Israeli Tax Authority on the finding of the VAT audit.

to the uncertainty regarding the outcome of the appeal, the financial statements as of December 31, 2021 included a provision

related to the additional taxes of $ 229

thousand, which was included in general and administrative expenses in the statement of operation report.

July 2022, ScoutCam reached an agreement with the Israeli Tax Authority, according to which the amount due in additional taxes was

reduced to NIS 340 thousand (approximately $ 100 thousand).

TO THE CONSOLIDATED FINANCIAL STATEMENTS

8 – RELATED PARTIES :

On April 20, 2020, ScoutCam entered into an Amended

and Restated Intercompany Services Agreement with Medigus (the “Intercompany agreement”).

The agreed upon services provided

under the amended and restated Intercompany Agreement include:

lease of office space based on actual space utilized by Medigus and in shared spaces according to employee ratio;

(2) utilities such

as electricity, water, information technology and communication services based on employee ratio;

(3) car services, including car rental,

gas usage and payment for toll roads based on 100% of expense incurred from ScoutCam’s employee car;

(5) directors and officers

insurance, Medigus shall pay $150,000 of the annual premium for;

(6) CFO services at a sum of 50% of Medigus’ CFO employer cost;

(7) every direct expense of ScoutCam’s that is paid by Medigus in its entirety subject to approval of such direct expenses in advance;

and (7) any other mutual expense that is borne by the parties according to the respective portion of the mutual expense.

total net expenses for year ended December 31, 2020 amounted to $ 143 thousand.

didn’t recognize expenses for the year ended December 31, 2021 in connection with this agreement.

On March 22, 2022, ScoutCam

provided 60 days prior written notice to Medigus of termination of the Intercompany Services Agreement.

July 31, 2019, ScoutCam and Prof.

Benad Goldwasser entered into a consulting agreement, whereby Prof.

Goldwasser agreed to serve

as chairman of the Board of Directors of ScoutCam.

Effective retroactively to March 1, 2019, services as chairman under the agreement

were provided in consideration for, inter alia , a monthly fee of $ 10,000 and options representing 5 % of Company’s fully-diluted

share capital as of the Closing Date.

June 23, 2020, the Company and Medigus entered into a certain Conversion Side Letter, pursuant to which the Company converted $ 381,136

worth of outstanding credit previously extended by Medigus to the Company, which amount, as of the date thereof, included interest

accrued thereon.

In accordance with the terms of the Conversion Side Letter, the Company issued to Medigus, at a purchase price of

$8.712, (a) 87,497 shares of common stock, (b) warrants to purchase 43,749 shares of common stock at an exercise price of $5.355,

and (c) warrants to purchase 87,497 shares of common stock at an exercise price of $8.037 .

December 2019, the Company entered into a consulting agreement with Shrem Zilberman Group (the “Consultant”) in the amount

thousand (see also note 9a).

director of the Company is related to one of the Consultant’s shareholders.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

8 – RELATED PARTIES (continued):

On March 15, 2020, the Company’s Board of Directors approved, among other things, a quarterly fee of $ 4,000 payable to each of the Company’s directors, excluding Professor Goldwasser.

On May 18, 2020, the Company allocated in a private

issuance to M.

Parties Balances:

OF BALANCES WITH RELATED PARTIES

Directors (directors’ accrued compensation)

(see note 8c)

May 18, 2020, the Company allocated in a private issuance to M.

Arkin (1999) Ltd.

(“Arkin”) a total of 229,569 units (as described in note 9c) at a purchase price

of $ 8.712 per unit (“Arkin Transaction”).

In connection with the Arkin Transaction, the

Company, Medigus and Arkin, entered into the letter agreement, whereby, provided the Company obtains certain regulatory approvals

described therein, Medigus and the Company agreed to amend certain terms of the amended and restated asset transfer agreement

and the license agreement, thereby transferring outright certain patent assets from Medigus to the Company;

however, that in the event the Company abandons the foregoing patent assets, the Company must transfer back ownership of the patent

assets to Medigus for no additional consideration and absent any additional contingencies.

In addition, on May 18, 2020, and in connection

with the Arkin Transaction, the Company, Medigus and Arkin entered into a voting agreement, pursuant to which Arkin and Medigus each

agreed to vote their respective shares of common stock in favor of the election of the opposite party’s designated representative(s),

as applicable, to the Board.

Each of Arkin’s and Medigus’ rights under the Voting Agreement are contingent upon, inter

alia, such party maintaining a certain beneficial ownership threshold in the Company’ as follows:

(a) One person designated by Arkin is

to be elected, for as long as Arkin, continues to beneficially own at least eight percent of the issued and outstanding

capital stock of the Company.

(b) Three persons designated by Medigus

are to be elected, for as long as Medigus, continues to beneficially own at least thirty five percent of the issued

and outstanding capital stock of the Company.

are to be elected for so long as Medigus, continues to beneficially own less than thirty five percent and more than twenty

(“Arkin”) a total of 229,569 units

(as described in note 9c) at a purchase price of $ 8.712 per unit (“Arkin Transaction”).

In connection with the Arkin Transaction, the Company, Medigus

and Arkin entered into a voting agreement, pursuant to which Arkin and Medigus each agreed to vote their respective shares of common

stock in favor of the election of the opposite party’s designated representative(s), as applicable, to the Board (“Voting

Each of Arkin’s and Medigus’ rights under the Voting Agreement are contingent upon, inter alia, such party

maintaining a certain beneficial ownership threshold in the Company’ as follows:

One person designated by Arkin is to be elected, for as long as Arkin, continues to beneficially own at least eight percent of the

issued and outstanding capital stock of the Company.

Three persons designated by Medigus are to be elected, for as long as Medigus, continues to beneficially own at least thirty five

percent of the issued and outstanding capital stock of the Company.

(d) One person designated by Medigus is

to be elected for as long as Medigus, continues to beneficially own less than twenty percent and more than eight percent of

the issued and outstanding capital stock of the Company.

During 2020 the Company’s Board of Directors

authorized the grant of options to purchase 318,207 shares of common stock of the Company to Prof.

Goldwasser, the Chairman of the Board,

options to purchase 131,048 shares of common stock of the Company to directors of the Company and options to purchase 227,356 shares of

common stock of the Company to certain officers of the Company.

During 2021 the Company’s Board of Directors authorized the grant of options to purchase

shares of common stock of the Company to Prof.

Goldwasser, the Chairman of the Board, options to purchase 75,855

shares of common stock of the Company to directors of the Company and options to purchase 335,987

shares of common stock of the Company to certain officers of the Company.

During 2020 and 2021 the Company received development services from Smartec R&D Ltd., a company owned by the Company’s

Total compensation for the fiscal years ended December 31, 2020 and December 31, 2021 was approximately $ 102 thousands and

$ 82 thousands, respectively.

During 2020 and 2021 the Company received financial consultant services from Anona De Finance

Ltd., a company owned by one of the Company’s directors.

Total compensation for the fiscal years ended December 31, 2020 and December 31, 2021 was approximately

$ 32 thousands and $ 37 thousands, respectively.

Two persons designated by Medigus are to be elected for as long as Medigus, continues to beneficially own less than thirty five percent

and more than twenty percent of the issued and outstanding capital stock of the Company.

One person designated by Medigus is to be elected for as long as Medigus, continues to beneficially

own less than twenty percent and more than eight percent of the issued and outstanding capital

stock of the Company.

2021 and 2022 the Company received development services from Smartec R&D Ltd., a company owned by the Company’s CTO.

compensation for the fiscal years ended December 31, 2021 and December 31, 2022 was $ 82 thousands and $ 117 thousands, respectively.

2021 the Company received financial consultant services from Anona De Finance Ltd., a company owned by one of the Company’s

expenses for the fiscal years ended December 31, 2021 was approximately $ 37 thousands.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

shall be consisting of 300,000,000 shares of common stock.

December 2019, the Company allocated in a private placement, a total of 379,269

units at a purchase price of $ 8.712

December 2019, the Company allocated in a private placement, a total of 379,269 units at a purchase price of $ 8.712 per unit.

unit was comprised of two shares of common stock par value $0.001 per share, one Warrant A (as described below) and two Warrants

B (as described below) .

The immediate

proceeds (gross) from the issuance of the units amounted to approximately $ 3.3

The immediate proceeds (gross) from the issuance of the units amounted to approximately $ 3.3 million.

Warrant A was exercisable into one share of common stock of the Company at an exercise price of $ 5.355 per share during the 12 month

11 unchanged sentences

2020, 332,551 Warrants A were exercised, and 46,718 unexercised Warrants A expired on December 30, 2020 .

The Consultant received $ 53 thousand

following the exercise of 332,551 Warrants A.

Consultant received $ 53 thousand following the exercise of 332,551 Warrants A.

the second quarter of 2021, 185,271 Warrants B were exercised, and 573,256 unexercised Warrants B expired on June 30, 2021 .

The Consultant received $ 45 thousand

following the exercise of 185,274 Warrants A.

Consultant received $ 45 thousand following the exercise of 185,271 Warrants B.

March 3, 2020, the Company issued in a private placement a total of 108,880 units at a purchase price of $ 8.712 per unit.

unit was comprised of two shares of common stock par value $0.001 per share, one Warrant A (as described below) and two Warrants

B (as described below) .

unit was comprised of two shares of common stock par value $0.001 per share, one Warrant A (as described below) and two Warrants B (as

described below) .

Warrant A was exercisable into one share of common stock of the Company at an exercise price of $ 5.355 per share during the 12 month

10 unchanged sentences

May 18, 2020, the Company allocated in a private placement to Arkin a total of 229,569 units at a purchase price of $ 8.712 per unit.

unit was comprised of two shares of common stock par value $0.001 per share, one Warrant A (as described below) and two Warrants

B (as described below) .

unit was comprised of two shares of common stock par value $0.001 per share, one Warrant A (as described below) and two Warrants B (as

described below) .

Warrant A was exercisable into one share of common stock of the Company at an exercise price of $ 5.355 per share during the 18 month

6 unchanged sentences

February 2021, 37,349 Warrants A were exercised.

During November 2021, 192,220 Warrants A were exercised.

November 2021, 192,220 Warrants A were exercised.

June 23, 2020, (the “Conversion Date”), the Company entered into a side letter

agreement with Medigus whereby the parties agreed to convert, at a conversion price of $ 4.356

share, an outstanding line of credit previously extended by Medigus to ScoutCam, which as

of the Conversion Date had $ 381,136

into (a) 87,497

of the Company’s common stock, (b) to 43,749

Warrant A (as described below), and (c) 87,497

Warrant B (as described below).

As the conversion price represented

the same unit price as in the March 2020 and May 2020 private placements, no finance expenses

have been recorded in statement of operations as a result of the conversion.

per share, an outstanding line of credit previously extended by Medigus to ScoutCam, which

as of the Conversion Date had $ 381,136 outstanding, into (a) 87,497 shares of the Company’s

common stock, (b) to 43,749 Warrant A (as described below), and (c) 87,497 Warrant B (as

described below).

As the conversion price represented the same unit price as in the March

2020 and May 2020 private placements, no finance expenses have been recorded in statement

of operations as a result of the conversion.

Warrant A is exercisable into one share of common stock of the Company at an exercise price of $ 5.355 per share during the 12 months

3 unchanged sentences

June 2021, 43,749 Warrants A were exercised.

December 23, 2021, 87,497

unexercised Warrants B expired.

On March 29, 2021, the Company issued to certain investors, including M.

Arkin (1999) Ltd., a major

stockholder of the Company, of which Mori Arkin, a director of the company, is the owner, 2,469,156 units in exchange for an aggregate

purchase price of $ 20 million.

Each such unit consists of (i) one share of common stock and (ii) one warrant to purchase one share

of common stock with an exercise price of $10.35 per share.

December 23, 2021, 87,497 unexercised Warrants B expired.

March 29, 2021, the Company issued to certain investors, including Arkin, a major stockholder of the Company, of which Mori Arkin,

a director of the company, is the owner, 2,469,156 units in exchange for an aggregate purchase price of $ 20 million.

Each such unit

consists of (i) one share of common stock and (ii) one warrant to purchase one share of common stock with an exercise price of $ 10.35

Each such warrant is exercisable until the close of business on March 31, 2026 .

Pursuant to the terms of the foregoing warrants, following April 1, 2024, if the closing price of Company common stock equal

or exceeds 135% of the aforementioned exercise price (subject to appropriate adjustments for stock splits, stock dividends, stock combinations

and other similar transactions after the issue date of the warrants) for any thirty (30) consecutive trading days, the Company may

force the exercise of the warrants, in whole or in part, by delivering to these investors a notice of forced exercise.

Pursuant to the terms of the foregoing

warrants, following April 1, 2024, if the closing price of Company common stock equal or exceeds 135 % of the aforementioned exercise

price (subject to appropriate adjustments for stock splits, stock dividends, stock combinations and other similar transactions after

the issue date of the warrants) for any thirty (30) consecutive trading days, the Company may force the exercise of the warrants,

in whole or in part, by delivering to these investors a notice of forced exercise.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

of December 31, 2022, the Company had the following outstanding warrants to purchase common stock:

SCHEDULE OF STOCK WARRANTS OUTSTANDING TO PURCHASE COMMON STOCK

OF STOCK WARRANTS OUTSTANDING TO PURCHASE COMMON STOCK

Per Share ($)

of common stock

March 2021 Warrant

addition, if ScoutCam achieves an aggregate amount of $ 33

million in sales within the first three

years immediately after the Exchange Agreement,

the Company will issue to Medigus 298,722

shares of the Company’s common stock,

which represents 10 %

of the Company’s issued and outstanding share capital as of the Exchange Agreement.

compensation to employees, directors and service providers:

25 unchanged sentences

Intrinsic Value (in thousands)

Outstanding - December

Options Exercisable

- December 31, 2020

of December 31, 2021, the aggregate intrinsic value

of options granted is calculated as the difference between the exercise price and the closing price on the same date.

- December 31, 2021

- December 31, 2022

Exercisable - December 31, 2022

of December 31, 2022, the aggregate intrinsic value of options granted is calculated as the difference between the exercise price and

the closing price on the same date.

Company estimates the fair value of stock option awards on the grant date using the Black-Scholes option pricing model.

The weighted-average

grant date fair value per option granted during the years ended December 31, 2021 was $ 6.73 .

grant date fair value per option granted during the year ended December 31, 2022 was $ 2.76 .

The fair value of each award is estimated

3 unchanged sentences

volatility (%)

45.8 %- 49.00 %

43.35 %- 45.25 %

of the options (years)

10 unchanged sentences

Accordingly, no dividend yield was assumed for purposes of estimating

the fair value of the

TO THE CONSOLIDATED FINANCIAL STATEMENTS

9 – EQUITY (continued):

share-based compensation.

The weighted average expected life of options was estimated individually in respect of each grant.

the fair value of the Company’s stock-based compensation.

The weighted average expected life of options was estimated individually

in respect of each grant.

unrecognized compensation expense calculated under the fair-value method for stock options expected to vest as of December 31, 2022 is

approximately $ 1.45 million and is expected to be recognized over a weighted-average period of 1.41 years.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

10 - REVENUES :

fulfillment assets:

Company’s contract fulfillment assets:

OF CONTRACT FULFILLMENT ASSETS

USD in thousands

The change in contract fulfillment assets:

Balance at beginning of year

Additions during the year

Balance at end of year

Company’s contract liabilities were as follows:

OF CONTRACT LIABILITIES

change in contract liabilities:

at beginning of year

revenue relating to new sales

recognition during the period

at end of year

liabilities include advance payments, which are primarily related to advanced billings for development services.

recognized in 2021 that was included in deferred revenue balance as of December 31, 2020 was $ 69

recognized in 2020 that was included in deferred revenue balance as of December 31, 2019 was $ 389

Performance Obligations

Performance Obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes contract liability

and amounts that will be invoiced and recognized as revenue in future periods.

As of December 31, 2021, the total RPO amounted to $ 3.2

million, which the Company expects to recognize over the expected manufacturing term of the product under development.

2022 and 2021 the Company’s Board of Directors authorized the grant of options to purchase 45,000 shares of common stock of

the Company and 83,334 shares of common stock of the Company,

respectively, to Prof.

Goldwasser, the Chairman of the Board.

Total expenses recorded regarding this grant, for the year

ended December 31, 2022, and December 31, 2021, are $ 367 thousand and $ 255 thousand, respectively.

During 2021 the Company’s Board of Directors

authorized the grant of options to purchase 75,855 shares of common stock of the Company to directors of the Company.

Total expenses

recorded regarding this grant, for the year ended December 31, 2022, and December 31, 2021, are $ 213 thousand and $ 221 thousand, respectively.

2022 and 2021 the Company’s Board of Directors authorized the grant of options to purchase 400,000

shares of common stock of the Company and 335,987

shares of common stock of the Company, respectively, to certain officers of the Company.

Total expenses recorded regarding this grant,

for the year ended December 31, 2022, and December 31, 2021, are $523 thousand and $871 thousand, respectively.

Compensation expense recorded by the Company in respect of its stock-based

employees, directors and service providers compensation awards in accordance with ASC 718-10 for the year ended December 31, 2022 and

2021 amounted to $ 1,487 thousands and $ 2,030 thousands, respectively.

stock unit (“RSU”) to employees and service providers:

the year ended December 31, 2022, the Company granted 110,000 RSUs pursuant to the Plan.

RSU will vest based on continued service which is generally over three years.

The grant date fair value of the award will be recognized

as stock-based compensation expense over the requisite service period.

The fair value of restricted stock units was estimated on the

date of grant based on the fair value of the Company’s common stock.

cost of the benefit embodied in the RSU granted during 2022, based on their fair value as at the grant date, is estimated to be approximately

$ 748 thousand.

These amounts will be recognized in the statements of operations over the vesting period.

following table summarizes RSU activity for December 31, 2022:

OF STOCK OPTION ACTIVITY

Average Remaining Contractual Term (years)

- December 31, 2021

and Outstanding - December 31, 2022

unrecognized compensation expense calculated under the fair-value method for RSU expected to vest as of December 31, 2022 is approximately

$ 164 thousand and is expected to be recognized over a weighted-average period of 1.15 years.

2022 the Company’s Board of Directors authorized the grant of options to purchase 90,000

shares of common stock of the Company to certain

officers of the Company.

Total expenses recorded regarding this grant, for the year ended December 31, 2022, are $ 127 thousand.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

11 - ENTITY WIDE DISCLOSURES :

ASC 280, “Segment Reporting,”

establishes standards for reporting information about operating segments.

The Company manages its business based on one operating

segment, as described in Note 1.

10 – REVENUES AND ENTITY WIDE DISCLOSURES :

280, “Segment Reporting,” establishes standards for reporting information about operating segments.

The Company manages its

business based on one operating segment, as described in Note 1.

Disaggregation

OF DISAGGREGATION OF REVENUE

Services (customer A) (*)

During the second quarter

of 2022, the Company completed the development of the product relating to a customer-specific project for a Fortune 500 multinational healthcare

corporation (“Customer A”) and moved from the development

phase of the project to its production phase.

As a result, during the year ended December 31, 2022, the Company recognized development

services revenues and related development costs that had been previously deferred, in the amounts of $ 317 thousand and $ 180 thousand,

respectively.

The amounts were recognized based on the expected manufacturing term of the product, which the Company estimates at

addition, following the commencement of the production phase, the Company recognized product revenues of $ 221

thousands during the year ended December 31,

2022 from the sale of units of the product developed in the context of these development services.

by geographical area (based on the location of customers)

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OF MAJOR CUSTOMER BREAKDOWN OF COMPANY’S REVENUE

fulfillment assets and Contract liabilities:

OF CONTRACT FULFILLMENT ASSETS AND CONTRACT LIABILITIES

fulfillment assets:

liabilities include advance payments, which are primarily related to advanced billings for development services.

change in contract fulfillment assets:

at beginning of year

during the year

costs recognized during the period

at end of year

change in contract liabilities:

at beginning of year

revenue relating to new sales

recognized during the year

at end of year

Performance Obligations

Performance Obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes deferred revenue

and amounts that will be recognized as revenue in future periods.

As of December 31, 2022, the total RPO amounted to $ 3,644 thousand,

which the Company expects to recognize over the expected manufacturing term of the product under development.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company’s leases relate to vehicles leases and to short term lease of Company’s offices.

components of lease expenses during the periods presented were as follows:

OF LEASE EXPENSES

lease expenses

Sublease income

net lease expenses

December 31, 2022, the Group’s ROU assets and lease liabilities for operating leases totaled $ 307 thousand and $ 263 thousand, respectively.

December 31, 2021, the Group’s ROU assets and lease liabilities for operating leases totaled $ 482 thousand and $ 459 thousand, respectively.

December 2020, ScoutCam entered into a lease agreement for office space in Omer, Israel.

The agreement is for 36 months beginning January

In March 2021, ScoutCam entered into a lease agreement for additional office space in Omer, Israel.

The agreement is until December

Monthly lease payments under the agreements are approximately $ 12 thousand.

ScoutCam subleases part of the office space to

a third party for $ 3 thousand per month.

December 2022, ScoutCam entered into a lease agreement for office space in Ramat Gan, Israel.

The agreement is for 12 months beginning

on December 14, 2022.

The agreement expires on December 14, 2023, and the Company has an option

to extend the lease period for an additional one year.

The Company doesn’t expect to extend the lease period.

Therefore, the Company has elected

to use the practical expedient regarding short-term leases.

Monthly lease payments under the agreements are $ 3 thousand.

addition, the Company leases vehicles under various operating lease agreements.

lease expenses were $ 264 thousand and $ 202 thousand for the years ended December 31, 2022 and 2021, respectively.

cash flow information related to operating leases during the period presented was as follows:

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES

OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES

ended December 31,

Cash paid for amounts

included in the measurement of lease liabilities:

paid for amounts included in the measurement of lease liabilities:

cash flows from operating leases

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lease liabilities

12 – RESEARCH AND DEVELOPMENT EXPENSES :

OF RESEARCH AND DEVELOPMENT EXPENSES

ended December 31,

and related expense

and subcontractors

and maintenance and other expenses

and Development expenses

13 – GENERAL AND ADMINISTRATIVE EXPENSES :

OF GENERAL AND ADMINISTRATIVE EXPENSES

ended December 31,

and related expense

and maintenance and other expenses

provision (note 7e)

and Administrative expenses

14 - SUBSEQUENT EVENTS :

February 23, 2022, the Company’s Board of Directors authorized the grant of options to Prof.

Goldwasser, the Chairman of the

Board, to purchase 45,000

shares of common stock of the Company and RSU to purchase 90,000

shares of common stock of the Company to certain

officers of the Company.

March 16, 2023, the Company consummated Stock Purchase Agreements for a private placement with (i) Moshe Arkin through his

individual retirement account and (ii) The Phoenix Insurance Company Ltd.

and Shotfut Menayot Israel – Phoenix Amitim, in

connection with the sale and issuance of an aggregate amount of 3,294,117

units (collectively, the “Units”), at a purchase price of $ 4.25

per Unit, and for an aggregate purchase price of $ 14,000,000 .

Each Unit consists of:

(i) one share of the Company’s common stock par value $ 0.001

per share (the “Common Stock”) and (ii) one warrant to purchase one share of Common Stock with an exercise price of

(the “Warrants”).

The Warrants are immediately exercisable and will expire three

years from the date of issuance and will be subject to customary adjustments.

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 9A. Controls and Procedures