Odysight.ai Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 333-188920 ODYSIGHT.AI INC. (Exact name of registrant as specified in its charter) Nevada 47-4257143 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) Suite 7A , Industrial Park P.O. Box 3030 , Omer , Israel 8496500 (Address of Principal Executive Offices) (Zip Code) + 972 73 370-4691 (Registrant’s telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of exchange on which registered N/A N/A N/A Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of August 13, 2023, the registrant had 10,436,684 shares of common stock, par value $0.001 of the registrant issued and outstanding. As used in this Quarterly Report and unless otherwise indicated, the terms “Odysight.ai (formerly known as ScoutCam Inc.),” “we,” “us,” “our,” or “our Company” refer to Odysight.ai. Unless otherwise specified, all dollar amounts are expressed in United States dollars. ODYSIGHT.AI INC. QUARTERLY REPORT ON FORM 10-Q TABLE OF CONTENTS Page Cautionary Note Regarding Forward-Looking Statements 3 PART 1-FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (unaudited) 4 Consolidated Balance Sheets 5 Consolidated Statements of Comprehensive Loss 7 Statements of Stockholders’ Equity 8 Consolidated Statements of Cash Flows 10 Notes to Consolidated Financial Statements 12 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20 Item 3. Quantitative and Qualitative Disclosures about Market Risk 25 Item 4. Control and Procedures 25 PART II-OTHER INFORMATION Item 1A. Risk Factors 26 Item 6. Exhibits 26 SIGNATURES 27 - 2 - CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. These statements may be found under the section of our Annual Report on Form 10-K for the year ended December 31, 2022 (filed on March 28, 2023) entitled “Risk Factors” as well as in our other public filings. In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. - 3 - Item 1. Financial Statements ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) INTERIM FINANCIAL STATEMENTS AS OF JUNE 30, 2023 CONSOLIDATED ODYSIGHT.AI INC. Page Interim Condensed Consolidated Financial Statements - in US Dollars (USD) in thousands Interim Condensed Consolidated Balance Sheets (unaudited) 5 Interim Condensed Consolidated Statements of Operations (unaudited) 7 Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) 8 Interim Condensed Consolidated Statements of Cash Flows (unaudited) 10 Notes to the Interim Condensed Consolidated Financial Statements 12 - 4 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2023 December 31, 2022 Unaudited Audited USD in thousands Assets CURRENT ASSETS: Cash and cash equivalents 3,319 10,099 Short terms deposits 18,736 3,047 Accounts receivable 158 60 Inventory 724 630 Other current assets 668 281 Total current assets 23,605 14,117 NON-CURRENT ASSETS: Contract fulfillment assets 1,376 1,495 Property and equipment, net 513 648 Operating lease right-of-use assets 653 307 Severance pay asset 262 328 Total non-current assets 2,804 2,778 TOTAL ASSETS 26,409 16,895 The accompanying notes are an integral part of these interim condensed consolidated financial statements. - 5 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) June 30, 2023 December 31, 2022 Unaudited Audited USD in thousands Liabilities and shareholders’ equity CURRENT LIABILITIES: Accounts payable 774 297 Contract liabilities - short term 954 1,426 Operating lease liabilities - short term 232 199 Accrued compensation expenses 454 365 Related parties 47 58 Other account payable 522 214 Total current liabilities 2,983 2,559 NON-CURRENT LIABILITIES: Contract liabilities - long term 2,007 2,218 Operating lease liabilities - long term 339 64 Liability for severance pay 256 268 Other liabilities - long term 28 - Total non-current liabilities 2,630 2,550 TOTAL LIABILITIES 5,613 5,109 SHAREHOLDERS’ EQUITY: Common stock, $ 0.001 par value; 300,000,000 shares authorized as of June 30, 2023 and December 31, 2022, 10,436,684 and 7,121,737 shares issued and outstanding as of June 30, 2023 and December 31, 2022 , respectively 10 7 Additional paid-in capital 51,110 36,541 Accumulated deficit ( 30,324 ) ( 24,762 ) TOTAL SHAREHOLDERS’ EQUITY 20,796 11,786 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 26,409 16,895 The accompanying notes are an integral part of these interim condensed consolidated financial statements. - 6 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2023 2022 2023 2022 Six months ended June 30, Three months ended June 30, 2023 2022 2023 2022 Unaudited USD in thousands (except per share data) REVENUES 977 372 674 370 COST OF REVENUES 1,327 849 777 561 GROSS LOSS ( 350 ) ( 477 ) ( 103 ) ( 191 ) RESEARCH AND DEVELOPMENT EXPENSES 2,753 1,975 1,355 1,021 SALES AND MARKETING EXPENSES 669 446 493 203 GENERAL AND ADMINISTRATIVE EXPENSES 2,126 2,452 1,168 1,166 OPERATING LOSS ( 5,898 ) ( 5,350 ) ( 3,119 ) ( 2,581 ) OTHER INCOME 10 15 3 7 FINANCING INCOME (EXPENSES), NET 326 ( 225 ) 240 ( 198 ) NET LOSS ( 5,562 ) ( 5,560 ) ( 2,876 ) ( 2,772 ) Net loss per ordinary share (basic and diluted, USD) ( 0.63 ) ( 0.78 ) ( 0.28 ) ( 0.39 ) Net loss per ordinary share (basic, USD) ( 0.63 ) ( 0.78 ) ( 0.28 ) ( 0.39 ) Weighted average ordinary shares (basic and diluted, in thousands) 8,864 7,122 10,435 7,122 Weighted average ordinary shares (basic, in thousands) 8,864 7,122 10,435 7,122 The accompanying notes are an integral part of these interim condensed consolidated financial statements. - 7 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Six Months Ended June 30, 2023 (Unaudited) Number Amount capital deficit equity Additional Total Common Stock paid-in Accumulated Shareholders’ Number Amount capital deficit equity In thousands USD in thousands Balance at January 1, 2023 7,122 $ 7 $ 36,541 $ ( 24,762 ) $ 11,786 Stock based compensation - - 685 - 685 Issuance of shares upon RSU vesting 21 - * - * - - Issuance of shares and warrants 3,294 3 13,884 - 13,887 Net loss - - - ( 5,562 ) ( 5,562 ) Balance at June 30, 2023 10,437 $ 10 $ 51,110 $ ( 30,324 ) $ 20,796 Three Months Ended June 30, 2023 (Unaudited) Additional Total Ordinary shares paid-in Accumulated Shareholders’ Number Amount capital deficit Equity In thousands USD in thousands Balance at April 1, 2023 10,433 $ 10 $ 50,813 $ ( 27,448 ) $ 23,375 Stock based compensation - - 337 - 337 Issuance of shares upon RSU vesting 4 - * - * - - Issuance expenses - - ( 40 ) - ( 40 ) Net loss - - - ( 2,876 ) ( 2,876 ) Balance at June 30, 2023 10,437 $ 10 $ 51,110 $ ( 30,324 ) $ 20,796 * Represents an amount less than $1 thousand The accompanying notes are an integral part of these interim condensed consolidated financial statements. - 8 - Six Months Ended June 30, 2022 (Unaudited) Additional Total Ordinary shares paid-in Accumulated Shareholders’ Number Amount capital deficit Equity In thousands USD in thousands Balance at January 1, 2022 7,122 7 34,903 ( 15,294 ) 19,616 Stock based compensation - - 1,457 - 1,457 Net loss - - - ( 5,560 ) ( 5,560 ) Balance at June 30, 2022 7,122 7 36,360 ( 20,854 ) 15,513 Three Months Ended June 30, 2022 (Unaudited) Additional Total Ordinary shares paid-in Accumulated Shareholders’ Number Amount capital deficit Equity In thousands USD in thousands Balance at April 1, 2022 7,122 7 35,675 ( 18,082 ) 17,600 Balance 7,122 7 35,675 ( 18,082 ) 17,600 Stock based compensation - - 685 - 685 Net loss - - - ( 2,772 ) ( 2,772 ) Balance at June 30, 2022 7,122 7 36,360 ( 20,854 ) 15,513 Balance 7,122 7 36,360 ( 20,854 ) 15,513 The accompanying notes are an integral part of these interim condensed consolidated financial statements. - 9 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 2023 2022 2023 2022 Six months ended June 30, Three months ended June 30, 2023 2022 2023 2022 Unaudited USD in thousands CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ( 5,562 ) ( 5,560 ) ( 2,876 ) ( 2,772 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation 192 103 37 53 Stock based compensation 685 1,457 337 685 Severance pay asset and liability 54 51 - 51 Profit from exchange differences from operating lease liability ( 22 ) ( 50 ) ( 13 ) ( 40 ) Loss from exchange differences on cash and cash equivalents 53 327 49 286 Interest income in respect of deposits ( 189 ) ( 23 ) ( 231 ) ( 10 ) CHANGES IN OPERATING ASSET AND LIABILITY ITEMS: Increase in accounts receivable ( 98 ) ( 91 ) ( 97 ) ( 85 ) Increase in inventory ( 94 ) ( 442 ) ( 31 ) ( 419 ) Decrease (increase) in other current assets ( 387 ) 33 ( 104 ) 6 Decrease in contract fulfillment assets 119 60 59 60 Decrease in ROU asset 94 132 50 113 Increase in account payables 477 206 409 82 Increase (decrease) in contract liabilities ( 683 ) 1,435 ( 455 ) ( 181 ) Decrease in operating lease liability ( 110 ) ( 125 ) ( 62 ) ( 109 ) Increase in accrued compensation expenses 89 21 152 1 Increase (decrease) in related parties ( 11 ) ( 17 ) 39 - Increase in other account payable 310 85 128 105 Net cash flows used in operating activities ( 5,083 ) ( 2,398 ) ( 2,609 ) ( 2,174 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 57 ) ( 42 ) ( 42 ) ( 18 ) Withdrawal of short terms deposits 3,000 5,000 - 5,000 Investment in short term deposits ( 18,500 ) ( 3,500 ) ( 3,500 ) ( 3,500 ) Net cash flows provided by (used in) investing activities ( 15,557 ) 1,458 ( 3,542 ) 1,482 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of shares and warrants 13,913 - ( 64 ) - Net cash flows provided by used in financing activities 13,913 - ( 64 ) - DECREASE IN CASH AND CASH EQUIVALENTS ( 6,727 ) ( 940 ) ( 6,215 ) ( 692 ) LOSS FROM EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS ( 53 ) ( 327 ) ( 49 ) ( 286 ) BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 10,099 8,581 9,583 8,292 BALANCE OF CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 3,319 7,314 3,319 7,314 - 10 - Non cash activities - Six months ended June 30, Three months ended June 30, 2023 2022 2023 2022 Unaudited USD in thousands Non cash activities Unpaid issuance expenses 26 - ( 24 ) - Right-of-use assets obtained in exchange for operating lease liabilities 465 81 382 35 Termination of right-of-use assets in exchange for cancellation of operating lease obligations ( 25 ) - ( 25 ) The accompanying notes are an integral part of these interim condensed consolidated financial statements. - 11 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – GENERAL : a . Odysight.ai.Inc (the “Company”), formerly known as ScoutCam Inc., 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 company”. The Company’s wholly owned subsidiary, Odysight.ai Ltd (“Odysight.ai”.), formerly known as ScoutCam Ltd., was formed in the State of Israel on January 3, 2019, as a wholly-owned subsidiary of Medigus Ltd. (“Medigus”), an Israeli company traded on the Nasdaq Capital Market, and commenced operations on March 1, 2019. In December 2019, Medigus and Odysight.ai consummated an asset transfer agreement, under which Medigus transferred and assigned certain assets and intellectual property rights related to its miniaturized imaging business to Odysight.ai. On December 30, 2019, the Company and Medigus consummated a securities exchange agreement (the “Exchange Agreement”), pursuant to which Medigus delivered 100 % of its holdings in Odysight.ai to the Company in exchange for shares of the Company’s common stock representing 60 % of the issued and outstanding share capital of the Company immediately upon the consummation of the Exchange Agreement. During 2020 - 2023 Medigus has decreased its holdings in the Company such that as of March 31, 2023, Medigus owned 18.45 % of the Company’s outstanding common stock. On June 1, 2023, Medigus sold all its holdings in the Company to existing shareholders and to Chairman of the Board and CEO of the Company. On June 5, 2023, the Company filed with the Nevada Secretary of State a Certificate of Amendment to the Registrant’s Articles of Incorporation to change its name from “ScoutCam Inc.” to “Odysight.ai Inc.”, effective June 5, 2023. The Company, through Odysight.ai, is engaged in the development, production and marketing of Predictive Maintenance (PdM) and Condition Based Monitoring (CBM) technologies, providing visual sensing and AI-based video analytics solutions for systems in the aviation, maritime, industrial non-destructing-testing industries, transportation, and energy industries. Some of the Company’s products utilize micro visualization technology in medical devices for minimally invasive medical procedures. - 12 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – GENERAL (continued): b. Since incorporation of Odysight.ai and through June 30, 2023, the Company accumulated a deficit of approximately $ 30.3 million and its activities have been funded mainly by its shareholders. The Company’s management believes the Company’ cash and cash resources will allow the Company to fund its operating plan through at least the next 12 months from the filing date of these Interim Condensed Consolidated Financial Statements. However, the Company expects to continue to incur significant research and development and other costs related to its ongoing operations, requiring the Company to obtain additional funding in order to continue its future operations until becoming profitable. NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES a. Unaudited Interim Financial Statements The accompanying unaudited interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Group’s Annual Report on Form 10-K for the year ended December 31, 2022. b. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. c. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, deferred taxes, inventory impairment, stock-based compensation, as well as in estimates used in applying the revenue recognition policy. Actual results may differ from those estimates. - 13 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued): d. Significant Accounting Policies The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements. e. Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Group’s condensed consolidated financial statements. NOTE 3 – LEASES : In December 2020, Odysight.ai entered into a lease agreement for office space in Omer, Israel (“original space”), with the 36-month term for such agreement beginning on January 1, 2021 . In March 2021, Odysight.ai entered into a lease agreement for additional office space in Omer, Israel (“additional space”), with the term for such agreement is ending December 31, 2023 . On June 25, 2023, Odysight.ai entered into an amendment to these agreements, pursuant to which the lease for the additional office space will be shortened and end on June 30, 2023 and the lease for original space will be extended for an additional five years until December 31, 2028. It was also agreed that Odysight.ai has an option to terminate the agreement for the original space after three years. Monthly lease payments under the agreement for the original space are approximately $ 7 thousand. In December 2022, Odysight.ai entered into a lease agreement for office space in Ramat Gan, Israel. The agreement is for 12 months beginning on December 14, 2022 and the Company has an option to extend the lease period for an additional one year. The Company does not 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 agreement are $ 3 thousand. Supplemental cash flow information related to operating leases was as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES June 30, 2023 June 30, 2022 Six months ended June 30, 2023 June 30, 2022 USD in thousands Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 119 136 As of June 30, 2023, the Company’s operating leases had a weighted average remaining lease term of 0.9 years and a weighted average discount rate of 6 %. Future lease payments under operating leases as of June 30, 2023 were as follows: SCHEDULE OF MATURITIES LEASE LIABILITIES UNDER OPERATING LEASES Operating leases USD in thousands Remainder of 2023 120 2024 231 2025 188 2026 83 Total future lease payments 622 Less imputed interest ( 51 ) Total lease liability balance 571 - 14 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 – EQUITY : a. Private Placement On March 16, 2023, the Company consummated a 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 aggregated amount of 3,294,117 units (collectively, the “Units”), at a purchase price of $ 4.25 per Unit, and for an aggregated purchase price of $ 14,000,000 . Each Unit consists of: (i) one share of the Company’s common stock with par value of $ 0.001 per share (the “Common Stock”) and (ii) one warrant to purchase one share of Common Stock with an exercise price of $ 5.50 (the “Warrants”). The Warrants are immediately exercisable and will expire three years from the date of issuance and will be subject to customary adjustments. Warrants: As of June 30, 2023, the Company had the following outstanding warrants to purchase common stock: SCHEDULE OF STOCK WARRANTS OUTSTANDING TO PURCHASE COMMON STOCK Number of Shares of Exercise Price common stock Issuance Expiration Per Share Underlying Warrant Date Date ($) Warrants March 2021 Warrant March 29, 2021 March 31, 2026 10.35 2,469,156 March 2023 Warrant March 27, 2023 March 26, 2026 5.50 3,294,117 5,763,273 - 15 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 – EQUITY (continued): b. Stock-based compensation to employees, directors and service providers: In February 2020, the Company’s Board of Directors approved the 2020 Share Incentive Plan (the “Plan”). The Plan initially included a pool of 580,890 shares of common stock for grant to Company employees, consultants, directors and other service providers. On March 15, 2020, the Company’s Board of Directors approved an increase to the option pool pursuant to the Plan by an additional 64,099 shares of common stock. On June 22, 2020, the Company’s Board of Directors approved an increase to the option pool pursuant to the Plan by an additional 401,950 shares of common stock. During the second quarter of 2021, the Company’s Board of Directors approved an increase to the option pool pursuant to the Plan by an additional 777,778 shares of common stock. During the first quarter of 2023, the Company’s Board of Directors approved an increase to the option pool pursuant to the Plan by an additional 1,000,000 shares of common stock. The Plan is designed to enable the Company to grant options to purchase shares of common stock and RSUs under various and different tax regimes including, without limitation: (i) pursuant and subject to Section 102 of the Israeli Tax Ordinance or any provision which may amend or replace it and any regulations, rules, orders or procedures promulgated thereunder and to designate them as either grants made through a trustee or not through a trustee; and (ii) pursuant and subject to Section 3 (i) of the Israeli Tax Ordinance. Stock option activity During the six months ended June 30, 2023, the Company granted 57,000 options pursuant to the Plan. The fair value of each option was estimated as of the date of grant or reporting period using the Black-Scholes option-pricing model, using the following assumptions: SCHEDULE OF SHARE-BASED PAYMENT, STOCK OPTIONS, VALUATION ASSUMPTIONS Six months ended June 30, 2023 Underlying value of ordinary shares ($) 5 Exercise price ($) 4.5 Expected volatility (%) 37.5 % Term of the options (years) 7 Risk-free interest rate 3.94 % The cost of the benefit embodied in the options granted during the six months ended June 30, 2023, based on their fair value as of the grant date, is estimated to be approximately $ 142 thousand. These amounts will be recognized in the statements of operations and comprehensive income over the vesting period. The following table summarizes stock option activity for the six months ended June 30, 2023: SCHEDULE OF STOCK OPTION ACTIVITY For the Six months ended June 30, 2023 Weighted average Amount of exercise options price $ Outstanding at beginning of period 1,560,040 3.64 Granted 57,000 4.50 Fortfeited ( 20,365 ) 3.47 Outstanding at end of period 1,596,675 3.68 Vested at end of period 978,486 3.11 - 16 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 – EQUITY (continued): Restricted stock unit (“RSU”) activity Each 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. The following table summarizes RSU activity for the three months ended June 30, 2023: SCHEDULE OF STOCK OPTION ACTIVITY For the Six months ended June 30, 2023 Weighted Average Amount of Grant Date Fair Value RSUs per Share $ Outstanding at beginning of period 50,000 6.32 Vested ( 20,830 ) 6.32 Unvested and Outstanding at end of period 29,170 6.32 The following table sets forth the total stock-based payment expenses resulting from options granted, included in the statements of operation and comprehensive income: SCHEDULE OF TOTAL SHARE-BASED PAYMENT EXPENSES Six months ended June 30, 2023 USD in thousands Cost of revenues 5 Research and development 265 Sales and marketing expenses 62 General and administrative 353 Total expenses 685 - 17 - ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – REVENUES : Disaggregation of revenue SCHEDULE OF DISAGGREGATION OF REVENUE 2023 2022 Six months ended June 30, 2023 2023 2022 USD in thousands Development Services ( * ) 211 106 Products 766 266 Revenue 977 372 (*) 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 and moved from the development phase of the project to its production phase. As a result, during the six months ended June 2023, the Company recognized development services revenues and related development costs that had been previously deferred, in the amount of $ 211 thousand. The amount was recognized based on the expected manufacturing term of the product, which the Company estimates at seven years . In addition, following the commencement of the production phase, the Company recognized product revenues of $ 722 thousand during the six months ended June 2023 from the sale of units of the product developed in the context of these development services. Contract fulfillment assets and Contract liabilities: The Company’s contract fulfillment assets and contract liabilities as of June 30, 2023 and December 31, 2022 were as follows: SCHEDULE OF CONTRACT FULFILLMENT ASSETS AND CONTRACT LIABILITIES June 30, December 31, 2023 2022 USD in thousands Contract fulfillment assets 1,376 1,495 Contract liabilities 2,961 3,644 Contract liabilities include advance payments, which are primarily related to advanced billings for development services. The change in contract fulfillment assets: June 30, December 31, 2023 2022 USD in thousands Balance at beginning of year 1,495 1,675 Contract costs recognized during the period ( 119 ) ( 180 ) Balance at end of year 1,376 1,495 The change in contract liabilities: June 30, December 31, 2023 2022 USD in thousands Balance at beginning of year 3,644 2,420 Deferred revenue relating to new sales - 1,613 Revenue recognized during the year ( 683 ) ( 389 ) Balance at end of year 2,961 3,644 Remaining Performance Obligations Remaining Performance Obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of June 30, 2023, the total RPO amounted to $ 2.9 million, which the Company expects to recognize over the expected manufacturing term of the product. - 18 - NOTE 6 – ODYSIGHT.AI INC. (Formerly known as ScoutCam Inc.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - INVENTORY : Composed as follows: SCHEDULE OF INVENTORY June 30, December 31, 2023 2022 USD in thousands Raw materials and supplies 563 438 Work in progress 42 148 Finished goods 119 44 Inventory Net 724 630 During the period ended June 30, 2023, no impairment occurred. NOTE 7 – LOSS PER SHARE Basic loss per share is computed by dividing net loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares as described below. In computing the Company’s diluted loss per share, the numerator used in the basic loss per share computation is adjusted for the dilutive effect, if any, of the Company’s potential shares of common stock. The denominator for diluted loss per share is a computation of the weighted-average number of ordinary shares and the potential dilutive ordinary shares outstanding during the period. NOTE 8 – RELATED PARTIES a. Balances with related parties : SCHEDULE OF BALANCES WITH RELATED PARTIES June 30 , 2023 December 31, 2022 USD in thousands Directors (directors’ accrued compensation) 38 48 Smartec R&D Ltd. (see b below) 9 10 Related parties 47 58 b. During six months ended June 30, 2023 the Company received development services from Smartec R&D Ltd., a company owned by the Company’s CTO. Total compensation during the six months ended June 30, 2023 and June 30, 2022 were approximately $ 29 thousands and $ 55 thousands, respectively. NOTE 9 - COMMITMENTS AND CONTINGENCIES The Company received approval from the Israel Innovation Authority (previously the Office of the Chief Scientist), (the “IIA”) to support and enhance the Company’s production line and capabilities in the next 12 months until May 2024. Pursuant to the agreement with the IIA relating to the program, the Company has to pay royalties of 3% to the IIA up to the amount IIA funding received and the accrued interest r epayment of the grant is contingent upon the Company successfully completing its enhancement plans and generating sales from the enhancements preformed. The Company has no obligation to repay these grants if its enhancement plans are not completed or aborted or if it generates no sales. The Company had not yet started the enhancement plan as of June 30, 2023. On June 12, 2023, the Company received an advance from the IIA in the amount of NIS 357 thousand (approximately $ 96 thousand), which was recorded as a short term liability in the other account payable account, since the Company may need to repay this advance to IIA in case its enhancement plans will not be completed or aborted. NOTE 10 – SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. The Company identified no subsequent events as of the date that the financial statements were issued. - 19 - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Readers are advised to review the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2022. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements”. You should review the “Risk Factors” section of our Annual Report for the fiscal year ended December 31, 2022 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . Overview Overview The Company’s primary business activities during last few months were: ● Production and supply of product to a Fortune 500 multinational healthcare corporation. ● Enlarging our focus on R&D activities in the domain of I4.0 (including PdM and CBM in sectors such as aerospace, maritime energy and other heavy machinery, engines and complicated mechanics which have a need for monitoring and predictive maintenance applications). The main effect of this activity was an increase in the number of employees to enable the Company to manage the anticipated increased workload and solution development activity. Comparison of the Six months ended June, 2023 and 2022 The following table summarizes our results of operations for the six month period ended June 30, 2023 and 2022, together with the changes in those items in dollars and as a percentage: Six months ended June 30, 2023 2022 % Change Revenues 977,000 372,000 163 % Cost of Revenues 1,327,000 849,000 56 % Gross Loss (350,000 ) (477,000 ) (27 )% Research and development expenses 2,753,000 1,975,000 39 % Sales and marketing expense 669,000 446,000 50 % General and administrative expenses 2,126,000 2,452,000 (13 )% Operating Loss (5,898,000 ) (5,350,000 ) 10 % Revenues As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of customers. For the six months ended June 30, 2023, we generated revenues of $977,000, an increase of $605,000, or 163%, compared to revenues of $372,000 for the six months ended June 30, 2022. The increase in revenues was primarily due to the completion of development of the product relating to our miniature camera solution with a Fortune 500 company during the second quarter of 2022 and moving to production stage. Total revenues recorded from our miniature camera solution with the Fortune 500 company for the six months ended June 30, 2023 amounted to approximately $933,000 compared to $327,000 for the six months ended June 30, 2022. Cost of Revenues Cost of revenue is primarily comprised of cost of personnel including warehouse personnel costs, certain allocated facilities, and expenses associated with logistics and quality control. Cost of revenues for the six months ended June 30, 2023 was $1,327,000, an increase of $478,000, or 56%, compared to cost of revenues of $849,000 for the six months ended June 30, 2022. The increase was primarily due to an increase in material costs due to an increase in the number of products sold and supplied to the Fortune 500 company. Gross Loss Gross loss for the six months ended June 30, 2023 was $350,000, a decrease of $127,000, or 27%, compared to gross loss of $477,000 for the six months ended June 30, 2022. The decrease was primarily due to increase in revenues partially offset by increase in cost of revenues, as described above. Research and Development Expenses Research and development efforts are focused on new product development and on developing additional functionality for our new and existing products. These expenses primarily consist of employee-related expenses, including salaries, benefits, and stock-based compensation expense for personnel engaged in research and development functions, consulting, and professional fees related to research and development activities, prototype materials, facility costs, and other allocated expenses, which include expenses for rent and maintenance of our facility, utilities, depreciation, and other supplies. We expense research and development costs as incurred. Research and development expenses for the six months ended June 30, 2023 were $2,753,000, an increase of $778,000, or 39%, compared to $1,975,000 for the six months ended June 30, 2022. The increase was primarily due to an increase in payroll expenses from additional employee recruitments, as result of enlarging our focus on R&D activities in the domain of I4.0. We expect that our research and development expenses will increase as we continue to develop our products and service and recruit additional research and development employees to the I4.0 domain. - 20 - Sales and Marketing Expenses Sales and marketing expenses primarily consist of payroll expenses, consulting services, promotional materials, exhibitions ,demonstration equipment, and certain allocated facility infrastructure costs. Sales and marketing expenses for the six months ended June 30, 2023 were $669,000, an increase of $223,000, or 50%, compared to $446,000 for the six months ended June 30, 2022. The increase was primarily due to recent rebranding activities (including expenses related to the changing of the name of the Company which include among other designing a new logo and promotional materials). In addition, during June 2023 the Company participated on Paris Air Show, the world’s premier and largest event dedicated to the aviation and space industry. This increase was partially offset by a decrease in payroll expenses (including stock-based compensation) due to the resignation of our VP Business Development during the fourth quarter of 2022. We expect that our selling and marketing expenses will increase as we expand our selling and marketing efforts in the I4.0 domain. General and Administrative Expenses General and administrative expenses primarily consist of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor, public relations, accounting, auditing, tax services, and insurance costs. General and administrative expenses for the six months ended June 30, 2023 were $2,126,000, a decrease of $326,000, or 13%, compared to $2,452,000 for the six months ended June 30, 2022. The decrease was primarily due to stock-based compensation vesting of options and to a decrease in D&O insurance costs. Operating loss We incurred an operating loss of $5,898,000 for the six months ended June 30, 2023, an increase of $548,000, compared to operating loss of $5,350,000 for the six months ended June 30, 2022. The increase in operating loss was primarily due to an increase in expenses related to research and development and sales and marketing expenses, partially offset by a decrease in general and administrative expenses, each as described above. Cash Flows The following table sets forth the significant sources and uses of cash for the periods set forth below (in dollars): Six month ended June 30, 2023 2022 Cash used in Operating Activity (5,083,000 ) (2,398,000 ) Cash provided by (used in) Investing Activity (15,557,000 ) 1,458,000 Cash provided by Financing Activity 13,913,000 - Operating Activities Our primary uses of cash from operating activities have been for payroll expenses, research and development costs, manufacturing costs, marketing and promotional expenses, professional services cost and costs related to our facilities. We expect that our cash flows from operating activities will continue to increase due to an expected increase of expenses of our business and our working capital requirements. During the six months ended June 30, 2023, cash used in operating activities was $5.1 million, consisting of net loss of $5.5 million, an unfavorable net change in operating assets and liabilities of $0.3 million, partially offset by a non-cash benefit of $0.8 million. Our non-cash benefit consisted primarily of non-cash charges for stock-based compensation. The net change in our operating assets and liabilities primarily reflects cash outflows from changes in contract liability and other current assets, was partially offset by inflows from changes in account payables and other accounts payables. During the six months ended June 30, 2022, cash used in operating activities was $2.4 million, consisting of net loss of $5.6 million, partially offset by a non-cash benefit of $1.5 million, a favorable net change in operating assets and liabilities of $1.3 million and loss from exchange differences on cash and cash equivalents of $0.3 million. Our non-cash benefit consisted primarily of non-cash charges of $1.5 million for stock-based compensation. The net change in our operating assets and liabilities primarily reflects cash inflows from changes in contract liability of $1.4 million. - 21 - Investing Activities During the six months ended June 30, 2023, cash used in investing activities was $15.6 million, consisting mainly of investment, net on short-term deposits. For the six months ended June 30, 2022, net cash flows provided by investing activities was $1.5 million consisting mainly of withdrawal of short terms deposits. Financing Activities During the six months ended June 30, 2023, cash provided by financing activities was $13.9 million, consisting of cash proceeds from issuance of shares and warrants, net of issuance costs. Comparison of the three months ended June 30, 2023 and 2022 The following table summarizes our results of operations for the three months period ended June 30, 2023, and 2022, together with the changes in those items in dollars and as a percentage: Three months ended June 30, 2023 2022 % Change Revenues 674,000 370,000 82 % Cost of Revenues 777,000 561,000 39 % Gross Loss (103,000 ) (191,000 ) (46 )% Research and development expenses 1,355,000 1,021,000 33 % Sales and marketing expense 493,000 203,000 143 % General and administrative expenses 1,168,000 1,166,000 - % Operating Loss (3,119,000 ) (2,581,000 ) 21 % Revenues For the three months ended June 30, 2023, we generated revenues of $674,000, an increase of $304,000, or 82%, from the three months ended June 30, 2022. The increase in revenues was primarily due to the completion of development of the product relating to our miniature camera solution with a Fortune 500 company and moving to production stage. Total revenues recorded from our miniature camera solution with the Fortune 500 company for the three months ended June 30, 2023 amounted to approximately $645,000, compared to $327,000 for the three months ended June 30, 2022. Cost of Revenues Cost of revenue is primarily comprised of cost of personnel including warehouse personnel costs, certain allocated facilities, and expenses associated with logistics and quality control. Cost of revenues for the three months ended June 30, 2023 was $777,000, an increase of $216,000, or 39%, compared to cost of revenues of $561,000 for the three months ended June 30, 2022. The increase was primarily due to an increase in material costs due to an increase in the number of products sold and supplied to the Fortune 500 company. Gross Loss Gross loss for the three months ended June 30, 2023 was $103,000, a decrease of $88,000, or 46%, compared to gross loss of $191,000 for the three months ended June 30, 2022. The decrease was primarily due to increase in revenues partially offset by increase in cost of revenues, both as described above. - 22 - Research and Development Expenses Research and development efforts are focused on new product development and on developing additional functionality for our new and existing products. These expenses primarily consist of employee-related expenses, including salaries, benefits, and stock-based compensation expense for personnel engaged in research and development functions, consulting, and professional fees related to research and development activities, prototype materials, facility costs, and other allocated expenses, which include expenses for rent and maintenance of our facility, utilities, depreciation, and other supplies. We expense research and development costs as incurred. Research and development expenses for the three months ended June 30, 2023 were $1,355,000, an increase of $334,000, or 33%, compared to $1,021,000 for the three months ended June 30, 2022. The increase was primarily due to an increase in payroll expenses from additional employee recruitments, as result of enlarging our focus on R&D activities in the domain of I4.0. We expect that our research and development expenses will increase as we continue to develop our products and service and recruit additional research and development employees to the I4.0 domain. Sales and Marketing Expenses Sales and marketing expenses primarily consist of payroll expenses, consulting services, promotional materials, exhibitions ,demonstration equipment, and certain allocated facility infrastructure costs. Sales and marketing expenses for the three months ended June 30, 2023 were $493,000, an increase of $290,000, or 143%, compared to $203,000 for the three months ended June 30, 2022. The increase was primarily due to recent rebranding activities (including mainly expenses related to the changing of the name of the Company which include among other designing a new logo and promotional materials). In addition, during June 2023 the Company participated in the Paris Air Show, the world’s premier and largest event dedicated to the aviation and space industry. We expect that our selling and marketing expenses will increase as we expand our selling and marketing efforts in the I4.0 domain. General and Administrative Expenses General and administrative expenses primarily consist of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor, public relations, accounting, auditing, tax services, and insurance costs. General and administrative expenses for the three months ended June 30, 2023 were $1,168,000, an increase of $2,000, compared to $1,166,000 for the three months ended June 30, 2022. Operating loss We incurred an operating loss of $3,119,000 for the three months ended June 30, 2023, an increase of $538,000, compared to operating loss of $2,581,000 for the three months ended June 30, 2022. The increase in operating loss was primarily due to increases in expenses related to research and development and sales and marketing expenses. - 23 - Cash Flows The following table sets forth the significant sources and uses of cash for the periods set forth below (in dollars): Three month ended June 30, 2023 2022 Cash used in Operating Activity (2,609,000 ) (2,174,000 ) Cash provided by (used in) Investing Activity (3,542,000 ) 1,482,000 Cash used in Financing Activity (64,000 ) - Operating Activities Our primary use of cash from operating activities have been for payroll expenses, research and development costs, manufacturing costs, marketing and promotional expenses, professional services cost and costs related to our facilities. We expect that our cash flows from operating activities will continue to be increase due to the expected increase in spending on our business and our working capital requirements. During the three months ended June 30, 2023, cash used in operating activities was $2.6 million, consisting of net loss of $2.9 million, a favorable net change in operating assets and liabilities of $0.1 million and a non-cash benefit of $0.2 million. Our non-cash benefit consisted primarily of non-cash charges of $0.3 million for stock-based compensation. During the three months ended June 30, 2022, cash used in operating activities was $2.2 million, consisting of net loss of $2.8 million and an unfavorable net change in operating assets and liabilities of $0.4 million partially offset by a non-cash benefit of $0.7 million, and loss from exchange differences on cash and cash equivalents of $0.3 million. Our non-cash benefit consisted primarily of non-cash charges of $0.7 million for stock-based compensation. The net change in our operating assets and liabilities primarily reflects cash inflows from changes in inventory of $0.4 million. Investing Activities For the three months ended June 30, 2023, net cash flows used in investing activities was $3.5 million, consisting mainly of investment, net on short-term deposits. For the three months ended June 30, 2022, net cash flows provided by investing activities was $1.5 million consisting mainly of withdrawal of short terms deposits. Financing Activities For the three months ended June 30, 2023, net cash flows used in financing activities was $64,000, consisting of issuance expenses. Liquidity and Capital Resources As of June 30, 2023, we had cash and cash equivalents of $3.3 million and $18.7 million of short-term deposits compared to cash and cash equivalents $10.1 million and $3.0 million of short-term deposits as of December 31, 2022. In addition, as of June 30, 2023 we incurred an accumulated deficit of approximately $30.3 million, compared to $24.8 million as of December 31, 2022. Our primary sources of liquidity to date have been from fund raisings and warrant exercises. Additional Cash Requirements We plan to continue to invest for long-term growth, and therefore we expect that our expenses will increase. We currently believe that our existing cash and cash equivalents and short-term deposits, as of August 14, 2023, will allow us to fund our operating plan through at least the next 12 months. We expect our expenses will increase in connection with our ongoing activities, particularly as we continue the research and development and the scale up process of our I4.0 solutions. We expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. Furthermore, we will continue to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. We may raise these funds through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our common stock. There is no assurance that we will be able to maintain operations at a level sufficient for investors to obtain a return on their investment in our common stock, or that we will be able to raise sufficient capital required to implement our business plan on acceptable terms, if at all. Even if we are successful in raising sufficient capital to implement our business plan, we will, most likely, continue to be unprofitable for the foreseeable future. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. - 24 - Off-Balance Sheet Arrangements None. Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, we are not required to provide the information requested by this Item. Item 4. Controls and Procedures. Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Exchange Act Rule 13a-15(e). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. No change in our internal control over financial reporting, as defined in Exchange Act Rule 13a-15(e), occurred during the fiscal quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. - 25 - PART II- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. Our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows. ITEM 1A. RISK FACTORS. There have been no material changes from the information set forth in “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31,2022 as filed with the SEC on March 28, 2023. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES There have been no unregistered sales of equity securities in addition to the sales provided under Form 8-K as filed with the SEC during the recent fiscal quarter ended June 30, 2023. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURE Not applicable. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS. (a) The following documents are filed as exhibits to this Quarterly Report or incorporated by reference herein. Exhibit Number Description 3.1.1 Amended and Restarted Articles of Incorporation, effective as of June 4,2023 (incorporated by reference to Exhibit 3.1.1 to our Registration Statement on Form S-1 filed with the SEC on July 17, 2023) 3.2.1 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2.1 to our Registration Statement on Form S-1 filed with the SEC on July 17, 2023) 31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document 101.INS Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) * Filed herewith. ** Furnished herewith. - 26 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: August 14, 2023 ODYSIGHT.AI INC By: /s/ Yehu Ofer Name: Yehu Ofer Title: Chief Executive Officer Odysight.ai.Inc By: /s/ Tanya Yosef Name: Tanya Yosef Title: Chief Financial Officer Odysight.ai.Inc - 27 -