What changed in this filing

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Item 1. Business

2026-03-19 compared with 2025-03-26 · 281 added, 312 removed, 315 unchanged (65% of the section changed)

We are a pioneer in the development,

production and marketing of innovative visual monitoring artificial intelligence, or AI, solutions that deploy small visual sensors to

monitor critical safety components in hard-to-reach locations and harsh environments, across various PdM, and CBM use cases applied both

for the civil and defense sectors.

We aim to be the industry benchmark for real-time, visual-based machine and infrastructure health monitoring

and predictive maintenance analysis through AI and machine learning data analytics.

aim to become the industry standard for real time, visual based, health monitoring using AI/ML data analytics.

are a pioneer in the development, production and marketing of an innovative visualization AI solution that deploys small cameras to monitor

critical safety components in hard-to-reach locations and harsh environments, across various PdM, and CBM use cases.

We aim to be the

industry benchmark for real-time, visual-based machine and infrastructure health monitoring through AI and machine learning data analytics.

TruVision solution streams visual information to our processing unit, an in-platform, high-performance AI/machine learning

computer, allowing maintenance and operations teams, on the ground and during operations, visibility into areas that are

inaccessible under normal operating conditions or where conditions are not suitable for continuous real-time monitoring.

and informative data, continuously collected and analyzed by our solution on our secured cloud, provides customers with real-time

failure / anomaly detection, events and data recordings, interfacing with platform mission systems and providing real-time alerts

and streaming video or images, all while training our algorithms for ongoing improved accuracy and prediction capabilities.

customers benefit from increased safety, a reduction in downtime, a more efficient data driven operation, increased

mission readiness and lower maintenance costs for their monitored platforms, using the prediction capabilities of our solution to

efficiently plan maintenance work on monitored components.

solution enhances safety and minimizes downtime by enabling real-time visual analysis of any failure occurrences.

Additionally, we leverage

advanced big data analytics to offer predictive insights throughout the entire system lifecycle.

This includes efficient spare parts

management and intelligent performance predictions, ensuring optimal system reliability and efficiency.

Odysight TruVision solution is successfully used by NASA, as we seek to reshape the aerospace, Industry 4.0, transportation and

energy markets with a vison-based technology leveraging AI and machine learning to deliver innovative solutions that transform maintenance

As used in this Annual Report, Industry 4.0, or I4.0, refers to the integration of advanced technologies into manufacturing and industrial

processes to create smart, interconnected systems for improved efficiency and productivity.

Odysight solutions

are already deployed in the aviation and medical sectors.

Our customers include the Israeli Air Force, the Israeli Ministry of

Defense, France-based Safran Aircraft Engines, a global international defense contractor, a leading Fortune 500 medical company as

well as NASA, who came back to us for a repeat order.

Our Solutions

solutions stream visual information to our processing unit, an in-platform, high-performance AI/ML (machine learning) computer,

allowing maintenance and operations teams, on the ground and during operations, visibility into areas that are inaccessible under

normal operating conditions or where conditions are not suitable for continuous monitoring.

The data, continuously

collected and analyzed by our solution on our secured cloud, provides customers with real-time failure / anomaly detection, events

and data recordings, interfacing with platform mission systems and providing real-time alerts and streaming video or images, all

while training our algorithms for ongoing improved accuracy and prediction capabilities.

Our customers benefit from increased

safety, a reduction in downtime, a more efficient data driven operation, increased mission readiness and lower maintenance costs for

their monitored platforms, using the prediction capabilities of our solution to efficiently plan maintenance work on monitored

solution aims to enhance safety and minimize costly downtime by enabling real-time visual analysis of any failure occurrences

and to leverage advanced big data analytics to offer predictive insights throughout the entire system lifecycle.

This includes

efficient spare parts management and intelligent performance predictions, ensuring optimal system reliability and efficiency.

solutions are already deployed in the industrial, automotive and aviation sectors.

Our customers include the Israeli Air Force, the

Israeli Ministry of Defense, a global international defense contractor, NASA, and Israel Railways Ltd., as well as a leading

European provider of elevator monitoring solutions.

Historically, our revenue stream has been derived mainly from the medical

Our 2024 financial results reflect orders and agreements from both the medical and aerospace sectors.

We have recently

secured several contracts for our PdM and CBM systems with major government clients and defense and aviation companies and our

backlog as of December 31, 2024 of approximately $15 million (compared to approximately $2.6 million as of December 31, 2023)

reflects mostly those contracts.

vision-based sensor technology

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Sensor Technology :

This innovative approach uses micro cameras and specialized AI models to monitor and analyze system health

in real-time, even in hard-to-reach and harsh environments.

This innovative approach uses micro sensors to monitor and analyze system health condition in real-time, designed

for hard-to-reach and harsh environments.

and Machine Learning :

We employ sophisticated proprietary AI algorithms to predict potential hazards, optimize maintenance schedules

and enhance operational efficiency.

We employ sophisticated proprietary AI algorithms and models to predict potential hazards, optimize maintenance

schedules and enhance operational efficiency.

High-Resolution

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Our solution provides detailed visual data, enabling accurate detection and monitoring of issues such as liquid

leaks and bearing malfunctions.

The collected data is continuously analyzed on a secure cloud platform, offering customers both raw data and processed

insights for improved decision-making.

leaks, cracks, deformation and many other use cases.

The collected data is continuously analyzed on a secure cloud platform or “On Prem”, offering customers

both raw data and processed insights for improved decision-making.

vision-based sensing technology provides solutions across diverse PdM and CBM markets, and in harsh conditions as demonstrated in a variety

of environments, including outer space during NASA’s Robotic Refueling Mission, or RRM3, the Israeli Air Force, the Israeli Ministry

of Defense, a global international defense contractor and a leading Fortune 500 medical company.

of environments, including outer space during NASA’s Robotic Refueling Mission, or RRM3.

“Apache” Use Case

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events, preventing such critical future events.

solution was further developed to monitor safety critical and other components on the aircraft and today the solution has been procured for

the SH-60 Seahawk helicopter and deployed on the AH-64 Apache and other operational platforms in Israel and globally.

TruVision System Architecture

solution was further developed to monitor safety critical and other components on the aircraft and today the solution has been procured

for the SH-60 Seahawk helicopter and deployed on the AH-64 Apache and other operational platforms in Israel and globally.

System Architecture

specialized software collects, processes, detects, and records real time information from multiple sensors.

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Our modular integrated solution is comprised of a processing

unit and multiple vision-based sensors that are integrated into hard-to-reach areas and monitoring safety critical components in real

The solution is designed as an open architecture that supports both a full solution by the Odysight TruVision or integration

with existing systems.

unit and multiple vision-based sensors that are integrated into hard-to-reach areas and monitoring safety critical components in

This open architecture supports both our full solution or integration with existing

Business Model and Value Proposition

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Our value proposition is based on providing actual condition of a platform in real-time, offering

significant value through enhanced safety, efficiency and cost savings.

Our big data analytics provide predictive insights regarding

an entire system life cycle, spare parts management and smart prediction of system performance.

The operational, financial and quality

benefits of using the Odysight TruVision solution include the following:

The Odysight TruVision solution enhances worker safety without sacrificing productivity and while minimizing planned

and unexpected downtime.

This is made possible by early detection of potential failures, which can prevent accidents and help to ensure

the aircraft operates within safe parameters.

In addition, our technology can endure extreme environments and has wireless capability,

features that allow maintenance teams to conduct monitoring and visual inspection remotely, with such continuous monitoring and real-time

analysis on the ground and in-flight operations reducing the risk of unexpected malfunctions.

Our smarter approach collects data by placing

multiple cameras on or near the moving parts of machines, allowing workers to conduct remote monitoring to assess the condition of a

component or machine without having to touch the mechanical parts themselves, eliminating potential hazards of being exposed to those

parts, including extreme environmental conditions, rotating equipment and accidents while climbing ladders, among others.

significant value through enhanced safety, efficiency and cost savings and transition from periodic maintenance to condition-based maintenance.

Our data analytics provide predictive insights regarding an entire system life cycle, spare parts management and smart prediction

of system performance.

The operational, financial and quality benefits of using our solutions include the following:

\ Our solutions enhance worker safety without sacrificing productivity, while minimizing planned and unexpected downtime.

This is made possible by early detection of potential failures, which can prevent accidents and help to ensure the aircraft operates

within safe parameters.

In addition, our technology can endure extreme environments and has wireless capability, features that allow

maintenance teams to conduct monitoring and visual inspection remotely, with such continuous monitoring and real-time analysis on the

ground and in-flight operations reducing the risk of unexpected malfunctions.

Our smarter approach collects data by placing multiple

cameras on or near the moving parts of machines, allowing workers to conduct remote monitoring to assess the condition of a component

or machine without having to touch the mechanical parts themselves, eliminating potential hazards of being exposed to those parts, including

extreme environmental conditions, rotating equipment and accidents while climbing ladders, among others.

Efficiency and Mission Capability.

On average, organizations are estimated to lower their machine failure rates by 70 percent

using a predictive maintenance program.

Organizations are estimated to lower their machine failure rates significantly by using

predictive maintenance programs.

Conducting condition-based monitoring using technologies that can gather and distribute sensor

data enables maintenance teams to obtain real-time data on the health of a mechanical system, providing automated and precise detection

of issues that minimizes the time needed for manual and human visual inspections and increases the mission capability of the platform.

data enables maintenance teams to obtain real-time data on the health of a mechanical system, providing automated and precise

detection of issues that minimizes the time needed for manual and human visual inspections, and increases the mission capability of

the platform.

This provides enough forewarning to apply the appropriate maintenance tasks that will prevent failure.

For example, our vision-based

sensor reduces or replaces a significant part of the visual inspections required by maintenance teams in the aviation or transportation

industries (i.e., checks for completeness, checks for existence, checks for proper installation, etc.), allowing technicians that oversee

rotating and other equipment to conduct real-time monitoring of bearing malfunctions and deformations while the machine is in operation.

Our technology can detect minuscule deformations that will eventually leave the bearings vulnerable to surface fatigue.

AI algorithms

can then forecast the time of failure.

This not only helps ensure that the bearings are replaced, when necessary, but also prevents collateral

damage to nearby components, machines or systems that would occur should the bearings fail.

Predictive maintenance is estimated to cut maintenance costs by 5 to 10 percent.

This is savings on costs related to

inventory management, the personnel needed to install replacement components and more.

Under conventional maintenance programs, in cases

of emergencies and unexpected machine breakdown, these costs can multiply.

With the foresight predictive maintenance provides into the

health of a machine, organizations can reduce the frequency of unexpected machine breakdowns and optimized maintenance schedules, extending

the lifespan of aircraft components and lowering replacement costs.

Using predictive maintenance in lieu of other maintenance approaches

that rely on rigid maintenance scheduling also means that costs are saved on servicing and replacing machine components that are still

in good working order.

our vision-based sensor reduces or replaces a significant part of the visual inspections required by maintenance teams in the

aviation or transportation industries (i.e., checks for completeness, checks for existence, checks for proper installation, etc.),

allowing technicians that oversee rotating and other equipment to conduct real-time monitoring of bearing malfunctions and

deformations while the machine is in operation.

Our technology can detect minuscule deformations that will eventually leave the

bearings vulnerable to surface fatigue.

AI algorithms can then forecast the estimated time of failure.

This not only helps ensure

that the bearings are replaced, when necessary, but also prevents collateral damage to nearby components, machines or systems that

would occur should the bearings fail.

Predictive maintenance is estimated to cut maintenance costs on average by 25 percent.

These savings are on

costs related to inventory management, the personnel needed to install replacement components and more.

Under conventional

maintenance programs, in cases of emergencies and unexpected machine breakdown, these costs can multiply.

With the foresight

predictive maintenance provides into the health of a machine, organizations can reduce the frequency of unexpected machine

breakdowns and optimized maintenance schedules, extending the lifespan of aircraft components and lowering replacement costs.

predictive maintenance in lieu of other maintenance approaches that rely on rigid maintenance scheduling also means that costs are

saved on servicing and replacing machine components that are still in good working order.

Accuracy and Reliability.

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Our vision-based system and analysis

ensures consistent and objective detection of issues, reducing human error and enhancing the reliability of maintenance predictions and

ensure consistent and objective detection of issues, reducing human error and enhancing the reliability of maintenance predictions and

interventions.

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The analysis of machine data from our vision-based sensing solution and analytics will highlight the situations in which components fail

or breakdown frequently.

or break down frequently.

Maintenance teams can use this information to minimize breakdowns.

Unexpected downtime is expensive, and can be one of the largest money drains in Industry 4.0 organizations.

the unplanned downtime of machines is estimated to cost industrial manufacturers as much as $50 billion annually.

The Odysight TruVision

solution has been designed to eliminate unplanned downtime and allows maintenance teams to keep necessary, planned downtime to a

minimum and at a more convenient, less disruptive schedule.

This is a stark difference from other maintenance approaches, such as preventive

maintenance, that can increase downtime by implementing either insufficient or excessive maintenance.

Unexpected downtime is expensive and can be one of the largest money drains in Industry 4.0 organizations (as used

in this Annual Report, Industry 4.0, or I4.0, refers to the integration of advanced technologies into manufacturing and industrial

processes to create smart, interconnected systems for improved efficiency and productivity).

For example, Siemens estimates that the

world’s 500 largest companies lose almost $1.4 trillion annually through unplanned downtime, which is equivalent to

approximately 11% of their revenues.

Our solutions have been designed to eliminate unplanned downtime and allows maintenance teams

to keep necessary, planned downtime to a minimum and at a more convenient, less disruptive schedule.

This is a stark difference from

other maintenance approaches, such as preventive maintenance, which can increase downtime by implementing either insufficient or

excessive maintenance.

Training and Support .

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current business model is to identify customers interested in adding real-time visualization and analytics to their existing or new

This model includes the initial kit sale including vision-based sensors, processing unit with embedded software and basic

set of algorithms.

This strategy allows for immediate revenue generation from system sales, and also set the base to create a steady

stream of recurring revenue from multi-year software subscriptions services.

This model includes the initial kit sale including vision-based sensors, and processing unit with embedded software and

basic set of algorithms.

This strategy allows for immediate revenue generation from system sales, while also setting a base that we

believe will allow us in the future to create a steady stream of recurring revenue from multi-year software subscriptions services

when the warranty expires.

solution provides upsell opportunities including expanding algorithmic functionalities, additional applications, fleet management solutions

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have commercial agreements and purchase orders for hundreds of airborne systems of various original equipment manufacturers, or OEMs,

in aerospace and have completed successful demonstration projects for various industrial users.

We are in the process of developing additional

applications for our vision-based sensing portfolio, which are anticipated to provide significant benefits to our customers.

believe the Odysight TruVision solution has potential application across diverse industry verticals as it is a core technology.

benefits of vision-based sensor technology become more widely accepted, we believe there are significant market opportunities available

for our product offerings.

on industry reports and our estimates, the global predictive maintenance market was approximately $8 billion in 2024 and is

projected to grow to approximately $34 billion by 2030, at a compound annual growth rate of approximately 30%.

In the aerospace

market alone, which constitutes commercial aviation, military rotorcraft, fixed wing aircraft and UAVs, we believe that our

Aerospace TAM is currently more than $10 billion.

We based our Aerospace TAM calculations on data from third-party industry and

governmental sources regarding the total number of units that could utilize our vision-based sensor technology and on our estimates

of an average selling price and extent of our market penetration.

We believe the TAM for other verticals we are targeting such as

Industry 4.0, transportation and energy eclipse that of aerospace.

in the aerospace industry, and have completed successful demonstration projects for various industrial users.

We are in the process of

developing additional applications for our vision-based sensing portfolio, which are anticipated to provide significant benefits to our

believe that our solutions have potential application across diverse industry verticals as it is a core technology.

As the benefits of

vision-based sensor technology become more widely accepted, we believe there are significant market opportunities available for our product

on industry reports and our estimates, the global predictive maintenance market was approximately $14 billion in 2025 and is projected

to grow to approximately $82 billion by 2031, at a compound annual growth rate of approximately 34%.

In the aerospace market alone, which

includes commercial aviation, military rotorcraft, fixed wing aircraft and UAVs, we believe that our Aerospace TAM is currently more

than $10 billion.

We based our Aerospace TAM calculations on data from third-party industry and governmental sources

regarding the total number of units that could utilize our vision-based sensor technology and on our estimates of an average selling

price and extent of our market penetration.

We believe the TAM for other verticals we are targeting such as Industry 4.0, transportation

and energy eclipse that of aerospace.

addition, the U.S.

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specialized sensors.

The Odysight TruVision solution utilizes high end device sensor technology coupled with software-defined

With this combination, we develop new solutions for industry-specific requirements, constantly expanding our product offerings.

Our solutions utilize high end device sensor technology coupled with software-defined products.

combination, we develop new solutions for industry-specific requirements, constantly expanding our product offerings.

value proposition.

We designed the Odysight TruVision solution to provide improved operating efficiency and safety, minimize

maintenance costs, reduce downtime and extend operational life.

In addition, our solution may be installed at the design stage as well

Due to these advantages, we believe that our vision-based sensor solutions are appealing to customers seeking the benefits

of condition based monitoring and predictive maintenance solutions in hard-to-reach locations and harsh environments.

long-term growth due to recurring subscription-based model.

Currently, our revenues are derived mostly from sales of the Odysight

TruVision solution.

As we expand the installed base of our solutions, we expect subscriptions for the continued support of our technology

to become the foundation of our recurring revenue for sustainable growth over time.

We design our solutions to provide improved operating efficiency and safety, minimize maintenance costs, reduce

downtime and extend operational life.

In addition, our solution may be installed at the design stage as well as retrofit.

advantages, we believe that our vision-based sensor solutions are appealing to customers seeking the benefits of condition based monitoring

and predictive maintenance solutions in hard-to-reach locations and harsh environments.

long-term growth driven by recurring subscription-based model.

Currently, our revenues are derived mostly from sales of our solutions.

As we expand the installed base of our solutions, we expect subscriptions for the continued support of our technology to become the foundation

of our recurring revenue for sustainable growth over time.

research and development capabilities and a robust intellectual property portfolio.

We have invested in establishing strong

research and development capabilities, including integrating hardware, software and algorithms to create an exceptional solution in

a single optimized system.

Our deep knowledge and intellectual property is protected by a broad patent portfolio, including 17

issued patents, seven of which are in the U.S., and 55 pending patent applications, 19 of which are in the U.S.

provisional patent applications), as of the date of this Annual Report.

We believe our intellectual property and know-how present a

significant barrier to entry for our competitors.

We have invested in establishing strong research

and development capabilities, including integrating hardware, software and algorithms to create an exceptional solution in a single optimized

Our deep knowledge and intellectual property are protected by a broad patent portfolio, including 19 issued patents, 10 of

which are in the U.S., and 63 pending patent applications, 25 of which are in the U.S.

(including provisional patent applications),

as of the date of this Annual Report.

We believe our intellectual property and knowledge present a significant barrier to entry for our

management team.

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believe we are well-positioned as a pioneer of PdM and CBM vision-based sensor technology.

Our significant growth opportunities are

focused on the aerospace vertical where we have achieved sales to leading clientele, as well as expansion into new

Our significant growth opportunities are focused

on the aerospace vertical where we have achieved sales to leading clientele, as well as expansion into the industrial and transportation

verticals as part of Industry 4.0.

We continue to apply our technology and solutions to a broad range of applications within both the

civil and defense sectors.

New Customers.

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markets over time to win new and expanded business opportunities.

We believe the performance of the Odysight TruVision solution,

in conjunction with the flexibility of our software, will allow us to continue providing new solutions to our customers and further develop

the use cases for our systems across various vertical markets.

We believe the performance of our solutions, in conjunction with the

flexibility of our software, will allow us to continue providing new solutions to our customers and further develop the use cases for

our systems across various vertical markets.

Our Technology Leadership .

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We continue to sign new commercial

agreements in the aerospace vertical and believe our solution is highly relevant and a value add in many aerospace platforms.

we are working to develop new vertical opportunities, including transportation, energy and other industries.

agreements in the aerospace vertical and believe our solution is highly relevant and provides additional value in many aerospace platforms.

In addition, we are working to develop new vertical opportunities, including transportation, energy and other industries.

with Global Market Leading Corporations to Leverage their Commercial Position .

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our vision-based sensor technology.

In the aerospace market we are already generating commercial revenues, in Industry 4.0,

we are executing on proof of concept projects, in transportation, we received our first purchase order in December 2024 and in the energy

market we are conducting initial discussions with potential customers.

our main marketing efforts are focused on the Israeli and U.S.

markets, with some efforts invested in pursuing opportunities in European

and other top tier markets.

We are generating commercial revenues in aerospace, and advancing Industry 4.0 and transportation

initiatives, from proof-of-concept and demos into commercial deliveries.

At the same time, we have initiated market-entry activities

in multiple geographies and continue to expand globally across aerospace and additional verticals as opportunities unfold.

are implementing a comprehensive sales and marketing approach that encourages widespread adoption of our products.

Our aim is to sell

the Odysight TruVision solution by targeting the Israeli home market, utilizing global platforms available in the U.S.

our solutions by targeting the Israeli home market, utilizing global platforms available in the U.S.

and internationally.

This involves addressing operators, OEMs, maintenance and repair organizations, and forming strategic partnerships with entities holding

strong market positions that can benefit from our solution, providing them immediate value and a technological edge, thereby accelerating

strong market positions that can benefit from our solution, providing them with immediate value and a technological edge, thereby accelerating

our sales and global expansion.

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We employ several professional experienced sales managers in

relevant fields of expertise, in addition to a team of consultants who analyze global trends and designated geographical territories

to assist us in targeting potential customers.

relevant fields of expertise, in addition to a team of consultants who assist us in targeting potential customers by analyzing global

trends and designated geographical territories.

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

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

proof of concept demonstrations in order to evaluate the feasibility of integration of the Odysight TruVision solution for

monitoring their systems and to demonstrate the significant value proposition of our technology to customers;

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

proof of concept demonstrations with customers in various industries in order to evaluate the feasibility of integrating our solutions

for monitoring their systems and to demonstrate the significant value proposition of our technology;

through personal contacts in the aerospace, defense, transportation, maritime and energy industries;

participating

in major aerospace, defense, vision technology, and other exhibitions, as well as Industry 4.0 specific events.

we have four major customers that are expected to generate a substantial portion of our forecasted revenue in the near term.

June 2022 we announced that we completed the verification and validation stage of our endoscopic camera solution with our Fortune 500

client, in January 2023 we announced the receipt of a $1.45 million order from this client, and in October 2023 we announced a solidified

purchase order with this client and that formal commitments under the purchase order amount to a total of $3.3 million for fiscal year

As of the date of this Annual Report, we have not received a purchase order from the Fortune 500 medical company customer with respect to 2025, and we do not expect to receive such purchase order for 2025, or if we do, it may be substantially lower in quantity than our

2024 purchase order from this customer.

As this customer has accounted for the vast majority of our revenues to date, a lack of a sufficient

order may lead to a significant decrease in our revenues in the near term, which in turn could result in us engaging in certain cost-cutting

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

platforms with our real time video monitoring system.

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

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

Since our technology features a modular open system architecture, it enables seamless integration with advanced unmanned aerial platforms.

July 2023, we announced a collaboration with the Israel Aerospace Industries, or IAI, through which the IAI will utilize our advanced

vision-based sensing and video analytics technology in a vision-based “health monitoring system” for UH-60 (Blackhawk) helicopters.

By harnessing our multiple highly resilient video-based sensors, embedded software, video analytics and AI algorithms specifically designed

for the UH-60 helicopter, this solution will provide real-time insights into the health of UH-60 helicopters, improving safety measures,

minimizing downtime, optimizing spare parts management and enabling the implementation of predictive maintenance strategies.

December 2023, we announced a strategic partnership to develop advanced applications for aerospace and industrial markets worldwide with

SIPAL S.P.A., a leading company in Italy in the engineering sector.

The goal of the collaboration is a next generation maintenance solution

that will allow maintenance crews the ability to obtain and review real time visual inspection of an aircraft’s internal systems

without the need to remove a single panel or a hatch.

February 2024, we announced the receipt of a purchase order for our PdM system for an Israel Air Force Boeing AH-64 Apache attack helicopter

The partnership marks a significant milestone, integrating our autonomous, vision-based monitoring and predictive maintenance

technology into a leading attack helicopter.

There are approximately 2,700 Boeing AH-64 Apache attack helicopters deployed worldwide.

March 2024, we announced the receipt of a purchase order exceeding $1 million from a major international defense contractor for our vision-based

sensor and AI analytics solution.

The system will be installed in upgraded Lockheed Martin (Sikorsky) SH-60 Seahawk Maritime Rotary Wing

Aircraft of the Israel Air Force.

More than 4,000 UH-60 Black Hawk aircraft, and its variants such as the SH-60 Seahawk, are in service

worldwide today.

May 2024, we announced the receipt of a purchase order from Tel Aviv University for the Israeli Ministry of Defense for a bespoke system

based on our proprietary vision-based sensors.

In addition, in the same month, we announced the

receipt of a purchase order for an engine guide vane monitoring system from France-based Safran Aircraft Engines.

September 2024, we announced a purchase order exceeding $10 million with a leading international defense contractor for the integration

of our vision-based sensor technology into a new UAV configuration as well as an existing UAV line.

In the same month, we announced the

receipt of a new repeat purchase order from NASA to support its high-speed aeronautical flight testing on aerospace vehicles.

January 2025, we announced a collaboration with Israel Railways to develop an advanced monitoring and predictive maintenance system designed

to prevent derailments and improve the safety and efficiency of the country’s rail network.

This innovative solution, powered by

artificial intelligence, aims to revolutionize Israel’s railway infrastructure by enhancing the performance, reliability, and safety

of critical track switches.

we have three major customers that are expected to generate a substantial portion of our forecasted revenue in the near

To date, Odysight.ai has made significant progress in deploying its advanced vision-based sensing and predictive

maintenance technologies across multiple sectors, including defense, aerospace, transportation and industrial markets.

The Company established

strong partnerships and collaborations with prominent clients such as Elbit Systems, Israel Aerospace Industries, SIPAL S.P.A., Israel

Railways and several major international defense contractors.

Odysight.ai’s solutions have been integrated into a variety of high-profile

platforms, including UAVs, helicopters (such as the UH-60 Blackhawk, SH-60 Seahawk, AH-64 Apache and AW139), and industrial systems like

elevator belts and mine trucks.

These efforts were marked by some substantial purchase orders – one exceeding $10 million

– and successful pilot programs, validating the robustness, scalability and market relevance of Odysight.ai’s solutions.

Company’s modular, AI-driven technology has enabled real-time monitoring, predictive analytics and proactive maintenance, improving

operational safety, reducing downtime and optimizing maintenance costs for its clients.

Odysight.ai has also transitioned from successful

proof-of-concept trials to initial commercial rollouts in the industrial sector, notably with elevator belt monitoring systems, and expanded

its reach into new geographies and applications, including railways and heavy vehicles.

While Odysight.ai has demonstrated strong market

momentum and technological validation, it also acknowledges the potential risk of revenue decline if order volumes from new and existing

customers do not meet expectations, which could necessitate cost-cutting measures in the near term.

Overall, the Company’s recent

milestones underscore its growing impact on predictive maintenance across diverse industries and its readiness to scale globally.

purchase orders and collaborations generate revenue over a period ranging from a few months to several years.

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new market opportunities.

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

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

When a potential opportunity is identified, we seek to protect

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

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

solutions, including image analysis, might add value.

When a potential opportunity is identified, we seek to protect our rights by establishing

relevant intellectual property safeguards and developing prototypes for the required application.

Manufacturing

rely on both in-house manufacturing together with outsourced manufacturing for a portion of the assembly of our vision-based sensor products.

We manufacture the miniature cameras used in our vision-based sensor solution at our Omer location, while the manufacture of the processing

units and handheld devices is outsourced to third parties.

The camera is then assembled in our facilities into a finished system that

is calibrated and tested by us for quality control.

rely on a combination of in-house and outsourced manufacturing for the assembly of our vision-based sensor products.

We assemble the

miniature sensors used in our PHM and CBM solutions at our Omer facility, while the processing units and handheld devices are produced

by third-party manufacturers.

The integration into complete systems is conducted in our facilities.

of the components and parts we use in our manufacturing operations are available from more than one source.

However, we obtain certain

components from single source suppliers.

For example, the number of suppliers engaged in the provision of miniature video sensors which

are suitable for our CMOS technology mainly in the medical domain is very limited.

As we do not have a direct general contract in place

with these suppliers, there is no contractual commitment on the part of such suppliers for any set quantity of such sensors.

of an extended failure of a supplier or suppliers in this area, it is possible that we could experience an interruption in supply until

we established new sources or, in some cases, implemented alternative processes.

Any inability or delay in finding a suitable replacement

supplier or suppliers could negatively affect our business, financial condition, results of operations and reputation.

However, we obtain

certain components from single source suppliers.

In the event of an extended failure of one or more of these suppliers, it is

possible that we could experience an interruption in supply until we established new sources or, in some cases, implemented

alternative processes.

Any inability or delay in finding a suitable replacement supplier or suppliers could negatively affect our

business, financial condition, results of operations and reputation.

However, we perform periodic supply chain risk analysis and

seek to procure required components to enable consistency in production of our solutions.

facility in Omer holds the following certifications:

AS9100, ISO13485, IPC-A-610, and IPC-7711/7721.

We have completed the process of implementing the I SO14001

Standard to comply with environmental management systems.

ISO 9001, AS9100, ISO14001,

ISO13485, IPC-A-610, and IPC-7711/7721.

and Development

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the value proposition of our vision-based sensor solutions.

research and development efforts focus on two main areas:

We are advancing our multi-camera technology, which utilizes advanced vision-based sensing and AI/ML processing focusing

on sensing, computing and prediction.

Cloud-Based Products :

We leverage our existing cloud environment to develop proof of concept and innovative industrial solutions.

research and development efforts focused on the following core areas:

Repurposing proven micro-visualization technology for high-stakes aerospace

and industrial applications.

AI Integration :

Developing specialized AI models that process high-resolution visual

data directly at the edge, enabling the detection of subtle physical anomalies before they

result in malfunction or failure.

Environment Resilience :

Engineering sensors and algorithms capable of operating reliably

in harsh environments.

Capabilities :

Designing systems that can be retrofitted onto existing legacy platforms

or integrated into new platforms from the outset, providing a significant advantage over

traditional vibration- or acoustic-based sensors.

● Cloud-Based

Continuously analyzing collected data through a secure cloud-based or on-premises

platform, providing customers with both raw data and processed insights to support better

decision-making.

among providers of sensing solutions is characterized by extensive research efforts and rapid technological progress.

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current and future products and technologies.

of March 20, 2025, our patent portfolio included 17 issued patents, seven of which are in the U.S., and 55 pending patent

applications, 19 of which are in the U.S.

(including provisional patent applications).

of March 18, 2026, our patent portfolio included 19 issued patents, nine of which are in the U.S., one allowed patent application in

the U.S., and 63 pending patent applications, 25 of which are in the U.S.

(including provisional patent applications, not including PCT

applications).

The issued U.S.

patents are expected to

expire between 2030 and 2042, in each case taking into account awarded patent term adjustments and extensions, and assuming payment

of all appropriate maintenance, renewal, annuity or other governmental fees.

We have a total of 19 patent families, 12 of which are

in the predictive maintenance field and seven are related to imaging technology.

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

(Sumita), a specialty

optical fiber technology company, pursuant to which we granted a non-exclusive license to Sumita to one of our imaging patent families

in return for payment of royalties and a grant-back license to Odysight.ai of Sumita’s patents and patent applications related

patents are expected to expire between 2030 and 2042, in each case taking into account awarded patent

term adjustments and extensions, and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees.

have a total of 24 patent families, 19 of which are in the predictive maintenance field and five are related to imaging technology.

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

optical fiber technology company, pursuant to which we granted Sumita a non-exclusive license to one of our imaging patent families in

return for payment of royalties and a grant-back license to Odysight.ai of Sumita’s patents and patent applications related

to fiber optics illumination.

To date, only an immaterial amount of royalties has accrued.

often initially submit applications to the USPTO as provisional patent applications.

We sometimes continue by filing non-provisional

patent applications under the Patent Cooperation Treaty, or the PCT, which is an international patent law treaty that provides a unified

procedure for filing a single initial patent application to later seek patent protection for an invention in any number of the member

states of the PCT.

Although a PCT application does not itself issue as a patent, it acts as a placeholder allowing the applicant to seek

protection in any of the member states through national-phase applications.

In other cases, we file national applications claiming priority

under the Paris Convention from the provisional patent applications.

often initially submit applications to the United States Patent and Trademark Office, or USPTO, as provisional patent applications.

sometimes continue by filing non-provisional patent applications under the Patent Cooperation Treaty, or the PCT, which is an international

patent law treaty that provides a unified procedure for filing a single initial patent application to later seek patent protection for

an invention in any number of the member states of the PCT.

Although a PCT application does not itself issue as a patent, it acts as

a placeholder allowing the applicant to seek protection in any of the member states through national-phase applications.

In other cases,

we file national applications claiming priority under the Paris Convention from the provisional patent applications.

have trademark rights in our trade name and other brand elements in certain jurisdictions, including trademark applications and registrations

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Our competitors could

also independently develop technologies like ours, and our intellectual property rights may not be broad enough for us to prevent competitors

from selling products and services incorporating those technologies.

For more information regarding the risks relating to intellectual

property, see “Item 1.A — Risk Factors — Risks Related to our Intellectual Property .”

also independently develop technologies like ours, and our intellectual property rights may not be broad enough or early enough for us

to prevent competitors from selling products and services incorporating those technologies.

For more information regarding the risks

relating to intellectual property, see “Item 1.A — Risk Factors — Risks Related to our Intellectual Property .”

are subject to a variety of laws, regulations and licensing requirements of U.S.

federal, state and local authorities, including Israel.

We are also required to obtain various licenses and permits from state, local and Israeli authorities in connection with the operation

of our business.

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

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

manufacture and sell the Odysight TruVision solution that contains electronic components, and such components may contain materials

that are subject to government regulation in both the locations where we develop, manufacture and assemble our products, as well as the

locations where we sell our products.

Among other things, certain applicable laws and regulations require or may in the future require

the submission of annual reports to certain governmental agencies certifying that such products comply with applicable performance standards,

the maintenance of manufacturing, testing and distribution records, and the reporting of certain product defects to such regulatory agency

or consumers.

If our products fail to comply with applicable regulations, we and/or our products could be subjected to a variety of enforcement

actions or sanctions, such as product recalls, repairs or replacements, warning letters, untitled letters, safety alerts, injunctions,

import alerts, administrative product detentions or seizures or civil penalties.

The occurrence of any of the foregoing could harm our

business, results of operations and financial condition.

federal, state, and local authorities, as well as those

of Israel and other countries in which we operate.

We are also required to obtain various licenses and permits from such

authorities in connection with the operation of our business.

manufacture and sell solutions that contain electronic components, and such components may contain materials that are subject to government

regulation in both the locations where we develop, manufacture, and assemble our products, as well as the locations where we sell our

Among other things, certain applicable laws and regulations require or may in the future require the submission of annual reports

to certain governmental agencies certifying that such products comply with applicable performance standards, the maintenance of manufacturing,

testing and distribution records, and the reporting of certain product defects to such regulatory agencies or consumers.

If our products

fail to comply with applicable regulations, we and/or our products could be subjected to a variety of enforcement actions or sanctions,

such as product recalls, repairs or replacements, warning letters, untitled letters, safety alerts, injunctions, import alerts, administrative

product detentions or seizures, or civil penalties.

The occurrence of any of the foregoing could harm our business, results of operations,

and financial condition.

we plan to operate on a global basis, we will be required to continually monitor applicable laws and regulations and engage in an ongoing

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be subject to CE certification, a regulatory standard that verifies certain products are safe for sale and use in much of Europe.

and other requirements are applicable for the Odysight TruVision solution in various jurisdictions across the globe.

our engagements with customers operating in the biomedical sector, we comply with the medical device standards in the corresponding territory,

such as the FDA or ISO, among others.

Compliance with these regulations is achieved through our QA department and the support we receive

from highly experienced quality assurance and regulatory affairs consultants.

In addition, we are audited annually by MEDCERT GmbH, a

German Notified Body.

and other requirements are applicable to our solutions in various jurisdictions across the globe.

are subject to a number of laws and regulations that involve matters central to our business.

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Many of the laws and regulations to which we are subject are

still evolving and being tested in courts and could be interpreted in ways that could harm our business.

still evolving and are being tested in courts, and could be interpreted in ways that could harm our business.

In addition, the application

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Failure to comply with anti-corruption laws and trade

control laws could subject us to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses.

control laws could subject us to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and to legal expenses.

from the Israel Innovation Authority

May 21, 2023, we were awarded a grant by the IIA.

The purpose of this grant is to support and our production capabilities.

our successfully achieving all predetermined milestones, the maximum grant amount that can be received is NIS 1 million (approximately

US$ 277,777).

of December 31, 2024, we received IIA royalty-bearing grants totaling approximately NIS 515,000 (approximately US$130,000).

May 21, 2023, we were awarded a grant by the Israel Innovation Authority, or the IIA.

The purpose of this grant is to support our production

capabilities.

Subject to our successfully achieving all predetermined milestones, the maximum grant amount that can be received is NIS

1 million (approximately $ 277,777 using the NIS-dollar exchange rate at the time of grant).

of December 31, 2024, we received IIA royalty-bearing grants totaling approximately NIS 515,000 (approximately $130,000 at that

are committed to paying royalties to the IIA at a rate of approximately 1.0% to 3.5% on sales proceeds from our products (and related

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addition, as a result of certain agreements between Xylo Technologies Ltd.

(formerly Medigus Ltd.), an Israeli company traded on

Nasdaq, or Xylo Technologies and Odysight.ai Ltd., the IIA approved a transfer of IIA know-how developed by Xylo Technologies in

the framework of the Bio Medical Photonic Consortium, or the Xylo Technologies Consortium.

Accordingly, all rights and obligations

with regard to the IIA under the Innovation Law, in connection with such know-how, now apply to us.

The rights and obligations

within the framework of our activity in the Xylo Technologies Consortium continue to apply to us notwithstanding the termination of

the Xylo Technologies Consortium and include, among other things, the following:

(formerly Medigus Ltd.), or Xylo Technologies, and Odysight.ai Ltd., the IIA approved a transfer of IIA know-how developed by Xylo Technologies in the framework

of the Bio Medical Photonic Consortium, or the Xylo Technologies Consortium.

Accordingly, all rights and obligations with regard to the

IIA under the Israeli Encouragement of Research, Development and Technological Innovation in the Industry Law, 5744-1984, or the Innovation

Law, in connection with such know-how, now apply to us.

The rights and obligations within the framework of our activity in the Xylo Technologies

Consortium continue to apply to us notwithstanding the termination of the Xylo Technologies Consortium and include, among other things,

the following:

property rights to information which has been developed belongs to the Xylo Technologies Consortium member that developed it.

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recognition and rewards programs.

of the date of this Annual Report, we have four officers which consists of a Chief Executive Officer, Chief Financial Officer, Chief

Technology Officer and Senior VP of Product Portfolio, all of whom are engaged on a full-time basis.

As of the date of this Annual Report,

we had 61 employees in full- or part-time capacities.

Our employees are all located in Israel.

of the date of this Annual Report, we have three officers, which consist of a Chief Executive Officer, Chief Financial Officer

and Chief Business Officer, all of whom are engaged on a full-time basis.

As of the date of this Annual Report, we had 52 employees

in full or part-time capacities.

While most of our employees are all located in Israel, we also have employees in the U.S.

of our employees are represented by labor unions or covered by collective bargaining agreements.

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December 4, 2019, we sold 100% of our holdings in Canna Patch.

September 16, 2019, Intellisense and Xylo Technologies entered into an exchange agreement pursuant to which, on December 30, 2019, we acquired

from Xylo Technologies all of the issued and outstanding share capital of ScoutCam Ltd.

On December 31, 2019, we changed our name to ScoutCam Inc.

Following this acquisition, we integrated and fully adopted the acquired miniaturized imaging business into the company as our primary

business activity.

December 1, 2019, Xylo Technologies and Odysight.ai Ltd.

consummated a certain Amended and Restated Asset Transfer Agreement, which transferred

and assigned certain assets and intellectual property rights related to its miniaturized imaging business.

On May 18, 2020, we and Xylo Technologies

entered into a certain Side Letter Agreement, whereby the parties agreed to amend certain terms of the Amended and Restated Asset Transfer

Agreement and related documents.

April 20, 2020, Odysight.ai Ltd.

entered into an Amended and Restated Intercompany Services Agreement with Xylo Technologies, which effectively

amended and restated an intercompany services agreement dated May 30, 2019.

September 16, 2019, Intellisense and Xylo Technologies entered into an exchange agreement pursuant to which, on December 30, 2019, we

acquired from Xylo Technologies all of the issued and outstanding share capital of ScoutCam Ltd.

On December 31, 2019, we changed our

name to ScoutCam Inc.

Following this acquisition, we integrated and fully adopted the acquired miniaturized imaging business into the

company as our primary business activity.

December 1, 2019, we consummated a certain Amended and Restated Asset Transfer Agreement with Xylo Technologies, which transferred and

assigned certain assets and intellectual property rights related to its miniaturized imaging business.

On May 18, 2020, we entered into

a certain Side Letter Agreement with Xylo Technologies, whereby the parties agreed to amend certain terms of the Amended and Restated

Asset Transfer Agreement and related documents.

April 20, 2020, we entered into an Amended and Restated Intercompany Services Agreement with Xylo Technologies, which effectively amended

and restated an intercompany services agreement dated May 30, 2019.

June 5, 2023, we changed our name to Odysight.ai Inc.

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

What changed 10-K

Item 1. Business