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Item 9A. Controls and Procedures

2025-03-26 compared with 2024-03-26 · 1346 added, 959 removed, 732 unchanged (76% of the section changed)

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to allow timely decisions regarding required disclosure.

management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure

controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2024, the end of the period

covered by this Annual Report on Form 10-K.

Based on such evaluation, our principal executive officer and principal financial officer

concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2024.

Report on Internal Control over Financial Reporting

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assessed the effectiveness of our internal control over financial reporting on December 31, 2024.

In making this assessment, management

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

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

Based on that assessment

under those criteria, management has determined that, as of December 31, 2023, our internal control over financial reporting was effective.

In making this assessment,

management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, in

Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or

Based on that assessment under those criteria, management has determined that, as of December 31, 2024, our

internal control over financial reporting was effective.

Independent Report of the Registered Public Accounting Firm

annual report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm

annual report on Form 10-K does not include an attestation report of our independent registered public accounting firm

regarding internal control over financial reporting.

Management’s report was not subject to attestation by the Company’s

Management’s report was not subject to attestation by our

registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this

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were no changes in internal control over financial reporting during the year ended December 31, 2024 that have materially affected or

are reasonably likely to materially affect the Company’s internal control over financial reporting.

are reasonably likely to materially affect our internal control over financial reporting.

Other information

the quarter ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement”

or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

use our website (www.odysight.ai) as a channel of distribution for Company information.

The information we post on our website may be

deemed material.

Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public

conference calls and webcasts.

The contents of our website are not, however, a part of this Annual Report.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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following table sets forth the names and ages of our directors and executive officers:

Benad Goldwasser †

Executive Officer

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VP of Product Portfolio

On June 1, 2023, Ronen Rosenbloom

notified the Company that he would resign as a member of our board of directors effective immediately.

Rosenbloom advised the Company

that his resignation was not the result of any conflict with the Company or objection to any action taken by it.

On August 13, 2023, our board

of directors appointed Mr.

Nir Nimrodi to serve as a member of the board of directors.

On December 6, 2023, certain

of the Company’s stockholders representing more than 50% of the Company’s outstanding share capital as of November 30, 2023

voted by written consent to reelect Ms.

Inbal Kreiss and elect Mr.

Jackson Schneider and Ms.

Ronit Rubin as Class II directors of the

Company, with a term of office for each to expire at the third succeeding annual meeting of the stockholders after their election and

until their successors are duly elected and qualified.

February 21, 2024, the Company appointed Ms.

Yosef as VP of Finance, a position she is expected to begin on May 5, 2024.

continue to serve as Chief Financial Officer until such time as the new position is effective.

An announcement by the Company regarding

the appointment of a new chief financial officer will be forthcoming.

Benad Goldwasser has served as chairman of our board of directors since December 26, 2019, and has served as chairman of Odysight.ai’s

board of directors since its inception.

Benad Goldwasser (4)

Schneider (4)

Rubin (1)(3)(4)

Kreiss (1)(3)(2)(4)

Vurembrand (1)(3)(2)(4)

Nimrodi (2)(4)

of our audit committee

of our compensation committee

of our nominating and corporate governance committee

director under the rules of Nasdaq

Ofer has served as our Chief Executive Officer since October 2022.

Ofer served as a colonel (now retired) in the Israeli Air

Force, or the “IAF”, commanding two operational squadrons before commanding “Wing 15”, the optic and electronic

intelligence wing of the IAF.

In his last position, Mr.

Ofer served as Israel Defense Attaché to Italy, Greece, Serbia, and Croatia,

where he oversaw the largest ever government-to-government transaction between Israel and Italy.

Upon his retirement from the Israel

Defense Forces in 2013, Mr.

Ofer joined Elbit Systems Ltd.

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

in airborne optic and laser solutions.

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

programs and VP of the Brazil business unit.

Before leaving Elbit Systems, in October 2022, to become our CEO, Mr.

Ofer served as VP

of Global Business Development, Marketing and Sales for Elbit Systems, a position he held since 2020.

Ofer holds an MBA degree from

the University of Haifa, a Bachelor of Economics and Logistics degree (cum laude) from Bar Ilan University in Tel Aviv, and a degree

from the National Security College in Tel Aviv.

Ofer has served as a member of the board of directors of Aerospace Industrial Scan

since August 2024, Robotican Ltd since September 2024 and of the International Board of the Weizmann Institute since November 2023.

Brenner has served as our Chief Financial Officer since May 2024.

From May 2022 until becoming our CFO, Ms.

Brenner served as the

VP Finance of Solato Ltd.

In this capacity, Ms.

Brenner supported the establishment of global company activities,

including strategic decision making and significant commercial agreements, building financial and operational teams and infrastructure,

and handling fund raising and investor relations.

From July 2017 to May 2022, Ms.

Brenner served as Executive Director of Finance at

RedHill Biopharma Ltd.

RDHL), where she facilitated fund raising activities, managed complex transactions and legal aspects,

and was responsible for Securities and Exchange Commission filings and financial reporting.

Prior to this, Ms.

Brenner served in various

financial positions at Vizrt Inc., Viola Ventures and PricewaterhouseCoopers.

Brenner is a CPA (Israel), holds a Bachelor of Accounting,

Economics and Business Administration, and an MBA in Financial Management, both from Tel Aviv University.

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

Avinu has more than 15 years of experience in development,

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

He joined Odysight.ai from Elbit Systems, where

since 2018 he led the advanced capabilities R&D group in helmet-mounted displays and sensors, a key segment within the company’s

aerospace division.

Before joining Elbit Systems, Mr.

Avinu served for six years in the IAF as a computer vision system engineer and

commander of the electronic systems development group.

Avinu holds a Master of Science degree from Ben-Gurion University of the Negev

in Beer-Sheva, Israel with a focus on electro-optical engineering, and a Bachelor of Science degree in electrical engineering from Ort

Braude College of Engineering in Karmiel Israel.

Avinu also studied practical engineering and electronics at the Israeli Air Force

Israeli has served as our Chief Technology Officer since October 2023.

Before joining us, Mr.

Israeli served from January 2022 to

September 2023 as CTO at Gadfin, where he spearheaded the development and execution of Gadfin’s technology strategy.

From December

2019 to February 2022, Mr.

Israeli served as the Senior Vice President of System Engineering, Program Management, and Customer Success

at IAI headquarters.

His career includes a variety of other roles, including Chairman of the consortium of AI Academy–- Artificial

Intelligence Training;

Director of Program Management, Ground-Based & Missiles Defense Systems at IAI;

Director of System Engineer

and Product Management, Civil Aircraft Protection Systems at the Israel Ministry of Defense – DDR&D;

Senior Systems Engineer,

Unmanned Aerial Vehicle at the Israeli Air Force;

and Director of R&D and Program Management, MALE Unmanned Aerial System at the

Israeli Ministry of Defense - DDR&D.

Israeli holds an MSc in System Engineering and Program Management from the Technion –

Israel Institute of Technology in Haifa, Israel, and a BSc in electrical engineering and Bachelor of Education from Tel Aviv University.

Benad Goldwasser has served as chairman of our board of directors since December 2019, and has served as chairman of Odysight.ai

Ltd.’s board of directors since its inception.

Goldwasser is a serial entrepreneur and retired urology medical doctor.

In 2016, Prof.

Goldwasser launched a venture capital fund partnered with SAIL, a Shanghai Government investment company.

Goldwasser has served

as a member of the board of directors of Innoventric Ltd.

since 2017 and Inspira Technologies Ltd.

since January 2021.

From 2013-2016

Goldwasser served as an external director of BioCanCell Ltd.

Goldwasser was the co-founder of Vidamed Inc.,

Medinol Ltd., Rita Medical Inc., Optonol Ltd.

Goldwasser helped launch a venture capital fund together with SAIL, a Shanghai Government investment company.

Goldwasser has served as a member of the board of directors of Innoventric Ltd.

From January 2021 to January 2025, Prof.

Goldwasser served as Chairman of the Board of Directors of Inspira Technologies Ltd (Nasdaq:

From 2013-2016 Prof.

served as an external director of BioCanCell Ltd.

Goldwasser was the co-founder of Vidamed Inc., Medinol Ltd.,

Rita Medical Inc., Optonol Ltd.

and GI View Ltd.

Goldwasser served as managing director of Biomedical Investments

Ltd., an Israeli Venture Capital firm.

During his medical career, he served as Chairman of Urology at the Chaim Sheba Medical Center

and Professor of Surgery at Tel-Aviv University.

Goldwasser served as managing director of Biomedical Investments Ltd., an

Israeli Venture Capital firm.

During his medical career, he served as Chairman of Urology at the Chaim Sheba Medical Center and

Professor of Surgery at Tel-Aviv University.

Goldwasser holds MD and MBA degrees from Tel-Aviv University .

Schneider has served on our board of directors since December 2023.

Schneider is currently a Senior Research Scholar at Columbia

University in New York, a position he has held since July 2023.

Schneider is currently an Adjunct Professor Senior at

Columbia University in New York.

From January 2014 to November 2022, Mr.

Schneider served as President

and CEO of Embraer Defense & Security, a leading Latin American aerospace and defense company and, from August 2020 to August 2022,

he served as a visiting senior research fellow (non-resident) in the Department of War Studies at King’s College in London.

Schneider served in other capacities for Embraer and in a series of senior management positions for Mercedes-Benz Do Brasil

LTDA, Daimler-Chrysler (Mercedes-Benz), and Unilever do Brasil.

Schneider served as President and CEO of Embraer Defense

& Security, a leading Latin American aerospace and defense company and, from August 2020 to August 2022, he served as a visiting

senior research fellow (non-resident) in the Department of War Studies at King’s College in London.

Before this, Mr.

served in other capacities for Embraer and in a series of senior management positions for Mercedes-Benz Do Brasil LTDA,

Daimler-Chrysler (Mercedes-Benz), and Unilever do Brasil.

Schneider also served on the board of directors of Tempest S.A.,

Visiona Tecnologia Aerospacial S.A., and OGMA, the Portugal Aerospace Industry, each affiliated with Embraer, until April 2023.

serves on the advisory board or Board of Directors of Sonda Tecnologias (Brazil), Abra Aviation Group (London), and Mercedes-Benz Do

currently serves on the advisory board or board of directors of Sonda Tecnologias (Brazil), Abra Aviation Group (London), CBMM

(Brazil) and Mercedes-Benz Do Brasil.

In addition, Mr.

Schneider has served in leadership roles in various industry associations and is currently the President of

the Superior Council for Trade and Commerce in the Federation of Industries of the State of Sao Paulo (FIESP).

He holds a law degree

from 1982 to 1986 from UFRGS/UNB and an MBA from the Business School Sao Paulo (BSP) in Brazil in partnership with the Rotman School

in Toronto, Canada.

Schneider has served in leadership roles in various industry associations and

is currently the President of the Superior Council for Trade and Commerce in the Federation of Industries of the State of Sao Paulo.

He holds a law degree from 1982 to 1986 from UFRGS/UNB and an MBA from the Business School Sao Paulo in Brazil in partnership with

the Rotman School in Toronto, Canada.

Rubin has served on our board of directors since December 2023.

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(Mori) Arkin has served on our board of directors since February 2021.

Arkin is a leading life science and pharmaceutical

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

Arkin has served as chairman of the board of

directors of Sol Gel Technologies Ltd.

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

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

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

Arkin is a leading life science and pharmaceutical entrepreneur

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

Arkin has served as chairman of the board of directors of

Sol Gel Technologies Ltd.

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

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

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

From 2005 to 2008, Mr.

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

Prior to joining Sol Gel

Technologies Ltd., Mr.

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

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

Arkin served as chairman of

Agis Industries Ltd.

Arkin served as the

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

Prior to joining Sol Gel Technologies

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

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

Arkin served as chairman of Agis Industries Ltd.

from 1972 until its acquisition by Perrigo Company in 2005.

Arkin holds a B.A.

degree in psychology from the

Tel Aviv University, Israel.

degree in psychology from the Tel Aviv University,

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

Kreiss is currently the Chief of Innovation at the Systems,

Missiles and Space Division of the Israeli Aerospace Industries Ltd.

(IAI) and Chairwoman of RAKIA, Scientific and Technological Mission

to the International Space Station.

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

and Space Division of the IAI, a position she has held since April 2020, and Chairwoman of RAKIA, Scientific and Technological Mission

to the International Space Station, a position she has held since April 2021.

Since 2013, Ms.

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

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

Kreiss has served as Deputy Director of

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

both Israeli and foreign users.

Since January 2025, Ms.

Kreiss is also serving as a member of the board of Phoenix Financial Ltd (TLV:PHOE).

Prior to that, Ms.

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

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

Kreiss holds a B.Sc degree

in chemical engineering from the Technion, Israeli Institute of Technology, an Executive Masters in Business Administration degree from

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

Institute of Technology (MIT).

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

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

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

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

Massachusetts Institute of Technology.

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

Vurembrand is currently the Chief Executive Officer and Owner

of Vurembrand Management & Innovation Ltd.

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

of Vurembrand Management & Innovation Ltd., a position he has held since March 2019, and has been a member of the board of Bezeq

the Israeli Telecommunication Corp.

BEZQ) since 2017.

Vurembrand also served as chairman of the board of Lageen Ltd.

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From 2013 until 2019, Mr.

Vurembrand was the Chief Executive Officer of Kupat Holim Meuhedet, Israel’s third largest health care organization.

until 2013, he was the Chief Executive Officer of Alon Holding Blue Square – Israel Ltd., and prior to that, from 2007 until 2008,

he was the Chief Executive Officer of Phoenix Investments and Finance Ltd.

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

was the Chief Executive Officer of Clalit Health Services Group, Israel’s largest health care organization.

Vurembrand has

served on numerous boards of directors, including Africa Israel Residences LTD.

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

2006 until 2007, U-Bank from 2005 until 2006, Blue Square Israel (TASE:

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

1995 until 2002.

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

Vurembrand holds a B.Sc

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

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

third largest health care organization.

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

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

in his career, from 2002 until 2007, Mr.

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

health care organization.

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

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

BSI) from 2001

until 2006, and Dikla Medical Insurance Ltd.

from 1995 until 2002.

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

University since 2019.

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

of Technology.

Nimrodi has served on our board of directors since August 2023.

Nimrodi has served as chairman and chief executive

officer of Accellix Inc., a life sciences company, since May 2019 and has over 25 years’ experience working in start-ups and

large global businesses in the life sciences, pharmaceutical, and biotechnology industries.

From 2014 to April 2019, Mr.

the chief business officer of Intrexon (currently Precigen, Inc.).

Prior to this, he held several executive roles at Life

Technologies Inc.

Nimrodi has over 25 years’ experience working in

start-ups and large global businesses in the life sciences, pharmaceutical, and biotechnology industries.

From May 2019 to November

Nimrodi was the chairman and chief executive officer of Accellix Inc., a life sciences company.

From 2014 to April 2019,

Nimrodi was the chief business officer of Intrexon (currently Precigen, Inc.).

Prior to this, he held several executive roles at

Life Technologies Inc.

(now part of Thermo Fisher), and was chief executive officer at Proneuron Biotechnologies Inc.

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EVGN) and at the private

companies Genesee Scientific and Scopio Labs.

Nimrodi holds a B.A.

in Economics and an MBA from Tel-Aviv

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

Ofer served as a colonel (now retired) in the

Israeli Air Force (“IAF”), commanding two operational squadrons before commanding “Wing 15”, the optic and electronic

intelligence wing of the IAF.

In his last position, Mr.

Ofer served as Israel Defense Attaché to Italy, Greece, Serbia, and Croatia,

where he oversaw the largest ever government-to-government transaction between Israel and Italy.

Upon his retirement from the Israel

Defense Forces in 2013, Mr.

Ofer joined Elbit Systems Ltd.

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

in airborne optic and laser solutions.

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

programs and VP of the Brazil business unit.

In his last position at Elbit Systems, Mr.

Ofer served as VP of Global Business Development,

Marketing and Sales, a position he held since 2020.

Ofer holds an MBA degree from the University of Haifa, a Bachelor of Economics

and Logistics degree (cum laude) from Bar Ilan University in Tel Aviv, and a degree from the National Security College in Tel Aviv.

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

Yosef is a certified public accountant with many years

of experience and held various positions with Medigus Ltd.

MDGS) since December of 2009, including most recently as chief financial

officer and prior thereto as financial controller.

During 2008-2009 Ms.

Yosef worked in the audit department at Kesselman & Kesselman,

a member firm of PricewaterhouseCoopers International Limited.

Yosef holds a BA degree in Economics and Accounting from the Ben-Gurion

University, Israel .

Israeli has been our Chief Technology Officer since October 11, 2023.

Before joining us, Mr.

Israeli served from January 2022

to September 2023 as CTO at Gadfin, where he spearheaded the development and execution of Gadfin’s technology strategy.

From December

2019 to February 2022, Mr.

Israeli served as the Senior Vice President of System Engineering, Program Management, and Customer Success

at Israel Aerospace Industries (IAI) headquarters.

His career includes a variety of other roles, including Chairman of the consortium

of AI Academy - Artificial Intelligence Training;

Director of Program Management, Ground-Based & Missiles Defense Systems at IAI;

Director of System Engineer and Product Management, Civil Aircraft Protection Systems at the Israel Ministry of Defense – DDR&D;

Senior Systems Engineer, Unmanned Aerial Vehicle at the Israeli Air Force;

and Director of R&D and Program Management, MALE Unmanned

Aerial System at the Israeli Ministry of Defense - DDR&D.

Israeli holds an MSc in System Engineering and Program Management from

the Technion – Israel Institute of Technology in Haifa, Israel, and a BSc in electrical engineering and Bachelor of Education (BEd)

from Tel Aviv University.

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

Avinu has more than 15 years of experience in

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

He joined Odysight.ai from Elbit

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

the company’s aerospace division.

Before joining Elbit Systems, Mr.

Avinu served for six years in the IAF as a computer vision

system engineer and commander of the electronic systems development group.

Avinu holds a Master of Science degree from Ben-Gurion

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

engineering from Ort Braude College of Engineering in Karmiel Israel.

Avinu also studied practical engineering and electronics at

the Israeli Air Force Academy.

company Scopio Labs.

From July 2022 to December 2024, Mr.

Nimrodi served as a member of the board of Genesee Scientific.

in Economics and an MBA from Tel-Aviv University.

Carlo Papa has served on our board of directors since September 2024 and as Chairman of Odysight.ai EU since January 2025.

Papa has served as Chief Economics Advisor at

Berkeley Research Group since January 2025, Senior Fellow at the Columbia Center on Sustainable Investment at Columbia University

since August 2024 and as a member of the Impact Advisory Board of SACE, Italy’s export credit agency, since June 2023.

April 2015 to June 2024, Dr.

Papa served as Managing Director of the Enel Foundation, an Italian think-tank, and as Global Head of

Relationships with academic and research institutions for Enel Group.

Papa previously served as Chief Innovation Officer at Enel

Green Power and has held several positions with the Enel Group, including Chief of Staff of the Chairman’s Office, Head of

Business Development for Russia and Ukraine (Power Generation Division) and co-founder of and Investment Manager for Enel Capital

Corporate Venture Fund.

Papa currently serves on the board, advisory board or executive committee of Italy’s National PhD

in Sustainable Development and Climate Change, the UN’s Council Engineers for Energy Transition and Harambee Africa.

received a BSc in Economics - MSc in Management and Finance from Palermo University in Italy, an EMBA Trium Global Executive from

London School of Economics, Stern NYU, HEC Paris and a PhD in Management Engineering from Tor Vergata University in Rome.

board of directors is divided into three classes.

Zeev Vurembrand and Nir Nimrodi are our Class I directors, with their terms of office

to expire at our 2025 annual meeting of stockholders.

Jackson Schneider, Ronit Rubin and Inbal Kreiss are our Class II directors, with

their terms of office to expire at our 2026 annual meeting of stockholders.

Professor Benad Goldwasser and Moshe (Mori) Arkin are our

Class III directors, with their terms of office to expire at our 2024 annual meeting of stockholders.

At each annual meeting of stockholders,

directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding

annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly

elected and qualified.

Zeev Vurembrand, Nir Nimrodi and Dr.

Carlo Papa are our Class I directors, with their

terms of office to expire at our 2025 annual meeting of stockholders.

Jackson Schneider, Ronit Rubin and Inbal Kreiss are our Class II

directors, with their terms of office to expire at our 2026 annual meeting of stockholders.

Professor Benad Goldwasser and Moshe (Mori)

Arkin are our Class III directors, with their terms of office to expire at our 2027 annual meeting of stockholders.

At each annual meeting

of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the

third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall

have been duly elected and qualified.

board of directors may consider a broad range of factors relating to the qualifications and background of nominees to serve as director,

4 unchanged sentences

They serve at the pleasure of our board of directors.

Amsalem, a principal at Arkin Capital (the chairman of which is our board member, Mr.

Arkin), serves as a non-voting observer of our

board since May 2023.

Relationships

are no family relationships between or among any of our directors or executive officers.

in Certain Legal Proceedings

our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten years:

bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer

either at the time of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,

permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking

activities or to be associated with any person practicing in banking or securities activities;

found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated

a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed,

suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law

or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or

fraud in connection with any business entity;

subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization,

any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members

or persons associated with a member.

with Section 16(a) of the Exchange Act

common stock is not registered pursuant to Section 12 of the Exchange Act.

Accordingly, our directors, officers and principal stockholders

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

in Legal Proceedings

our knowledge, there have been no material legal proceedings that would require disclosure under the federal securities laws that are

material to an evaluation of the ability of our directors or executive officers.

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

6 unchanged sentences

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

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

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

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

Notwithstanding the

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

under SEC and Nasdaq rules.

The members of the audit committee are Ms.

Trading Policy

We adopted an insider

trading policy that governs the purchase, sale and/or other transactions of our securities by our directors, officers and employees that

it believes is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and listing standards

applicable to us.

A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal

year ended December 31, 2024.

In addition, with regard to our trading in its own securities, it is our

policy to comply with the federal securities laws and applicable listing standards.

Board of Directors has adopted an Executive Officer Clawback Policy (the “Clawback Policy”), in accordance with the Nasdaq

listing standards and Exchange Act Rule 10D-1, which applies to our current and former executive officers.

Under the Clawback Policy,

we are required to recoup the amount of any Erroneously Awarded Compensation (as defined in the Clawback Policy) on a pre-tax basis within

a specified lookback period in the event of any Accounting Restatement (as defined in the Clawback Policy), subject to limited impracticability

Policies and Practices Related to the Grant of

Certain Equity Awards

Under our insider

trading policy, our board of directors or any committee thereof shall consider our possession of material non-public information in connection

with the timing of each grant of equity under our equity incentive plans, and determine whether a grant of equity should be delayed or

otherwise modified due to the possession of such information at such time.

Leadership Structure and Role in Risk Oversight

assessment and oversight are an integral part of our governance and management processes.

Our board of directors encourages management

to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations.

Management discusses

strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the

year that include a focused discussion and analysis of the risks facing us.

board of directors does not have a standing risk management committee, but rather administers this oversight function directly through

our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent

in their respective areas of oversight.

While our board of directors has a fiduciary duty to monitor and assess strategic risk exposure,

our audit committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor

and control these exposures, overseeing cybersecurity risks and assisting the board of directors in its oversight over enterprise risk

The audit committee also approves or disapproves any related person transactions.

Our compensation committee assesses and

monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

Our nominating and

corporate governance committee monitors the effectiveness of our corporate governance guidelines and manages risks associated with the

independence of the board of directors.

board of directors has established an audit committee, compensation committee and a nominating and corporate governance committee and

adopted written characters for each of these committees, which are available on our website at www.odysight.ai.

Our board of directors

may establish other committees as it deems necessary or appropriate from time to time.

members of the audit committee are Ms.

Rubin, and Mr.

Vurembrand, with Mr.

Vurembrand as its designated

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

www.odysight.ai.

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

listing requirements and that Mr.

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

adopted pursuant to the Exchange Act.

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

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

The Board has

determined that Ms.

Rubin, and Mr.

Vurembrand meet the independence criteria established in the Nasdaq listing requirements

and the Exchange Act.

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

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

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

The audit committee is responsible for the appointment

of the Company’s independent auditors.

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

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

The audit committee is responsible

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

and treatment of complaints received by Odysight.ai regarding accounting controls or auditing matters and the confidential, anonymous

submission by Company employees of concerns regarding questionable accounting or auditing matters.

The audit committee is also responsible

for approving or ratifying related person transactions pursuant to the Company’s related person transaction approval policy contained

in the audit committee charter.

The members of the compensation committee are Ms.

Vurembrand as its designated chairperson, all

of whom meet the independence criteria established by Nasdaq.

The board of directors has determined that Mr.

Vurembrand qualifies as

an “audit committee financial expert” as defined by SEC rules adopted pursuant to the Exchange Act.

Nasdaq requires that

audit committees have at least three directors and that all directors be independent, as defined in the Nasdaq requirements and Rule

10A-3 under the Exchange Act.

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

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

and the performance of our internal control function.

The audit committee is responsible for the appointment of our independent auditors.

The audit committee oversees our internal controls and risk assessment and management policies and meets with our independent auditor

and management regarding our internal controls and other matters.

The audit committee is responsible for periodically reviewing our code

of business conduct and ethics and has established procedures for the receipt, retention, and treatment of complaints received by us

regarding accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable

accounting or auditing matters.

The audit committee is also responsible for approving or ratifying related person transactions pursuant

to our related person transaction approval policy contained in the audit committee charter.

members of the compensation committee are Ms.

Nimrodi, and Mr.

Vurembrand, with Ms.

Kreiss as its designated

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

The compensation committee is

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

The compensation committee

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

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

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

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

Kreiss as its designated chairperson,

all of whom meet the independence criteria established by Nasdaq.

The compensation committee is charged with the responsibility for setting

executive compensation, reviewing certain compensation programs, administering our equity incentive plans, reviewing and discussing with

management the compensation discussion and analysis required in proxy statements (if and when applicable), preparing a report on executive

compensation required by SEC rules to be included in proxy statements (if and when applicable) and making other recommendations to the

board of directors.

and Corporate Governance Committee

members of the nominating and corporate governance committee are Ms.

Rubin, and Mr.

Vurembrand, with Mr.

Vurembrand as its

designated chairperson, as its designated chairperson, all of whom meet the independence criteria established by Nasdaq.

of the nominating committee is to assist the board of directors in identifying qualified individuals to become directors, help to develop

and implement corporate governance guidelines and monitor board effectiveness.

audit committee charter, compensation committee charter, nominating and corporate governance committee charter and other corporate governance

information are available under the Corporate Governance section of the Investors page of our website located at www.odysight.ai, or

by writing to our Secretary at our offices at Suite 7A, Industrial Park, P.O.

Box 3030, Omer, Israel 8496500.

committee interlocks and insider participation

of the members of our compensation committee is a current or former officer or employee.

None of our executive officers served as a director

or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, including any entity

whose executive officers served as a director or member of our compensation committee.

Executive Compensation

following sets forth information about the compensation paid to or accrued by the company’s named executive officers, as that term

is defined in Item 402(m)(2) of Regulation S-K, as of December 31, 2023.

Compensation Table

following sets forth information about the compensation paid to or accrued by our named executive officers, as that term is defined in

Item 402(m)(2) of Regulation S-K, as of December 31, 2024.

Name and Principal Position

Base Salary (7)

Stock Awards (8)

Option Awards

Nonequity incentive plan compensation

Nonqualified deferred compensation earnings

All Other Compensation

1 unchanged sentence

Chief Executive Officer (1)

Senior VP Product (2)

Einav Brenner,

Chief Financial Officer (2)

Chief Software Architect (4)

VP Research and Development (5)

Senior VP Product Portfolio (3)

Ofer’s compensation earned in his capacity as the Chief Executive Officer of our wholly-owned subsidiary, Odysight.ai

Ofer did not earn any compensation in his capacity as the Chief Executive Officer of Odysight.ai Inc.

Ofer’s employment

commenced on October 18, 2022.

connection with the appointment of Mr.

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

agreement with Mr.

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

announced from time to time in accordance with Israeli law.

The agreement also provides that Mr.

Ofer is entitled to receive an equity

grant of options to purchase a total of 300,000 shares of the Company’s Common Stock, par value $0.001 per share, at an exercise

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

33.33% of the shares covered by Mr.

Ofer’s options

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

Ofer’s options at the end of each subsequent

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

Furthermore, Mr.

Ofer’s options will immediately

vest upon the occurrence of the following (i) the sale of all or substantially all of the assets of the Company, (ii) the sale of

more than 50% of the Common Stock of the Company in a non-public sale, (iii) the dissolution or liquidation of the Company or (iv)

any merger, share exchange, consolidation or other reorganization or business combination if immediately after such transaction either

(A) the persons who were directors of the Company immediately prior to such transaction do not constitute at least a majority of

the directors of the surviving entity or (B) the persons who hold a majority of the voting capital stock of the surviving entity

are not the persons who held a majority of the voting capital stock of the Company immediately prior to such transaction.

Additionally,

the Company agreed to pay Mr.

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

to certain pre-determined measurable objectives agreed to with Mr.

Ofer and approved by the board of directors by January 31 with

respect to each calendar year, with the Company agreeing to recommend to the board of directors a grant of restricted stock in lieu

Ofer’s bonus through such time the Company is profitable and subject to meeting applicable objectives.

In accordance

with the terms of Mr.

Ofer’s employment agreement, he will also receive additional benefits customary for an executive officer

of his experience and for companies of similar stature and standing to that of the Company.

Avinu’s compensation earned in his capacity as the Senior VP Product of our wholly-owned subsidiary, Odysight.ai Ltd.

Avinu’s employment commenced on November 15, 2022.

connection with the appointment of Mr.

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

The agreement provides for a monthly salary of NIS 60,000.

The agreement also provides that Mr.

Avinu is entitled

to receive an equity grant of options to purchase a total of 100,000 shares of the Company’s Common Stock, par value $0.001

per share, at an exercise price of $4.50 per share, which shall vest and become exercisable as follows:

33.33% of the shares covered

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

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

Additionally, the

agreement provides to Mr.

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

amount of NIS 120,000 pursuant to certain objectives and (iii) the Company will consider, at to its sole discretion, after the first

and second years following his employment, granting Mr.

Avinu additional options / RSUs pursuant to certain objectives, subject to

the approval of such grant by the CEO and board of directors of the Company.

In accordance with the terms of Mr.

Avinu’s employment

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

stature and standing to that of the Company.

Yosef’s compensation earned in her capacity as the Chief Financial Officer of our wholly-owned subsidiary, Odysight.ai

Yosef did not earn any compensation in her capacity as the Chief Financial Officer of Odysight.ai Inc.

employment commenced on January 15, 2021.

connection with the appointment of Ms.

Yosef as the Company’s Chief Financial Officer, the Company entered into an employment

agreement with Ms.

Yosef that provides for a monthly base salary of NIS 29,500 and monthly travel pay of NIS 2,500.

In accordance

with the terms of Ms.

Yosef’s employment agreement, she will also receive additional benefits customary for an executive officer

of her experience and for companies of similar stature and standing to that of the Company.

Priel’s compensation earned in his capacity as the Chief Software Architect of our wholly-owned subsidiary, Odysight.ai

Priel’s employment commenced on November 1, 2021.

connection with the appointment of Mr.

Priel as the Company’s Chief Software Architect, the Company entered into an employment

agreement with Mr.

Priel that provides for a monthly base salary of NIS 60,000.

In accordance with the terms of Mr.

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

of similar stature and standing to that of the Company.

Molad’s compensation earned in his capacity as the VP Research and Development of our wholly-owned subsidiary, Odysight.ai

Molad’s employment commenced on June 4, 2023.

connection with the appointment of Mr.

Molad as the Company’s VP Research and Development, the Company entered into an employment

agreement with Mr.

Molad that provides for a monthly base salary of NIS 56,000 and monthly travel pay of NIS 6,500.

The agreement

also provides that Mr.

Molad is entitled to receive an equity grant of options to purchase a total of 30,000 shares of the Company’s

Common Stock, par value $0.001 per share, and 25,000 RSUs, the terms and conditions of which shall be subject to the sole discretion

of the board of directors.

Additionally, the agreement provides to Mr.

(i) a signing bonus in the aggregate amount of NIS

75,000 and (ii) a performance bonus pursuant to certain objectives, which will be paid in cash and/or options/RSUs at the sole discretion

of the Company.

In accordance with the terms of Mr.

Molad’s employment agreement, he will also receive additional benefits

customary for an employee of his experience and for companies of similar stature and standing to that of the Company.

a signing bonus.

Ofer did not earn any compensation in his capacity as the Chief Executive Officer of Odysight.ai Inc and any of our other subsidiaries.

Brenner’s compensation earned in her capacity as then Chief Financial Officer of our wholly-owned subsidiary,

Odysight.ai Ltd.

Brenner did not earn any compensation in her capacity as the Chief Financial Officer of Odysight.ai Inc and any of our other subsidiaries.

Brenner’s employment commenced on May 5, 2024.

Avinu’s compensation earned in his capacity as the Senior VP Product Portfolio of our wholly-owned subsidiary,

Odysight.ai Ltd.

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

16 unchanged sentences

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

and through our wholly-owned subsidiary, Odysight.ai Ltd., have entered into written employment agreements with each of our executive

The 2024 figures

are unaudited numbers.

2024 and 2023, referenced amount is for car lease and other related vehicle expenses.

September 16, 2024, our board of directors, upon recommendation of our compensation committee, approved (i) a cash compensation bonus

of NIS 375,000 to Yehu Ofer, our Chief Executive Officer, and an award to him of 120,000 options to purchase shares of our common stock,

(ii) a cash compensation bonus of NIS 60,000 to Einav Brenner, our Chief Financial Officer, and an award to her of 30,000 options to

purchase shares of our common stock and (iii) a cash compensation bonus of NIS 120,000 to Jacob Avinu, our Senior VP of Product Portfolio,

and an award to him of 40,000 options to purchase shares of common stock.

So long as the executive continues as a service provider with us, the options will vest with respect to one-third of the shares of common

stock on the first anniversary of the grant date and, with respect to the balance of the shares of common stock, will vest over two years

in eight equal quarterly installments following the first anniversary of the grant date.

The options are subject to acceleration of vesting

in the event of a change of control.

March 10, 2025, our b oard of directors, upon recommendation of our

compensation committee, approved the following with regard to Mr.

increase in monthly base salary from NIS 80,000 to NIS 90,000, effective January 1, 2025 , with

such monthly base salary remaining subject to adjustments for inflation as announced from time to time in accordance with

Israeli law , (ii) a cash compensation bonus of $142,500 and (iii) an award of 150,000 options to purchase shares of our

common stock.

The foregoing options were awarded to Mr.

Ofer pursuant to our 2024 Stock Incentive

Plan and have an exercise price of $6.50 per share.

So long as Mr.

Ofer continues as a service provider with us , the

options will vest with respect to one-third of the shares of common stock on the first anniversary of the grant date and, with

respect to the balance of the shares of common stock, will vest over two years in eight equal quarterly installments following the

first anniversary of the grant date.

The options are subject to acceleration of vesting in the event of a change of control of the

On the same date, our board of directors, upon recommendation of the compensation committee, approved a cash

compensation bonus of $95,000 to Ms.

or through our wholly-owned subsidiary, Odysight.ai Ltd., have entered into written employment agreements with each of our executive

All of these agreements contain customary provisions regarding noncompetition, confidentiality of information, and assignment

1 unchanged sentence

However, the enforceability of the noncompetition provisions may be limited under applicable law.

In addition, we have

entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them to the fullest

extent permitted by law to the extent that these liabilities are not covered by directors and officers’ insurance.

In addition, our officers

and directors are covered by directors and officers’ insurance, and we have entered into agreements with each executive officer

and director pursuant to which we have agreed to indemnify each of them to the fullest extent permitted by law to the extent that these

liabilities are not covered by directors and officers’ liability insurance.

connection with the appointment of Mr.

Ofer as our Chief Executive Officer, we entered into an employment agreement with Mr.

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

in accordance with Israeli law.

The agreement also provides that Mr.

Ofer is entitled to receive an equity grant of options to

purchase a total of 300,000 shares of our common stock, par value $0.001 per share, at an exercise price of $4.50 per share, which

shall vest and become exercisable as follows:

33.33% of the shares covered by Mr.

Ofer’s options on the first anniversary of

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

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

thereafter over the course of the subsequent two years.

Furthermore, Mr.

Ofer’s options will immediately vest upon the

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

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

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

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

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

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

Additionally, we agreed to pay Mr.

Ofer both (i) a

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

objectives agreed to with Mr.

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

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

Ofer’s bonus through such

time we are profitable and subject to meeting applicable objectives.

In accordance with the terms of Mr.

Ofer’s employment

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

similar stature and standing to that of us.

Effective January 1, 2025, Mr.

Ofer’s monthly base salary was NIS 90,000.

connection with the appointment of Einav Brenner as our Chief Financial Officer, we entered into an employment agreement with Ms.

that provides for the terms and conditions of her employment.

The employment agreement provides for a monthly base salary of NIS 60,000.

The employment agreement also provides that Ms.

Brenner is entitled to receive an equity grant of options to purchase a total of 70,000

shares of our common stock which shall vest and become exercisable as follows:

33.33% of the shares covered by the options on the first

anniversary of her service, and 8.33% of the shares covered by the options at the end of each subsequent three-month period thereafter

over the course of the subsequent two years.

Additionally, we agreed to pay Ms.

Brenner a signing bonus in the aggregate amount of NIS

60,000 pursuant to certain objectives.

In accordance with the terms of Ms.

Brenner’s employment agreement, she will also receive

additional benefits customary for an executive officer of her experience and for companies of similar stature and standing to that of

connection with the appointment of Mr.

Avinu as our Senior VP Product Portfolio, we entered into an employment agreement with Mr.

agreement provides for a monthly salary of NIS 60,000.

The agreement also provides that Mr.

Avinu is entitled to receive an equity

grant of options to purchase a total of 100,000 shares of our common stock, par value $0.001 per share, at an exercise price of

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

33.33% of the shares covered by Mr.

Avinu’s options on

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

Avinu’s options at the end of each

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

Additionally, the agreement provides to Mr.

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

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

employment, granting Mr.

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

the CEO and our board of directors.

In accordance with the terms of Mr.

Avinu’s employment agreement, he will also receive

additional benefits customary for an executive officer of his experience and for companies of similar stature and standing to that

of the Company.

In October 2024, the Board of Directors approved a salary increase for Mr.

Avinu in the amount of NIS 3,000 per

Equity Awards

following table provides information regarding equity awards for each of our named executive officers as of our fiscal year end of December

following table provides information regarding equity awards for each of our named executive officers as of December 31, 2024.

Options Award

Restricted Stock Awards

Name and Position

1 unchanged sentence

of Securities Underlying Unexercised Options (#) Unexercisable

Equity Incentive Plan Awards:

Number of Securities Underlying Unexercised Unearned Options (#)

Option Exercise Price ($)

3 unchanged sentences

Market Value of Units of Stock That Have Not Vested ($)

Chief Executive Officer

November 14, 2029

Senior VP Product Portfolio

Equity Incentive Plan Awards:

Number of Unearned Shares, Units or Other Rights That

Have Not Vested

November 14, 2029

Chief Executive

September 16, 3031

Einav Brenner,

June 13, 2031

Chief Financial Officer

February 12, 2027

Chief Software Architect

September 16, 3031

November 14, 2029

Senior VP Product Portfolio

September 16, 3031

VP Research and Development

on the fair market value of our Common Stock on December 31, 2023 ($3.05 per share).

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

2 unchanged sentences

any outstanding and unvested options shall immediately accelerate and vest upon the occurrence of certain events, including, inter

alia, a merger or sale of all assets of the Company.

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

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

Pursuant to an acceleration mechanism,

any outstanding and unvested options shall immediately accelerate and vest upon the occurrence of certain events, including, inter

alia, a merger or sale of all assets of the Company.

alia, a merger or sale of all our assets.

or Similar Benefit Plans

4 unchanged sentences

or a change in control of our Company or a change in our directors’ or executive officers’ responsibilities following a change

following table sets out the compensation paid to directors for services rendered during the year ended December 31, 2023.

However, the vast majority of the options we have granted to our directors, executive officers and employees will become

fully vested upon a change of control.

following table sets out the compensation earned or paid to directors for services rendered during the year ended December 31, 2024.

Non-Equity Incentive Plan Compensation

Nonqualified Deferred Compensation Earnings

$ in thousands

Benad Goldwasser

Shmuel Donnerstein (1)

Ronen Rosenbloom (2)

Lior Amit (1)

Carlo Papa (1)

Moshe (Mori) Arkin

Zeev Vurembrand

Ronit Rubin (3)

Jackson Schneider

Nir Nimrodi (4)

as director of Odysight.ai Inc.

until December 6, 2023.

as director of Odysight.ai Inc.

until June 1, 2023.

as a director of Odysight.ai Inc.

since December 6, 2023.

as a director of Odysight.ai Inc.

since August 13, 2023.

since September 16, 2024.

Includes compensation earned as Chairman of Odysight.ai EU.

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

of awards computed in accordance with ASC 718, not the actual amounts paid to or realized by the directors during fiscal 2023.

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

Additional information

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

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

On each of April, 9, 2021 and August 12, 2021, our board of directors approved the same terms for directors appointed

subsequent to March 15, 2020.

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

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

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

July 31, 2019, the Company entered into a consulting agreement with Prof.

of awards computed in accordance with ASC 718, not the actual amounts paid to or realized by the directors during fiscal year 2024.

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

July 31, 2019, we entered into a consulting agreement with Prof.

Goldwasser, whereby Prof.

Goldwasser agreed to serve as chairman

of the Board of Directors of the Company.

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

in consideration for a monthly fee of $10,000 and a grant of options to purchase Common Stock of the Company representing 5% of the fully

diluted share capital of the Company post issuance of the then-next financing round, subject to certain limitations.

The Options, which

will have a six-year term, will vest in eight equal semi-annual installments over a period of four years with an exercise price per share

calculated based on a 25% discount on the sale price of the Common Stock in the then-next fund raising of the Company and accelerated

vesting upon closing of a material transaction resulting in change of control of the Company and/or in case Prof.

Goldwasser is dismissed

not for cause, with other terms and limitations as provided in the consulting agreement.

Goldwasser agreed to serve as chairman of

our board of directors.

Effective retroactively to March 1, 2019, services as chairman under the agreement were provided in consideration

for a monthly fee of $10,000 and a grant of options to purchase our common stock representing 5% of the fully diluted share capital of

the Company post issuance of the then-next financing round, subject to certain limitations.

The options, which will have a six-year term,

will vest in eight equal semi-annual installments over a period of four years with an exercise price per share calculated based on a

25% discount on the sale price of the common stock in the then-next fund raising of the Company and accelerated vesting upon closing

of a material transaction resulting in change of control of the Company and/or in case Prof.

Goldwasser is dismissed not for cause, with

other terms and limitations as provided in the consulting agreement.

On March 15, 2020, our board of directors approved a quarterly fee of $4,000

payable to each of our currently serving directors, excluding Prof.

On each of April 9, 2021 and August 12, 2021, our board

of directors approved the same terms for directors appointed subsequent to March 15, 2020.

On May 15, 2022, the board of directors approved

a quarterly fee in the amount of $2,000 payable to a director for each committee on which such director serves, if any, with such fee

in addition to any other fees to which such director is entitled as a member of the board of directors or any other committee.

November 22, 2023, our board of directors approved a separate compensation arrangement with Mr.

Jackson Schneider, subject to his election

Schneider, subject to his election

as a director, which took place on December 6, 2023.

1 unchanged sentence

Schneider is expected to

make to the operation of the Company, the Board approved compensation that includes an annual fee of $80,000, which will be paid on a

monthly basis in equal installments, and a recommendation to the Board to grant Mr.

Schneider options to purchase a total of 50,000 shares

of common stock at an exercise price per share equal to $3.00 per share, vesting over a period of three years and such other terms as

provided in a Director Service Agreement signed between Mr.

make to the operation of the Company, the board of directors approved compensation that includes an annual fee of $80,000, which will

be paid on a monthly basis in equal installments, and a recommendation to the board of directors to grant Mr.

Schneider options to purchase

a total of 50,000 shares of common stock at an exercise price per share equal to $3.00 per share, vesting over a period of three years

and such other terms as provided in a Director Service Agreement signed between Mr.

Schneider and the Company.

September 16, 2024, we entered into a director appointment and services agreement with Dr.

Papa, who was appointed as a member of our

board on the same date, pursuant to which Dr.

Papa will receive an annual fee of €30,000 for such service, to be paid in equal quarterly

installments, a grant of options to purchase 30,000 shares of our common stock at an exercise price of $4.80 per share, one-third of

which will vest on the first anniversary of the grant date and the remaining amount vesting over the following two years in eight equal

quarterly installments, and such other terms as provided in the agreement.

The options are subject to acceleration of vesting in the

event of a change of control of the Company.

18, 2025, Odysight.ai EU entered into a two-year agreement with Dr.

Papa, who will serve as Odysight.ai EU’s president and legal

representative, effective as of January 9, 2025.

Pursuant to the agreement, Dr.

Papa will receive:

(i) an annual fee of €120,000

for such service, to be paid in equal monthly installments, (ii) a signing bonus of €20,000, (iii) an entry bonus equal to an amount

of €40,000 reflecting Dr.

Papa’s prior effort and support in the development of the Italian subsidiary and (iv) such other

insurance, termination fees and other benefits as provided in the agreement.

2025, our board of directors, upon recommendation of our

compensation committee, approved a one-time cash compensation bonus of $130,000 to Prof.

From time to time our directors, including those with separate compensation

arrangements with the Company as described above, receive periodic grants of equity securities for their service as directors.

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

Ownership of Certain Beneficial Owners and Management

table below provides information regarding the beneficial ownership of our common stock as of March 26, 2024, of (i) each of our current

directors, (ii) each of the Named Executive Officers, (iii) all of our current directors and

officers as a group, and (iv) each person or entity known to us who owns more than 5% of our common stock.

percentage of common stock beneficially owned is based on 10,446,685 shares of common stock outstanding as of March 26, 2024.

and percentage of shares beneficially owned by a person or entity also include shares of common stock issuable upon exercise of warrants

that are currently exercisable or will become exercisable within 60 days of March 26, 2024.

However, these shares are not deemed to

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

otherwise indicated below, the address for each beneficial owner listed in the table below is c/o Odysight.ai Inc., Suite 7A, Industrial

following table sets forth certain information with respect to the beneficially owned holdings of:

(1) each person known to us to be

the beneficial owner of more than 5% of our common stock;

(2) each of our directors, nominees for director and named executive officers;

and (3) all directors and executive officers as a group.

Applicable percentage ownership is based on 16,307,321 shares of common stock

outstanding as of March 20, 2025.

A person is considered to beneficially own any shares:

(i) over which such person, directly or indirectly,

exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any

time within 60 days through an exercise of stock options or warrants.

To the best of our knowledge, each of the persons named in the

table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such

shares, unless otherwise indicated.

Unless otherwise indicated below, the address for each beneficial owner listed in the table below

is c/o Odysight.ai Inc., Suite 7A, Industrial Park, P.O.

Box 3030, Omer, Israel 8496500.

Name and Address of Beneficial Owner

of Beneficial

Ownership (1)

Name and Address of Owner

Shares of Common

Stock Owned Beneficially

Percent of Class

Benad Goldwasser (2)

Inbal Kreiss (3)

Moshe (Mori) Arkin (2)

Zeev Vurembrand (5)

Benad Goldwasser (3)

Yehu Ofer (4)

Tanya Yosef (7)

Jacob Avinu (5)

Zeev Vurembrand (6)

Inbal Kreiss (7)

Jackson Schneider (8)

Eli Israeli (9)

Nir Nimrodi (10)

Ronit Rubin (11)

Einav Brenner

Directors and officers as a group (12 individuals)

Phoenix Financial Ltd.

The More Group (13)

The Phoenix Holdings (10)

The Meitav Dash Group (11)

Less than 1%.

Sudoku Capital Ltd.

Kranot Hishtalmut (15)

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

1 unchanged sentence

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

options to purchase 435,290 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

options to purchase 16,025 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

included herein are held directly by Mr.

Moshe Arkin, Mr.

Arkin through his individual retirement account at Phoenix Insurance Company

Ltd., or by M.

Based in part upon information contained in a Schedule 13G filed on March

6, 2025 by Mr.

Arkin to report holdings as of February 10, 2025.

The securities included herein are held (i) by Mr.

Arkin directly or

Arkin (1999) Ltd., a company wholly-owned by Mr.

These securities include warrants to purchase 2,575,164 shares

of Common Stock and options to purchase 21,581 shares of Common Stock which are currently exercisable or will become exercisable

within 60 days of March 26, 2024.

of options to purchase 14,689 shares of common stock which are currently exercisable or will become exercisable within 60 days of

March 26, 2024.

of options to purchase 149,992 shares of common stock which are currently exercisable or will become exercisable within 60 days of

March 26, 2024.

of options to purchase 47,387 shares of common stock which are currently exercisable or will become exercisable within 60 days of

March 26, 2024.

options to purchase 49,997 shares of common stock which are currently exercisable or will become exercisable within 60 days of March

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

of options to purchase 470,159 shares of common stock which are currently exercisable or will become exercisable within 60 days

of March 26, 2024.

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

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

12, 2024, securities included herein are held directly by Phoenix Insurance and Phoenix Amitim, majority or wholly-owned subsidiaries

of the Phoenix Holdings Ltd.

In general, subsidiaries of the Phoenix Holdings Ltd.

manage their own funds and/or the funds of others,

including for holders of exchange-traded notes or various insurance policies, members of pension or provident funds, unit holders

of mutual funds, and portfolio management clients.

Each subsidiary operates under independent management and makes its own independent

voting and investment decisions.

These securities include 1,620,189 warrants to purchase shares of Common Stock, which are currently

Arkin, as follows:

(a) 2,959,143 shares of common stock, (b) options to acquire

39,081 shares of common stock that are currently exercisable or will become exercisable within 60 days of March 25, 2025 and (c) warrants

to acquire 222,223 shares of common stock that are current exercisable;

and (ii) by Phoenix Insurance Company Ltd.

on behalf of Mr.

(a) 2,352,941 shares of common stock and (b) warrants to acquire 2,352,941 shares of common stock that are currently exercisable.

Includes (i) options to purchase 534,037 shares of common

stock which are currently exercisable or will become exercisable within 60 days of March 20, 2025 and (ii) 75,000 shares of common stock beneficially owned directly by Prof.

Goldwasser’s spouse.

Includes options to purchase 337,493 shares of common stock that are currently

exercisable or will become exercisable within 60 days of March 20, 2025.

Not included as beneficially owned

by The Phoenix Holdings are shares of Common Stock held by Mr.

Arkin through his individual retirement account at Phoenix Insurance

Company Ltd.;

rather, as indicated in footnote 4 above, these shares of Common Stock are beneficially owned by Mr.

address of the Phoenix Holdings Ltd.

is Derech Hashalom 53, Givataim 53454, Israel.

on information provided to or available to the Company, includes warrants to purchase 458,054 shares of common stock which are

Includes options to purchase 94,998 shares of common stock that are currently

exercisable or will become exercisable within 60 days of March 20, 2025.

Consists of options to purchase 33,524 shares of common stock that are

currently exercisable or will become exercisable within 60 days of March 20, 2025.

On June 1, 2023, a stock transfer

agreement was entered into by and among Medigus Ltd., L.I.A.

Pure Capital Ltd., Mr.

Eli Yoresh and Ms.

Cheli Menashe, as sellers, and

Arkin (1999) Ltd., The Phoenix Insurance Company Ltd., Shotfut Menayot Israel – Phoenix Amitim, Lior Prosor, Prof.

Benad Goldwasser

Yehu Ofer, as purchasers.

Pursuant to the agreement, the sellers sold an aggregate of 2,022,964 shares of our Common Stock to

the purchasers for $6.07 million (equal to $3.00 per share).

Medigus sold 1,924,575 shares, representing its entire beneficial ownership

in the Company as follows:

Arkin (1999) Ltd.

purchased 1,293,576 shares;

(ii) The Phoenix Insurance Company Ltd.

purchased 65,000

(iii) Shotfut Menayot Israel – Phoenix Amitim purchased 368,333 shares;

Lior Prosor purchased 33,333 shares;

Goldwasser purchased 150,000 shares:

Ofer purchased 14,333 shares of our Common Stock.

Pure Capital Ltd.

an aggregate of 78,900 shares of our Common Stock to M.

Arkin (1999) Ltd.

Eli Yoresh sold 11,156 shares of our Common Stock to M.

Arkin (1999) Ltd.).

Cheli Menashe sold 8,333 shares of our Common Stock to M.

Arkin (1999) Ltd.

Concurrently, each of Mr.

Arkin, Phoenix

Insurance and Phoenix Amitim provided written consent to the inclusion in a Registration Statement on Form S-1 currently pending with

the SEC but not yet declared effective as of the date of this Annual Report of the Common Stock acquired by each of the other purchasers

in the stock transfer agreement, including Prof.

Goldwasser, Mr.

Prosor, and we have included in a Registration Statement

on Form S-1 currently pending with the SEC but not yet declared effective as of the date of this Annual Report the Common Stock acquired

by each such purchaser (except as to certain shares of Common Stock acquired by Mr.

Goldwasser is chairman of our board

of directors.

Ofer is our chief executive officer.

Following the transaction, Mr.

Arkin, who currently serves as a director on our

board of directors, beneficially owns more than 50% of our outstanding shares of Common Stock.

options to purchase 33,524 shares of common stock that are currently exercisable or will become exercisable within 60 days of March

Includes options to purchase 20,831 shares of common stock that are currently

exercisable or will become exercisable within 60 days of March 20, 2025.

of options to purchase 17,499 shares of common stock that are currently exercisable or will become exercisable within 60 days of

March 20, 2025.

options to purchase 17,499 shares of common stock that are currently exercisable or will become exercisable within 60 days of March

options to purchase 12,499 shares of common stock that are currently exercisable or will become exercisable within 60 days of March

Based in part on information contained in a Schedule 13G filed on November

14, 2024 by Phoenix Financial Ltd.

to report holdings as of September 30, 2024.

The securities reported herein include 1,620,189 warrants

to purchase shares of common stock that are currently exercisable or will become exercisable within 60 days of March 20, 2025.

reported in the Schedule 13G are beneficially owned by various direct or indirect, majority or wholly-owned subsidiaries of Phoenix Financial

Ltd., which manage their own funds and/or the funds of others, including for holders of exchange-traded notes or various insurance policies,

members of pension or provident funds, unit holders of mutual funds and portfolio management clients.

Each of the subsidiaries of Phoenix

Financial Ltd.

operates under independent management and makes its own independent voting and investment decisions.

Not included as beneficially

owned by Phoenix Financial Ltd.

are shares of common stock and warrants to acquire shares of common stock that are currently exercisable,

each as held by Phoenix Insurance Company Ltd.

on behalf of Mr.

Arkin and included in the shares of common stock that are beneficially

Arkin, as indicated in footnote 4 above.

The business address of Phoenix Financial Ltd.

is Derech Hashalom 53, Givataim 53454,

upon information contained in the Schedule 13G filed on March 13, 2025 by the Y.D.

More Investment Ltd., or Y.D.

More, to report

holdings as of February 10, 2025.

The securities reported herein include warrants to purchase 432,099 shares of common stock that

are currently exercisable.

Y.D More is an Israeli public company controlled through a voting agreement among the following

individuals and entities, each of which is a Reporting Person in the Schedule 13G:

(a) Yosef Meirov, directly and through B.Y.M.

Investments Ltd., a company he controls with Michael Meirov and Dotan Meirov, (b) Benjamin Meirov (c) Yosef Levy and (d) Eli Levy

through Elldot Ltd., a wholly owned company.

Other reporting persons in the Schedule 13G include More Mutual Funds Management (2013)

and More Investment House Portfolio Management Ltd., each of which is a wholly-owned subsidiaries of Y.D.

More, and More

Provident Funds and Pension Ltd., which is a majority-owned subsidiary of Y.D.

The business address of the More Group is 2 Ben

Gurion Street, Ramat Gan, Israel.

Based on information provided to or available to us.

Sudoku Capital Ltd.

is an entity affiliated with Shmuel Harlap.

The business address of Sudoku Capital Ltd.

is Sokolov 62, Ramat Hasharon, Israel.

on information contained in a Schedule 13G filed on February 20, 2025 by Kranot Hishtalmut Le Morim Ve Gananot Hevera Menahelet Ltd.

and Kranot Hishtalmut Le Morim Tichoniim Hevera Menahelet Ltd.

(the “Management Companies”) to report holdings as of February

The Management Companies, which manage various education funds (referred to in Hebrew as “Kranot hishtalmut”),

operate under independent management and make their own independent voting and investment decisions.

Any economic interest or beneficial

ownership in any of the securities is held for the benefit of the members of the education funds.

The business address of the Management

Companies is 8 Sderot Sha’ul HaMelech St., Tel Aviv 64733, Israel.

Authorized for Issuance under Equity Compensation Plans.

February 2020, our board of directors approved the 2020 Share Incentive Plan, or the 2020 Plan.

The 2020 Plan initially included a pool

of 580,890 shares of common stock for grant to our employees, consultants, directors and other service providers.

15, 2020, our board of directors approved an increase to the 2020 Plan’s option pool by an additional 64,099 shares of

common stock.

On June 22, 2020, our board of directors approved an increase to the 2020 Plan’s option pool by an additional 401,950 shares

of common stock.

During the second quarter of 2021, our board of directors approved an increase to the 2020 Plan’s option pool

by an additional 777,778 shares of common stock.

During the first quarter of 2023, our board of directors approved an increase

to the 2020 Plan’s option pool by an additional 1,000,000 shares of common stock.

June 2024, our board of directors approved the 2024 Share Incentive Plan, or the 2024 Plan.

The 2024 Plan initially included a pool of 234,484 shares

of common stock, representing the number of shares remaining available for grant under the 2020 Plan.

These shares are available for

future grant to our employees, consultants, directors and other service providers.

Shares that were subject to awards granted under either

the 2020 Plan or the 2024 Plan that have expired or were cancelled or become un-exercisable for any reason without having been exercised

in full shall become available for future grant under the 2024 Plan.

In July 2024, our board of directors approved an increase to the

2024 Plan’s option pool by an additional 850,000 shares of common stock.

following table provides certain information as of December 31, 2024, with respect to our equity compensation plans under which our equity

securities are authorized for issuance:

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Share Incentive Plan

have adopted the 2020 Plan, under which we previously granted equity-based incentive awards to attract, motivate, and retain the talent

for which we compete.

With adoption of the 2024 Share Incentive Plan, described below, we make awards under that plan and have ceased

making new awards under the 2020 Plan.

The maximum number of shares of common stock which were available for issuance under the 2020 Plan is equal to the sum of

2,824,717 shares.

Administration.

Our board of directors, or a duly authorized committee of our board of directors, will administer the 2020 Plan.

Under the 2020 Plan,

the administrator has the authority, subject to applicable law, to interpret the terms of the 2020 Plan and any award agreements or awards

granted thereunder, designate recipients of awards, determine and amend the terms of awards, including the exercise price of an option

award, the fair market value of a share of common stock, the time and vesting schedule applicable to an award or the method of payment

for an award, accelerate or amend the vesting schedule applicable to an award, prescribe the forms of agreement for use under the 2020

Plan, and take all other actions and make all other determinations necessary for the administration of the 2020 Plan.

administrator also has the authority to amend and rescind rules and regulations relating to the 2020 Plan or terminate the 2020 Plan

at any time before the date of expiration of its ten-year term.

The 2020 Plan provides for granting awards under various tax regimes, including, without limitation, in compliance with Section 102

of the Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Ordinance”), and Section 3(i) of the Ordinance and for

awards granted to our United States employees or service providers, including those who are deemed to be residents of the United States

for tax purposes, Section 422 of the Internal Revenue Code (the “Code”) and Section 409A of the Code.

102 of the Ordinance allows employees, directors, and officers who are not controlling stockholders and are considered Israeli residents

to receive favorable tax treatment for compensation in the form of shares or options.

Our non-employee service providers and controlling

stockholders may only be granted options under section 3(i) of the Ordinance, which does not provide for similar tax benefits.

All awards granted pursuant to the 2020 Plan were evidenced by an award agreement, in a form approved, from time to time, by the

administrator in its sole discretion.

The award agreement was set forth the terms and conditions of the award, including the type of

award, number of shares subject to such award, vesting schedule and conditions (including performance goals or measures), and the exercise

price, if applicable.

Certain awards under the 2020 Plan may constitute or provide for a deferral of compensation, subject to Section

409A of the Code, which may impose additional requirements on the terms and conditions of such awards.

award will expire seven years from the date of the grant thereof, unless such shorter term of expiration is otherwise designated by the

administrator.

The 2020 Plan provides for the grant of stock options (including incentive stock options and nonqualified stock options), shares

of common stock, restricted shares, restricted share units, and other share-based awards.

granted under the 2020 Plan to our employees who are U.S.

residents may qualify as “incentive stock options” within the meaning

of Section 422 of the Code, or may be non-qualified stock options.

The exercise price of a stock option may not be less than 100% of

the fair market value of the underlying share on the date of grant (or 110% in the case of ISOs granted to certain significant stockholders).

An award under the 2020 Plan may be exercised by providing the company with a written or electronic notice of exercise and full payment

of the exercise price for such shares underlying the award, if applicable, in such form and method as may be determined by the administrator

and permitted by applicable law.

An award may not be exercised for a fraction of a share.

With regard to tax withholding, exercise price,

and purchase price obligations arising in connection with awards under the 2020 Plan, the administrator may, in its discretion, accept

cash, provide for net withholding of shares in a cashless exercise mechanism, or direct a securities broker to sell shares and deliver

all or a part of the proceeds to us or the trustee.

Transferability.

Other than by will, the laws of descent and distribution, or as otherwise provided under the 2020 Plan, neither the options nor any

right in connection with such options are assignable or transferable.

of Employment.

For grantees who terminated their employment with us or any of its affiliates prior to July 5, 2022, all vested and

exercisable awards held by such grantees as of the date of termination may be exercised within three months, unless otherwise determined

by the administrator.

For grantees who terminated their employment with us or any of our affiliates after July 5, 2022, all vested and

exercisable awards held by such grantees as of the date of termination may be exercised within three years, unless otherwise determined

by the administrator.

After such three month or three-year period, as applicable, all such unexercised awards will terminate, and the

shares covered by such awards shall again be available for issuance under the 2020 Plan.

the event of termination of a grantee’s employment or service with the company or any of its affiliates due to such grantee’s

death, permanent disability, or retirement, all vested and exercisable awards held by such grantee as of the date of termination may

be exercised by the grantee or the grantee’s legal guardian, estate, or by a person who acquired the right to exercise the award

by bequest or inheritance, as applicable, within twelve months after such date of termination, unless otherwise provided by the administrator.

Any awards which are unvested as of the date of such termination or which are vested but not then exercised within the twelve-month period

following such date, will terminate and the shares covered by such awards shall again be available for issuance under the 2020 Plan.

Notwithstanding

any of the foregoing, if a grantee’s employment or services with the company or any of its affiliates is terminated for “cause”

(as defined in the 2020 Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of

such termination and the shares covered by such awards shall again be available for issuance under the 2020 Plan.

Transactions.

In the event of a share split, reverse share split, share dividend, recapitalization, combination, or reclassification of our shares,

or any other increase or decrease in the number of issued shares effected without receipt of consideration by the company (but not including

the conversion of any convertible securities of the company), the administrator in its sole discretion shall make an appropriate adjustment

in the number of shares related to each outstanding award and to the number of shares reserved for issuance under the 2020 Plan, to the

class and kind of shares subject to the 2020 Plan, as well as the exercise price per share of each outstanding award, as applicable,

the terms and conditions concerning vesting and exercisability, and the term and duration of outstanding awards, or any other terms that

the administrator adjusts in its discretion, or the type or class of security, asset, or right underlying the award (which need not be

only that of the Company, and may be that of the surviving corporation or any affiliate thereof or such other entity party to any of

the above transactions);

provided that any fractional shares resulting from such adjustment shall be rounded down to the nearest whole

share unless otherwise determined by the administrator.

In the event of a distribution of a cash dividend to all stockholders, the administrator

may determine, without the consent of any holder of an award, that the exercise price of an outstanding and unexercised award shall be

reduced by an amount equal to the per share gross dividend amount distributed by the Company, subject to applicable law.

the event of a merger or consolidation of our Company, or a sale of all, or substantially all, of our shares or assets, or other transaction

having a similar effect on us, or change in the composition of the board of directors, or liquidation or dissolution, or such other transaction

or circumstances that the board of directors determines to be a relevant transaction, then without the consent of the grantee, the administrator

may but is not required to (i) cause any outstanding award to be assumed or substituted by such successor corporation, or (ii) regardless

of whether or not the successor corporation assumes or substitutes the award (a) provide the grantee with the option to exercise the

award as to all or part of the shares, and may provide for an acceleration of vesting of unvested awards, or (b) cancel the award and

pay in cash, shares of the company, the acquirer, or other corporation which is a party to such transaction, or other property as determined

by the administrator as fair in the circumstances.

Notwithstanding the foregoing, the administrator may upon such event amend, modify,

or terminate the terms of any award as it shall deem, in good faith, appropriate.

Share Incentive Plan

have adopted the 2024 Plan, under which we may grant equity-based incentive awards to attract, motivate, and retain the talent for which

The maximum number of shares of common stock available for issuance under the 2024 Plan is equal to the sum of 1,084,484

shares, or such number as our board of directors may determine from time to time.

Awards granted under either the 2020 Plan or

the 2024 Plan that have expired or was cancelled or become un-exercisable for any reason without having been exercised in full, the shares

that were subject thereto shall become available for future grant under the 2024.

Administration.

Our board of directors, or a duly authorized committee of our board of directors, will administer the 2024 Plan.

Under the 2024 Plan,

the administrator has the authority, subject to applicable law, to interpret the terms of the 2024 Plan and any award agreements or awards

granted thereunder, designate recipients of awards, determine and amend the terms of awards, including the exercise price of an option

award, the fair market value of a share of common stock, the time and vesting schedule applicable to an award or the method of payment

for an award, accelerate or amend the vesting schedule applicable to an award, prescribe the forms of agreement for use under the 2024

Plan, and take all other actions and make all other determinations necessary for the administration of the 2024 Plan.

administrator also has the authority to amend and rescind rules and regulations relating to the 2024 Plan or terminate the 2024 Plan

at any time before the date of expiration of its ten-year Eligibility.

The 2024 Plan provides for granting awards under various

tax regimes, including, without limitation, in compliance with Section 102 of the Israeli Income Tax Ordinance (New Version), 5721-1961

(the “Ordinance”), and Section 3(i) of the Ordinance and for awards granted to our United States employees or service providers,

including those who are deemed to be residents of the United States for tax purposes, Section 422 of the Internal Revenue Code (the “Code”)

and Section 409A of the Code.

102 of the Ordinance allows employees, directors and officers who are not controlling stockholders and are considered Israeli residents

to receive favorable tax treatment for compensation in the form of shares or options.

Our non-employee service providers and controlling

stockholders may only be granted options under section 3(i) of the Ordinance, which does not provide for similar tax benefits.

All awards granted pursuant to the 2024 Plan will be evidenced by an award agreement, in a form approved, from time to time, by the

administrator in its sole discretion.

The award agreement will set forth the terms and conditions of the award, including the type of

award, number of shares subject to such award, vesting schedule and conditions (including performance goals or measures), and the exercise

price, if applicable.

Certain awards under the 2024 Plan may constitute or provide for a deferral of compensation, subject to Section

409A of the Code, which may impose additional requirements on the terms and conditions of such awards.

award will expire seven years from the date of the grant thereof, unless such shorter term of expiration is otherwise designated by the

administrator.

The 2024 Plan provides for the grant of stock options (including incentive stock options and nonqualified stock options), shares

of common stock, restricted shares, restricted share units, and other share-based awards.

granted under the 2024 Plan to our employees who are U.S.

residents may qualify as “incentive stock options” within the meaning

of Section 422 of the Code, or may be non-qualified stock options.

The exercise price of a stock option may not be less than 100% of

the fair market value of the underlying share on the date of grant (or 110% in the case of ISOs granted to certain significant stockholders).

An award under the 2024 Plan may be exercised by providing the company with a written or electronic notice of exercise and full payment

of the exercise price for such shares underlying the award, if applicable, in such form and method as may be determined by the administrator

and permitted by applicable law.

An award may not be exercised for a fraction of a share.

With regard to tax withholding, exercise price,

and purchase price obligations arising in connection with awards under the 2024 Plan, the administrator may, in its discretion, accept

cash, provide for net withholding of shares in a cashless exercise mechanism, or direct a securities broker to sell shares and deliver

all or a part of the proceeds to us or the trustee.

Transferability.

Other than by will, the laws of descent and distribution, or as otherwise provided under the 2024 Plan, neither the options nor any

right in connection with such options are assignable or transferable.

of Employment.

In the event of termination of a grantee’s employment or service with the company or any of its affiliates (other

than by reason of death, disability, or retirement), all vested and exercisable awards held by such grantees as of the date of termination

may be exercised within three months after such date of termination, unless otherwise determined by the administrator.

After such three

month period, all such unexercised awards will terminate, and the shares covered by such awards shall again be available for issuance

under the 2024 Plan.

the event of termination of a grantee’s employment or service with the company or any of its affiliates due to such grantee’s

death, permanent disability, all vested and exercisable awards held by such grantee as of the date of termination may be exercised by

the grantee or the grantee’s legal guardian, estate, or by a person who acquired the right to exercise the award by bequest or

inheritance, as applicable, within one year after such date of termination, unless otherwise provided by the administrator.

which are unvested as of the date of such termination or which are vested but not then exercised within the twelve-month period following

such date, will terminate and the shares covered by such awards shall again be available for issuance under the 2024 Plan.

the event of termination of a grantee’s employment or service with the company or any of its affiliates due to such grantee’s

retirement, all vested and exercisable awards held by such grantee at the time of such retirement may be exercised by the grantee within

three months after the date of such retirement, unless otherwise provided by the administrator.

Any awards which are unvested as of the

date of such termination or which are vested but not then exercised within the three months period following such date, will terminate

and the shares covered by such awards shall again be available for issuance under the 2024 Plan.

Notwithstanding

any of the foregoing, if a grantee’s employment or services with the company or any of its affiliates is terminated for “Cause”

(as defined in the 2024 Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of

such termination and the shares covered by such awards shall again be available for issuance under the 2024 Plan.

Transactions.

In the event of a share split, reverse share split, share dividend, recapitalization, combination, or reclassification of our shares,

or any other increase or decrease in the number of issued shares effected without receipt of consideration by the company (but not including

the conversion of any convertible securities of the company), the administrator in its sole discretion shall make an appropriate adjustment

in the number of shares related to each outstanding award and to the number of shares reserved for issuance under the 2024 Plan, to the

class and kind of shares subject to the 2024 Plan, as well as the exercise price per share of each outstanding award, as applicable,

the terms and conditions concerning vesting and exercisability, and the term and duration of outstanding awards, or any other terms that

the administrator adjusts in its discretion, or the type or class of security, asset, or right underlying the award (which need not be

only that of the Company, and may be that of the surviving corporation or any affiliate thereof or such other entity party to any of

the above transactions);

provided that any fractional shares resulting from such adjustment shall be rounded down to the nearest whole

share unless otherwise determined by the administrator.

In the event of a distribution of a cash dividend to all stockholders, the administrator

may determine, without the consent of any holder of an award, that the exercise price of an outstanding and unexercised award shall be

reduced by an amount equal to the per share gross dividend amount distributed by us, subject to applicable law.

the event of a merger or consolidation of our Company, or a sale of all, or substantially all, of our shares or assets, or other transaction

having a similar effect on the Company, or liquidation or dissolution, or such other transaction or circumstances that the board of directors

determines to be a relevant transaction, then without the consent of the grantee, the administrator may but is not required to (i) cause

any outstanding award to be assumed or substituted by such successor corporation, or (ii) regardless of whether or not the successor

corporation assumes or substitutes the award (a) provide the grantee with the option to exercise the award as to all or part of the shares,

and may provide for an acceleration of vesting of unvested awards, or (b) cancel the award and pay in cash, shares of the company, the

acquirer, or other corporation which is a party to such transaction, or other property as determined by the administrator as fair in

the circumstances.

Notwithstanding the foregoing, the administrator may upon such event amend, modify, or terminate the terms of any

award as it shall deem, in good faith, appropriate.

are not aware of any arrangement that might result in a change in control in the future.

We have no knowledge of any arrangements, including

any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in the Company’s

Certain relationships and related transactions, and director independence

Party Transactions

following section describes various related party transactions.

Pursuant to a stock transfer agreement dated June 1, 2023, Medigus

sold all of its shares of our Common Stock, following which sale Medigus beneficially owned none of our Common Stock and ceased to be

a “related person”.

April 20, 2020, Medigus and Odysight.ai Ltd.

entered into an Intercompany Services Agreement, which amended and restated the intercompany

services agreement executed between the parties on May 30, 2019.

The agreement has an initial term of one year, and renews automatically

for additional one-year periods, unless either party provides 60 (sixty) days written notice of non-renewal.

Either Medigus or Odysight.ai

may terminate the agreement for convenience upon providing 60 days prior written notice.

The services to be provided by Odysight.ai

include the provision of office space, utilities, car services, insurance, and chief financial officer services.

In consideration

for the foregoing services, Odysight.ai Ltd.

is entitled to arm’s length service fees based on the most recent transfer pricing

analysis as performed by an external expert, which may be adjusted from time to time.

On March 22, 2022, Odysight.ai Ltd.

provided prior

written notice to Medigus of termination of the Intercompany Services Agreement effective May 21, 2022.

January 1, 2021 and as of the date hereof, our board of directors authorized the allotment of options to purchase 278,334 shares of Common

Stock to Prof.

Benad Goldwasser and an aggregate of 1,406,842 options and RSUs to purchase shares of Common Stock to certain officers

and directors of our Company.

March 29, 2021, we issued to certain investors, including Arkin Ltd., 2,469,156 units in exchange for an aggregate purchase price of

Each such unit consists of (i) one share of Common Stock and (ii) one warrant to purchase one share of Common Stock with

an exercise price of $10.35 per share.

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

Pursuant to the

terms of the foregoing warrants, following April 1, 2024, if the closing price of our the Common Stock equal or exceeds 135% of the aforementioned

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

after the issue date of the warrants) for any thirty (30) consecutive trading days, we may force the exercise of the warrants, in whole

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

The shares of Common Stock and the warrants were issued to

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

The securities issued in connection with the foregoing

investment were registered by us for resale under a registration statement on Form S-1 declared effective on May 10, 2021.

addition to the compensation arrangements, including employment, termination of employment, and change in control arrangements, discussed,

when required, in the sections titled “ Management ” and “ Executive Compensation ,” the following

is a description of each transaction for the prior two year period and each currently proposed transaction in which:

have been or are to be a participant;

amount involved exceeded or exceeds $120,000;

of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person

sharing the household with, any of these individuals, had or will have a direct or indirect material interest.

March 16, 2023, we entered into and consummated securities purchase agreements with (i) Phoenix Insurance Company Ltd.

(for Moshe Arkin

through his individual retirement account) and (ii) Phoenix Insurance, and Phoenix Amitim, in connection with the sale and issuance

of an aggregate of 3,294,117 units, at a purchase price of $4.25 per unit, and for an aggregate purchase price of $14,000,000 (the “Private

who currently serves as a director on our board of directors, through his individual retirement account) and (ii) Phoenix Insurance and

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

for an aggregate purchase price of $14,000,000.

Each unit consists of:

(i) one share of Common Stock and (ii) one warrant to purchase one share of Common Stock with

an exercise price of $5.50 (the “Warrants”).

The Warrants are immediately exercisable and will expire three (3) years from

the date of issuance and will be subject to customary adjustments.

In connection with the Private Placement, we undertook to file a Registration

Statement on Form S-1 with the Securities and Exchange Commission covering the resale of the shares of Common Stock issued pursuant to

the Private Placement, the shares of Common Stock underlying the Warrants issued pursuant to the Private Placement, and any other shares

of Common Stock and shares of Common Stock underlying warrants to the extent previously issued to Mr.

Arkin, Phoenix Insurance or Phoenix

We further undertook that the Registration Statement on Form S-1 would not include any shares of Common Stock or other securities

for the account of any other holder without the prior written consent of Mr.

(i) one share of 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.

In connection with the private placement,

we undertook to file a Registration Statement on Form S-1 with the SEC covering the resale of the shares of common stock issued pursuant

to the private placement, the shares of common stock underlying the Warrants issued pursuant to the private placement, and any other

shares of common stock and shares of common stock underlying warrants to the extent previously issued to Mr.

Arkin, Phoenix Insurance

or Phoenix Amitim.

We further undertook that the Registration Statement on Form S-1 would not include any shares of common stock or other

securities for the account of any other holder without the prior written consent of Mr.

Arkin, Phoenix Insurance and Phoenix Amitim.

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

Arkin, Phoenix Insurance and Phoenix Amitim are our existing stockholders.

The shares of common stock and warrants were issued

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

During 2022 and 2023 the Company

received development services in the amount of $117,000 and $29,000, respectively, from Smartec R&D Ltd., a company owned by our former

CTO, Amir Govrin.

pursuant to Regulation S of the Securities Act.

2023 we received development services in the amount of $29,000 from Smartec R&D Ltd., a company owned by our former CTO, Amir Govrin.

July 16, 2024, we issued 2,144,583 shares of our common stock in consideration for a purchase price of $4.80 per share to new and

existing investors, including Mr.

Arkin (via M.

Arkin (1999) Ltd.), who currently serves as a director on our board of directors, and The Phoenix Holdings,

through Phoenix Insurance and Phoenix Amitim.

We raised approximately $10 million in the private placement.

The shares of common

stock were issued pursuant to Regulation S of the Securities Act.

February 2025, one or more entities affiliated with the More Group and Sudoku Capital Ltd.

(an entity affiliated with Shmuel Harlap),

purchased 1,046,672 shares and 1,153,846 shares, respectively ,

of our common stock in our underwritten public offering.

More Group was a more than 5% beneficial owner of our common stock prior to the underwritten public offering while Sudoku Capital became

a more than 5% beneficial owner following its participation in the underwritten public offering.

Indemnification

have entered into indemnification agreements with all of our directors and named executive officers.

These agreements require us to indemnify

these individuals to the fullest extent permitted under Nevada law against certain liabilities that may arise by reason of their service

to us, and, subject to certain exceptions and repayment conditions, to advance expenses incurred as a result of any proceeding against

them as to which they could be indemnified.

We also intend to enter into indemnification agreements with our future directors and executive

and Procedures for Related Party Transactions

audit committee is responsible for approving or ratifying related person transactions pursuant to Odysight.ai’s related person

transaction approval policy contained in the audit committee charter.

In reviewing and approving any such related person transactions,

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

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

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

it deems it to be appropriate.

audit committee is responsible for approving or ratifying related person transactions pursuant to our related person transaction approval

policy contained in the audit committee charter.

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

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

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

The audit committee

shall have the authority to establish guidelines for related person transactions and intercompany arrangements where it deems it to be

have been approved to list our common stock on Nasdaq.

Under the rules of Nasdaq, independent directors must comprise a majority of a

listed company’s board of directors within one year following the listing date of the company’s securities, and a director

will only qualify as an “independent director” if that that company’s board of directors affirmatively determines that

such person does not have a relationship with the company that would interfere with the exercise of independent judgment in carrying

out the responsibilities of a director.

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

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

We are not currently subject to

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

board of directors be classified as “independent”.

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

comprised of a majority of “independent directors”.

Notwithstanding the foregoing, we have voluntarily adopted the definition

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

Schneider, Ms.

Vurembrand and Mr.

Nimrodi qualify accordingly.

Principal accounting fees and services

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firm in the Deloitte global network, for the fiscal years ended December 31, 2023 and December 31, 2024:

December 31, 2023

December 31, 2022

$ in thousands

Audit fees (1)

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

fees consist of services related to representing the Company before the ITA in a VAT assessment.

fees consist of services related to representing us before the ITA in a VAT assessment.

Committee Administration of Engagement

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exhibits AND financial statement schedules

Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1.1 to our Form S-1 filed with the SEC on July 17, 2023)

Securities Exchange Agreement, dated September 16, 2019, by and among Medigus Ltd.

and Intellisense Solutions Inc.

(incorporated by reference to Exhibit 10.1 to the report on Form 8-K filed by Medigus Ltd.

on September 17, 2019)

Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1.1 to our Registration Statement on Form S-1 filed with the SEC on July 17, 2023)

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed with the SEC on June 8, 2023)

Description of the Registrant’s Securities

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on January 27, 2025)

Amended and Restated Asset Transfer Agreement, by and between Odysight.ai Ltd.

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2020 Share Incentive Plan (incorporated by reference to Exhibit 10.3 to our Annual Report on Form 10-K filed with the SEC on March 28, 2023)

Form of Notice of Option Grant and Option Agreement (incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K filed with the SEC on March 28, 2023)

Form of Notice of RSU Grant and RSU Agreement (incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K filed with the SEC on March 28, 2023)

2024 Share Incentive Plan (incorporated by reference to Exhibit 10.4 to our Registration Statement on Form S-1 filed with the SEC on June 24, 2024)

Form of Notice of Option Grant and Option Agreement 2020 Share Incentive Plan (incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K filed with the SEC on March 28, 2023)

Form of Notice of RSU Grant and RSU Agreement 2020 Share Incentive Plan (incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K filed with the SEC on March 28, 2023)

Employment Agreement of Eli Israeli, dated September 19, 2023 (incorporated by reference to Exhibit 10.6 to our Registration Statement on Form S-1/A filed with the SEC on December 20, 2023)

Employment Agreement of Tanya Yosef, dated January 14, 2021 (incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K filed with the SEC on March 31, 2021)

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

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

Purchase Order Form, between Odysight.ai Inc.

and the Investors in the March 2021 Private Placement (incorporated by reference to Exhibit 10.34 to our Registration Statement on Form S-1 filed with the SEC on May 4, 2021)

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

Employment Agreement of Yehu Ofer, dated July 13, 2022 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on October 18, 2022)

Employment Agreement of Jacob Avinu, dated September 20, 2022 (incorporated by reference to Exhibit 10.14 to our Registration Statement on Form S-1 filed with the SEC on July 17, 2023)

Employment agreement of Ido Molad, dated May 21,2023 (incorporated by reference to Exhibit 10.14 to our Form S-1 filed with the SEC on February 20, 2023)

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

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

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

and the Investors defined therein.

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

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

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

Registration Rights Agreement, dated March 16, 2023, among Odysight.ai Inc.

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

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

Registration Rights Agreement, dated March 16, 2023, among Odysight.ai Inc.

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

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

Director Appointment and Service Agreement of Jackson Schneider, dated December 6, 2023 (incorporated by reference to Exhibit 10.18 to our Registration Statement on Form S-1/A filed with the SEC on December 20, 2023)

Securities Exchange Agreement, dated September 16, 2019, by and among Medigus Ltd.

and Intellisense Solutions Inc.

(incorporated by reference to Exhibit 99.2 to the report on Form 6-K filed by Medigus Ltd.

on September 17, 2019)

Stock Transfer Agreement, dated June 1, 2023, by and among M.

Arkin (1999) Ltd.

and additional purchasers listed therein, and Medigus Ltd.

and additional sellers listed therein (incorporated by reference to Exhibit 10.22 to our Form S-1 filed with the SEC on February 20, 2023)

Subsidiaries of the Registrant

Consent of Brightman Almagor Zohar & Co., a Firm in the Deloitte Global Network

Employment Agreement of Einav Brenner, dated February 21, 2024 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on May 6, 2024)

Form of Subscription Order (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July 15, 2024)

Director Appointment and Service Agreement of Carlo Papa, dated September 16, 2024.

Form of Underwriting Agreement (incorporated herein by reference to Exhibit 1.1 to our Registration Statement on Form S-1, as amended, filed with the SEC on January 28, 2025)

Agreement between Carlo Papa and Odysight.ai EU, dated February 18, 2025.

Insider Trading Policy

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to our Registration Statement on Form S-1/A filed with the SEC on January 24, 2025)

Consent Brightman Almagor Zohar & Co., a firm in the Deloitte global network, an independent registered public accounting firm

Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer

Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer

Executive Officer Clawback Policy

XBRL Instance Document

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confidential information contained in this exhibit, marked by brackets, was omitted because it is both (i) not material and (ii)

would likely cause competitive harm to the Company if publicly disclosed.

would likely cause competitive harm to us if publicly disclosed.

“[***]” indicates where the information has

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Executive Officer)

Einav Brenner

Financial Officer

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Report of Independent Registered Public Accounting Firm (PCAOB ID 1197 )

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Balance Sheets

Statements of Operations

Statements of Changes in Shareholders’ Equity

Statements of Cash Flows

to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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on the Financial Statements

have audited the accompanying consolidated balance sheets of Odysight.ai Inc.

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

31, 2023 and 2022, the related consolidated statements of operations, changes in shareholders’ equity and cash flows, for each

of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial

statements”).

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

of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the

period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Odysight.ai

and its Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations,

changes in shareholders’ equity and cash flows, for each of the two years in the period ended December 31, 2024, and the related

notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its

operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles

generally accepted in the United States of America.

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

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

Our responsibility is to express an opinion on

the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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disclosures to which it relates.

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

financial statements.

— Customization and Development Services — Refer to Note 2l and 9 to the consolidated financial statements

Audit Matter Description

the year ended December 31, 2023, the Company recorded stock options related compensation expense of $1,664 thousand.

The Company estimated

the fair value of these stock options granted using the Black-Scholes option pricing model.

The Black-Scholes option-pricing model required

management to make a number of assumptions, of which the most significant are the stock price volatility and the expected option term.

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

the fair value of stock-based options granted.

The Company recognizes revenue from customization and development services

that represent a single performance obligation over the duration of the respective contract (“over time”).

These revenues

are recognized commensurate with the progress of services, as products are produced and services are rendered, based on the effort expanded

through the reporting date relative to total estimated effort to satisfy the performance obligation.

During the year ended December 31,

2024 the Company recognized revenues from customization and development services in the amount of $863 thousands.

The accounting for these

contracts requires management to make judgments related to the total estimated amount and cost of man hours and materials required to

satisfy the performance obligation.

We identified revenue from customization and development services as a

critical audit matter because of the judgments made by management in estimating the total effort to satisfy the performance obligation.

This required a high degree of auditor judgment and an increased extent of effort, in relation to our audit as whole.

the Critical Audit Matter Was Addressed in the Audit

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

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

relevant Board of Directors minutes and grant documents.

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

whether the method used for determining fair value was applied appropriately.

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

options granted.

Such evaluation included independent calculation of the expected volatility.

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

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

Brightman Almagor Zohar & Co .

Public Accountants

Firm in the Deloitte Global Network

Our audit procedures related to revenues from customization and development

services included the following, among others:

We obtained understanding

of the contractual terms.

We tested the accuracy of

the actual effort incurred through the reporting date to satisfy the performance obligation by performing a sample of actual costs

and obtaining supporting documents.

We evaluated reasonability

of estimated total effort to satisfy the performance obligation by:

– Inquiring of Company research and development personnel to understand the

process used to develop management’s estimate.

the amount of effort incurred to date to management’s historical estimates and inquiring

regarding differences.

sensitivity analysis over total estimated effort.

We tested the mathematical accuracy of management’s

calculation of effort expanded through the reporting date relative to total estimated effort.

/s/ Brightman Almagor Zohar & Co.

Certified Public Accountants

A Firm in the Deloitte Global Network

Tel Aviv, Israel

have served as the Company’s auditor since 2020.

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BALANCE SHEETS

USD in thousands

CURRENT ASSETS:

Cash and cash equivalents

Restricted deposit

Short terms deposits

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Other current assets

current assets

Total current assets

NON-CURRENT ASSETS:

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Other non-current assets

non-current assets

Liabilities and shareholders’

Total non-current assets

Liabilities and shareholders’ equity

CURRENT LIABILITIES:

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Other current liabilities

current liabilities

Total current liabilities

NON-CURRENT LIABILITIES:

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Liability for severance pay

Other non-current

non-current liabilities

Other non-current liabilities

Total non-current liabilities

TOTAL LIABILITIES

SHAREHOLDERS’ EQUITY:

Common stock, $ 0.001 par value;

300,000,000 shares authorized as of

December 31, 2023 and December 31, 2022, 10,443,768 and 7,121,737 shares issued and outstanding as of December 31, 2023 and December

300,000,000 shares authorized as of December 31, 2024 and December 31, 2023, 12,612,517 and 10,443,768

shares issued and outstanding as of December 31, 2024 and December 31, 2023

Additional paid-in capital

Accumulated deficit

TOTAL SHAREHOLDERS’

LIABILITIES AND SHAREHOLDERS’ EQUITY

TOTAL SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

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

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STATEMENTS OF OPERATIONS

ended December 31,

(except per share data)

Year ended December 31,

USD in thousands

(except per share

COST OF REVENUES

GROSS PROFIT (LOSS)

RESEARCH AND DEVELOPMENT

RESEARCH AND DEVELOPMENT EXPENSES

SALES AND MARKETING EXPENSES

AND ADMINISTRATIVE EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

OPERATING LOSS

INCOME (EXPENSES), NET

FINANCING INCOME, NET

LOSS BEFORE TAXES ON INCOME

Net loss per share (basic

and diluted, in USD)

Weighted average common

shares (basic and diluted, in thousands)

TAXES ON INCOME

Net loss per share (basic and diluted, in USD)

Weighted average common shares (basic and diluted, in thousands)

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

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STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

paid-in capital

Accumulated deficit

Shareholders’ equity

USD in thousands

Balance at January 1, 2024

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Issuance of shares upon RSU vesting (see note 8)

Issuance of shares and warrants(see note 9)

Issuance of shares (see note 8)

Balance at December 31, 2024

paid-in capital

Accumulated deficit

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Stock based compensation (see note 8)

Issuance of shares upon RSU vesting (see note 8)

Issuance of shares and warrants (see note 8)

Balance at December 31, 2023

an amount less than $1 thousand.

an amount of less than $1 thousand.

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

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STATEMENTS OF CASH FLOWS

ended December 31,

CASH FLOWS FROM OPERATING

Adjustments to reconcile

net loss to net cash used in operating activities:

Year ended December 31,

USD in thousands

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Stock based compensation

Profit (loss) from exchange differences on

cash and cash equivalents

Interest and exchange differences from operating

lease liability

Profit (Loss) from exchange differences on cash and cash equivalents

Interest and exchange differences from operating lease liability

Severance pay asset and liability

Interest income in respect of deposits

CHANGES IN OPERATING ASSET

AND LIABILITY:

CHANGES IN OPERATING ASSET AND LIABILITY:

Increase in accounts receivable

Decrease (increase) in inventory

Increase in operating lease liability

Increase in ROU asset

Decrease (increase) in current and non-current

Decrease in inventory

Decrease in operating lease liability

Decrease in right-of-use asset

Decrease (increase) in other current and non-current assets

Increase (decrease) in account payable

Decrease in contract fulfillment assets

Increase (decrease) in current and non-current

contract liabilities

Increase (decrease) in current and non-current contract liabilities

Increase in accrued compensation expenses

Increase (decrease) in related parties

Increase (decrease) in

current and non-current other liabilities

Increase (decrease) in other current and non-current liabilities

Net cash flows used in operating activities

CASH FLOWS FROM INVESTING

Purchase of property

and equipment

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Withdrawal of short terms deposits

Investment in short

terms deposits

Net cash flows provided by (used in) investing

CASH FLOWS FROM FINANCING

Investment in short terms deposits and restricted deposit

Net cash flows provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of shares and warrants

Net cash flows provided

by financing activities

INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS

BALANCE OF CASH AND CASH

EQUIVALENTS AT BEGINNING OF YEAR

FROM EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS

OF CASH AND CASH EQUIVALENTS AT END OF YEAR

Net cash flows provided by financing activities

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

PROFITS (LOSS) FROM EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS

BALANCE OF CASH AND CASH EQUIVALENTS AT END OF YEAR

cash activities -

ended December 31,

Non cash activities

Right-of-use assets obtained in exchange for

operating lease liabilities

Termination of right-of-use assets in exchange

for cancellation of operating lease obligations

Year ended December 31,

USD in thousands

SUPPLEMENTAL INFORMATION FOR CASH FLOW:

Right-of-use assets obtained in exchange for operating lease liabilities

Termination of right-of-use assets in exchange for cancellation of operating lease obligations

(Formerly known as ScoutCam Inc.)

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Inc (the “Company”), formerly known as ScoutCam Inc., was incorporated under the laws of the State of Nevada on March

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

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.

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.

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.

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

2020-2023 Medigus 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 of its holdings in the Company to existing shareholders and to Chairman

of the Board and CEO of the Company.

Company’s wholly owned subsidiary, Odysight.ai Ltd (“Odysight.ai”), formerly known as ScoutCam Ltd., was incorporated

in the State of Israel on January 3, 2019, and was merged into the Company on December 31, 2019, in a share exchange transaction,

following which the surviving operations of the merged entity were the operations of Odysight.ai.

February 28, 2024, D.

was formed in the State of Israel, wholly owned by Odysight.ai Inc., to act as a local agent for

the defense market in Israel.

Company, through Odysight.ai, provides image-based platforms.

Through the use of its proprietary visualization technology, Odysight.ai

offers solutions across predictive maintenance and condition-based monitoring markets, in sectors such as energy, automotive and

Odysight.ai’s solutions are based on small and highly resilient cameras, specialized AI analysis and supplementary

technologies.

Some of the Company’s products utilize micro visualization technology in medical devices for minimally invasive

medical procedures.

incorporation of Odysight.ai and through December 31, 2023, the Company accumulated a deficit of approximately $ 34.2 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 Consolidated Financial Statements.

VIEW Ltd., a wholly owned subsidiary of the Company was incorporated in the State of Israel to act as a local

representative for the defense market in Israel.

On January 9, 2025, Odysight.Ai Eu S.r.l., a wholly owned subsidiary of the Company was incorporated under the laws of Italy.

References to the Company include the subsidiaries unless the context indicates otherwise.

Company, through its subsidiaries, provides vision-based platform solutions for the Predictive Maintenance (PdM) and Condition Based

Monitoring (CBM) markets with its visualization and AI platform.

The Company’s video sensor-based solutions

and its embedded software, and AI algorithms

are deployed in hard-to-reach locations and harsh environments across a variety of PdM and CBM use cases and allow maintenance and

operations teams visibility into areas which are inaccessible under normal operation, or where the operating ambience is not suitable

for continuous real-time monitoring.

Some of the Company’s products utilize micro visualization technology in medical devices

for minimally invasive medical procedures.

On February 11, 2025, Company’s completed its uplist

and its common stock began trading on the Nasdaq Capital Market under the symbol “ODYS”.

Prior to such date, the Company

was quoted on the OTCQB under the same symbol.

the incorporation of Odysight.ai, and through December 31, 2024, the Company accumulated a deficit of approximately $ 46

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 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.

On October 7, 2023, Hamas terrorists infiltrated Israel’s southern

border from the Gaza Strip and conducted a series of attacks on civilian and military targets, which led Israel to formally declare war

on Hamas the next day.

The war is ongoing as of the issuance date of these financial statements.

At this stage, the Company does not expect

substantial impact of the above-described events on its operations.

and other costs related to its ongoing operations, which may require the Company to obtain additional funding in order to continue

its future operations until becoming profitable.

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

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2 - SIGNIFICANT ACCOUNTING POLICIES (continued) :

Restricted deposit

The restricted deposits consist of funds that are contractually restricted

as to usage or withdrawal due to guarantees made to the Company’s client.

Accounts receivable

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or the related account receivable.

As of December 31, 2023 and 2022, no allowance

for doubtful accounts was recorded.

of December 31, 2024 and 2023, no allowance for doubtful accounts was recorded.

Property and equipment

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Stock-Based Compensation

The Company applies the fair value recognition provisions

of ASC 718, Compensation—Stock Compensation, or ASC 718, for stock-based awards granted to employees, directors, and other providers

for their services.

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

estimated fair values on the grant dates.

The Company calculates the estimated fair value of option awards on the grant date using

the Black-Scholes option-pricing model.

The Black-Scholes option-pricing model requires a number of assumptions, of which the most

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

The Company’s expected dividend rate is zero since

the Company does not currently pay cash dividends on its stocks and does not anticipate doing so in the foreseeable future.

Volatility is derived from the historical volatility of publicly traded set of peer companies.

The risk-free interest rates used in

the Black-Scholes calculations are based on the prevailing U.S.

Company applies the fair value recognition provisions of ASC 718, Compensation—Stock Compensation, or ASC 718, for stock-based

awards granted to employees, directors, and other providers for their services.

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

fair values on the grant dates.

The Company calculates the estimated fair value of option awards on the grant date using the Black-Scholes

option-pricing model.

The Black-Scholes option-pricing model requires a number of assumptions, of which the most significant are the

stock price volatility and the expected option term.

The Company’s expected dividend rate is zero since the Company does not currently

pay cash dividends on its stocks and does not anticipate doing so in the foreseeable future.

Volatility is derived from the historical

volatility of publicly traded set of peer companies.

The risk-free interest rates used in the Black-Scholes calculations are based on

the prevailing U.S.

Treasury yield as determined by the U.S.

Federal Reserve.

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

Each of the above factors requires

the Company to use judgment and make estimates in determining the percentages and time periods used for the calculation.

Company were to use different percentages or time periods, the estimated fair value of option awards could be materially different.

The Company recognizes stock-based compensation cost for option awards on an accelerated basis over the employee’s requisite

service period, forfeitures are accounted for as they occur.

The weighted average expected life of options was estimated

individually in respect of each grant.

Each of the above factors requires the Company to use judgment and make estimates in determining

the percentages and time periods used for the calculation.

If the Company were to use different percentages or time periods, the estimated

fair value of option awards could be materially different.

The Company recognizes stock-based compensation cost for option awards on

an accelerated basis over the employee’s requisite service period, forfeitures are accounted for as they occur.

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

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

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

fixed production overheads.

Costs of purchased

raw materials and inventory in process include costs of design, raw materials, direct labor, other direct costs and fixed production

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

18 unchanged sentences

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

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

transaction price is allocated to each distinct performance obligations on a relative standalone selling price (“SSP”) basis

and revenue is recognized for each performance obligation when control has passed.

In most cases, the Company is able to establish SSP

based on the observable prices of services sold separately in comparable circumstances to similar customers and for products based on

the Company’s best estimates of the price at which the Company would have sold the product regularly on a stand-alone basis.

Company reassesses the SSP on a periodic basis or when facts and circumstances change.

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

from product customization and development contracts in which the performance obligation is satisfied over time are recognized over

the duration of the contract and commensurate with the progress of services.

The Company measures the progress of services

using the input method, based on the effort expended relative to the estimated total effort to satisfy the performance

from product sales are recognized at a point in time when the customer obtains control of the Company’s product, typically upon

2 unchanged sentences

are excluded from revenues.

Company also generates revenues from development services.

Revenue from development services is recognized over the period of the applicable

service contract.

To the extent development services are not distinct from the performance obligation relating to the subsequent mass

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

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

(Formerly known as ScoutCam Inc.)

8 unchanged sentences

to incur losses.

IIA grants are offset against cost revenues.

Research and development costs

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tax benefits are recognized in tax expense.

The Company and Odysight.ai provide a valuation allowance, if necessary, to reduce deferred

The Company provides a valuation allowance, if necessary, to reduce deferred

tax assets to their estimated realizable value.

Legal contingencies

The Company follows ASC 450-20,

Loss Contingencies, to report accounting for contingencies.

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

course of business.

Such matters are generally subject to many uncertainties and outcomes are not predictable with assurance.

Company accrues for contingencies when the loss is probable and can reasonably estimate the amount of any such loss.

Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies.

From time to time, the Company may

become involved in legal proceedings or subject to claims arising in its ordinary course of business.

Such matters are generally

subject to many uncertainties and outcomes are not predictable with assurance.

The Company accrues for contingencies when the loss is

probable and can reasonably estimate the amount of any such loss.

(Formerly known as ScoutCam Inc.)

1 unchanged sentence

2 — SIGNIFICANT ACCOUNTING POLICIES (continued):

and diluted net loss per share of common stock :

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

of common stock outstanding during the year.

Basic and diluted net loss per share of common stock :

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

common stock outstanding during the year.

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

stock outstanding during the year, plus the number of shares of common stock that would have been outstanding if all potentially

dilutive shares of common stock had been issued, using the treasury stock method, in accordance with ASC 260-10 “Earnings per

stock outstanding during the year, plus the number of shares of common stock that would have been outstanding if all potentially dilutive

shares of common stock had been issued, using the treasury stock method, in accordance with ASC 260-10 “Earnings per Share”.

outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share for the years ended December

4 unchanged sentences

asset for a period of time in exchange for consideration.

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

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

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

lease liabilities in the consolidated balance sheet at lease commencement.

Operating lease ROU assets and operating lease liabilities

9 unchanged sentences

New accounting pronouncements

issued accounting pronouncements, not yet adopted

The Company adopted the following accounting

standards during the year:

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting

(Topic 280), Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) to improve reportable segment disclosure

requirements through enhanced disclosures about significant segment expenses on an interim and annual basis.

All disclosure requirements

of ASU 2023-07 are also required for entities with a single reportable segment.

ASU 2023-07 is effective starting January 1, 2024 and

should be applied on a retrospective basis to all periods presented.

The adoption of this ASU did not have a material impact on the Company’s

financial statements (see also Note 16 ).

issued accounting pronouncements, not yet effective

December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

7 unchanged sentences

Early adoption is permitted, with the option to apply the standard retrospectively.

The Company does not expect any significant impact from the adoption of this standard.

3 - SHORT-TERM DEPOSITS :

term deposits as of December 31, 2023 bearing annual interest rates of 7.2 % and 6.3 %, with maturities of up

to 12 months.

The Company is currently evaluating the impact that ASU 2023-09 will have on its related disclosures, and the transition method.

In November 2024, the FASB issued ASU 2024-03, “Income Statement–Reporting

Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (“ASU

2024-03”), which requires the disaggregation of certain expenses in the financial statements notes, to provide enhanced transparency

into the expense captions presented on the face of the consolidated statement of operations.

ASU 2024-03 is effective for annual reporting

periods beginning January 1, 2027 and interim periods beginning January 1, 2028 and may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact that ASU 2024-03 will have on its related disclosures, and the transition method.

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 - INVENTORY :

SCHEDULE OF INVENTORY

USD in thousands

Raw materials and supplies

4 unchanged sentences

4 - PROPERTY AND EQUIPMENT, NET :

plant and equipment, net consisted of the following:

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT NET

USD in thousands

Machinery and laboratory equipment

Leasehold improvements, office furniture and

Computers and computer

Leasehold improvements, office furniture and equipment

Computers and computer software

Total property and equipment, gross

accumulated deprecation

Total property and equipment,

Total property and equipment, net

expenses were $ 123 thousand and $ 284 thousand for the years ended December 31, 2024 and 2023, respectively.

2 unchanged sentences

5 – OTHER CURRENT LIABILITIES :

SCHEDULE OF OTHER ACCRUED EXPENSES

SCHEDULE OF OTHER CURRENT LIABILITIES

USD in thousands

Government authorities

1 unchanged sentence

Other payables

Total other accrued expenses

other current liabilities

6 - INCOME TAXES :

rates applicable to the income of the Israeli subsidiary:

rates applicable to the income of the Israeli subsidiaries:

is taxed according to Israeli tax laws.

9 unchanged sentences

SCHEDULE OF COMPONENT OF DEFERRED TAX ASSET

loss carryforward

USD in thousands

Operating loss carryforward

Net deferred tax asset before valuation allowance

6 unchanged sentences

not be realized in the foreseeable future.

carryforward tax losses:

of December 31, 2023, the Company has an accumulated tax loss carryforward of approximately $ 25,006 thousand.

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

6 - INCOME TAXES (Continued):

carryforward tax losses:

in Israel are of unlimited duration.

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

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

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

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

of December 31, 2024, the Company has an accumulated tax loss carryforward of approximately $ 34,433

Carryforward tax losses in Israel are of unlimited duration.

Under the Tax Cut and Jobs Act of 2017 (the “Tax Act”) (subject

to modifications under the Coronavirus Aid, Relief, and Economic Security Act), federal net operating losses (NOL) incurred in

taxable years ending after December 31, 2017 and in future years may be carried forward indefinitely, but the deductibility of such

federal net operating losses is limited.

It is uncertain if and to what extent various states will conform to the newly enacted

federal tax law.

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

7 unchanged sentences

of such deferred taxes.

of December 31, 2021, Odysight.ai owed NIS 740 thousand, (approximately $ 229 thousand) in additional taxes to the Israel Tax Authority

following a VAT audit in Israel for 2019-2021.

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

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

to the additional taxes of $ 229 thousand, which was included in general and administrative expenses in the statement of operation

July 2022, Odysight.ai reached an agreement with the Israeli Tax Authority, according to which the amount due in additional taxes

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

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

7 – RELATED PARTIES :

Parties Balances:

OF BALANCES WITH RELATED PARTIES

Directors (directors’ accrued

compensation)

SCHEDULE OF BALANCES WITH RELATED PARTIES

USD in thousands

Directors (directors’ accrued compensation)

Smartec R&D Ltd.

(see note 8b)

Related parties

2022 and 2023 the Company received development services from Smartec R&D Ltd., a company owned by the Company’s former

compensation for the fiscal years ended December 31, 2022 and December 31, 2023 was $ 117 thousands and $ 29 thousands, respectively.

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

of the authorized share capital

January 20, 2021, the Company’s Board of Directors approved an increase of the authorized share capital of the Company by an additional

February 5, 2021, the Company increased its authorized share capital of the Company by an additional

225,000,000 shares of common stock par value $ 0.001 per share, such that the authorized share capital of the Company following such increase

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

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

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

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

Each such unit

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

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

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

4 unchanged sentences

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

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

March 16, 2023, the Company consummated a private placement with (i) Moshe Arkin and (ii) The Phoenix Insurance Company Ltd.

Shotfut Menayot Israel – Phoenix Amitim, for the sale of an aggregate amount of 3,294,117 units,

at a purchase price of $ 4.25 per

unit resulting in gross proceeds of $ 14,000,000 .

Each unit consisted of:

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

price of $ 5.50

The warrants are immediately exercisable and will expire three years from the date of issuance and will be subject to

customary adjustments.

On July 16, 2024, the Company issued 2,144,583

shares of its common stock in consideration for a purchase price of $ 4.80

per share to new and existing investors, including Mori Arkin and The Phoenix Holdings, through Phoenix Insurance and Phoenix

The gross proceeds from the issuance of securities

offered amounted to approximately $ 10.3 million.

After deducting issuance costs, the Company received proceeds of approximately

$ 9.8 million.

(Formerly known as ScoutCam Inc.)

2 unchanged sentences

of December 31, 2024, the Company had the following outstanding warrants to purchase common stock:

OF STOCK WARRANTS OUTSTANDING TO PURCHASE COMMON STOCK

SCHEDULE OF STOCK WARRANTS OUTSTANDING TO PURCHASE COMMON STOCK

Exercise Price

2 unchanged sentences

March 31, 2026

March 2023 Warrant

March 27, 2023

March 26, 2026

compensation to employees, directors and service providers:

10 unchanged sentences

option pool pursuant to the Plan by an additional 1,000,000 shares of common stock.

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.

2022, the Company granted 479,000 options pursuant to the Plan.

2023, the Company granted 986,000 options pursuant to the Plan

granted generally have a contractual term of seven years and vest over a period of three to four years .

June 2024, the Company’s Board of Directors approved the 2024 Share Incentive Plan (the “2024 Plan”).

2024 Plan initially included a pool of 234,484 shares of common stock, representing the number of shares remaining available for grant

under the 2020 Plan.

These shares are available for future grant to Company employees, consultants, directors and other service providers.

Shares that were subject to awards granted under either the 2020 Plan or the 2024 Plan that have expired or were cancelled or become

un-exercisable for any reason without having been exercised in full shall become available for future grant under the 2024 Plan.

July, 2024, the Company’s Board of Directors approved an increase to the 2024 Plan’s option pool by an additional 850,000

shares of common stock.

2020 Plan and 2024 Plan each provide for the grant of stock options (including incentive stock options and nonqualified stock options),

shares of common stock, restricted shares, restricted share units, and other share-based awards.

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

8 – EQUITY (continued):

1 unchanged sentence

following summarizes stock option activity:

OF STOCK OPTION ACTIVITY

average exercise price

Average Remaining Contractual Term (years)

Intrinsic Value (in thousands)

SCHEDULE OF STOCK OPTION ACTIVITY

Amount of options

Weighted average exercise price

Weighted Average Remaining Contractual

Aggregate Intrinsic Value (in thousands)

$ in thousands

Outstanding - January 1, 2023

9 unchanged sentences

using Black-Scholes option-pricing model based on the following assumptions:

based on underlying value of shares of

$ 3 , exercise price of $ 3 -$ 4.5 , expected volatility of 88 %- 90 %, term of the options – 7 years and risk-free interest rate 3.93 %- 4.47 %.

based on underlying value of shares of $ 5.55 - 5.75 , exercise

price of $ 4.5 -$ 4.8 , expected volatility of 100.61 %- 101.39 %, term of the options – 7 years and risk-free interest rate 3.51 %- 4.23 %.

is derived from the historical volatility of publicly traded set of peer companies.

11 unchanged sentences

approximately $ 3.4 million and is expected to be recognized over a weighted-average period of 1.43 years.

2023 and 2022 the Company’s Board of Directors authorized the grant of options to purchase 150,000

shares of common stock of the Company and 45,000

shares of common stock of the Company, respectively, to Prof.

2024 and 2023, the Company’s Board of Directors authorized the grant of options to purchase 60,000 shares of common stock of the

Company and 150,000 shares of common stock of the Company, respectively, to Prof.

Goldwasser, the Chairman of the Board.

2023 the Company’s Board of Directors authorized the grant of options to purchase 260,000

shares of common stock of the Company to directors of the Company.

2023 and 2022 the Company’s Board of Directors authorized the grant of options to purchase 225,000

shares of common stock of the Company and 400,000

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

2024, the Company’s Board of Directors authorized the grant of options to purchase 120,000 shares of common stock of the Company

to directors of the Company.

2024 and 2023, the Company’s Board of Directors authorized the grant of options to purchase 285,000 shares of common stock of the

Company and 225,000 shares of common stock of the Company, respectively, to certain officers of the Company.

expense recorded by the Company in respect of its stock-based employees, directors and service providers compensation awards in

accordance with ASC 718-10 for the year ended December 31, 2024 and 2023 amounted to $ 2,329

thousands and $ 1,638

thousands, respectively.

thousand and $ 1,548

thousand, respectively.

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

8 – EQUITY (continued):

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

the year ended December 31, 2023, the Company granted 25,000 RSUs pursuant to the Plan.

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

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

cost of the benefit embodied in the RSU granted during 2023, based on their fair value as at the grant date, is estimated to be approximately

$ 75 thousand.

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

following table summarizes RSU activity for December 31, 2024:

1 unchanged sentence

Amount of RSUs

Weighted Average Grant Date Fair Value per Share

Weighted Average Remaining Contractual Term (years)

Weighted Average Grant Date Fair Value

Weighted Average Remaining Contractual

Outstanding - December 31, 2023

Unvested and Outstanding - December 31, 2024

Compensation expense recorded by the Company in respect of its stock-based employees, directors and service providers

compensation awards in accordance with ASC 718-10 for the year ended December 31, 2024 and 2023 amounted to $ 57 thousand and $ 116 thousand,

respectively.

unrecognized compensation expense calculated under the fair-value method for RSUs expected to vest as of December 31, 2024 is approximately

$ 13 thousand and is expected to be recognized over a weighted-average period of 0.92 years.

The following table sets forth the total stock-based

payment expenses resulting from options and RSU granted, included in the statements of operation and comprehensive income:

OF STOCK-BASED PAYMENT EXPENSE

following table sets forth the total stock-based payment expenses resulting from options and RSU granted, included in the statements

of operation and comprehensive income:

SCHEDULE OF STOCK-BASED PAYMENT EXPENSE

Year ended on

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9 – REVENUES AND ENTITY WIDE DISCLOSURES :

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

The Company manages its

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

Disaggregation

OF DISAGGREGATION OF REVENUE

Development Services (customer

the second quarter of 2022, the Company completed the development of to a customer-specific project for a Fortune 500 multinational

the second quarter of 2022, the Company completed the development of a customer-specific project for a Fortune 500 multinational

healthcare corporation (“customer A”) and moved from the development phase of the project to its production phase.

result, during the year ended December 31, 2024, the Company recognized development services revenues and related development costs

that had been previously deferred, in the amounts of $ 422

thousand and $ 239 thousand, respectively.

The amounts were recognized based on the expected manufacturing term of the product, which the Company estimates at 7

addition, following the commencement of the production phase, the Company recognized product revenues of $ 2,514 thousands during

the year ended December 31, 2023 from the sale of units of the product developed in the context of these development services.

that had been previously deferred, in the amounts of $ 422 thousand and $ 239 thousand, respectively.

The amounts were recognized based

on the expected manufacturing term of the product, which the Company estimates at 7 years.

addition, following the commencement of the production phase, the Company recognized product revenues of $ 2,578

thousand during the year ended December 31,

2024 from the sale of units of the product developed in the context of these development services.

the year ended December 31, 2024 the Company recognized revenues from customization and development services in which the performance

obligation is satisfied over time in the amount of $ 863

by geographical area (based on the location of customers)

following is a summary of revenues within geographic areas:

OF REVENUES WITHIN GEOGRAPHIC AREAS

SCHEDULE OF REVENUES WITHIN GEOGRAPHIC AREAS

Year ended on

USD in thousands

United States

United Kingdom

forth below is a breakdown of Company’s revenue by major customers (major customer –revenues from these customers constituted

at least 10% of total revenues in a certain year):

OF MAJOR CUSTOMER BREAKDOWN OF COMPANY’S REVENUE

SCHEDULE OF MAJOR CUSTOMER BREAKDOWN OF COMPANY’S REVENUE

Year ended on

USD in thousands

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

9 – REVENUES AND ENTITY WIDE DISCLOSURES (continued) :

fulfillment assets and Contract liabilities:

OF CONTRACT FULFILLMENT ASSETS AND CONTRACT LIABILITIES

fulfillment assets

SCHEDULE OF CONTRACT FULFILLMENT ASSETS AND CONTRACT LIABILITIES

USD in thousands

Contract fulfillment assets

Contract liabilities

liabilities include deferred service and advance payments.

change in contract fulfillment assets:

USD in thousands

Balance at beginning of year

Contract costs recognized

during the period

Contract costs recognized during the period

Balance at end of year

change in contract liabilities:

USD in thousands

Balance at beginning of year

Deferred revenue relating to new sales

Revenue recognized during

Revenue recognized during the year

Balance at end of year

1 unchanged sentence

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

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

As of December 31, 2023, the total RPO amounted to $ 2.3 million, which

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

and amounts that are expected to be invoiced and recognized as revenue in future periods.

As of December 31, 2024, the total RPO amounted

to approximately $15 million.

The total RPO amount includes an amount exceeding $10 million related to a long-term purchase order agreement

signed in the third quarter of 2024 with a leading international defense contractor.

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 .

June 25, 2023, Odysight.ai entered into an amendment to these agreements, pursuant to which the lease for the additional space will

be shortened and end on June 30, 2023 and the lease for the 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

Odysight.ai expect that the lease period

will be three years.

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.

March 2021, Odysight.ai entered into a lease agreement for additional office space in Omer, Israel (“Additional Space”),

with the term for such agreement ending in December 31, 2023.

June 25, 2023, Odysight.ai entered into an amendment to these agreements pursuant to which the lease for the Additional Space was

shortened and ended on June 30, 2023 and th e lease for the Original Space was extended for an additional five years until December

It was also agreed that Odysight.ai has an option to terminate the agreement for the Original Space after three years.

expect that the lease period will be three years.

lease payments under the agreement for the Original Space are approximately $ 7 thousand.

Gan office space

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 .

Monthly lease payments under the agreement are $ 3 thousand.

The Company terminate the agreement after 12 months.

May 2023, Odysight.ai entered into an additional lease agreement for office space in Ramat Gan, Israel.

6 unchanged sentences

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

December 31, 2023, the Group’s ROU assets and lease liabilities for operating leases totaled $ 1,380 thousand and $ 1,326 thousand,

December 31, 2024, the Company’s ROU assets and lease liabilities for operating leases totaled $ 1,113 thousand and $ 1,047 thousand,

respectively.

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

lease expenses were $ 403

thousand and $ 264

thousand for the years ended December 31, 2023 and 2022, respectively.

December 31, 2023, the Company’s ROU assets and lease liabilities for operating leases totaled $ 1,380 thousand and $ 1,326 thousand,

respectively.

lease expenses were $ 514 thousand and $ 403 thousand for the years ended December 31, 2024 and 2023, respectively.

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

OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES

ended December 31,

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES

Year ended December 31,

USD in thousands

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating

Operating cash flows from operating leases

term and discount rate related to operating leases as of the period presented were as follows:

OF LEASE TERM AND DISCOUNT RATE RELATED TO OPERATING LEASES

Weighted-average remaining lease

term (in years)

SCHEDULE OF LEASE TERM AND DISCOUNT RATE RELATED TO OPERATING LEASES

USD in thousands

Weighted-average remaining lease term (in years)

Weighted-average discount rate- leases vehicles

Weighted-average discount rate- leases offices

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

10 – LEASES (continued) :

maturities of lease liabilities under operating leases as of December 31, 2024 are as follows:

OF MATURITIES LEASE LIABILITIES UNDER OPERATING LEASES

SCHEDULE OF MATURITIES LEASE LIABILITIES UNDER OPERATING LEASES

USD in thousands

Remainder of fiscal year

Total undiscounted lease payments

Imputed interest

lease liabilities

Total lease liabilities

COST OF REVENUES:

SCHEDULE OF COST OF REVENUES

Year ended December 31,

USD in thousands

Salaries and related expenses

Stock-based compensation

Materials and subcontractors

Travel expenses

Vehicle expenses

Rent and maintenance and other expenses

COST OF REVENUES

12 – RESEARCH AND DEVELOPMENT EXPENSES :

OF RESEARCH AND DEVELOPMENT EXPENSES

ended December 31,

Salaries and related expense

SCHEDULE OF RESEARCH AND DEVELOPMENT EXPENSES

Year ended December 31,

USD in thousands

Salaries and related expenses

Stock-based compensation

2 unchanged sentences

Vehicle expenses

Rent and maintenance

and other expenses

and Development expenses

Rent and maintenance and other expenses

Research and Development

13 – SALES AND MARKETING EXPENSES :

OF SALES AND MARKETING EXPENSES

ended December 31,

Salaries and related expense

SCHEDULE OF SALES AND MARKETING EXPENSES

Year ended December 31,

USD in thousands

Salaries and related expenses

Stock-based compensation

4 unchanged sentences

14 – GENERAL AND ADMINISTRATIVE EXPENSES :

OF GENERAL AND ADMINISTRATIVE EXPENSES

ended December 31,

Salaries and related expense

SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES

Year ended December 31,

USD in thousands

Salaries and related expenses

Stock-based compensation

2 unchanged sentences

Rent and maintenance and other expenses

VAT provision (note

and Administrative expenses

General and Administrative

(Formerly known as ScoutCam Inc.)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

15 - COMMITMENTS AND CONTINGENCIES

On April 2023,

the Company received approval from the Israel Innovation Authority (previously the Office of the Chief Scientist), (the “IIA”)

April 2023, 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 24 months until April 2025.

5 unchanged sentences

or if it generates no sales.

the year ended December 31, 2023 grants of $ 60 thousand recorded as cost of revenues in the consolidated statements.

16 — SEGMENT REPORTING

information is prepared on the same basis that the chief executive officer, who is the Company’s chief operating decision maker,

manages the business, makes business decisions and assesses performance.

The Company has one reportable segment specializing in vision-based

platform solutions as described in Note 1.

Chief Executive Officer assesses performance for this segment and decides how to allocate resource.

The measure of segment assets is reported on the balance

sheet as total assets.

The chief executive officer performs the assessment of segment performance by using the reported

measure of segment profit or loss to monitor budget versus actual results.

table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024 and 2023:

OF SEGMENT REPORTING INFORMATION

Year ended December 31,

USD in thousands

Cost of Sales (*)

Research and Development expenses (*)

Sales and marketing (*)

General and Administrative expenses (*)

Other segment items:

Share-based payments

Finance income, net

(*) Excluding share-based

payments, depreciation expense and finance income, net

17 - SUBSEQUENT EVENTS :

February 28, 2024, D.

was formed in the State of Israel, wholly owned by Odysight.ai Inc., to act as a local agent for the

defense market in Israel.

On January 9, 2025, the Company formed a wholly-owned subsidiary, Odysight.Ai

Eu S.r.l., a private company organized under the laws of Italy.

On February 12, 2025, the

Company completed a U.S.

underwritten public offering issuing 3,307,692 shares

of the Company’s common stock at a public offering price of $ 6.50 per

The Company also granted the underwriters a 30-day over-allotment option to purchase up to an additional 496,153 shares

at a purchase price of $ 6.50 per

On February 14, 2025, the

Company sold an additional 345,432 shares

of common stock as a result of a partial exercise of the over-allotment option at the public offering price of $ 6.50 per

Following the exercise of

the over-allotment option, the Company sold a total of 3,653,124 shares

of common stock, generating gross proceeds of approximately $ 23.7 million,

prior to the deduction of underwriting discounts, commissions, and estimated offering expenses.

On February 11,

2025, the Company’s common stock began trading on the Nasdaq Capital Market under the symbol “ODYS”.

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

What changed 10-K

Item 9A. Controls and Procedures