Odysight.ai Inc 10-K/A for FY2019

Odysight.ai Inc. (ODYS)

10-K/A 2020-05-12 For: 2019-12-31

Added on April 07, 2026

About this 10-K/A

Odysight.ai Inc filed this 10-K/A on May 12, 2020, covering the fiscal year ended December 31, 2019 (FY2019).

Headline figures

Fiscal year ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $309K; down 21.0% from $391K a year earlier
Net loss: $1.83M; compared with a net loss of $524K a year earlier

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Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[ ]

	Page
Consolidated Financial Statements – in US Dollars (USD) in thousands
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Shareholders’ Equity (Capital Deficiency)	F-5
Consolidated Statements of Cash Flows	F-6
Notes to the Consolidated Financial Statements	F-7

	December 31,
	2019			2018
	USD in thousands

Assets

CURRENT ASSETS:
Cash and cash equivalents		3,245			-
Accounts receivable		22			90
Inventory		900			81
Parent Company		73			-
Other current assets		78			62
Total current assets		4,318			233

NON-CURRENT ASSETS:
Property and equipment, net		59			13
Operating lease right-of-use assets		53			-
Severance pay asset		327			270
Total non-current assets		439			283

TOTAL ASSETS		4,757			516

Liabilities and shareholders’ equity (capital deficiency)

CURRENT LIABILITIES :
Accounts payable		35			19
Contract liabilities		502			-
Operating lease liabilities - short term		24			-
Accrued compensation expenses		297			131
Loan from Parent company		500			-
Other accrued expenses		552			32
Total current liabilities		1,910			182

NON-CURRENT LIABILITIES:
Contract liabilities		-			200
Operating lease liabilities - long term		29			-
Liability for severance pay		296			252
Total non-current liabilities		325			452

TOTAL LIABILITIES		2,235			634

SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY):
Ordinary shares Common stock, $0.001 par value; 75,000,000 shares authorized, 26,884,921 and 16,130,952* shares issued and outstanding at December 31, 2019 and 2018, respectively		27			16
Additional paid-in capital		4,135			(16	)
Parent company deficit		-			(118	)
Accumulated deficit		(1,640	)		-
TOTAL SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY)		2,522			(118	)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY)		4,757			516

	Year ended December 31,
	2019			2018
	USD in thousands (except per share data)

REVENUES (*):
PRODUCTS		188			174
SERVICES		121			217
		309			391

COST OF REVENUES:
PRODUCTS		421			104
SERVICES		121			117
		542			221

GROSS PROFIT (LOSS)		(233	)		170
RESEARCH AND DEVELOPMENT EXPENSES		274			183
SALES AND MARKETING EXPENSES		183			270
GENERAL AND ADMINISTRATIVE EXPENSES		1,117			240
OPERATING LOSS		(1,807	)		(523	)
FINANCING EXPENSES, NET		(20	)		**
LOSS BEFORE TAXES ON INCOME		(1,827	)		(523	)
TAXES ON INCOME		(2	)		(1	)
NET LOSS		(1,829	)		(524	)
Net loss per Ordinary share (basic and diluted, in USD)		(0.11	)		(0.03	)
Weighted average Ordinary shares (basic and diluted, in thousands)		16,190			16,131

	/s/ Kesselman & Kesselman
	Certified Public Accountants (Isr.)
	A member firm of PricewaterhouseCoopers International Limited

	*	As for revenues related to transaction with the Parent Company – see Note 11(b)
	**	Less than 1 thousand

	Ordinary shares				Additional paid-in capital			Parent company deficit			Accumulated deficit			Total Shareholders’ equity (Capital deficiency)
	Shares in thousands		USD in thousands
Balance at January 1, 2019		16,131		16		(16	)		(118	)		-			(118	)
Net transfer from Parent company									514						514
Net loss									(189	)		(1,640	)		(1,829	)
Consummation of the Carve-out						207			(207	)					-
Capital contribution from Parent company						720									720
Sale of assets to Parent company						168									168
Effect of reverse recapitalization		10,754		11		3,029									3,040
Share based compensation						27									27
Balance at December 31, 2019		26,885		27		4,135			-			(1,640	)		2,522

	Ordinary shares				Additional paid-in capital			Parent company deficit			Total Shareholders’ equity (Capital deficiency)
	Shares in thousands		USD in thousands
Balance at January 1, 2018		16,131		16		(16	)		(117	)		(117	)
Net transfer from Parent company									523			523
Net loss									(524	)		(524	)
Balance at December 31, 2018		16,131		16		(16	)		(118	)		(118	)

	As of December 30, 2019

Assets acquired (liabilities assumed):

Current assets excluding cash and cash equivalents	$	-
Current liabilities		(73	)
Recapitalization Transaction costs		(89	)
Reverse recapitalization effect on equity		(3,040	)

Cash obtained in connection with Recapitalization Transaction	$	3,202

	December 31,
	2019			2018
	USD in thousands
Cost: machinery and equipment		132			286
Less: accumulated deprecation		(73	)		(273	)
Total property and equipment, net		59			13

	b.	On June 3, 2019, the Parent Company executed a capital contribution on account of additional paid in capital into ScoutCam Ltd. of an aggregate amount of USD 720 thousand.

	c.	On August 27, 2019, the Parent Company provided ScoutCam Ltd. with a line of credit in the aggregate amount of USD 500 thousand and, in exchange, ScoutCam Ltd. agreed to grant the Parent Company a capital note that will bear an annual interest rate of 4%. The repayment of the credit line amount shall be spread over one year in monthly payments beginning January 2020. The said note is presented in the consolidated balance sheet within “Loan from Parent Company”.

	d.	On July 31, 2019, ScoutCam Ltd. and Prof. Benad Goldwasser entered into a consulting agreement, whereby Prof. Goldwasser agreed to serve as chairman of the board of directors of ScoutCam Ltd., effective retroactively to March 1, 2019, in consideration for, inter alia, a monthly fee of $10,000 and options representing 5% of our fully-diluted share capital as of the Closing Date.

	e.	On September 3, 2019, a certain Asset Transfer Agreement, by and between ScoutCam Ltd. and the Parent Company dated May 28, 2019, became effective. According to the Asset Transfer Agreement the Company transferred certain assets (property and equipment) with a nil carrying amount to the Parent Company in consideration of USD 168 thousand. The assets were then sold to a third party. The excess of the said consideration over the carrying amount was directly recorded to shareholders’ equity.

	f.	During December 2019, the Company entered into a consulting agreement with Shrem Zilberman Group Ltd. (the “Consultant”) in the amount of USD 165 thousand (see also note 9b). A director of the Company is related to one of the Consultant’s shareholders.

	g.	On February 12, 2020, the Company’s Board of Directors authorized the allotment of options to purchase 2,235,691 shares of Common Stock of the Company to Professor Benad Goldwasser, the Company’s Chairman of the Board, and options to purchase 1,865,346 shares of Common Stock of the Company to certain officers of the Company. Each option is convertible into one share of common stock of the Company of $0.001 par value at an exercise price of $0.29. See also note 13b.

	Year ended on December 31,
	2019		2018
	USD in thousands
Products		188		174
Services		121		217
		309		391

	Year ended on December 31,
	2019		2018
	USD in thousands
United States		142		300
United Kingdom		33		24
South Korea		-		7
Israel		67		12
Other		67		48
		309		391

	Year ended December 31, 2019
	USD in thousands
Operating lease expenses		29
Short-term lease expenses		60
Total lease expenses		89

	Year ended December 31, 2019
	USD in thousands
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		29
ROU assets obtained in exchange for lease liabilities:
Operating leases		55

	December 31, 2019
	USD in thousands
Weighted-average remaining lease term (in years)		1.4
Weighted-average discount rate		10	%

	USD in thousands
2020		25
2021		21
2022		14
Total undiscounted lease payments		60
Less: Imputed interest		(7	)
Total lease liabilities		53

Exhibit No.		Exhibit Description
3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-1 filed with the SEC on May 29, 2013)
3.2		Certificate of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on January 2, 2020)
3.3		Bylaws (incorporated by reference to Exhibit 3.2 to our Registration Statement on Form S-1 filed with the SEC on May 29, 2013)
4.1**		Description of the Registrant’s Securities
10.1		Securities Exchange Agreement, dated September 16, 2019, by and between our Company and Medigus Ltd. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on September 17, 2019)
10.2		Form of Securities Purchase Agreement, dated December 26, 2019, by and among our Company, ScoutCam Ltd., and certain investors listed therein (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
10.3		Form of Escrow Agreement, dated December 26, 2019, by and among our Company, ScoutCam Ltd., Altshuler Shaham Trusts Ltd., and those certain investors that are a party to the Securities Purchase Agreement dated December 26, 2019 (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
10.4		Form of Warrant A by and between our Company and those certain investors that are a party to the Securities Purchase Agreement dated December 30, 2019 (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
10.5		Form of Warrant B by and between our Company and those certain investors that are a party to the Securities Purchase Agreement dated December 30, 2019 (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
10.6		Form of Registration Rights Agreement, dated December 26, 2019, by and among our Company and those certain investors that are a party to the Securities Purchase Agreement dated December 26, 2019 (incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
10.7		Amended and Restated Asset Transfer Agreement, by and between ScoutCam Ltd. and Medigus Ltd., dated December 1, 2019 (incorporated by reference to Exhibit 10.7 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
10.8		Consulting Agreement by and between ScoutCam Ltd. and Prof. Benad Goldwasser, dated July 31, 2019 (incorporated by reference to Exhibit 10.8 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
10.9**		Consulting Agreement by and between ScoutCam Ltd. and Shrem Zilberman Group Ltd., dated December 10, 2019
10.10**		2020 Share Incentive Plan
10.11**		Form of Notice of Option Grant and Option Agreement
21.1		Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to our Current Report on Form 8-K filed with the SEC on December 31, 2019)
31.1*		Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer
32.1*		Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer and Principal Financial Officer
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document]

	SCOUTCAM INC.

	By:	/s/ Yaron Silberman
	Name:	Yaron Silberman
	Title:	Chief Executive Officer
	Date:	May 12, 2020

1.	I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2019 of ScoutCam Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the year end covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the year end presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the year end in which this report is being prepared;

b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the year end covered by this report based on such evaluation; and

d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2020

/s/ Yaron Silberman
Yaron Silberman
Chief Executive Officer

Date: May 12, 2020

/s/ Tanya Yosef
Tanya Yosef
Chief Financial Officer

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.