Odysight.ai (ODYS) risk factors, FY2024 10-K

Other

1. 01If we are unable to establish sales, marketing and distribution capabilities or enter into successful relationships with business targets and third parties to perform these services, we may not be successful in commercializing our products and technology

Risks Related to Our Business and Financial Condition

1. 02We have a limited operating history and may not be able to successfully operate our business or execute our business plan
2. 03We have a history of losses and anticipate that we will continue to incur significant losses for the foreseeable future
3. 04It is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably
4. 05Backlog may not be realized or may not result in revenue or profit
5. 06Our sales cycles are long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to predict when, if at all, we will obtain new customers and when we will generate revenue from those customers
6. 07Our future growth and success are highly dependent upon large-scale adoption of the Odysight TruVision solution in the markets we compete
7. 08Sales to government entities and highly regulated organizations are subject to a number of challenges and risks
8. 09If we are unable to ensure that the Odysight TruVision solution interoperates with a variety of hardware and software platforms that are developed by others, including our partners, we may become less competitive and our business may be harmed
9. 10If we fail to scale our business operations or otherwise manage our future growth effectively as we attempt to grow our company, we may not be able to produce, market, service and sell the Odysight TruVision solution successfully
10. 11We incorporate artificial intelligence, or AI, and machine learning, or ML, into some of our products. This technology is new and developing and may present both compliance and reputational risks
11. 12Failure to make competitive technological advances will put us at a disadvantage and may lead to negative operational and financial outcomes
12. 13We have four customers that account for a substantial portion of our revenues, and our result of our operation could be harmed were we to lose these customers or receive lower than expected purchase orders
13. 14Our reliance on third-party suppliers for most of the components of our products could harm our ability to meet demand for our products in a timely and cost-effective manner
14. 15We may not be able to manage our strategic partners effectively
15. 16We face competition from providers of sensing solutions. If we cannot successfully compete with new or existing technologies or future developed products, our marketing and sales will suffer, and we may never be profitable
16. 17Our insurance coverage may be inadequate to protect against the potential hazards incident to our business
17. 18Our inability to retain key members of our senior management could impair our future success
18. 19We rely on highly skilled personnel, and if we are unable to attract, retain or motivate qualified personnel, we may not be able to operate our business effectively
19. 20If a significant portion of our employees leave us, we might fail to effectively manage a transition to new personnel, or if we fail to attract and retain qualified and experienced professionals on acceptable terms, our business, financial condition and results of operations could be adversely affected
20. 21The estimates and forecasts of market opportunity and market growth included in this Annual Report may prove to be inaccurate, and we cannot assure you our business will grow at similar rates, or at all, or that we will be able to address, fully or at all, the markets we believe represent our market opportunity
21. 22Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine
22. 23International operations will expose us to additional market and operational risks, and failure to manage these risks may adversely affect our business and operating results
23. 24Adverse conditions in the aerospace, industrial, transportation and energy markets or the global economy more generally could have adverse effects on our results of operations

Risks Related to Regulation

1. 25Our business could be adversely affected if we fail to maintain product quality and product performance at an acceptable cost or if we incur significant losses, increased costs or harm to our reputation or brand as a result of product liability claims or product recalls
2. 26Our business may be adversely affected by changes in aerospace and transportation safety regulations or concerns that drive further regulation of the aerospace and transportation safety market
3. 27We may be prohibited from selling the Odysight TruVision to certain countries if we are unable to obtain Israeli authorization regarding the export of our products, or if current or future export laws limit or otherwise restrict our business
4. 28If we fail to comply with anti-bribery, anti-corruption and anti-money laundering laws, we could be subject to penalties and other adverse consequences
5. 29Scrutiny of, and evolving expectations for, sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs or otherwise adversely impact our business
6. 30Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, financial condition and prospects

Risks Related to Intellectual Property

1. 31If we are unable to obtain, maintain and protect effective intellectual property rights for our products, we may not be able to compete effectively in our markets
2. 32If we cannot obtain and maintain effective patent rights for our products, we may not be able to compete effectively, and our business and results of operations would be harmed
3. 33Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents
4. 34We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful
5. 35We may be subject to claims challenging the inventorship of our intellectual property
6. 36We may not be able to protect our intellectual property rights throughout the world
7. 37We rely on licenses to use the intellectual property rights of third parties. If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose rights that are important to our business

Risks Related to Our Common Stock

1. 38An active, liquid trading market for our shares of common stock may not develop or be sustained
2. 39Sales of a substantial number of our shares of common stock in the public market by our existing shareholders could cause our share price to fall
3. 40Directors, executive officers, principal stockholders and affiliated entities own a significant percentage of our capital stock, and they may make decisions that our stockholders do not consider to be in their best interests
4. 41If the ownership of our common stock continues to be highly concentrated, it may prevent you and other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest
5. 42We do not anticipate paying any cash dividends in the foreseeable future
6. 43If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or shares of common stock, our share price and trading volume could decline
7. 44Anti-takeover provisions contained in our articles and bylaws, as well as provisions of Nevada law, could impair a takeover attempt
8. 45If we fail to comply with the rules and regulations under the Sarbanes-Oxley Act, our operating results, our ability to operate our business and investors’ views of us may be harmed
9. 46There can be no assurances that our common stock will not be subject to potential delisting if we do not continue to maintain the listing requirements of Nasdaq

Risks Related to our Operations in Israel

1. 47Our headquarters and other significant operations are located in Israel and, therefore, our business, financial condition and results of operation may be adversely affected by political, economic and military instability in Israel
2. 48It may be difficult for investors in the United States to enforce any judgments obtained against us or some of our directors or officers
3. 49Exchange rate fluctuations between foreign currencies and the U.S. Dollar may negatively affect our earnings
4. 50Certain technology developed and used by us received Israeli government grants for certain research and development activities. The terms of those grants require us to satisfy specified conditions in addition to repayment of the grants upon certain events
5. 51We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business