Odysight.ai (ODYS) risk factors, FY2025 10-K

Risks Related to Our Business and Financial Condition

1. 01We have a limited operating history and may not be able to successfully operate our business or execute our business plan
2. 02We have a history of losses and anticipate that we will continue to incur significant losses for the foreseeable future
3. 03It is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably70% rewritten
4. 04Backlog may not be realized or may not result in revenue or profit
5. 05Our 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. 06Our future growth and success are highly dependent upon large-scale adoption of our solutions in the markets in which we compete62% rewritten
7. 07If 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 technology100% rewritten
8. 08Sales to government entities and highly regulated organizations are subject to a number of challenges and risks
9. 09If we are unable to ensure that our solutions interoperate 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 harmed43% rewritten
10. 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 our solutions successfully
11. 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
12. 12Failure to make competitive technological advances will put us at a disadvantage and may lead to negative operational and financial outcomes
13. 13We have three customers that account for a substantial portion of our revenues, and the results of our operations could be harmed were we to lose these customers or receive lower than expected purchase orders70% rewritten
14. 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 manner31% rewritten
15. 15We may not be able to manage our strategic partners effectively
16. 16We face competition from providers of sensing, PdM and CBM 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
17. 17Our insurance coverage may be inadequate to protect against the potential hazards incident to our business
18. 18Our inability to retain key members of our senior management could impair our future success
19. 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
20. 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
21. 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
22. 22Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by geopolitical events, including the ongoing conflicts in the Middle East and between Russia and Ukraine41% rewritten
23. 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
24. 24Trade tariffs, including those implemented by the U.S., may increase the costs of importing our products and increase our supply chain costs, which could potentially reduce profit margins and affect our competitive positionNew
25. 25Changes in tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditionsNew
26. 26Adverse conditions in the aerospace, industrial, transportation and energy markets or the global economy more generally could have adverse effects on our results of operations26% rewritten

Risks Related to Regulation

1. 27Our 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. 28Our 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. 29We may be prohibited from selling our solutions in 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 business22% rewritten
4. 30If 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. 31Scrutiny 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. 32Actual 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. 33If 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. 34If 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. 35Patent 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. 36We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful
5. 37We may be subject to claims challenging the inventorship of our intellectual property
6. 38We may not be able to protect our intellectual property rights throughout the world
7. 39We 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. 40An active, liquid trading market for our shares of common stock may not develop or be sustained
2. 41Sales 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. 42Directors, 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. 43If 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. 44We do not anticipate paying any cash dividends in the foreseeable future
6. 45If 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. 46Anti-takeover provisions contained in our articles and bylaws, as well as provisions of Nevada law, could impair a takeover attempt
8. 47If 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 harmed21% rewritten
9. 48There 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. 49Our 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 Israel92% rewritten
2. 50It may be difficult for investors in the United States to enforce any judgments obtained against us or some of our directors or officers
3. 51Exchange rate fluctuations between foreign currencies and the U.S. Dollar may negatively affect our earnings62% rewritten
4. 52Certain 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. 53We 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