Odysight.ai Inc. (ODYS) - 10-K Filing Summary
Business Context and Reporting Period
Company: Odysight.ai Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year Ended December 31, 2025
Business Overview: Odysight.ai develops AI-driven visual monitoring solutions for Predictive Maintenance (PdM) and Condition-Based Monitoring (CBM). The company deploys vision-based sensors in hard-to-reach locations for aerospace, defense, industrial, and transportation sectors. Key customers include the Israeli Air Force, NASA, and major defense contractors.
Listing Status: Nasdaq Capital Market (Symbol: ODYS) since February 11, 2025.
Key Financial Metrics
| Metric (USD in thousands) | 2025 | 2024 |
|---|---|---|
| Revenues | $3,015 | $3,964 |
| Cost of Revenues | $2,144 | $2,807 |
| Gross Profit | $871 | $1,157 |
| Gross Margin | 28.9% | 29.2% |
| Operating Loss | $(18,135) | $(12,507) |
| Net Loss | $(17,035) | $(11,767) |
| Cash and Cash Equivalents (End of Period) | $25,677 | $18,164 |
| Accumulated Deficit | $(63,009) | $(45,974) |
| Backlog (Non-GAAP) | $13.8 million | $15.0 million |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 24% to $3.0 million. This was primarily due to the full derecognition of a $1.7 million contract liability associated with a Fortune 500 medical customer, as the company no longer expected to receive a purchase order. Revenue from core PdM/CBM solutions grew to $1.2 million.
- Increased Operating Expenses:
- R&D Expenses: Increased 40% to $9.6 million due to new product development, hiring, and Industry 4.0 projects.
- Sales & Marketing: Increased 91% to $2.3 million driven by global expansion efforts and new hires.
- G&A Expenses: Increased 27% to $7.0 million, reflecting costs related to the Nasdaq uplisting, fundraising, and executive compensation.
- Liquidity Improvement: Cash balances increased by approximately $7.5 million, bolstered by a February 2025 public offering that generated net proceeds of approximately $20.9 million.
- Inventory Impairment: Recognized a $203,000 inventory impairment charge in Q1 2025 related to the medical customer project.
Guidance, Outlook, Risks, and Unusual Items
- Outlook: Management expects expenses to continue growing as the company scales operations. Current cash reserves are deemed sufficient to fund operations for at least the next 12 months. The company anticipates needing additional capital before achieving profitability.
- Geopolitical Risks: The company faces significant risks due to its headquarters in Israel. Ongoing conflicts (including the "Lion's Roar Operation" in early 2026) have caused office closures, travel restrictions, and reserve duty call-ups for employees and executives. While not yet materially adverse, escalation could disrupt operations and supply chains.
- Customer Concentration: The company relies heavily on a few customers. In 2024 and 2025, three customers accounted for approximately 98% of total revenues.
- Regulatory Constraints: Operations are subject to Israeli Innovation Authority (IIA) restrictions, which limit the transfer of funded know-how and manufacturing outside of Israel without approval and potential redemption fees.
- Unusual Items: The derecognition of the $1.7 million contract liability from the medical customer was a significant non-recurring event impacting 2025 revenue recognition.
Key Facts for Investor Verification
- Revenue Sustainability: Verify the status of the $13.8 million backlog and the likelihood of converting these orders into revenue, given the recent loss of the major medical customer.
- Geopolitical Exposure: Assess the potential impact of escalating military conflicts in the Middle East on the company's workforce, supply chain, and ability to service international clients.
- Burn Rate and Runway: Confirm the company's cash burn rate against its $25.7 million cash balance to validate the 12-month liquidity runway claim.
- Customer Diversification: Monitor progress in reducing reliance on the top three customers, which historically generated 98% of revenue.
- IIA Compliance: Review any pending approvals or restrictions from the Israel Innovation Authority regarding the transfer of technology or manufacturing capabilities outside Israel.