SecProbe.io

CORRESP
1
filename1.htm

December
20, 2023

VIA
EDGAR

U.S.
Securities and Exchange Commission

Division
of Corporation Finance

Office
of Industrial Applications and Services

100
F Street, NE

Washington,
D.C. 20549

    Attention:
    Benjamin
    Richie

    Abby
    Adams

    Re:
    Odysight.ai
    Inc.

    Amendment
    No. 1 to Registration Statement on Form S-1

    Filed
    September 27, 2023

    File
    No. 333-273285

Ladies
and Gentlemen:

On
behalf of Odysight.ai Inc. (the “Company”), we are responding to the comments of the staff of the Division
of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission set forth in the Staff’s
letter, dated October 11, 2023, with respect to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (the “Registration
Statement”). We are concurrently filing via the EDGAR system pre-effective Amendment No. 2 to the Registration Statement.

For
the convenience of the Staff, each of the Staff’s comments is included and is followed by the corresponding response of the Company.

Risk
Factors

Risks
Related to This Offering and Our Common Stock, page 6

    1.
    We
    reissue comment 1 to the extent that you did not clarify the risk factor on page 6, which still implies you are working toward Nasdaq
    listing approval, and does not disclose that listing was denied or that you likely will not actively pursue the listing until at
    least April 2024, after your next Form 10-K filing.

Response:
In order to emphasize its status as an OTC company, the Company has deleted the risk factor related to Nasdaq and included certain additional
information in the risk factor “Trading on the OTC Markets is volatile, sporadic and often thin, which could depress the market
price of our Common Stock and make it difficult for our stockholders to resell their Common Stock.”

Herzog
Tower, 6 Yitzhak Sadeh St. Tel Aviv 6777506, Israel Tel: +972-3-692-2020, Fax: +972-3-696-6464

www.herzoglaw.co.il

      2

    2.
    Revise
    the summary risk factors and the risk factor on pages 15 and 17, and any related disclosure in the document, to clarify if your stock
    is currently is a “penny stock.”

Response:
To clarify its current status as a “penny stock,” the Company has revised the summary risk factor and risk factor sections
and has added a “Section 15(g) of the Exchange Act” explanation under the section titled “Market For Registrant’s
Common Equity and Related Stockholder Matters.”

Security
Ownership of Certain Beneficial Owners and Management, page 55

    3.
    We
    note your response to comment 2. As Mr. Arkin currently holds approximately 44.59% of the voting power of your securities and additional
    warrants and options that are “currently exercisable or will become exercisable within 60 days,” please amend your disclosure
    to include any risks related to your possible status as a controlled company.

Response:
The Company has added a risk factor to address the risk that it may be considered a “controlled company” if it ever lists
on Nasdaq.

    4.
    We
    reissue comment 3 in part. We note the disclosure in footnote 13 to the table that “in general, subsidiaries of the Phoneix
    Holdings Ltd. manage their own funds and/or the funds of others.” Please revise footnote 13 here and footnote 6 to the selling
    stockholders table to clarify who has beneficial ownership over the shares held by each subsidiary of Mr. Arken’s company,
    Phoenix Insurance Company Ltd.

Response:
The Company has amended footnote 10 of the beneficial ownership table and footnote 5 of the selling stockholder table to clarify that
the shares of Common Stock held by Mr. Arkin through his unrelated and strictly individual retirement account at Phoenix Insurance Company
Ltd. (“Phoenix Insurance”) are not included as beneficially owned by The Phoenix Holdings; rather, these shares of
Common Stock are beneficially owned by Mr. Arkin. Although Mr. Arkin maintains an individual retirement account at Phoenix Insurance,
please note that Phoenix Insurance is neither affiliated with Mr. Arkin nor is it Mr. Arkin’s company. Rather, Phoenix Insurance
is a completely separate wholly-owned subsidiary of The Phoenix Holdings, a public company in Israel listed on the Tel Aviv Stock Exchange.

The
Company does not believe that any of the selling stockholders is a member of a “group” with any selling stockholder within
the meaning of Section 13(d)(3) of the Exchange Act or Rule 13d-5(b) thereunder. The Company is not aware of any relationship among the
selling stockholders other than as disclosed in the Registration Statement and believes that the selling stockholders act independently
of one another.

    5.
    We
    note the disclosure on page 67 that “[t]he Selling Stockholders and any underwriters, broker-dealers or agents that participate
    in the sale of the Common Stock or interests therein may be ‘underwriters’ within the meaning of Section 2(11) of the
    Securities Act.” We note the shares subject to resale consist of over 56% of the beneficial ownership of your common stock,
    that it appears Mr. Arkin, the selling shareholder acquired the vast majority of the shares within the past 3-6 months, which resulted
    in a change of control and let to the name change, Mr. Arkin has authority to determine which shareholders may resale their shares
    in the offering, that the company could receive up to $27.4 million from conversion of the warrants into common stock, and other
    information disclosed in Recent Developments beginning on page 44. Please provide your analysis why the selling securityholders should
    not be deemed underwriters. Refer to Securities Act Rules Compliance and Disclosure Interpretation (“C&DI”) 612.09.

Response:

The
Company respectfully advises the Staff that based on its analysis of all the circumstances, as discussed in greater detail below, it
does not believe that the selling stockholders should be deemed underwriters.

Herzog
Tower, 6 Yitzhak Sadeh St. Tel Aviv 6777506, Israel Tel: +972-3-692-2020, Fax: +972-3-696-6464

www.herzoglaw.co.il

      3

The
Company considered the definition of an “Underwriter” provided in Section 2(a)(11) of the Securities Act in its analysis:

Section
2(a)(11) of the Securities Act defines an “underwriter” to include: “any person who has purchased from an issuer
with a view to, or offers or sells for an issuer in connection with, the distribution of any security, or participates or has a direct
or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any
such undertaking…”

    a)
    Not
    Purchased with View to Distribute. The shares and warrants subject to the Registration Statement (the “Securities”)
    were not purchased with a view to distribute such Securities. As described in the Registration Statement, the Securities were originally
    purchased by the Selling Stockholders in connection with their investment in the Company, in the ordinary course of business and
    in connection with private placements by the Company and purchases from another stockholder. In each case, the Securities were purchased
    with a long-term investment intent in the Company. In each of the private placements, the Selling Stockholders made extensive representations
    and warranties regarding their investment intent, including representations that each Selling Stockholder was purchasing the Securities
    for their own account, for investment purposes and not for the purpose of effecting any distribution of the Securities in violation
    of the Securities Act. In fact, the securities have standard insider trading restrictions on resale. In addition, at the time of
    acquisition of the Securities and currently, to the Company’s knowledge none of the Selling Stockholders had or currently has
    any agreements or understandings, directly or indirectly, with any person to distribute such Securities.

    b)
    No
    Contractual, Legal or Other Relationship with Selling Stockholders. The registration of the Selling Stockholders’ shares
    through the Registration Statement constitutes a valid secondary offering and is not an offering by or on behalf of the Company.
    No Selling Stockholder is acting on behalf of the Company with respect to the shares included in the Registration Statement, and
    the Company has no contractual, legal or other relationship with the Selling Stockholders who received shares in the transactions
    described above that would control the timing, nature and amount of resales of such shares following the effectiveness of the Registration
    Statement or whether such shares are even resold at all under the Registration Statement. As such, the Selling Stockholders are not
    acting as a conduit for the Company, and the Company believes that the present registered offering is properly suited as a secondary
    offering and not an indirect primary offering.

    c)
    Selling
    Stockholder Questionnaires and Confirmations. We provided the Selling Stockholders with a questionnaire to be completed and returned
    to us should such Selling Stockholder elect to have the Securities included in the Registration Statement. Based on information provided
    by the Selling Stockholders, it is our belief that such Selling Stockholders acquired their Securities in the ordinary course of
    business and in connection with private placements and purchases from another stockholder. The Selling Stockholders at the time of
    purchase and currently, had and currently have no agreements or understandings, directly or indirectly, with any party to distribute
    the securities. Therefore the Selling Stockholders should not be deemed to be underwriters within the meaning of Section 2(11) of
    the Securities Act.

Herzog
Tower, 6 Yitzhak Sadeh St. Tel Aviv 6777506, Israel Tel: +972-3-692-2020, Fax: +972-3-696-6464

www.herzoglaw.co.il

      4

    d)
    Sales
    by a Control Person Not Dispositive of a Primary Offering. The Company notes the Staff’s prior interpretive positions which
    advise that, in certain contexts, a selling stockholder’s status as a control person alone is not dispositive of a disguised
    primary offering on behalf of an issuer. In Compliance and Disclosure Interpretation, Securities Act Rules, Question 216.14, the
    Staff acknowledged that an affiliate with a large shareholding may engage in secondary offerings that are not deemed to be by or
    on behalf of the registrant: “Secondary sales by affiliates may be made under General Instruction I.B.3 to Form S-3, even in
    cases where the affiliate owns more than 50% of the issuer’s securities, unless the facts and circumstances indicate that the
    affiliate is acting as an underwriter or by or on behalf of the issuer.” Compliance and Disclosure Interpretation, Securities
    Act Rules, Question 212.15 similarly provides that affiliates may make secondary offerings under Rule 415(a)(1)(i) under appropriate
    circumstances: “Rule 415(a)(1)(i) excludes from the concept of secondary offerings sales by parents or subsidiaries of the
    issuer. Form S-3 does not specifically so state; however, as a practical matter, parents and most subsidiaries of an issuer would
    have enough of an identity of interest with the issuer so as not to be able to make “secondary” offerings of the issuer’s
    securities. Aside from parents and subsidiaries, affiliates of issuers are not necessarily treated as being the alter egos of the
    issuers. Under appropriate circumstances, affiliates may make offerings which are deemed to be genuine secondaries.” In Compliance
    and Disclosure Interpretation, Securities Act Rules, Interpretation 612.12 (“CDI 612.12”), the Staff took the
    position that even a single affiliate holding as much as 73% of the equity of an issuer may effect a valid secondary offering if
    circumstances do not otherwise indicate that the affiliate is acting as an alter ego of the issuer. CDI 612.12 states, in relevant
    part: “A controlling person of an issuer owns a 73% block. That person will sell the block in a registered ‘at-the-market’
    equity offering. Rule 415(a) (4), which places certain limitations on ‘at-the-market’ equity offerings, applies only
    to offerings by or on behalf of the registrant. A secondary offering by a control person that is not deemed to be by or on behalf
    of the registrant is not restricted by Rule 415(a)(4).” The 73% ownership block discussed in CDI 612.12 is significantly greater
    than Mr. Arkin’s beneficial ownership of the Company. We believe these interpretative positions support the Company’s
    view that the Company can register a valid secondary offering of its shares on behalf of a controlling stockholder, unless other
    facts indicate that the controlling stockholder is acting as a conduit for the issuer. As there are no other facts which indicate
    that Mr. Arkin is acting as a conduit for the Company, the Company does not believe that the affiliate status of any Selling Stockholder
    should be indicative of an indirect primary offering on behalf of the Company.

    e)
    Company
    Name Change Unrelated to Recent Acquisition of Additional Shares. The recent name change of the Company from ScoutCam Inc. to
    Odysight.ai Inc. is not related in any way to Mr. Arkin’s acquiring additional shares. Mr, Arkin has served on the Company’s
    board of directors since February 15, 2021. Mr. Arkin, according to the Company’s understanding and inquiries, believes in
    the long term vision of the Company. As we reported in our SEC filings, the name “Odysight.ai” reflects the Company’s
    significant transformation into a leading global provider of critical system, visualization monitoring technology for the aviation,
    transportation, energy and Industry 4.0 markets, relying in part on its artificial intelligence (AI) capabilities. These AI capabilities
    have developed gradually since 2019 and the recent decision to change the Company’s name to reflect these capabilities was
    not a change of business plans resulting from any change of control.

    f)
    Not
    in Business of Underwriting. The Company advises that the Selling Stockholders are not in the business of buying and selling
    securities, nor are they acting as a conduit for the Company in order to do so. Each of the Selling Stockholders has made an investment
    decision to acquire the Securities and has advised the Company that it purchased or acquired the Securities in the ordinary course
    of business and that at the time of the purchase or acquisition of the Securities to be sold hereunder, it had no agreements or understandings,
    directly or indirectly, with any person to distribute the securities.

    g)
    Not
    Acting as a Conduit for the Issuer. None of Selling Stockholders has an underwriting relationship with the Company and they are
    not receiving a finder’s fees, commission or other payment from the Company in connection with the sale of any of the Securities
    registered for resale in the Registration Statement. In addition, the Company will not receive any proceeds from the resale of the
    Securities registered on behalf of the Selling Stockholders under the Registration Statement. Proceeds received by the Company as
    a result of conversion of outstanding warrants does not mean the Company is directly receiving any proceeds from the sale of the
    Securities.

Herzog
Tower, 6 Yitzhak Sadeh St. Tel Aviv 6777506, Israel Tel: +972-3-692-2020, Fax: +972-3-696-6464

www.herzoglaw.co.il

      5

In
addition, to the Company’s knowledge, there is nothing to suggest that any special selling efforts or selling methods have or would
take place if these Securities were registered for resale under the Securities Act. The Company is not aware