SecProbe.io

CORRESP
1
filename1.htm

June
24, 2024

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. 5 to Registration
  Statement on Form S-1

  Filed June 24, 2024

  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 (the “SEC”)
set forth in the Staff’s letter, dated April 26, 2024, with respect to Amendment No. 4 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. 5 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.

Amendment
No. 4 to Registration Statement on Form S-1

Risk
Factors, page 5

 1. We
                                            note your response to prior comment 2 and reissue the comment in part. Given Mr. Arkin is
                                            a director and status as a controlling shareholder, please provide your analysis whether
                                            Mr. Arkin has an identity of interest with the company such that he cannot register his shares
                                            for resale pursuant to Securities Act Rule 415(a)(1)(i). For additional guidance, please
                                            refer to Securities Act Rule 415 Compliance & Disclosure Interpretation Question 212.15.

Response:
As stated in Compliance and Disclosure Interpretation 212.15, parents and subsidiaries share enough of an identity of interest with an
issuer to prevent them from making a truly “secondary” offerings of the issuer’s securities; however, affiliates of
issuers are not necessarily treated as being an issuer’s alter ego and, under appropriate circumstances, may make offerings which
are deemed to be genuine secondaries. In our case, while Mr. Arkin is an affiliate of the Company, we believe that it is clear he does
not share an identity of interest with the Company and any sales by Mr. Arkin pursuant to the Registration Statement would represent
a genuine secondary offering, as would sales by the other selling stockholders. We believe that the existing disclosure in the Registration
Statement, with the further changes and additions as described below pursuant to the Staff’s comments, should be sufficient to
allow the offering to proceed as a secondary offering of 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

In
a variety of related contexts, prior Staff interpretive positions have provided that a selling stockholder’s status as a control
person, even one beneficially owning a majority of the shares of the registrant, alone is not dispositive of a disguised primary offering
on behalf of an issuer. Two of these interpretive positions are summarized below:

 ● 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.”

 ● In
                                            Compliance and Disclosure Interpretation, Securities Act Rules, Interpretation 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).”

We
believe these interpretative positions support the view that the Company may register a valid secondary offering of its shares on behalf
of a controlling stockholder, so long as the facts and circumstances demonstrate that the affiliate is not acting as an underwriter
or otherwise as a conduit for the issuer. As described in more detail in the Company’s response letter of April 8, 2024, Mr. Arkin
has none of the characteristics typical of an underwriter of securities. He acquired the securities that are subject to the Registration
Statement over a period of several years, for investment purposes, a portion from the Company and a portion from other stockholders,
with the most recent purchase approximately a year ago, each in a bona fide private placement transaction or private resale in
which he made the typical investment and private placement representations to the Company (or to the then existing stockholders, as the
case may be). Mr. Arkin is not involved in the business of underwriting securities.

Regarding
identity of interest, a clear example of such a relationship involves the transfer of restricted securities, issued by third persons,
from a corporation to its sole stockholder parent. The recipient in such a situation has total and complete control over the corporation’s
assets. Because the corporation is simply a legal extension of the parent stockholder and because the stockholder has assumed the full
economic risk of investment from the moment its corporate alter ego acquired the restricted securities, a transfer from the affiliate
corporation to the stockholder causes no change in the allocation of economic risks. Indeed, the Staff has addressed such relationships
multiple times in connection with Rule 144(d)(1).1 In that context, Staff has also focused on the difference between one-person
and multi-owner corporations with regard to identify of interest. In addition, the identity of interest issue has arisen in previous
comment letters to other issuers regarding the applicability of Rule 415(a)(1)(i), where the Staff used such terminology when it commented
on a selling stockholder in an offering by its wholly-owned subsidiary and indicated that parents of issuers generally have enough
of an identity of interest with the issuer so as not to be able to make genuine secondary offerings of the issuer’s securities
under Rule 415(a)(1)(i).2

  1
  Cf. Hellman, Gal Investment
  Associates, SEC No-Action Letter, 1981 WL 25816, [1981 Transfer Binder] Fed. Sec. L. Rep. (CCH) 76,799 (December 19, 1980); Chart House,
  Incorporated, SEC No-Action Letter, 1975 WL 10527 (June 30, 1975); Dann Company, SEC No-Action Letter, 1974 WL 9347 (January 10, 1974);
  and Hydroculture Incorporated, SEC No-Action Letter, 1973 WL 6591 (April 4, 1973).

  2
  For example, see Comment
  1 at https://www.sec.gov/Archives/edgar/data/1742924/000000000018022180/filename1.pdf and Comment 6 at https://www.sec.gov/Archives/edgar/data/1533526/000000000011067645/filename1.pdf.

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

In
each case above, the analysis regarding identity of interest is similar. A stockholder of a wholly-owned company controls the destiny
of an entity that, for all practical purposes, is the owner’s alter ego, permitting the stockholder to, for example, effect a transfer
of securities from the corporation to itself without having to obtain meaningful consent of any other person. By contrast, a stockholder
in a public company with numerous stockholders, while of course viewed as the beneficial owner of his or her proportionate interest in
all the securities held by the corporation, frequently has significantly reduced individual control over such company. Before a desired
action can be effectuated, such stockholder must await a group decision by the company’s board of directors and, possibly, by its
stockholders.

The
distinction between a dominant parent and an affiliated stockholder in a multi-owner corporation, together with considerations of the
investment intent and economic interests of the stockholder, which reflect on whether an offering of such shares is in pursuit of company
or stockholder goals, are crucial in determining the presence of identify of interest or lack thereof, thwarting disguised primary offerings
but permitting genuine secondary offerings to proceed.

We
believe the following facts and circumstances surrounding Mr. Arkin’s role and holdings in the Company clearly demonstrate that
he does not share an identity of interest with the Company, neither exercising the necessary degree of control nor having economic interests
are necessarily aligned with those of the Company:

 1. Lack
                                            of Meaningful Board Authority: Although a person who is a director of a corporation is
                                            presumptively an affiliate, additional considerations relative to that status should be taken
                                            into account when considering an identity of interest. For example, a relevant fact is whether
                                            a particular director is a member of an especially important board committee, such as the
                                            executive or audit committee, or is the chair of the board. Also relevant is the duration
                                            of that person’s status as a director and the respect and influence that the person
                                            has among other board members. Mr. Arkin is only one member of a board of seven (7) directors,
                                            each of whom other than Mr. Arkin is independent under Nasdaq rules. In addition, the Company’s
                                            board has staggered terms and Mr. Arkin is not a member of the audit committee or any other
                                            important, crucial or authoritative committee of the Company. Mr. Arkin has no other nomination
                                            rights to the board, no other directors are affiliated with him and he does not dominate
                                            the other independent directors or the board as a whole in any way. Mr. Arkin joined the
                                            board in February 2021 and therefore was not the founder nor has he ever been the “living
                                            soul” of the Company. Mr. Arkin has no voting agreements with other stockholders or
                                            contractual rights in the Company’s founding documents.

 2. Lack
                                            of Officership. A person who is an officer of an issuer may also be an affiliate of that
                                            issuer. Relevant factual concerns with respect to this issue include the responsibilities
                                            of the officer and the extent of his or her power to perform a policy making function for
                                            the issuer. In our case, Mr. Arkin is simply not an officer or executive of the Company,
                                            neither having nor exerting any executive powers or effective control over management,
                                            including decisions regarding hiring or firing of Company personnel or setting the strategic
                                            direction of the Company, nor does he perform a policy-making function for the Company as
                                            only one voice out of seven on the board.

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

 3. Lack
                                            of Domination of Shareholder Base. Mr. Arkin currently holds approximately 44.52% of
                                            the voting power in the Company and may exercise warrants and options which could increase
                                            his voting power to 55.59%, making him the beneficial owner of 55.59% of the Company’s
                                            outstanding Common Stock pursuant to the SEC’s calculation methodology. However, Mr.
                                            Arkin’s beneficial ownership percentage masks the actual control that he would likely
                                            be able to exert in economic terms, were the Company subject to a merger, for example. The
                                            reason for this is that a significant portion of Mr. Arkin’s holdings are in warrants,
                                            a portion of which may be exercised on a cashless basis if certain conditions are met, and
                                            he is far from the only holder of warrants convertible into Common Stock of the Company.3
                                            Were Mr. Arkin to exercise on a cashless basis that portion of his warrants where he
                                            is permitted to do so, his beneficial ownership would drop to 46.35% of the Company’s
                                            outstanding Common Stock (based on the current market price). On a fully diluted basis, with
                                            all option and warrant holders fully exercising, Mr. Arkin’s beneficial ownership would
                                            drop to 38.32%, and if he exercised on a cashless basis that portion of his warrants where
                                            he is permitted to do so, to 31.74%, of the Company’s outstanding Common Stock
                                            (based on the current market price). In economic terms, Mr. Arkin does not dominate the stockholder
                                            base as one would expect from a true parent.

 4. Investor
                                            with Long Term View. Mr. Arkin holds a diverse portfolio of investments in private and
                                            public companies, both personally and as part of his investment group (see website https://arkinholdings.com/).
                                            He is a serial investor looking to grow his investments across a variety of fields with economic
                                            inte