Israeli co Odysight.ai set for Nasdaq IPO

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The sensor solutions company will seek to raise about $21.5 million at a company valuation of $129 million.

The first Israeli IPO on Nasdaq in 2025 is expected to take place soon, when tech company Odysight.ai (OTC: ODYS) will seek to raise $21.5 million at a company valuation of $129 million.

Although this is the most modest of IPOs, the company has major customers and a list of well-known capital market investors. Odysight.ai is currently traded on Wall Street's over-the-counter market with a market cap of $111 million. Its share price has positive momentum although trading volumes are small and the company still posts a loss on relatively low revenue.

Odysight.ai (formerly known as ScoutCam) was founded in 2013 and since 2022 has been managed by CEO Yehu Ofer, the former commander of the Sde Dov air base, who subsequently held senior executive positions at Elbit Systems Ltd. (Nasdaq: ESLT; TASE:ESLT). The company develops, manufactures and markets a unique sensor solution that allows continuous monitoring of critical components, infrastructure and machines, using AI-based analysis and machine learning. Odysight's solution is used by US space agency NASA, and other prominent customers include the Israeli Air Force and Ministry of Defense, as well as French company Safran.

The company also recently announced a collaboration with Israel Railways, in which it will develop an AI-based monitoring system to increase safety on train travel. According to the prospectus filed by Odysight, its solution was initially intended for the medical device market, but later proved to be suitable for industries such as aviation and aerospace, where visual assessments are critical to the safety and performance of systems.

In an interview with Globes a few months ago, the company's chairman and cofounder, Prof. Benad Goldwasser (who was previously one of the founders of medical device giant Medinol), told how NASA came to Odyssey when it was looking for a durable camera: "NASA decided to develop a shuttle to refuel satellites in outer space; each such satellite costs $200 million, And when it can no longer be transported, it becomes scrap. In preparation for the day when the agency wants to reach Mars, it was important for it to carry out refueling missions in outer space - where the temperature can reach minus 147 degrees.

NASA wanted a durable camera that could fit into the refueling tube, so that its diameter would not exceed 4 mm. "NASA searched the Internet - until it came to an Israeli company from Omer that in 2012 announced that it had managed to develop the world's smallest video camera, with a diameter of 1.2 mm," recounts Goldwasser. The company was Medigus, which had developed medical cameras in general, and Goldwasser, a doctor and entrepreneur in the medical industry identified the potential and acquired Medigus's activity, on the basis of which Odysight was founded.

Medigus no longer owns shares in Odysight. The controlling shareholder in the company is businessman Mori Arkin who has a 51.1% stake, currently worth $69.7 million, and his holding is expected to shrink to 44.6% after the flotation.

Goldwasser has a 5.5% stake and Ofer has 2.5%. Institutional investors Phoenix Finance (26.5%), Meitav (10.9%), and Mor (7.4%) also have major stakes.

According to IVC Research, Odysight has raised $60.3 million in several rounds. The most recent fundraising was carried out last July at a share price of $4.8, in which the company raised $10.3 million in a private offering to existing investors, including Arkin. The company has 61 employees - all in Israel at its offices in Ramat Gan and Omer.

The company's financial results indicate rapid growth, but the numbers are still modest. In the first three quarters of 2024, Odysight reported revenue of $2.66 million, up 145% from the corresponding period of 2023, while net loss was $8.2 million. In total, Odysight has "burned" $42 million to date. At the end of the third quarter, Odysight's cash balance stood at $20.9 million. Another figure that the company provides in the prospectus is its order backlog, which at the end of 2024 was $15 million, compared with $2.6 million at the end of 2023.

Pricing for the IPO is expected later this week. The prospectus mentioned $8.50 per share although Odysight's share is currently traded on the OTC at $8.80. At a price of $8.5, the amount raised would be $21.5 million, at a company valuation of $129 million. The amount could increase by an additional $3.2 million later, if the underwriter in the offering chooses to exercise the option to purchase additional shares. The lead underwriter is The Benchmark Company and the law firms supporting the flotation are Greenberg Traurig, Herzog Fox Neeman, and Sheppard Mullin Richter & Hampton.

Published by Globes, Israel business news - en.globes.co.il - on February 5, 2025.

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