Executive Summary

Q1 2023 revenue was $43,283, up from $0 in Q1 2022 and above Q3 2022 ($23,003), reflecting continued momentum in Structural Health Monitoring (SHM) and early progress in Smart Manufacturing; net loss attributable to common shareholders was $(178,170), or $(0.00) per share .
Management indicated Q1 2023 revenue was on track to exceed Q4 2022, extending a streak of improving top-line trajectory from late 2022; however, no formal numeric guidance or sell-side estimates were provided for comparison .
Directional FY2023 outlook was reiterated: revenue expected to exceed 2022, with catalysts from a DOT bridge monitoring extension, a CNC Smart Manufacturing POC expected to convert to SaaS, and IAQ partner sales; management framed 2023 as a transition from “Survive” to “Thrive” .
Risks remain elevated: going-concern uncertainty, working capital deficit, and maturity/extension negotiations on secured notes; management disclosed two senior secured notes matured in March with extension discussions underway .

What Went Well and What Went Wrong

What Went Well
- Continued revenue traction: Q1 2023 revenue of $43,283 vs $0 in Q1 2022; sustained momentum from 2022 and ahead of Q3 2022 ($23,003) .
- Execution in SHM/Smart Manufacturing/IAQ: management cited DOT bridge monitoring extension through mid-2023 with expansion potential, a CNC POC (kicked off January 2023) expected to convert to SaaS in 2H23, and IAQ retail sales traction via Aretas .
- Tone on 2023: “transition from ‘Survive’ to ‘Thrive’,” with FY23 revenue expected to exceed 2022, supported by partnerships and pilots .
What Went Wrong
- Profitability and dilution: Q1 net loss attributable to common shareholders $(178,170) (EPS $(0.00)) and continued share issuance for financing/commitments; weighted average shares rose to 374.2M from 224.8M YoY .
- Balance sheet stress: working capital deficit of $1.74M; derivative liabilities of $471k; total current liabilities of $1.78M vs current assets of $43k .
- Financing overhang: two senior secured notes matured in March; while prior extensions were common, the company disclosed ongoing negotiations for further extensions, underscoring liquidity risk .

Financial Results

Income statement trend (oldest → newest)

Metric	Q1 2022	Q3 2022	Q1 2023
Revenue ($)	$0	$23,003	$43,283
Gross Profit ($)	$0	$17,863	$26,319
Total Operating Expenses ($)	$179,214	$171,295	$178,405
Net Loss Attributable to Common Stockholders ($)	$(525,160)	$(49,204)	$(178,170)
Diluted EPS ($)	$(0.00)	$(0.00)	$(0.00)

Prior-quarter directionality (Q1 2023 vs Q4 2022)

Metric	Direction vs Q4 2022	Source
Revenue	Higher (on track to exceed Q4)

Balance sheet snapshot

Metric	12/31/2022	3/31/2023
Cash and Cash Equivalents ($)	$33,336	$25,158
Accounts Receivable, net ($)	$28,941	$9,893
Total Current Assets ($)	$70,050	$42,824
Total Current Liabilities ($)	$1,676,878	$1,784,605
Derivative Liabilities ($)	$469,873	$471,165
Working Capital Deficit ($)	N/A	$1,741,781

Note: Gross margin (%) for Q1 2023 was approximately 60.8%, calculated from reported gross profit and revenue; Q3 2022 approximately 77.7% (calculated from reported figures) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2023	Anticipated YoY growth to meet or exceed 2022	Expect 2023 revenue to exceed 2022; four consecutive quarters of strong revenue; momentum to continue	Maintained/Reaffirmed

No quantitative guidance provided for margins/OpEx/OI&E/tax; commentary remained directional .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2022)	Previous Mentions (Q4 2022)	Current Period (Q1 2023)	Trend
Smart Manufacturing (CNC POC/SaaS)	Building momentum; pilots; new POC expected	POC secured in Dec 2022; kicked off Jan 2023; Q1 on track to exceed Q4	CNC POC concluding “this month”; expect SaaS contract to contribute in 2H23	Progressing toward monetization
Structural Health Monitoring (DOT bridge)	Contract extension; revenue through June 2023	Continued contribution through 1H23	Monitoring continues through June; expansion beyond June expected; new prospects in multiple NE states	Stable with expansion potential
IAQ partnership (Aretas)	Co-marketing; algorithm contract; Q3 revenue recognition	Continued traction; retail sales efforts	Retail sales beginning to show results; larger site opportunities targeted	Gradual build
Liquidity/Notes	Heavy reliance on equity lines/convertibles	Q4 funded via equity line; balance sheet risks persist	Two senior secured notes matured in March; negotiating extensions	Heightened near-term financing risk
Outlook/Tone	Revenue momentum into 4Q22	Q1 2023 on track to exceed Q4 2022; FY23 to exceed FY22	“Survive to Thrive” inflection; FY23 > FY22 reiterated	Confident but still directional

Management Commentary

“We are pleased to announce that strong revenue continued in our first quarter of 2023. This marks four consecutive quarters of strong revenue… Overall expect 2023 revenue will exceed that of 2022… We truly see this year as a transition from ‘Survive’ to ‘Thrive’ inflection point.” — CEO, April 11, 2023 .
“2022 revenue exceeded 2021, doing so by more than seven-fold… It is anticipated that 2023 YoY revenue growth will meet or exceed that of 2022.” — CEO, April 26, 2023 .
Q1 drivers cited: DOT bridge monitoring through June 2023 with planned expansions; CNC POC concluding with expected SaaS conversion; IAQ retail sales traction and larger-site pipeline .

Q&A Highlights

Format: Pre-submitted investor questions via SmallCapVoice for the May 3 call; replay link provided for those unable to attend live .
Financing/notes: Management disclosed two senior secured notes matured in March; expressed confidence in reaching extensions (while acknowledging no obligation on investors to extend) .
Growth pipeline: Reinforced near-term catalysts in SHM (extensions/expansions), Smart Manufacturing (CNC POC to SaaS), and IAQ (retail and larger site opportunities) .

Estimates Context

Wall Street consensus (S&P Global) for ITOX was not available; no published quarterly EPS or revenue consensus could be retrieved. As a result, no beat/miss analysis vs estimates is provided [SPGI access error recorded].

Key Takeaways for Investors

Early-stage growth continuation: Q1 revenue reaffirms a multi-quarter uptrend, with SHM anchoring and Smart Manufacturing/IAQ providing optionality; next catalyst is a CNC SaaS conversion in 2H23 (watch for contract announcement) .
Liquidity watch: Working capital deficit, derivative liabilities, and note maturity extensions are central to the de-risking path; monitor progress on secured note renegotiations and equity line usage .
Operating leverage path: High gross margin on small revenue base suggests future operating leverage if SaaS ramps and SHM expands; however, scale and consistent billings are needed to cover fixed costs .
Guidance framing: Directional only; FY2023 revenue expected to exceed 2022. Track execution on SHM expansions and timing/size of SaaS wins to gauge probability of achieving the outlook .
Risk/reward skewed by microcap constraints: No analyst coverage/consensus, penny stock dynamics, and financing dependence can amplify volatility; execution against named catalysts is likely the primary stock driver near term .

Supporting documents and sources: Q1 2023 Form 10-Q (filed May 22, 2023) ; April 11, 2023 8-K press release (Q1 2023 business update) ; April 26, 2023 8-K press release (annual results, call details) ; Q3 2022 Form 10-Q for trend ; January 30, 2023 8-K (Q4 commentary) .

IIOT-OXYS, Inc. (ITOX)·Q1 2023 Earnings Summary