Executive Summary

Q1 2022 was a transitional, investment-heavy quarter: revenue was $2,000, operating loss was $2.769M, and net loss was $2.788M as the company intensified R&D and shifted toward subscription-based CBM/PdM solutions .
Liquidity remained strong with $8.292M cash and $11.026M short‑term deposits ($19.318M combined), providing >12 months runway per management’s assessment .
No formal quantitative guidance was issued; management emphasized a new licensing agreement with Sumita Optical Glass (royalty stream potential) and a subscription model as strategic drivers of future revenue .
Consensus estimates from S&P Global were unavailable for Q1 2022; hence no beat/miss assessment versus Wall Street .
Near‑term catalysts: monetization of the Sumita licensing deal and conversion of $4.0M remaining performance obligations (RPO) tied to development contracts into reported revenue over time .

What Went Well and What Went Wrong

What Went Well

Signed royalty licensing agreement with Sumita Optical Glass, enabling passive royalty revenue streams over time; management believes long‑term royalties “could reach millions of dollars” based on Sumita’s endoscope business .
Strategic pivot toward subscription-based CBM/PdM solutions with data collection, cloud storage, and AI analysis to drive recurring revenue and margin visibility over time .
Strong backlog indicators: contract liabilities totaled $4.036M and RPO was ~$4.0M expected to be recognized over the manufacturing term of the product under development .

Management quotes:

“We’ve adopted a subscription-based model… Going forward, we plan on gaining market share and growing our revenues as we expand into new verticals.” – CEO Yovav Sameah .
“Licensing… offers another way to monetize our technology; the royalties… provide ScoutCam with a valuable passive revenue stream.” – CEO Yovav Sameah (Sumita agreement) .

What Went Wrong

Revenue fell sharply to $2,000 (–92% YoY), largely due to decreased sales of component products to occasional customers, amplifying gross loss .
Operating loss expanded to $2.769M (+74% YoY) driven by higher R&D ($954k, +240% YoY), G&A ($1.286M, +38% YoY), and S&M ($243k, +23% YoY), with significant stock‑based compensation embedded .
Gross loss increased to $286k (+60% YoY) given minimal revenue and higher cost of revenues (payroll and facility costs) .

Financial Results

Income Statement and EPS vs prior periods and YoY

Metric	Q1 2021	Q2 2021	Q3 2021	Q1 2022
Revenue ($USD Thousands)	$24	$274	$23	$2
Cost of Revenues ($USD Thousands)	$203	$407	$153	$288
Gross Profit/Loss ($USD Thousands)	$(179)	$(133)	$(188)	$(286)
Operating Loss ($USD Thousands)	$(1,590)	$(2,097)	$(2,563)	$(2,769)
Net Loss ($USD Thousands)	$(1,606)	$(2,088)	$(1,027) (three months Sep-20 shown in Q3’20; Q3’21 net loss is presented at nine-month level elsewhere)	$(2,788)
Diluted EPS ($USD)	$(0.38)	$(0.28)	$(0.27)	$(0.39)

Notes:

Q3 2021 net loss is shown at quarterly level within Q3 2021 table as $(1,027) for Q3 2020; the operating loss for Q3 2021 is $(2,563) with full loss detail at nine-month aggregate; the period’s operating and revenue lines guide the trend .
No consensus estimates available for Q1 2022 to judge beats/misses .

Margins (derived)

Metric	Q1 2021	Q2 2021	Q3 2021	Q1 2022
Gross Margin (%)	−746% (−179/24)	−48.5% (−133/274)	−817% (−188/23)	−14,300% (−286/2)

Operating Expense Mix (Q1 2022 detail)

Metric ($USD Thousands)	Q1 2022
Research & Development	$954
Sales & Marketing	$243
General & Administrative	$1,286

Cash Flow and Liquidity

Metric	Q1 2021	Q2 2021	Q3 2021	Q1 2022
Cash from Operations ($USD Thousands)	$(774)	$(2,280)	$(1,786)	$(224)
Cash & Equivalents ($USD Thousands)	$12,751 (end of period Q1 2021)	$21,775 (end of period)	$19,725 (end of period)	$8,292 (end of period)
Short‑Term Deposits ($USD Thousands)	N/A	N/A	N/A	$11,026

KPIs and Backlog Indicators

Metric	Jun 30 2021	Sep 30 2021	Dec 31 2021	Mar 31 2022
Contract Liabilities (Total, $USD Thousands)	$1,385	$1,377	$2,420	$4,036
Remaining Performance Obligations ($USD Millions)	$2.7	$2.7	N/A	$4.0
Inventory ($USD Thousands)	$145	$145	$167	$190

Segment breakdown: Not disclosed; the company reports consolidated results only .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company-wide quantitative guidance	FY/Q2 onward	None	None	Maintained (no formal guidance provided)

Narrative guidance emphasized strategic initiatives (subscription model, licensing, vertical expansion) without numeric ranges .

Earnings Call Themes & Trends

(Transcript not available; themes drawn from press releases and 10‑Q MD&A.)

Topic	Previous Mentions (Q2 2021)	Previous Mentions (Q3 2021)	Current Period (Q1 2022)	Trend
AI/technology initiatives	Expanded R&D team; micro‑camera/AI platform; Industry 4.0 focus	Continued I4.0 expansion and product development	Subscription model with AI-based analysis; Camera‑as‑a‑Sensor platform reiterated	Building capabilities → commercial model pivot
Supply chain/macro	No material COVID-19 impact cited	No material COVID-19 impact cited	No material COVID-19 impact cited	Stable
Product performance	Transition to production for Fortune 500 healthcare project	Increased operations to improve R&D capabilities	Focus on CBM/PdM applications across automotive, aviation, wind, UAVs, energy	Broadening end‑markets
Licensing/monetization	N/A	N/A	Sumita royalty licensing agreement signed	New monetization vector
R&D execution	R&D $754k in 1H21; hiring for I4.0	R&D ramp; increased materials/subcontractors	R&D $954k; continued ramp for CBM/PdM	Rising investment
Regional trends	Emphasis on US BD recruitment	Marketing expansion; new directors	Global verticals incl. Japan via Sumita partnership	Diversifying outreach
Regulatory/legal	VAT audit provision recorded in Q3 2021	VAT provision impacts G&A	No new legal events; “none” subsequent events	Normalized

Management Commentary

“Our innovative, patented technology is in the early stages of market acceptance, and we remain optimistic that over time adoption will be reflected in our financial results.” – CEO Yovav Sameah .
“We recently signed a new licensing agreement with Japan-based Sumita Optical Glass, Inc., allowing us to monetize… through royalty payments.” – CEO Yovav Sameah .
“Licensing… provides a valuable passive revenue stream that we believe could reach millions of dollars in the long term.” – CEO Yovav Sameah .

Q&A Highlights

No earnings call transcript was found for Q1 2022; therefore, no Q&A highlights or clarifications are available from a call .

Estimates Context

Wall Street consensus for Q1 2022 was unavailable from S&P Global for SCTC; as a result, no beat/miss determination versus estimates can be provided .

Key Takeaways for Investors

Liquidity is ample ($8.292M cash plus $11.026M short‑term deposits) to fund increased R&D and commercialization efforts over the next 12 months, lowering near‑term financing risk .
Revenue was de minimis ($2k) in Q1 2022; investment thesis hinges on backlog/RPO conversion and the subscription/licensing model driving future recurring revenues and gross margin stabilization .
Contract liabilities rose sharply to $4.036M, signaling customer prepayments and future revenue recognition tied to development milestones and manufacturing .
Operating losses widened as the company leaned into R&D (+240% YoY) and G&A (stock‑based comp), consistent with a build‑out phase toward Industry 4.0 CBM/PdM offerings .
The Sumita licensing agreement introduces a passive revenue stream with long‑term royalty potential, diversifying monetization beyond direct product sales .
No quantitative guidance was provided; watch for disclosures on deployment wins (e.g., automotive/aviation/UAV/energy) and subscription ARR traction in subsequent quarters .
Near‑term trading setup is likely headline/catalyst-driven (licensing follow‑ons, contract wins, backlog conversion updates) given the small revenue base and investment phase cost structure .

Cross‑references and reconciliations:

Q1 2022 cash and operating loss in the press release match the 10‑Q ($19.3M cash and short‑term deposits; operating loss $2.7M) confirming consistency across primary sources .
Drivers of expense growth (R&D, G&A, stock‑based compensation) are detailed in MD&A and reflected in the income statement, clarifying the “why” behind margin pressure .

Odysight.ai Inc. (SCTC)·Q1 2022 Earnings Summary