Business context and reporting period
ScoutCam Inc. (the registrant named in this filing; the request identifies Odysight.Ai Inc.) reported unaudited results for the quarter and six months ended June 30, 2021. The company develops and manufactures miniature camera and endoscopy systems for medical and industrial applications.
Management said it completed R&D for a customer-specific project and moved toward production under a contract with a Fortune 500 healthcare company. It also expanded R&D, marketing, intellectual-property work, and efforts to develop Industry 4.0 applications.
Financial results and liquidity
Amounts below are USD thousands, except per-share data.
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | 274 | 298 | 34 / 74 |
| Gross loss | (133) | (312) | (117) / (207) |
| Operating loss | (2,097) | (3,687) | (936) / (2,445) |
| Net loss | (2,088) | (3,694) | (970) / (2,383) |
| Net loss per share | (0.31) | (0.67) | (0.28) / (0.73) |
| Operating cash flow | (2,280) | (3,054) | (1,140) / (2,277) |
Revenue rose substantially year over year, largely from approximately $200,000 of A.M. Surgical revenue in both the quarter and first half. Costs exceeded revenue, leaving gross losses. For the six months, R&D expense was $754,000, sales and marketing $293,000, and general and administrative expense $2.328 million.
At June 30, cash and cash equivalents were $21.775 million, versus $3.373 million at December 31, 2020. Current assets were $22.837 million and current liabilities $1.150 million. Total liabilities were $3.066 million; the filing reports no borrowings, with liabilities including contract and lease liabilities. Equity was $22.482 million. Financing provided $21.622 million in first-half cash, mainly from share-and-warrant issuance ($19.118 million) and warrant exercises ($2.504 million). Investing cash outflow was $170,000.
Changes, outlook, and notable items
- First-half revenue increased from $74,000 to $298,000, while operating loss widened 51% to $3.687 million. Higher payroll and production-related costs, R&D, marketing, administration, and IP expenses contributed.
- Management expects R&D and selling and marketing expenses to increase. It said June 30 cash should fund the operating plan for more than 12 months, but additional financing will be needed to support growth and operations until profitability. No specific revenue or earnings guidance was provided.
- Remaining performance obligations were $2.7 million, expected to be recognized over the manufacturing term of the product under development.
- The March 2021 financing involved $20 million gross proceeds for shares and warrants; the statements report $19.118 million in proceeds. A substantial number of warrants and options remained outstanding, creating potential dilution.
- Stock-based compensation was $635,000 for the first half. Options granted during that period had estimated aggregate grant-date fair value of approximately $3.784 million, to be recognized over vesting periods.
- A 1-for-9 reverse stock split became effective August 9, 2021, after quarter-end; share and per-share data in the filing were retroactively adjusted. Stockholders also approved a staggered-board amendment in July 2021.
- The company reported no material adverse COVID-19 impact through June 30, no material change to previously disclosed risk factors, and no material pending legal claims. Management stated disclosure controls were effective.
Important facts for investors to verify
- Confirm the registrant and issuer identity: this filing is for ScoutCam Inc., not Odysight.Ai Inc.
- Assess whether the healthcare customer project advances to production, and whether the $2.7 million of remaining performance obligations converts into recognized revenue on schedule and at sustainable margins.
- Monitor cash burn and the timing and terms of any further financing; management anticipates needing additional funding despite the stated runway.
- Review warrant and option terms, potential share dilution, and the effect of the reverse split on share counts and trading.
- Evaluate whether rising operating expenses and negative gross margins can be offset by revenue growth and improved production economics.