"We are pleased with the results of our second quarter of 2025 especially with our ability to complete our submission of our De Novo application earlier than projected to the US Food and Drug Administration ("FDA"). This FDA submission is a major milestone for Spectral AI and the DeepView System, representing a crucial step toward bringing this innovative diagnostic device to market in the U.S. It provides clinicians with an immediate, data-driven assessment tool designed to assist clinical decision-making ...

Financial Data and Key Metrics Changes - Research and development revenue decreased to $5,100,000 from $7,500,000 in the second quarter of the previous year, reflecting reduced reimbursements under the BARDA Project BioShield contract [12] - Gross margin slightly decreased to 45.2% from 46.6% in the same quarter last year due to lower reimbursed expenses under the BARDA contract [13] - General and administrative expenses were significantly reduced from $5,800,000 in 2024 to $4,400,000 in 2025, primarily due to a focus on operating efficiencies [13] - The company reported a net loss of $7,900,000 in 2025 compared to a net loss of $2,900,000 in 2024, attributed to an increase in the fair value of publicly traded warrant liability [13] - Cash and cash equivalents totaled $10,500,000 as of June 30, 2025, up from $5,200,000 on December 31, 2024, due to successful financing [14] Business Line Data and Key Metrics Changes - The company is focusing on the commercialization of the DeepView system, with significant progress made in FDA submission [6][9] - The FDA submission is considered a key driver in the evolution of the business, with expectations for further interaction in the coming months [10] Market Data and Key Metrics Changes - The company does not expect material contributions from sales of the DeepView system in the UK or Australia for 2025, focusing instead on usage and learning from these markets [15][31] Company Strategy and Development Direction - The company emphasizes three principles: finance, focus, and finish, with a strong start to the year and a focus on commercialization plans [6][48] - The company is developing a thorough commercialization plan involving BARDA, which will assist in rolling out initial devices upon FDA clearance [22] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future prospects and is focused on the commercialization of the DeepView system [48] - The company is studying the UK market to gather insights that can be applied to the US market [33] Other Important Information - The healthcare intellectual property subsidiary, Spectral IP Inc., is undergoing SEC registration for its initial public offering, requiring limited management resources [11] Q&A Session Summary Question: Discussion on the submission for DeepView and commercial organization preparation - Management expects FDA clearance in the first half of next year and is developing a commercialization plan with BARDA's involvement [20][21] Question: Utility outside of burns for the DeepView system - Management indicated potential applications in wound care and other medical assessments, emphasizing the device's ability to differentiate healing and non-healing tissue [25][26] Question: Activities for deployment in the UK and Australia - Management highlighted the UK market's approval and its usefulness for burn care, focusing on learning from these markets rather than immediate sales [31][32] Question: Regulatory pathway for the handheld device - Management confirmed that the handheld device will use the cart-based device as a predicate for regulatory approval, with funding from military pathways [38] Question: Dialogue with BARDA regarding system rollout post-approval - Management refrained from speculating on BARDA's actions but noted that the contract includes methodologies for device rollout [43]

For the transition period from to Commission file number: UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 SPECTRAL AI, INC. (Exact Name of Registrant as Specified in Its Charter) (State or other jurisdiction of incorporation or organization) ...

Core Viewpoint - Spectral AI has submitted a De Novo 510k marketing clearance application to the FDA for its AI-driven DeepView® System, aimed at improving burn care through predictive assessments of healing potential [1][3]. Company Overview - Spectral AI, based in Dallas, focuses on predictive AI technology for medical diagnostics, particularly in wound care, with an emphasis on burn treatment [4]. - The DeepView System utilizes multi-spectral imaging and AI algorithms to provide non-invasive assessments of burn wounds, enabling timely and informed treatment decisions [2][4]. Product Details - The DeepView System is designed to predict the healing potential of burn wounds on the same day of injury and up to seven days post-injury, which can significantly enhance clinical decision-making [2][3]. - The technology is unique in the U.S. market, as there are currently no predicate devices available, necessitating the De Novo regulatory pathway for approval [1][3]. Regulatory Milestone - The submission of the De Novo request to the FDA is considered a major milestone for the company, marking a significant step towards bringing the DeepView System to the U.S. market [3]. - The project has received support from federal funds through the U.S. Department of Health and Human Services, indicating governmental backing for the development of this innovative technology [3].

Core Viewpoint - Spectral AI, Inc. is making significant advancements in burn care through its DeepView System, which enhances medical diagnostics and treatment decisions for wound care, as showcased at the British Burn Association conference [1][5][6]. Group 1: Company Overview - Spectral AI, Inc. is a Dallas-based predictive AI company focused on medical diagnostics, particularly in wound care, with initial applications for burn patients [7]. - The DeepView System aims to revolutionize wound care management by providing objective and immediate assessments of burn wounds' healing potential [7]. Group 2: Conference Highlights - The British Burn Association conference featured multiple presentations from Spectral AI, emphasizing the company's contributions to advancing burn care globally [1][5]. - Mr. Chris Wearn presented on the DeepView System, highlighting its potential to significantly improve acute burn care through its portability and AI-driven healing prediction capabilities [3][4]. - Dr. Jeffrey Carter reported promising results from early clinical experiences with DeepView, noting an increase in detection rates of non-healing wounds from 61% to 89% [5]. Group 3: Clinical Impact - The DeepView System has shown promising sensitivity and specificity results, enhancing clinicians' ability to assess burn wounds and improve patient outcomes [5]. - Feedback from clinicians at the conference indicates a positive impact of the DeepView System on clinical decision-making and patient care [6].

Company Overview - Spectral AI, Inc. is an artificial intelligence company focused on medical diagnostics, specifically aimed at improving treatment decisions in wound care [3] - The company is developing the DeepView System, a predictive device designed to provide clinicians with an objective assessment of a burn wound's healing potential [3] Leadership Change - Stanley Micek has been appointed as the Chief Operating Officer (COO) of Spectral AI, having previously served as Interim COO since May 2024 [1] - Micek's leadership has been recognized for his operational insight and ability to drive performance, particularly in overseeing the company's Research and Development efforts [1][2] Strategic Focus - The company aims to revolutionize wound care management by utilizing the DeepView System to exceed current standards of care, thereby improving patient outcomes and reducing healthcare costs [3] - Micek expressed enthusiasm about leading the operations team and emphasized the importance of the recent Pivotal Burn Study in driving the company's FDA submission efforts [3]

Core Viewpoint - Spectral AI, Inc. held its 2025 Annual Meeting of Stockholders, where stockholders approved both proposals presented by the Company, with 15,551,068 shares, representing 60.8% of total shares outstanding, participating in the meeting [1][2]. Group 1: Company Overview - Spectral AI is a Dallas-based predictive AI company focused on medical diagnostics, particularly in wound care, aiming for faster and more accurate treatment decisions [3]. - The Company is developing the DeepView System, a predictive device designed to provide clinicians with an objective assessment of a burn wound's healing potential before treatment [3]. - The DeepView System aims to improve patient outcomes and reduce healthcare costs by offering algorithm-driven results that exceed the current standard of care [3]. Group 2: Governance and Financial Oversight - Six directors were elected to the Company's Board of Directors to serve until the next Annual Meeting of Stockholders [2]. - Stockholders ratified the appointment of KPMG LLP as the independent registered public accounting firm for the 2025 fiscal year [2].

Core Insights - Spectral AI's DeepView System has demonstrated a 95.3% overall accuracy in predicting burn healing potential, significantly outperforming traditional subjective assessments [1][2] - The technology has been recognized in the journal Burns, highlighting its clinical importance and transformative role in burn care [2] Company Overview - Spectral AI, Inc. is a Dallas-based predictive AI company focused on enhancing medical diagnostics for wound care, particularly for burn patients [3] - The DeepView System aims to provide objective and immediate assessments of burn wounds, facilitating faster and more accurate treatment decisions [3] - The company is committed to improving patient outcomes and reducing healthcare costs through its innovative technology [3] Clinical Significance - The study published in Burns represents the first multi-center evaluation of AI-enhanced multispectral imaging in burn assessment, showcasing the effectiveness of the DeepView System across various clinical settings [2] - The technology empowers clinicians with data-driven insights, improving decision-making regarding healing time and the need for surgical interventions [2] Industry Context - Burns is a prominent peer-reviewed medical journal dedicated to advancements in burn care and wound healing, serving as a critical platform for sharing innovative techniques and best practices [2]

Core Insights - Spectral AI, Inc. announced that its research partners have won the Best Research Project award at the 2025 Education Awards for their work on diabetic foot ulcers using the DeepView System [1][3] Company Overview - Spectral AI is a Dallas-based predictive AI company focused on medical diagnostics, particularly in wound care, with initial applications for burn patients [4] - The DeepView System utilizes multi-spectral imaging and AI algorithms to provide objective assessments of burn wound healing potential [4] Research and Development - The awarded project demonstrates the integration of real-time multispectral imaging with AI analytics to enhance evaluation and treatment strategies for diabetic foot ulcers [3] - The research validates the clinical value of the DeepView System and contributes to expanding its clinical evidence base [3] Market Positioning - The findings from the research are expected to shape the company's commercialization strategy and position it strongly for broader market entry [3]

Financial Performance - The company generated research and development revenue of $6,707,000 for the three months ended March 31, 2025, representing a 6.0% increase from $6,326,000 in the same period of 2024[115]. - Gross profit for the same period was $3,168,000, with a gross margin of 47.2%, compared to a gross profit of $2,945,000 and a gross margin of 46.6% in 2024[101]. - The company reported a net income of $2,897,000 for the three months ended March 31, 2025, a significant improvement from a net loss of $3,205,000 in the prior year[114]. - Operating loss for the three months ended March 31, 2025, was $896,000, a reduction from an operating loss of $2,143,000 in the same period of 2024[114]. - Adjusted EBITDA for the three months ended March 31, 2025, was $(694) thousand, improving from $(1,857) thousand in the comparable period in 2024[126]. - General and administrative expenses decreased by 20.1% to $4.1 million for the three months ended March 31, 2025, down from $5.1 million in 2024[119]. - Net cash used in operating activities decreased by approximately $1.2 million to $(1.5) million for the three months ended March 31, 2025[136]. - Net cash provided by financing activities increased to approximately $10.3 million for the three months ended March 31, 2025, compared to $8.0 million in 2024[137]. Contracts and Funding - The company has received a new contract with BARDA, providing up to $150 million in funding, including an initial award of approximately $54.9 million for clinical validation of the DeepView System[95]. - The total potential support from BARDA is nearly $272.9 million, including the new PBS BARDA Contract valued at $54.9 million[128]. - The company has received a $4.9 million grant from MTEC, intended to support military battlefield burn evaluation via a handheld DeepView System device[96]. Clinical Studies and Product Development - The company completed enrollment of a pivotal clinical study with 267 patients, including 42 pediatric patients, across 22 sites in the United States[93]. - The company anticipates two revenue streams from the DeepView System: a software as a medical device (SaMD) model and an imaging device component[97]. - The company has not generated any product revenue to date, relying on contract development and research services for revenue[94]. Shareholder and Financing Activities - The company began trading its shares on the Nasdaq under the symbols "MDAI" and "MDAIW" following the completion of a Business Combination on September 12, 2023[99]. - The company entered into a Loan and Security Agreement allowing it to borrow up to $15.0 million, with an initial drawdown of $8.5 million[129]. - Avenue Financing includes warrant coverage equal to 8.5% of the total funding commitment, with an exercise price of $1.66[140]. - Spectral IP received a $1.0 million investment from an affiliate of its largest stockholder for developing artificial intelligence intellectual property[141]. - The Spectral IP Note was amended to reduce the annual interest rate from 8% to 4% and extend the term through March 18, 2026[142]. - The holder of the Spectral IP Note converted it into 540,996 shares of Common Stock at a 5% discount to the closing price[142]. Cash Position and Risks - As of March 31, 2025, the company had approximately $14.1 million in cash and an accumulated deficit of approximately $45.3 million[127]. - The company maintains a significant amount of cash, with interest rates on current borrowings at Prime plus 5.25%[152]. - The company has not recognized any losses from credit risks on cash, indicating a low exposure to significant credit risk[154]. - Inflationary pressures may adversely affect the company's gross margin and cash flows if costs continue to rise significantly[156]. Company Classification - The company is classified as an emerging growth company, allowing it to delay the adoption of certain accounting standards[147]. - One customer, a U.S. government agency, represents the majority of the company's research and development revenue and accounts receivable[155]. - The company has no off-balance sheet arrangements during the periods presented[143].