DALLAS, April 24, 2024 (GLOBE NEWSWIRE) -- Spectral AI, Inc. (Nasdaq: MDAI) (“Spectral AI” or the “Company”), an artificial intelligence (AI) company focused on medical diagnostics for faster and more accurate treatment decisions in wound care, today announced that it will report financial results for the first quarter ended March 31, 2024 on Tuesday, May 7, 2024 after the close of the stock market. The Company will host a corresponding conference call at 5:00 pm Eastern Time to discuss the results. Investo ...

About this content About Angela Harmantas Angela Harmantas is an Editor at Proactive. She has over 15 years of experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from numerous countries around the world, including Canada, the US, Australia, Brazil, Ghana, and South Africa for leading trade publications. Previously, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government ...

DALLAS, April 24, 2024 (GLOBE NEWSWIRE) -- Spectral AI, Inc. (NASDAQ:MDAI) ("Spectral AI" or the "Company"), an artificial intelligence (AI) company focused on medical diagnostics for faster and more accurate treatment decisions in wound care, today announced that Erich Spangenberg has been appointed as the Chief Executive Officer of its health care IP-focused subsidiary, Spectral IP. "Spectral AI is fortunate that our largest shareholder, Erich Spangenberg, has agreed to assume the CEO role at Spectral IP. ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Spectral AI develops AI-powered DeepView System for predictive medical diagnostics, focusing on burn and DFU indications, with substantial U.S. government funding and planned UK commercialization [Overview and Technology](index=7&type=section&id=Overview%20and%20Technology) The DeepView System is an AI-powered diagnostic tool using multispectral imaging to predict wound healing, having received UKCA marking for burn indications, with a business model combining SaaS fees and device sales - The DeepView System uses proprietary AI and multispectral imaging (MSI) to provide an immediate prediction on a wound's capacity to heal, assisting physicians in making timely treatment decisions[18](index=18&type=chunk) - The company received **UKCA marking** for its DeepView System for burn indications on February 22, 2024, with registration completed on March 7, 2024, enabling market access in the United Kingdom[19](index=19&type=chunk) - The technology captures images across a wide spectrum (near UV to near infrared), processes the data, and uses an AI model to classify tissue as non-healing, partially damaged, or healthy, with the entire process taking approximately **20-25 seconds**[20](index=20&type=chunk) [Government Funding and Commercialization Strategy](index=9&type=section&id=Government%20Funding%20and%20Commercialization%20Strategy) The company has secured approximately **$279.6 million** in U.S. government funding, primarily from BARDA, including a new **$150 million** contract, and plans UK commercial sales for burn indications in H2 2024, with DFU applications targeting UK, EU, and U.S. markets subsequently U.S. Government Funding Summary | Funder | Total Awarded Since 2013 (million USD) | New Contract (Sept 2023) (million USD) | | :--- | :--- | :--- | | **BARDA** | $272.9 | Up to $150.0 | | **Total (All Gov't)** | ~$279.6 | N/A | - The new BARDA contract includes an initial award of **$54.9 million** to support clinical validation and an FDA De Novo application for the DeepView AI-Burn software, with options for an additional **$95.1 million** for development and procurement[24](index=24&type=chunk) - Initial sales for the burn indication are anticipated in the **UK in the second half of 2024**, with the DFU application targeted for the **UK in mid-2024**, the **EU4 in 2026**, and the **U.S. in 2025**, pending regulatory authorizations[25](index=25&type=chunk)[26](index=26&type=chunk) [Clinical Indications and Development Pipeline](index=10&type=section&id=Clinical%20Indications%20and%20Development%20Pipeline) The company is advancing its DeepView System across burn and DFU indications, demonstrating **92% accuracy in adult burns** and **86% in DFUs**, while developing a handheld device and 3-D wound measurement technology DeepView System Accuracy in Clinical Trials | Indication | Population | Accuracy (%) | | :--- | :--- | :--- | | **Burn** | Adults | 92 | | **Burn** | Pediatrics | 88 | | **DFU** | Adults | 86 | - A validation study for the burn indication began in early 2024, planning to enroll **240 adult and pediatric subjects** across **20 clinical sites**[31](index=31&type=chunk) - The company is developing a fully handheld, portable version of its technology, the DeepView SnapShot M, with over **$6.0 million** in funding from the Department of Defense (DHA and MTEC)[40](index=40&type=chunk) [Intellectual Property](index=19&type=section&id=Intellectual%20Property) The company protects its technology through **nine active patent families** and a portfolio of **64 trademarks**, holding **10 issued U.S. patents** and **10 international patents** as of year-end 2023, with numerous applications pending Intellectual Property Portfolio (as of Dec 31, 2023) | IP Type | U.S. | International | | :--- | :--- | :--- | | **Issued/Allowed Patents** | 10 | 10 | | **Pending Patent Applications** | 5 | 29 | | **Trademarks** | - | 64 (across 9 jurisdictions) | | **Pending Trademark Apps** | - | 9 (across 9 jurisdictions) | - The company's technology is protected by **nine families of active patents** covering areas like Burn/Wound Classification, DFU healing prediction, and MSI snapshot imaging[73](index=73&type=chunk)[82](index=82&type=chunk) [Risk Factors](index=22&type=section&id=Item%201.A.%20Risk%20Factors) The company faces significant risks including financial losses, heavy reliance on government funding, uncertain regulatory approvals, commercialization challenges, and the need to protect its intellectual property and proprietary data [Risks Related to Financial Condition and Capital Requirements](index=22&type=section&id=Risks%20Related%20to%20Financial%20Condition%20and%20Capital%20Requirements) The company has a history of **significant net losses**, including **$20.9 million in 2023**, is highly dependent on **BARDA government funding**, and may require additional capital for operations and commercialization, with no guarantee of availability - The company has incurred substantial net losses since inception, with a net loss of **$20.9 million** for the year ended December 31, 2023, and an accumulated deficit of **$32.8 million**[85](index=85&type=chunk) - The business is substantially dependent on funding from BARDA and the DHA; the BARDA contract is the largest single source of revenue and its non-extension would have a material adverse impact[90](index=90&type=chunk)[91](index=91&type=chunk) - The company may need to raise additional capital to fund product development, regulatory submissions, and commercialization, but there are no assurances that additional financing will be available on favorable terms, or at all[100](index=100&type=chunk)[101](index=101&type=chunk) [Risks Related to Product Development and Regulatory Review](index=27&type=section&id=Risks%20Related%20to%20Product%20Development%20and%20Regulatory%20Review) The regulatory review process for medical devices is expensive, time-consuming, and uncertain, with no guarantee of FDA or international approvals, potential clinical trial delays, and risks from evolving legislation - The company may be unable to obtain necessary 510(k) clearance, De Novo classification, or PMA approval from the FDA, or CE mark/UKCA certification in Europe, for its DeepView technology, which is a prerequisite for marketing[105](index=105&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - Completion of clinical trials could be delayed, suspended, or terminated due to various reasons, including failure to meet regulatory requirements, slow patient enrollment, or adverse events, increasing development costs and delaying revenue generation[111](index=111&type=chunk)[113](index=113&type=chunk) - Changes in regulations by the FDA, or in the EU and UK (post-Brexit), could impose additional costs, lengthen review times, or make it more difficult to obtain or maintain market authorization for the DeepView System[115](index=115&type=chunk)[116](index=116&type=chunk)[120](index=120&type=chunk) [Risks Related to Commercialization of our DeepView System](index=41&type=section&id=Risks%20Related%20to%20Commercialization%20of%20our%20DeepView%20System) Commercial success of the DeepView System is uncertain, dependent on market acceptance, the company's ability to build sales infrastructure, secure third-party reimbursement, and effectively compete with existing diagnostic methods and new technologies - The commercial success of DeepView depends on its adoption by clinicians, which is uncertain and may be hindered by factors like lack of experience with new technology, perceived liability risks, and existing relationships with other companies[165](index=165&type=chunk)[166](index=166&type=chunk) - The company currently has no sales, marketing, or distribution infrastructure and will need to build these capabilities, which involves significant expense and risk[172](index=172&type=chunk) - Sales will depend on the extent of coverage and reimbursement from third-party payors like private insurers and government programs, which is uncertain and may not be adequate[173](index=173&type=chunk) [Risks Related to Our Intellectual Property](index=55&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's success relies on robust intellectual property protection for its AI algorithms and data, facing risks of insufficient patent coverage, costly litigation, and government rights to inventions developed under contracts with BARDA and DHA - The company's ability to successfully commercialize its products may be harmed if it is unable to obtain and maintain sufficient patent or other IP protection for its technology[228](index=228&type=chunk) - The success of the company's AI algorithms is dependent on its significant proprietary repository of approximately **340 billion pixels** of DFU and burn data; loss of access to or protection of this data would be a material adverse event[221](index=221&type=chunk) - Government contracts with BARDA and DHA grant the U.S. government a nonexclusive, nontransferable, irrevocable, paid-up, worldwide license to practice inventions conceived or reduced to practice under the contract[278](index=278&type=chunk) [Cybersecurity](index=79&type=section&id=Item%201.C.%20Cybersecurity) The company manages cybersecurity risk through an enterprise framework overseen by the Audit Committee, focusing on human, supply chain, and geopolitical threats, employing a multi-layered approach, and has not identified any material incidents as of the filing date - Cybersecurity risk is managed under an enterprise risk management framework overseen by the Audit Committee and the Board[309](index=309&type=chunk) - The company focuses on human risk through employee training, supply chain risks via a third-party risk management program, and geopolitical risks[310](index=310&type=chunk)[313](index=313&type=chunk) - The company maintains a cybersecurity incident response plan (CIRP) and performs periodic tabletop exercises to test preparedness[312](index=312&type=chunk) [Properties](index=81&type=section&id=Item%202.%20Properties) The company leases executive offices in Dallas, Texas, at **~$105,000 per month**, and an office in the United Kingdom at **$14,000 per month**, both deemed adequate for current operations Leased Properties | Location | Monthly Cost (USD) | | :--- | :--- | | Dallas, TX (Executive Offices) | ~$105,000 | | United Kingdom | $14,000 | [Legal Proceedings](index=81&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any material legal proceedings but is aware of one material threatened claim it believes lacks merit - The company is not a party to any material legal proceedings but is aware of a material threatened claim it believes lacks merit[319](index=319&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=82&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Common Stock and warrants began trading on Nasdaq as 'MDAI' and 'MDAIW' post-September 2023 Business Combination, with **17,466,871 shares outstanding** as of March 25, 2024, no dividends paid, and recent equity financing agreements with B. Riley and Yorkville - Common Stock and redeemable warrants trade on Nasdaq under symbols **'MDAI'** and **'MDAIW'** since September 12, 2023[322](index=322&type=chunk) - As of March 25, 2024, there were **17,466,871 shares** of Common Stock issued and outstanding[323](index=323&type=chunk) - The company has not declared or paid dividends and does not plan to in the foreseeable future[324](index=324&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=83&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue for 2023 decreased to **$18.1 million** from **$25.4 million** in 2022, leading to a net loss of **$20.9 million** due to lower contract activity and **$8.3 million** in transaction costs, though new BARDA funding and equity facilities are expected to provide sufficient liquidity [Results of Operations](index=91&type=section&id=Results%20of%20Operations) Research and development revenue decreased **28.8% to $18.1 million** in 2023, resulting in a **$20.9 million net loss** due to lower contract activity, increased G&A expenses, and **$8.3 million** in Business Combination transaction costs Consolidated Results of Operations | Metric | 2023 (in thousands USD) | 2022 (in thousands USD) | Change ($ in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Research and development revenue** | $18,056 | $25,368 | $(7,312) | (28.8)% | | **Gross profit** | $7,880 | $10,837 | $(2,957) | (27.3)% | | **Gross margin** | 43.6% | 42.7% | N/A | 0.9 ppt | | **Operating loss** | $(12,984) | $(2,647) | $(10,337) | (390.5)% | | **Net loss** | $(20,854) | $(2,912) | $(17,942) | (616.1)% | - The decrease in revenue was primarily due to less activity as the company completed work under the BARDA Burn II contract before initiating work on the new BARDA PBS contract in Q4 2023[366](index=366&type=chunk) - The significant increase in net loss was driven by lower revenue, a **$7.4 million** increase in G&A expenses, and **$8.3 million** in non-recurring transaction costs for the Business Combination[371](index=371&type=chunk)[375](index=375&type=chunk) [Liquidity and Capital Resources](index=95&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended 2023 with **$4.8 million in cash** and a **$32.8 million accumulated deficit**, but secured a **$10.0 million ELOC** with B. Riley and a **$30.0 million SEPA** with Yorkville, including a **$12.5 million advance**, to ensure sufficient working capital for the next 12 months - The company ended 2023 with **$4.8 million in cash**, down from **$14.2 million** at the end of 2022[381](index=381&type=chunk)[453](index=453&type=chunk) - In December 2023, the company entered into a **$10.0 million** committed equity facility with B. Riley[381](index=381&type=chunk) - In March 2024, the company secured a **$30.0 million** Standby Equity Purchase Agreement with Yorkville, which includes a **$12.5 million pre-paid advance**, of which **$5.0 million** was disbursed immediately[381](index=381&type=chunk)[454](index=454&type=chunk) [Non-GAAP Financial Measures](index=95&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes Adjusted EBITDA, a non-GAAP metric, to assess performance, reporting a loss of **$11.7 million in 2023** compared to a **$1.5 million loss in 2022**, after excluding specific non-operating and non-cash items Reconciliation of Net Loss to Adjusted EBITDA | | Year Ended Dec 31, 2023 (in thousands USD) | Year Ended Dec 31, 2022 (in thousands USD) | | :--- | :--- | :--- | | **Net loss** | **$(20,854)** | **$(2,912)** | | Depreciation expense | 9 | 11 | | Provision for income taxes | 13 | 106 | | Net interest income | (172) | (21) | | **EBITDA** | **$(20,789)** | **$(2,816)** | | Stock-based compensation | 1,243 | 1,155 | | Change in fair value of warrant liability | (335) | (57) | | Foreign exchange transaction loss | 24 | 237 | | Transaction costs | 8,342 | - | | **Adjusted EBITDA** | **$(11,732)** | **$(1,481)** | [Controls and Procedures](index=101&type=section&id=Item%209.A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were **ineffective** as of December 31, 2023, due to **three material weaknesses** in internal control over financial reporting, for which a remediation plan is currently being implemented - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2023[408](index=408&type=chunk) - Three material weaknesses were identified in internal controls related to: 1) communication of complex arrangements, 2) recording of operating expenses, accruals, and unbilled revenue, and 3) the financial statement close process[408](index=408&type=chunk) - A remediation plan is underway, involving engaging professional services, strengthening and formalizing accounting processes, and enhancing the ERP system[410](index=410&type=chunk) Part III [Directors, Compensation, Ownership, and Accountant Fees](index=104&type=section&id=Items%2010-14) Information for Items 10 through 14, covering Directors, Executive Officers, Compensation, Security Ownership, Related Transactions, and Principal Accountant Fees, is incorporated by reference from the company's forthcoming 2024 Proxy Statement - Information regarding Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees and Services is incorporated by reference from the company's Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[419](index=419&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk)[423](index=423&type=chunk)[424](index=424&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=105&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section presents the company's audited consolidated financial statements for 2023 and 2022, including Balance Sheets, Statements of Operations, Equity, and Cash Flows, with notes detailing accounting policies, the Business Combination, revenue, stock compensation, and subsequent financing events Key Consolidated Balance Sheet Data | | Dec 31, 2023 (in thousands USD) | Dec 31, 2022 (in thousands USD) | | :--- | :--- | :--- | | **Cash** | $4,790 | $14,174 | | **Total Assets** | $10,692 | $18,716 | | **Total Liabilities** | $12,401 | $6,720 | | **Total Stockholders' Equity (Deficit)** | $(1,709) | $11,996 | Key Consolidated Cash Flow Data | | Year Ended Dec 31, 2023 (in thousands USD) | Year Ended Dec 31, 2022 (in thousands USD) | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(13,240) | $(1,162) | | **Net cash provided by (used in) financing activities** | $3,844 | $(785) | | **Net decrease in cash** | $(9,384) | $(1,947) | - Subsequent to year-end, the company raised **$2.7 million** through its B. Riley facility, secured a new **~$500,000 DHA contract**, formed a new subsidiary (Spectral IP, Inc.) with a **$1.0 million investment**, and entered a **$30.0 million equity facility** with Yorkville, receiving an initial **$5.0 million advance**[560](index=560&type=chunk)[561](index=561&type=chunk)[562](index=562&type=chunk)[563](index=563&type=chunk)

[Overview and Business Highlights](index=1&type=section&id=Spectral%20AI%20Announces%202023%20Fourth%20Quarter%20and%20Full%20Year%20Financial%20Results) [CEO's Statement & Outlook](index=1&type=section&id=CEO's%20Statement%20%26%20Outlook) CEO highlights transition to commercialization, expecting DeepView System revenue in H2 2024, focusing on government contracts and regulatory approvals - The company expects to generate its first commercial product revenue in **H2 2024**[2](index=2&type=chunk) - The strategic goal is to generate commercial revenue from **four DeepView System platforms** for burn and DFU indications within the next three years[2](index=2&type=chunk) - Key regulatory milestones for 2024 include DFU indication filings in the US and UK, with US burn indication submission planned for **H1 2025**[3](index=3&type=chunk) [2023-2024 Select Business Highlights](index=2&type=section&id=2023-2024%20SELECT%20BUSINESS%20HIGHLIGHTS) Spectral AI secured its largest government contract for DeepView System, achieved UKCA Authorization for UK sales in H2 2024, and strengthened its financial position - Awarded the largest contract in company history from the US Government, valued at up to **$150.0 million**, for the DeepView System for burn, including an initial **$54.9 million** award[4](index=4&type=chunk) - Received **UKCA Authorization** in February 2024, enabling DeepView System sales for burn in the UK, with first commercial revenues expected in **H2 2024**[5](index=5&type=chunk) - Initiated a pivotal study in December 2023 to validate the DeepView System for burn, expected to be the final clinical trial before seeking FDA approval[9](index=9&type=chunk) - Successfully listed on Nasdaq in September 2023 and enhanced access to capital through equity financing and a standby equity purchase agreement[9](index=9&type=chunk) [Financial Performance](index=3&type=section&id=2023%20FINANCIAL%20RESULTS%20OVERVIEW) [Financial Results Summary](index=3&type=section&id=Financial%20Results%20Summary) For FY2023, R&D revenue decreased to $18.1 million, while increased G&A expenses and $8.3 million in transaction costs resulted in a net loss of $(20.9) million Full Year (FY) 2023 vs 2022 Financials (in millions) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | R&D Revenue | $18.1 | $25.4 | | Gross Margin | 43.6% | 42.7% | | General & Admin Expense | $20.9 | $13.5 | | Net Loss | $(20.9) | $(2.9) | | Net Loss Per Share | $(1.48) | $(0.22) | Fourth Quarter (Q4) 2023 vs 2022 Financials (in millions) | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | R&D Revenue | $5.3 | $6.1 | | Gross Margin | 46.1% | 41.1% | | General & Admin Expense | $5.4 | $4.3 | | Net Loss | $(3.5) | $(1.7) | | Net Loss Per Share | $(0.22) | $(0.13) | - The FY 2023 net loss included **$8.3 million** of non-recurring transaction costs from the business combination and Nasdaq listing[15](index=15&type=chunk) [Cash and 2024 Guidance](index=3&type=section&id=Cash%20and%202024%20Guidance) The company ended 2023 with $4.8 million in cash, strengthened its financial position in Q1 2024, and reiterated FY2024 revenue guidance of approximately $28.0 million - As of December 31, 2023, the company had **$4.8 million** in cash and no long-term debt[16](index=16&type=chunk) - In Q1 2024, the company enhanced its financial position by receiving **$5.0 million** from a prepaid advance and SEPA, and approximately **$2.8 million** from a committed equity facility[16](index=16&type=chunk) - The company reiterates its FY 2024 revenue guidance of approximately **$28.0 million**, excluding expected contributions from UK DeepView System sales[1](index=1&type=chunk)[17](index=17&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets decreased to $10.7 million, total liabilities increased to $12.4 million, resulting in a stockholders' deficit of $(1.7) million Balance Sheet Summary (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash | $4,790 | $14,174 | | Total Current Assets | $9,902 | $17,687 | | Total Assets | $10,692 | $18,716 | | Total Current Liabilities | $12,401 | $6,374 | | Total Liabilities | $12,401 | $6,720 | | Total Stockholders' Equity (Deficit) | $(1,709) | $11,996 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For FY2023, R&D revenue decreased to $18.1 million, operating loss widened to $(13.0) million, and $8.3 million in transaction costs led to a net loss of $(20.9) million Statement of Operations Highlights - Full Year (in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Research and development revenue | $18,056 | $25,368 | | Gross profit | $7,880 | $10,837 | | Operating loss | $(12,984) | $(2,647) | | Transaction costs | $(8,342) | $0 | | Net loss | $(20,854) | $(2,912) | | Net loss per share (Basic & Diluted) | $(1.48) | $(0.22) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For FY2023, net cash used in operating activities increased to $(13.2) million, while financing activities provided $3.8 million, resulting in a net decrease in cash of $(9.4) million, ending with $4.8 million Cash Flow Summary - Full Year (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,240) | $(1,162) | | Net cash provided by (used in) financing activities | $3,844 | $(785) | | Net decrease in cash | $(9,384) | $(1,947) | | Cash, end of period | $4,790 | $14,174 |

Financial Data and Key Metrics - Q4 2023 R&D revenue was $5.3M, down from $6.1M in Q4 2022, reflecting reduced activity as the BARDA Burn 2 contract neared completion [27] - Full-year 2023 R&D revenue was $18.1M, a 28.8% decrease from $25.4M in 2022, due to the wind-down of the BARDA Burn 2 contract [30] - Gross margin in Q4 2023 rose to 46.1% from 41.1% in Q4 2022, driven by higher reimbursement rates under the new BARDA PBS contract [29] - Full-year 2023 gross margin increased to 43.6% from 42.7% in 2022, despite a decrease in gross profit, due to the higher reimbursement rate under the BARDA PBS contract [31] - As of December 31, 2023, cash and cash equivalents totaled $4.8M, with no long-term debt [34] Business Line Data and Key Metrics - The DeepView System for burn wounds has a clinically validated accuracy of 92% [6] - The company received a $150M multiyear nondilutive contract from the U.S. government under Project BioShield, with an initial award of $54.9M to fund R&D through Q1 2026 [18] - Enrollment for the pivotal study to validate the DeepView System for burn wounds commenced in January 2024, with a target of 240 subjects, including both adult and pediatric patients [19] - The company received UKCA authorization to commence sales of the DeepView System for burn in the UK in February 2024, with the first device deployed in March 2024 [20] - A new $500K contract was awarded in March 2024 to support the development of the handheld version of the DeepView System, bringing total nondilutive support for this project to over $6M [21] Market Data and Key Metrics - There are approximately 125 burn centers in the U.S., making them a limited and scattered resource [7] - The company expects to generate commercial revenues across four platforms (burn in the U.S. and UK, and diabetic foot ulcer in the U.S. and UK) by 2026 [22] - The company has 20 allowed U.S. and international patents and 34 pending patents, with key patent protection exceeding 14 years [23] Company Strategy and Industry Competition - The company aims to integrate the DeepView System into the clinical treatment flow at emergency departments, hospitals, burn centers, and clinics for both diabetic foot ulcers and burn wounds [17] - The DeepView System is designed to provide immediate and accurate wound care assessment, reducing pain and suffering for patients and improving resource allocation for institutions [5][6][7] - The company formed a wholly-owned subsidiary, Spectral IP, to focus on developing or acquiring IP applicable to the broader AI ecosystem within healthcare, with a $1M investment from an affiliate of its largest shareholder [24] Management Commentary on Operating Environment and Future Outlook - The company expects 2024 revenue guidance of approximately $28M, a 55% increase from 2023, driven by the BARDA PBS contract and contributions from the handheld contract [38] - The company believes its financial agreements and nondilutive funding from U.S. government contracts provide a sound financial foundation to pursue strategic objectives [38] - Management is optimistic about future growth, with plans to submit regulatory filings for the approval of the DeepView System for burn in the U.S. in 2025 and for diabetic foot ulcer in the U.S. and UK later in 2024 [22] Other Important Information - The company has a clinical database with over 340 billion clinically validated data points, supporting the DeepView System's AI algorithm [12] - The DeepView System is expected to reduce the typical stay in a burn center by up to 3 days, a 37.5% reduction [14] - The company has a well-defined business focus for 2024 and beyond, prioritizing research, development, and clinical activities while driving commercialization efforts [17] Q&A Session Summary Question: Initial impressions of the UK market and adoption expectations - The company has deployed two devices in the UK, with positive initial feedback on ease of use and reduced complexity compared to existing tools [43] - Five to six more locations are lined up for deployment, with commercial arrangements expected after a period of field validation [44] Question: Impact of incremental capital on development acceleration - The company believes its financial resources will support operations well into 2025, allowing for increased hiring and accelerated activity [47] Question: Progress on the burn trial and enrollment efficiency - Enrollment for the burn trial is between 5% and 10%, with expectations to have nearly half of the sites fully engaged by the end of April [51] - The trial includes a commitment to enroll at least 25% pediatric participants, potentially up to 40% [52] Question: Details on the UK launch, including staffing and system deployment - The company has a small team in the UK and does not anticipate significant staffing increases to support initial deployments [55] - Devices are manufactured in the U.S., with a biomedical, clinician, and sales resource in the UK [56] Question: Allocation of the $55M BARDA funding and billing process - The company bills the U.S. government monthly for R&D expenses, with payments typically received within a few weeks [60] - The funding covers clinical trial costs, including overhead [61][62] Question: Regulatory hurdles for broader expansion in the UK - The UKCA mark allows for UK-wide deployment, with no significant additional regulatory hurdles [65] Question: Revenue structure for the DeepView System - Revenue includes device sales, annual license fees for the AI, and service/maintenance components [66] - The AI model is updated annually, with a robust dataset of 340 billion data points [69][70] Question: Potential for Middle East market expansion and 2024 margin expectations - The company is actively pursuing opportunities in the Middle East, leveraging the UKCA mark for regulatory access [78] - Margins for 2024 are expected to be consistent with Q4 2023, potentially slightly higher due to the BARDA PBS contract [79][80]

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 SPECTRAL AI, INC. (Exact Name of Registrant as Specified in Its Charter) (State or other jurisdiction of incorporation or organization) 2515 McKinney Avenue, Suite 1000 Dallas, Texas 75201 (Address of principal executive offices) For the quarterly period ended September 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15( ...

Commission file number: 001-40058 ROSECLIFF ACQUISITION CORP I 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, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to (Exact Name of Registrant as Specified in Its Charter) | Delaware | 85-3987148 | | --- | --- | | ...

FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 (MARK ONE) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40058 ROSECLIFF ACQUISITION CORP I (Exact Name of Registrant as Specified in Its Charter) | Delaware | 85-3987148 | | --- | --- | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to To Commission File No. 001-40058 ROSECLIFF ACQUISITION CORP I (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporati ...