Funding and Government Contracts - The company has received approximately $280.2 million in funding awards from government contracts since 2013, primarily from BARDA, which accounts for $272.9 million[132]. - The company executed a multi-year Project BioShield agreement with BARDA in September 2023, valued at up to approximately $150.0 million, including an initial award of nearly $54.9 million[133]. - The Company secured a multi-year PBS BARDA Contract valued at approximately $150.0 million, with an initial award of nearly $54.9 million for clinical validation and FDA clearance of DeepView[174]. - The Company received a $4.0 million grant under the MTEC Agreement for developing a handheld version of the DeepView System, expected to be completed by April 2025[175]. Financial Performance - Research and development revenue for the three months ended June 30, 2024, was $7.5 million, compared to $4.3 million for the same period in 2023, representing a 76.5% increase[141]. - Gross profit for the three months ended June 30, 2024, was $3.3 million, with a gross margin of 44.3%, compared to a gross profit of $1.8 million and a gross margin of 42.1% in 2023[141]. - The company reported an operating loss of $2.4 million for the three months ended June 30, 2024, an improvement from a loss of $3.0 million in the same period of 2023[141]. - The company reported a net loss of $2.9 million for the three months ended June 30, 2024, compared to a net loss of $3.1 million in 2023; for the six months, the net loss was $6.1 million, down from $6.7 million in 2023[154]. - Adjusted EBITDA for the three months ended June 30, 2024, was $(2.0) million, an improvement from $(2.6) million in 2023; for the six months, it was $(3.9) million, compared to $(5.2) million in 2023[169]. - General and administrative expenses increased to $5.8 million for the three months ended June 30, 2024, a 20.4% rise from $4.8 million in 2023; for the six months, expenses were $10.8 million, up 10.0% from $9.9 million in 2023[159]. - Cash used in operating activities increased by approximately $2.5 million for the six months ended June 30, 2024, totaling $8.0 million compared to $5.5 million in the same period of 2023[178][179]. - Net cash provided by financing activities increased by approximately $10.6 million for the six months ended June 30, 2024, totaling $10.1 million compared to a net cash used of $0.5 million in 2023[180]. - The company had approximately $6.9 million in cash as of June 30, 2024, with notes payable of $8.0 million and no long-term debt[170]. Product Development and Commercialization - The company has not generated any product revenue to date, focusing on research and development for the DeepView System[132]. - The DeepView System is expected to begin commercialization activities in the UK in the second half of 2024 following the receipt of the UKCA mark[129]. - The company anticipates two revenue streams from the DeepView System: a software as a medical device model and an imaging device component[135]. Inflation and Economic Risks - Recent inflation has increased the cost of research and development as well as operating costs[198]. - Significant inflationary pressures may adversely affect the company's ability to maintain current levels of gross margin[198]. - The company may face challenges in managing selling, general, and administrative expenses due to inflation[198]. - Inability to respond quickly to inflation could harm the company's cash flows and operational results in the future[198]. Corporate Structure and Subsidiaries - The business combination with Rosecliff Acquisition Corp I was completed on September 11, 2023, resulting in the company being renamed Spectral AI, Inc.[136]. - The Company formed a new subsidiary, Spectral IP, to acquire AI intellectual property, receiving a $1.0 million investment from an affiliate of its largest shareholder[183]. Risk Factors - The company is highly dependent on U.S. governmental contract awards for revenue, which may lead to inconsistencies in operating results[146]. - The company is exposed to credit risk, with a significant portion of research and development revenue coming from a single U.S. government agency[197]. - The change in fair value of warrant liability increased by $0.4 million for the three and six months ended June 30, 2024, reflecting changes in the fair value of the Public Warrants issued in September 2023[163].
ROSECLIFF ACQU(RCLF) - 2024 Q2 - Quarterly Report