Funding and Government Contracts - The company has received approximately $281.0 million in funding awards from government contracts since 2013, primarily from BARDA, which accounts for $272.9 million[139]. - In September 2023, the company executed a multi-year Project BioShield agreement with BARDA valued at up to approximately $150.0 million, including an initial award of nearly $54.9 million[140]. - The company has not generated any product revenue to date, relying heavily on government contracts for funding[139]. - The company received a $4.0 million grant under the MTEC Agreement, which was increased to $4.9 million, for the development of a handheld version of the DeepView® System[182]. Financial Performance - Research and development revenue for the three months ended September 30, 2024, was $8.173 million, compared to $3.440 million for the same period in 2023, representing a 138% increase[149]. - Gross profit for the nine months ended September 30, 2024, was $9.926 million, up from $5.444 million in the same period in 2023, indicating an 82% increase[149]. - The company reported a net loss of $1.504 million for the three months ended September 30, 2024, significantly improved from a net loss of $10.629 million in the same period in 2023[149]. - The net loss for Q3 2024 was $1.5 million, compared to a net loss of $10.6 million in Q3 2023, and for the nine months ended September 30, 2024, the net loss was $7.6 million, down from $17.3 million in the same period last year[162]. - Adjusted EBITDA for the three months ended September 30, 2024, was $(711) thousand, compared to $(3,885) thousand for the same period in 2023, indicating a significant improvement[176]. Revenue and Cost Analysis - Cost of revenue for Q3 2024 was $4.5 million, representing a 129.0% increase from $2.0 million in Q3 2023, and for the nine months ended September 30, 2024, it was $12.1 million, up 64.5% from $7.3 million in the same period last year[165]. - Gross profit for Q3 2024 was $3.7 million, a 149.1% increase from $1.5 million in Q3 2023, and for the nine months ended September 30, 2024, it was $9.9 million, up 83.3% from $5.4 million in the same period last year[165]. - The gross margin for the three months ended September 30, 2024, was 44.9%, compared to 42.8% for the same period in 2023[149]. - The gross margin for Q3 2024 was 46.3%, an increase of 3.5% compared to Q3 2023, and for the nine months ended September 30, 2024, it was 45.7%, up 3.1% from the same period last year[166]. Operational Developments - The company initiated a pivotal clinical study in December 2023, seeking enrollment of 240 patients, with 169 patients enrolled by the end of Q3 2024[137]. - The DeepView System is expected to begin commercialization activities in the United Kingdom in the second half of 2024 following the receipt of the UKCA mark[136]. - The business combination completed in September 2023 resulted in the company being renamed Spectral AI, Inc., and its shares began trading on Nasdaq under the symbol "MDAI"[144]. Cash Flow and Financing - As of September 30, 2024, the company had approximately $3.7 million in cash and an accumulated deficit of approximately $40.3 million[177]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $(9,668) thousand, a decrease from $(10,865) thousand in the same period in 2023[184]. - Net cash provided by financing activities increased by approximately $4.5 million for the nine months ended September 30, 2024, compared to the same period in 2023[186]. - The company entered into a Common Stock Purchase Agreement allowing it to sell up to $10.0 million in newly issued shares[178]. - The Standby Equity Purchase Agreement with Yorkville allows the company to sell up to $30.0 million of its shares, with a total of $12.5 million in convertible promissory notes already advanced[179]. Expenses and Liabilities - General and administrative expenses decreased by 19.2% to $4.6 million in Q3 2024 from $5.6 million in Q3 2023, and for the nine months ended September 30, 2024, it was $15.4 million, a slight decrease of 0.7% from $15.5 million in the same period last year[167]. - Other income (expense) for Q3 2024 was a net expense of $581,000, compared to a net expense of $6.5 million in Q3 2023, and for the nine months ended September 30, 2024, it was a net expense of $2.0 million, down from $7.2 million in the same period last year[168]. - Borrowing related costs increased by $1.1 million for Q3 2024 compared to Q3 2023, and by $2.1 million for the nine months ended September 30, 2024, due to debt issuance costs related to the Yorkville Convertible Notes[169]. - The change in fair value of warrant liability decreased by $0.7 million for Q3 2024 compared to Q3 2023, reflecting changes in the fair value of the Public Warrants issued in September 2023[170]. Company Status and Market Conditions - The company qualifies as an emerging growth company until the earliest of December 31, 2026, or when total annual gross revenues exceed $1.235 billion[195]. - The company maintains a significant amount of assets in cash, primarily in cash deposits, which are not significantly affected by interest rate changes due to their short-term nature[199]. - Revenue is primarily denominated in U.S. dollars, while expenses are incurred mainly in the U.S. and UK currencies[200]. - A major concentration of credit risk exists as one customer, a U.S. government agency, represents the majority of research and development revenue and accounts receivable[202]. - Recent inflation has increased research and development and operating costs, potentially affecting gross margins and cash flows[203].
ROSECLIFF ACQU(RCLF) - 2024 Q3 - Quarterly Report