Financial Performance - The company generated research and development revenue of $3,792,000 for the three months ended September 30, 2025, compared to $8,173,000 for the same period in 2024, representing a decrease of 53.7%[105] - Gross profit for the three months ended September 30, 2025, was $1,621,000, with a gross margin of 42.7%, down from a gross profit of $3,667,000 and a gross margin of 44.9% in the same period of 2024[105] - The company reported a net loss of $3,552,000 for the three months ended September 30, 2025, compared to a net loss of $1,504,000 for the same period in 2024, indicating an increase in net loss of 136.5%[118] - Operating loss for the three months ended September 30, 2025, was $3,341,000, compared to an operating loss of $886,000 for the same period in 2024, reflecting a significant increase in operating loss[118] - Adjusted EBITDA for the three months ended September 30, 2025, was $(3.05) million, compared to $(0.71) million in 2024[130] - The accumulated deficit as of September 30, 2025, was approximately $56.9 million[131] Revenue Sources - The company is highly dependent on U.S. governmental contracts for revenue, with current revenue almost exclusively from BARDA and MTEC[110] - The company anticipates two revenue streams from the DeepView System: a software as a medical device (SaMD) model and an imaging device component, with pricing to be strategically set per country[102] - 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 studies[100] - The new PBS BARDA Contract has a total value of up to approximately $150.0 million, with a base phase valued at $54.9 million[132] Research and Development - The pivotal clinical study for the DeepView System enrolled 267 patients by the end of 2024, exceeding the initial target of 240 patients[98] - Research and development revenue decreased to $3.8 million for the three months ended September 30, 2025, a decline of 53.6% compared to the same period in 2024[119] - For the nine months ended September 30, 2025, research and development revenue was $15.6 million, down 29.2% from $21.98 million in 2024[120] Cash and Financing - The company had approximately $10.5 million in cash as of September 30, 2025, remaining flat compared to the second quarter of 2025[131] - The Company has entered into a Loan and Security Agreement allowing it to borrow up to $15.0 million, with an initial drawdown of $8.5 million[133] - The loans under the LSA mature on March 1, 2028, with an interest-only payment period of at least 15 months, extendable to 24 months upon achieving certain milestones[134] - The Avenue Financing includes warrant coverage equal to 8.5% of the total funding commitment, with an exercise price based on the lower of $1.66 or the lowest price per share in future equity raises[135] - The Company raised an additional $2.7 million by selling 2,076,923 shares of Common Stock at an offering price of $1.30 per share[136] - In October 2025, the Company issued 3.1 million shares at $1.90 per share, raising gross proceeds of $7.6 million through concurrent private placements[137] - Net cash used in operating activities decreased by approximately $2.3 million to $(7.4) million for the nine months ended September 30, 2025, compared to $(9.7) million in 2024[140] - Net cash provided by financing activities increased to approximately $12.7 million for the nine months ended September 30, 2025, up from $8.6 million in 2024, primarily due to proceeds from Avenue Financing[141] - The Company has the ability to borrow an additional $6.5 million contingent upon FDA clearance of the DeepView System and an additional $7.0 million equity raise[134] Operational Risks - The Company has not recognized any losses from credit risks on cash, which is primarily held in U.S. financial institutions[157] - The Company is exposed to inflation risk, which may adversely affect its ability to maintain current levels of gross margin and operational expenses[160] - A significant portion of the company's research and development revenue and accounts receivable is concentrated with one customer, a U.S. government agency[158] - The company is permitted to present only two years of audited consolidated financial statements, leading to reduced disclosures in financial condition discussions[159] - The company has received an exception from compliance with auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act[159] - The company faces inflationary pressures that could adversely affect its gross margin and selling, general, and administrative expenses[160] - The inability to respond quickly to inflation may harm the company's cash flows and operational results in the future[160] General and Administrative Expenses - General and administrative expense increased by 9.0% to $5.0 million for the three months ended September 30, 2025, compared to the same period in 2024[123]
Spectral AI(MDAI) - 2025 Q3 - Quarterly Report