Revenue and Financial Performance - The company has not generated any product revenue to date, relying on contract development and research services for revenue [99]. - Research and development revenue for Q3 2025 was $3.79 million, a decrease of 53.7% from $8.17 million in Q3 2024 [105]. - Gross profit for Q3 2025 was $1.62 million, with a gross margin of 42.7%, compared to a gross profit of $3.67 million and a gross margin of 44.9% in Q3 2024 [105]. - The company reported a net loss of $3.55 million for Q3 2025, compared to a net loss of $1.50 million in Q3 2024, reflecting an increase in losses [118]. - Adjusted EBITDA for Q3 2025 was $(3.05) million, compared to $(0.71) million in Q3 2024, indicating a worsening financial performance [105]. - 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]. - Cost of revenue for the three months ended September 30, 2025, was $2.1 million, a decrease of 51.8% compared to $4.5 million in 2024 [121]. - Gross profit for the three months ended September 30, 2025, was $1.6 million, reflecting a 55.8% decrease from $3.67 million in 2024 [121]. - General and administrative expenses for Q3 2025 were $4.96 million, an increase from $4.55 million in Q3 2024 [118]. - 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]. - The accumulated deficit as of September 30, 2025, was approximately $56.9 million [131]. Funding and Contracts - 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 [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 already exercised [132]. - The company received a $4.9 million grant from MTEC, intended to support military battlefield burn evaluation through December 2025 [101]. - 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 paid by cash investors [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 of common stock at $1.90 per share, raising gross proceeds of $7.6 million [137]. - The Company has the ability to borrow an additional $6.5 million contingent upon FDA clearance of the DeepView System and a $7.0 million equity raise [134]. Cash Flow and Liquidity - The company had approximately $10.5 million in cash as of September 30, 2025, unchanged from the previous quarter [131]. - The company believes it will have sufficient working capital to fund operations for at least one year beyond the release date of the condensed consolidated financial statements [132]. - Net cash used in operating activities decreased by approximately $2.3 million to $(7,368) thousand for the nine months ended September 30, 2025, compared to $(9,668) thousand in 2024 [140]. - Net cash provided by financing activities increased to approximately $12.7 million for the nine months ended September 30, 2025, compared to $8.6 million in 2024, primarily due to proceeds from Avenue Financing [141]. Risks and Compliance - The Company has not recognized any losses from credit risks on cash accounts, which are 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 results [160]. - The majority of the company's cash is held in U.S. financial institutions, occasionally exceeding federally insured limits, with no recognized losses from credit risks on such accounts [157]. - 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]. Clinical Development - A pivotal clinical study for the DeepView System has enrolled 267 patients, exceeding the target of 240 patients, with 42 pediatric patients included [98]. - The company anticipates two revenue streams from the DeepView System: a software as a medical device (SaMD) model and an imaging device component [102].
ROSECLIFF ACQU(RCLF) - 2025 Q3 - Quarterly Report