Q3 2021 Nano-X Imaging Ltd Earnings Call
Okay.
Today's conference is scheduled to begin shortly please continue to standby and thank you for your patience.
[music].
Good day, and thank you for standing by and welcome to the Nasdaq's imaging third quarter 2021 earnings.
Earnings call at this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one on your telephone.
Okay.
I would now like to turn the conference over to your Speaker today, Mike Cavanaugh Investor Relations.
<unk> with ICR Westwick you may begin.
Good afternoon, and thank you for joining us today.
Earlier today.
Being limited released financial results for the quarter.
Quarter ended September 32021.
The release is currently available on the investors section of the company's website.
Ron.
Chairman of the board and Chief Executive Officer.
Meltzer.
At a board member and incoming Chief Executive Officer.
Ron Danielle Chief Financial Officer.
Post this afternoon's call.
Before we get started I would like to remind everyone that management will be making statements. During this call that include forward looking statements regarding the company's financial results research and development.
When you're factoring commercialization activities.
<unk> process operations the impact of.
<unk> will maintain on its business and other matters.
These statements are subject to risks uncertainties and assumptions that are based on management's current expectations as of today and may not be updated in the future there.
Therefore, these statements should not be relied upon as representing the companys views as of any.
Covid what date.
Factors may cause such a difference those factors that may cause such a difference include but are not limited to those described in the company's filings with the Securities and Exchange Commission.
We will also refer to certain non-GAAP financial measures to provide additional information to investors.
Subsequent reconciliation of the non-GAAP to GAAP measures.
Provided with our press release with the primary differences being stock based compensation and class action related expenses.
I'd now like to turn the call over to Nasdaq's, Chairman and CEO Ron <unk>.
Thank you Mike and thank you all for joining the.
Today, I will give an overview of our achievements during the quarter as the weight of corporate update before turning the call over to Ron <unk>, Our CFO to review our financial results.
We will then open the call to questions.
We've been busy since our last earning call it Vincent.
The non Ozark system, which has a potential to improve accessibility and aim to drive a significant increase in the delivery of medical imaging all over the world.
Besides greater availability and accessibility, we believe it or not in our system and it's end to end ecosystem will enable health care providers.
Colton crucial information, which have the potential to shorten diagnostic and treatment time and promote early detection.
It is well known that the earlier intervention is a key contributor to better health outcomes for patients.
Before I begin I would like to.
We have areas of military.
To obtain a coming to you say a few words and introduce some of our latest development areas.
Okay.
Thank you Ron and thank you all for being on the call today.
I'm excited about the levy.
And dedicated and talented team as we move ahead to work.
Ronald Personalizing, the <unk> arc system.
I'm working closely with the team to prepare for assuming the CEO role beginning on January 1st.
2022.
Look forward to start dissipating in the Q&A session at the end of today's call.
Turning for.
Our accomplishments during the quarter.
As many of you know, we recently completed our three previously announced strategic transactions.
We completed the merger with now looks AI, formerly known as the Brown medical vision.
We completed the acquisition of USA Rod holding.
And third completed the acquisition.
Of the assets of MPW.
I believe that having a more acceptable medical imaging technology would not be not different form the global market, but we also had to have an AI capability to complete and complement our technology.
Now, let's see.
Will fill this need and provide the image analytics necessary to locate the problem and begin the process of diagnosis and treatment.
The acquisition of USA, Rod and MPW.
The connected team of professionals, our geologist and decentralized marketplace that connects.
Facilities and patients with radiologists that the game. The next step of the evaluation process is there.
Alerts to a potential problem.
These transactions help fulfill our AI powered workflow and provide some of the important final pieces of the nominal scoring system.
As we head toward commercialization.
With that I'll turn the call back over to Ron Paul Yeah Kian.
Thank you Erez and I would like to quickly highlight a few other achievements since our last report in October we announced that we entered into an ambulance agreement with international clinics group.
And medical equipment distributors observed hospitals health systems clinics, and other medical facilities in Chile, Bolivia, and Peru, which adds to the growing future demand for our none of our system.
The agreement calls for the deployment of 359 Oclock devices across the region to date the company.
And enter into agreements for deployment of 6500, none of our Q&A.
In September and I don't say I received its eight five 10-K FDA clearance in this case for coronary artery cultural solution known as CFC as part of its portfolio.
Population health offering.
<unk> C is a key biomarker, indicating risk of cardiovascular disease, and can help kind of say I identify potential medium and high risk patients, which can then be flagged for further evaluation.
Another enhancement of <unk> powered the workflow.
That we feel.
Will lead to better value based population health.
Operationally, we continue to progress towards commercial.
Production of the Silicon chips, none of wholly owned Korean subsidiary that is integral to non institutional extra source.
We expect production.
It's a new facility to begin pilot production in 'twenty to 'twenty two.
This key initiative is especially important given the current supply chain shortage for many products worldwide. This will not only help to secure the stable supply of the chips that we need for the production of the nine o'clock, but we.
Sure Doug.
Quality of our chips is not a concern.
For us or the health care professionals things in our Fox systems.
And finally before I turn the call over to Rhonda.
I would like to take a moment to update you on our commercialization efforts, including the regulatory process.
Also with the F D. A we're still in the process of responding to the F. D. A after receiving their comments on our first submission.
As you all know we are planning a second submission in the near term that will cover. The next version of the multi source Tronox arc and we believe that the feedback we have received from our first submission.
This will have a inform any subsequent submission with that I would like to turn the call over to Rhonda Chief Financial Officer.
Thank you Ron before I get started on my first earnings commentary as the CFO of nano.
I would like to say all excited I am to be part of the team.
Looking to the future of medical imaging I'm looking forward to the warhead with the talented team.
Also like to mention another change we recently partnered with.
I see our west a week are leaving us kind of focused integrated communications firm as our new Investor Relations adviser.
Team did they are they are highly experienced in the medical technology space and it would be a good addition to the team and adding into the important year of 2022.
With that onto the financials now supported adopting net loss for the third quarters of 2021 or $36 million compared.
To a net loss of $11.1 billion for the same period in 2020 largely to due to an increase in our research and development expenses and general and administrative expenses, which were mitigated by a decrease in our marketing expenses.
Non-GAAP net loss applicable to the.
For the third quarter, 'twenty, 'twenty, one about $8 $5 million compared to a non-GAAP net loss of $5 $1 million for the same period in 2020.
Conciliation between GAAP net loss and non-GAAP net loss for the three month period ended on September 30 years, 2021 and.
'twenty is provided in the financial results that are part of the press release.
We issued this morning.
Difference between GAAP and non-GAAP net loss is mainly due to the share based compensation and legal fees related to the SEC equally and class action litigation.
Research.
And development expenses for the third quarter of 2021, with $3 7 million as compared to $2 $1 billion for the same period in 2020, reflecting the increased development activities for our monarch system and the related regulatory costs.
Marketing expenses for the third quarter was.
Was 121 were $1 $5 million as compared to $2 7 million for the same period in 2020 due to a decrease in share based compensation.
G&A expenses for the third quarter of 2021 were $8 2 million as compared to $6 $3 million for the same period.
2020.
The increase was due largely to an increase in our labor cost of approximately zero point $5 million due to an increase in our headcount in the connection with the expansion and extension of the company's management team and the overall organization infrastructure, increasing our D&O insurance expenses.
Answers of approximately 0.5 million daus increased in our legal fees in the amount of approximately zero point $6 million due to the SEC inquiry.
And class action litigation as described in our 6K filed to date and transaction expenses with connection to the acquisitions of nano.
It's Rob.
All day and the assets of MPW the amount of approximately 0.5 dollars.
Net cash used in operating activities during the third quarter of 2021 was 7.0 million.
For the nine months ended September 32021, and then also recorded adopting.
Net loss applicable to the ordinary shares of $39 8 million compared to a net loss of $24 9 million.
For the same period in 'twenty 'twenty.
Non-GAAP net loss for the first nine months of 2021 was $24 $2 million compared to a non-GAAP net loss of $10 5 million adults for the same period.
The 'twenty.
The difference between GAAP and non-GAAP net loss to the ordinary shares mainly due to a share based compensation expenses related to the secondary share offering which.
Flows in the first quarter over 2021 and legal fees in response to the SEC inquiry and class action litigation as.
And put in our 6K filed to date.
As of September 32021, we had approximately 47 9 million shares outstanding.
We ended the third quarter of 2021 with cash cash equivalents in marketable securities of over $180 million and $3 million.
Report on banks.
Before we take your questions I would like to mention that the company has been providing documents and information to the SEC in connection with an investigator investigation.
And has now received a subpoena from the SEC requesting that the company provide documents and other information relating to the development.
Cost of the company's not Nymex, our prototypes as well as the company's estimate for the cost of assembling the final minutes our product at scale.
Companies cooperating with cooperating with the SEC and responding to a request with that I will end the call back over to Antonio King.
Thank you for the financial updates Ron I understand that this is a lot of information to digest and many of you will like likely have more question. Then we can address on the call today, we're committed to being accessible to the investment community and for this reason, we will engage in a robust investor outreach in the coming months.
Italy as well as noted in our last press release last week, we will be attending the 2021 radiology Society of North America annual meeting in Chicago from November 28 to December 2nd.
There we will demonstrate new features of the announced ox system not all AI will host an onsite.
It is there.
The company will showcase its AI neighborhood medical imaging feels true population health solution.
And on December 1st none of our broadcast a virtual tour of arc and a three and exiting from the severe hospitality initiatives.
We will close our attendance at the arsenic.
Well fitting within existing webinar, specifically for investors, we hope to see many of you there.
We have to meet you soon again, thank you for the time today and continued support and especially for your belief in our vision a vision that will improve the health of all of us.
Thank you very much we will now open up the call for question, which runs on the island areas will handle today operator, please begin the Q&A session.
Thank you to ask a question you need to press star one on your telephone to withdraw your question press the pound key.
Our first question comes from.
Cohen with Ladenburg Thalmann. Your line is open.
Yeah.
Oh good morning, how are you.
Good.
So.
Couple of questions from Aaron So you had 0.6 of our legal expenses for.
Jesse agree any insight into what that May look like for the fourth quarter.
Ron.
Yes, we don't have any insight for the moment.
But as we said we filed the six.
6K today, and we refer to the information that we've closed over there.
That's what we can update at the moment.
Okay got it.
You had some commentary around about a pilot production.
I think the press release Red early 'twenty, two and you stated 2022 can you give us a walk through of this facility.
South Korea as far as the COO.
Construction.
How that looks now and how the timelines looking over the next number of months. Please.
Yeah.
With respect to the Korean facility.
Yes. Please.
Okay, I think that we've indicated that our we have launched the the new site we have already.
Siding, which is operating right now on a temporary basis, we expect.
Hum.
The new site will be operating.
Second quarter of <unk>.
Highly highly I would say highly likely that it will be.
Operating in the second quarter of next year.
And.
It's in line of the original expectations and in light of the plants.
Okay got it and then could you walk us through.
What you stated about the FDA timeline I know that you stated that you were responding through the.
A set of questions from me as well that go in as a response to the first set of questions and will that be separate.
From a a second submission as you called it for the the arc.
First of all I think Thats run addressed it very very clearly that basically were.
We're going to meet the 180 days a window that we currently have to the.
The latest a submission that basically we're going to use all the feedback that we get including the future feedback that a will get in order to to work on the future applications and a future of submissions that were up.
Turning to.
To do this is basically with respect to the arc as you can see on the Nymex AIE. We always are and we are continue to submit other fda's and took a lot to work with them to.
To get another approvals F D A's and CPT codes.
Okay got it. Thank you very much that does it for us.
And could you think of it or not.
Thank you. Our next question comes from Suraj Kalia with Oppenheimer. Your line is open.
Good morning, everyone can you hear me all right.
Yeah, we're trying to.
It definitely does.
Okay.
So.
Iran, Erez anyone I'll throw it out there so.
Considering filing another five 10-K.
Change in the morning, and I'm curious what is driving that.
Am I reading too much into it.
Hum.
I'm not sure that I understand what is.
Were referring that is not clearly reaping in the document.
Yeah Yep, you our earnings release says considering filing another 510.
10-K.
And I'm curious why.
Is there any anything any other mitigating factor that is causing some sort of <unk>.
A reconsideration of filing or am I reading too much into the reopening filings.
Youre reading too much I think that.
If.
You can see that basically on all fronts, some dynamics AI, including the arc, where all the time developing more and more we're going to show in the arts and eight new applications and new.
And new.
Ways of using the Rx so it will be presented in the <unk>.
If you.
Having said that it doesn't say anything that doesn't say that we're not going in the future.
To submit.
More if the FDA approvals or more requests for FDA approvals for future uses of the system.
Including both the source and the arc itself.
Got it and in terms of the.
The multi source.
Has it been independently validated.
E.
Non non ox.
We added people.
As any other independent.
Expert evaluated.
Did it so far.
First of all this happens all the time, but I.
I would suggest that as Ron said wait for the <unk> and you will see.
What's coming up.
Okay.
Aronson.
Forgive me if I missed this the housing units.
And run that has been talked about in the past.
I don't.
I'm not sure if I heard an update on that maybe you could provide some color.
We don't have any reason right now to believe that too that this is not the target that we would like to continue to stand behind.
Yes.
Production.
Okay and finally.
The SEC subpoena when was the original request for documentation of information received.
When was it first received.
Yeah.
As we.
As we as we said in our.
Finding today.
A written request for documentation from days he wasn't received on November eight.
November eight okay perfect gentlemen, thank you very much for the time and answering my questions. Thank you appreciate it.
You're more than welcome.
Thank you and our next question comes from Ravi Misra with Bamberg Capital. Your line is open.
Hey, good morning, guys. Good morning on my revenue line.
So I wanted to just kind of go back to that 1000 unit production cycle that Youre discussing can you just kind of give us in light of the updated.
Carry out of the Korean facility I think you said second quarter.
And kind of the original commentary from earlier this year, saying some of the units will be produced in Israel.
What is the kind of production schedule right now as you see it in terms of where the first thousand will be made and I guess is there.
Any risk if there are delays.
In Korea that you are unable to hit that number next year.
So first of all we have not disclosed any specific on this one bear in mind that we have already.
Enough.
Chips that are willing.
Will enable us to.
To do what we do from the original manufacturer.
From the Japanese so currently we have a lot.
Which is independent to the to the manufacturing of the Korean won.
Right now all the units are being assembled in Israel and do we have not made a decision yet.
Yet.
When we're going to switch to gear up to the.
To scale up the processes for assembly once we do and I think it's maybe.
Some sometime during <unk>.
The first death.
Third the for next year and if there are any changes we're going to.
The market knows any changes that will be will take place on this one right now we don't see the.
We're making a lot of old doors in the supply chain in order to be ready.
Yeah.
Okay, and then on the kind of potential second submission to the FDA.
Let me just help us think about what is going to be the key difference between that and the original submission.
I think that it was clear that it's not a second submission. Okay. We are planning a lot of some versions in the future.
Once we move on and we develop more applications and more.
More releases.
Releases in terms of the.
The use of the system than.
And then we're going to submit further.
I think that after the <unk> when you see the system you will probably be more.
Into the understanding of what has.
To be none.
Kind of further submission, we would like to do in the future.
And is that RSA <unk>.
Are you going to be attending the event or is it going to be virtual like last year, and then I guess my last question would.
It would be just on the FTC investigation I mean November.
November eight I guess is when you.
It started.
First line of inquiry.
Subpoena I guess it was received with today yesterday or a few days after that can you just help put some timing around that thank you.
Have you run to answer the.
So you see them, then I will address the arsenic.
Okay.
As for the FTC matter.
<unk> received on November eight.
We had informal and verbal discussions with the FCC.
That's it.
So with respect to the with respect to the arsenic.
The arc is going to be.
<unk> said they wanted to virtual.
And then actually what used to be zebra has secured a.
Booth.
In present.
In the <unk> and they are going to be knocks out would be presented there.
As people will be there.
Well impressed.
Present.
Our people will be either including people from the arc Division.
Okay. Thanks, and then just maybe one final clarification. Thank you very much <unk>. It's November eight just curious when did the original FTC investigation begin thanks.
Well sure.
Before.
Yeah.
Okay. Our next question comes from Ross <unk> with lifecycle.
Capital is open.
Hey, guys. Thanks for taking the questions.
Two questions from me in terms of the upcoming filing maybe could you comment on the.
The.
X Ray tubes that you guys want to use maybe on what the <unk> could be or whether it's going be a glass or ceramic too then.
Maybe an update on the manufacturing there as well.
So first of all I think I mentioned it we are.
With the original process in <unk>.
Plans for the manufacturing right now it's being done in Israel.
We have no.
Nothing to add in terms of the.
The JV that we have.
Over to you achieved it will be all presented.
Alive in the.
Not not live.
In present, but thrive in a well.
When it takes place in the virtual presentation of the RSA, so you'll be able to see also answered.
To the question of the.
Of these.
The question that you asked.
In addition, I think that the more we go into the deployment process right now in the countries that we're going to operate them initially start to implement and put our systems next year in place.
We.
Probably be more.
Exposed to what's further applications a request detailed has to be further presented and submitted to the FDA. So.
The more we go into the future of the better we know about this one as well.
Got it okay I appreciate.
Great that color.
And just last one for me.
Once again congrats on one of the most recent contract maybe you could talk a little bit about the interest that you're seeing us geographically kind of where you guys expect to see a bit of interest or the next few contracts.
Thanks for taking the questions.
You mean next.
Perfect.
Yeah looking forward.
[laughter] once we sign we didn't we announced this week.
6K.
I would say that there is kind of a race between a few of the players that were trying to go engage in the future.
Sure.
Who's going to sign first I'm I'm kidding, but seriously speaking I think that once we have more clarity on the next.
On the next agreement then we know what to tell and Gwen when it's going to be implemented but right now as you can imagine and see we are getting more and more attraction to the.
To future deals that are to be signed and as we speak there are a lot in the process in the pipeline.
Got it good to hear I appreciate it guys. Thank you.
Yeah.
Thank you and we have a follow up from Jeffrey Cohen with Ladenburg Thalmann your.
Your line is open.
Thanks again for taking the question so I wondered on the regulatory right outside.
Outside the U S.
The multi source is there any update or any progress on that.
Timing with regard to see in other territories.
No no that's.
Nothing new in this respect.
We will be working on to see an and simultaneously with the FDA once.
As you can imagine since we work on a global basis not everywhere we need.
D O or received cause some countries.
We will require a local so we generally speaking we work on a global basis to to get the F. D. A N C than others, but at the same time, we're going to implement the deploying the other countries work not necessarily well required to to this spin.
Specific regulate regulatory.
<unk> approvals.
Okay perfect. Thanks again.
Yeah.
Thank you and I'm showing no other questions in queue I'd like to turn the call back to <unk>.
No no.
For closing comments.
So thanks for the support.
<unk> and for participating in this call will further discuss as Ron was saying.
We'll probably.
Having more discussions either one of them went on or others that will come in the near future feel free to get in touch with the.
With Michael with either.
One of us to further and thank you so for being part of today's call.
Yeah.
Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Yeah.
[music].
[music].
[music].
Good afternoon, and thank you for joining us today.
Earlier today Anoxia imaging limited release.
Released financial results for the quarter ended September 32021.
Release is currently available on the investors section of the company's website.
Ron.
Chairman of the board and Chief Executive Officer.
Erez Melter Executive Board member and incoming Chief Executive Officer, and Ron Danielle.
<unk> Chief Financial Officer will host this afternoon's call.
Before we get started I would like to remind everyone that management will be making statements. During this call that include forward looking statements regarding the company's financial results research and development manufacturing commercialization activities regulatory process operations.
Impact of COVID-19 on its business and other matters.
These statements are subject to risks uncertainties and assumptions that are based on management's current expectations as of today and may not be updated in the future.
Therefore, these statements should not be relied upon as representing the companys views.
As of any subsequent date.
Factors may cause such a difference those factors that may cause such a difference include but are not limited to those described in the Companys filings with the Securities and Exchange Commission.
We will also refer to certain non-GAAP financial measures to provide additional information.
He seemed to investors they.
A reconciliation of the non-GAAP to GAAP measures is provided with our press release with the primary differences being stock based compensation and class action related expenses.
Now I'd like to turn the call over to <unk>, Chairman and CEO Ron <unk>.
Thank you Mike.
Information. Thank you all for joining the call today today I will give an overview of our achievements during the quarter as the weight of corporate update before turning the call over to Ron to nail our CFO to review our financial results. We will then open the call to questions. We've been busy since our last.
My accounting call advancing at Danone, Ozark system, which has the potential to improve accessibility and aim to drive a significant increase in the delivery of medical imaging all over the world.
Besides greater availability and accessibility, we believe none of our system and it's into an ecosystem.
The neighborhood health care providers to obtain crucial information, which has the potential to short term diagnostic and treatment time and promote early detection.
It is well known that earlier intervention is a key contributor to better health outcomes for patients.
Before I begin I would like.
Erez meritor, none of incoming CFO say, a few words and introduce some of our latest development areas.
Yeah.
Thank you Ron and thank you all for being on the call today IMAX.
I'm excited about the levy.
And dedicated and talented.
And as we move ahead towards commercializing the <unk> system.
I'm working closely with the team to prepare for assuming the CEO role beginning on January one 2022.
And I look forward to participating in the Q&A session at the end of today's call.
Turning.
We're accomplishing.
<unk> during the quarter as many of you know we recently completed our three previously announced strategic transactions first.
We completed the merger with non let's say AI, formerly known as Zebra Medical Division.
Second we completed the acquisition of USA Holdings.
Third completed the acquisition of the assets of MPW.
Believe that having more acceptable medical imaging technology would not be enough to transform the global market, but we also had to have an AI capability to complete and complement our technology.
And now, let's say I fulfill these needs and provides the image analytics necessary to help locate the problem and begin the process of diagnosis and treatment.
The acquisition of USA Rod MPW provide a connected team of professionals, our geologist and decentralized market.
<unk> that.
<unk> connects facility in patients with radiologists that begins the next step of the evaluation process.
Alerts to a potential problem.
These transactions help fulfill our AI powered workflow and provide some of the important final pieces of the nominal exports.
Our system.
As we had to award.
Commercialization.
With that I'll turn the call back over to Ron Paul Yeah Kian.
Thank you Erez and I would like to quickly highlight a few other achievements since our last year fourth in October we announced that we entered into an ambulance agreement with them.
International clinics groups and medical equipment distributors like serve hospitals health systems clinics, and other medical facilities in Chile, Bolivia, and Peru, which adds to the growing future demand for our non arc system. The agreement calls for the deployment of 359 oclock devices across the region.
To date the company enter into emphasis agreement for deployment of 6500, none of our Q&A.
In September and I don't say I received its eight five 10-K FDA clearance in this case for coronary artery costume solution known as C. C.
As part of its population health offering.
C. C is a key biomarker, indicating risk of cardiovascular disease and can head of products, they identify potential medium and high risk patients, which can then be flagged for further evaluation and is another enhancement of D. A.
We have powered the workflow that we feel oh.
Will lead to better value based population health.
Operationally, we continue to progress towards commercial.
Production of the Silicon chips, not only on Korean subsidiary that is integral to nonexclusive extra source.
We expect production at the new facility to begin pilot production in 2022.
This key initiative is especially important given the current supply chain shortage for many products worldwide. This will not only help to secure the stable supply of the chips that we need for the production of their nanos.
But we will also ensure that the quality of our chips is not a concern.
For us or the health care professionals things announced Fox systems.
And finally before I turn the call over to London, and I would like to take a moment to update you on our commercialization efforts, including.
The regulatory process with the F. D. A we're still in the process of responding to the F. D. A after receiving their comments on our first submission.
As you all know we are planning a second submission in the near term that will cover. The next version of the multi source candidates arc and we believe that the feedback we have received.
From our first submission would have.
Inform any subsequent submission with that I would like to turn the call over to Rhonda Chief Financial Officer.
Thank you Ron before I get started on my first earnings commentary as the CFO of nano.
I would like to say all excited.
And to be part of the team that is working to transform the future of medical imaging I'm looking forward to the warhead with the talented team.
Also like to mention another changed recently.
Recently partnered with.
ICR with week, a leading eschar focused integrated communications firm as our new Investor Relations.
Adviser. They are they are highly experienced in the medical technology space and it would be a good addition to the team and adding into the important year of 2022.
With that onto the financials now supported adopt the net loss for the third quarter of 2021 or $13 $6 million.
Compared to a net loss of $11.1 billion for the same period in 2020 largely to due to an increase in our research and development expenses and general and administrative expenses, which were mitigated by a decrease in our marketing expenses.
Non-GAAP net loss applicable.
Particularly to the ordinary shares for the third quarter of 2021.
$8 5 million compared to a non-GAAP net loss of five $1 million for the same period in 2020.
Constellation between GAAP net loss and non-GAAP net loss for the three months period ended on September 32020.
One in 'twenty 'twenty is provided in the financial results that are part of the press release.
We issued this morning.
Difference between GAAP and non-GAAP net loss is mainly due to the share based compensation and legal fees related to the SEC equally and class action litigation.
Research and development expenses for the third quarter of 2021, with $3 7 million as compared to $2 $1 million for the same period in 2020, reflecting the increased development activities for our <unk> system and the related regulatory calls.
Marketing expenses for the third.
Third quarter was 121 were $1 $5 million as compared to $2 7 million for the same period in 2020 due to a decrease in share based compensation G&A expenses for the first quarter of 2021 were $8 $2 million as compared to $6 3 million adults.
Same periods in 2020.
The increase was due largely to an increase in our labor cost of approximately 0.5 million daus due to an increase in our headcount in the connection with the expansion of expansion of the company's management team and the overall organization infrastructure, increasing our DNO issue.
<unk> expenses of approximately 0.5 million daus increased in our legal fees in the amount of approximately $6 million due to the SEC equally and class action litigation.
As described in our 6K filed to date and transaction expenses with connection to the acquisitions of nano.
U S, Rob all being and assets of MPW.
Out of approximately 0.5 dollars.
Net cash used in operating activities during the third quarter of 2021 about $7.0 million.
For the nine months ended September 32021, and then also recorded.
Courted adopt net loss applicable to the ordinary shares of $39 8 million compared to a net loss of $24 9 million.
For the same period in 2020.
Non-GAAP net loss for the first nine months of 2021, plus one and $4 $2 million compared to a non-GAAP net loss of $10 5 million adults for the same.
Period in 'twenty 'twenty.
The difference between GAAP and non-GAAP net loss to the ordinary shares mainly due to share based compensation expenses related to the secondary share offering which.
Closed in the first quarter over 2021 and legal fees in response to the FTC inquiry and class action litigation.
Pure fishing as reported in our 6K filed today.
As of September 32021, we had approximately 47 9 million shares outstanding we ended the third quarter of 2021 with cash cash equivalents in marketable securities of over $180 million and three.
<unk> loans from banks.
Before we take your questions I would like to mention that the company has been providing documents and information to the SEC in connection with and investigate investigation.
And has now received a subpoena from the SEC requesting that the company provide documents and other information relating.
And development cost of the company is not nine nexstar prototypes as well as the company estimates for the coastal of assembling the final minutes, our product at scale of companies cooperating with cooperating with the SEC and responding to its request.
With that I will end the call back over to Antonio.
Thank you for the financial updates run I understand that this is a lot of information to digest and that's many of you like likely have more question. Then we can address on the call today, we're committed to being accessible to the investment community and for this reason, we will engage in a robust investor outreach in the coming months.
The penalty as was noted in our last press release last week, we will be attending the 2021 radiology Society of North America annual meeting in Chicago from November 28 to December 2nd well. There. We will demonstrate new features of the Nox Sox system, none of AI, we will host an onsite.
It was there.
The company will showcase its AI neighborhood medical imaging software population health solution.
And on December 1st none of broadcast a virtual tour of arc and the Korean exiting from the severe hospitality initiatives.
We will close our attendance at the arsenic.
It is shifting with an exclusive webinar specifically for investors, we hope to see many of you there.
We have to meet you soon again, thank you for the time today and continued support and especially for your belief in our vision a vision that will improve the health of all of us.
Thank you very much we will now open up the call for question, which runs on the island areas will handle today operator, please begin the Q&A session.
Thank you to ask a question you need to press star one on your telephone to withdraw your question press the pound key.
Our first question comes from.
Jeffrey Cohen with Ladenburg Thalmann. Your line is open.
Yeah.
Good morning, how are you.
Good.
So.
Couple of questions from Aaron So you had 0.6 of our legal expenses for.
Q3, any insight into what that May look like for the fourth quarter.
Ron.
Yes, we don't have any insight for the moment.
But as we said we filed it.
6K today, and we refer to the information that we've closed over there.
That's what we can update at the moment.
Okay got it.
You had some commentary around about a pilot production.
I think the press release Red early 'twenty, two and you stated 2022 can you give us a walk through of the facility.
South Korea as far as the.
Construction and.
How that looks now and how the timeline is looking over the next number of months. Please.
Yeah.
With respect to the Korean facility.
Yes. Please.
Okay, I think that we've indicated that.
We have launched.
The new site, we have already.
<unk>, which is operating right now is on a temporary basis, we expect.
Hum.
The new site will be operating.
The second quarter of.
Highly highly I would say highly likely that it will be.
Operating in the second quarter of next year.
And.
It's in line of the our original expectations and in light of the plants.
Okay got it and then could you walk us through.
What you stated about the F D. A timeline I know that you stated that you were responding to the.
So the question is from yesterday, well that go in as a response to the first set of questions and will that be separate.
From.
A second submission as you call it here for the New York.
First of all I think Thats run addressed it very very clearly that basically were.
The person who meet the 180 days a window that we currently have to the the latest submission that basically we're going to use all the feedback that we get including the future feedback that a will get in order to to our work on the future applications and future submissions that we're planning.
Turning to.
To do this is basically with respect to the arc as you can see on the non Akshay I. We always are and we are continue to submit other F. D. A's and took a lot to work with them to.
To get another approvals F D A's and CPT codes.
Okay got it. Thank you very much that those are for us.
Thank you Jeff Thank you very much.
Thank you. Our next question comes from Suraj Kalia with Oppenheimer. Your line is open.
Good morning, everyone can you hear me all right.
Yeah, we're trying to.
[laughter] indefinitely.
Okay.
So.
Erez anyone I'll throw it out there so.
Considering filing another five 10-K.
The warning and I'm curious what is driving that.
Or am I reading too much into it.
I'm.
I'm not sure that I understand what is.
Were referring that is not clearly written in the document.
Our earnings release says you are not considering filing another five.
10-K.
And I'm curious why.
Is there any anything any other mitigating factors that is causing some sort of.
Reconsideration of filing or am I reading too much into the reopening filings.
You are reading too much I think that.
If.
You can see that basically on all fronts and dynamics, including the arc, where all the time developing more and more we're going to show in the arts and eight new applications and new.
New.
Ways of using the <unk>. So it will be presented in the <unk>.
Having said that it doesn't say anything that doesn't say that we're not going in the future.
To submit.
More.
FDA approvals or more request for FDA approvals for future uses of our system.
Including both the source and the arc itself.
Got it and in terms of.
The multi source.
Has it been independently validated.
E <unk>.
<unk> nano.
Affiliated people has any other independent.
Expert evaluated.
Did it so far.
First of all this happens all the time, but I.
I would suggest that as Ron said wait for the <unk> and you will see.
What's coming up.
Okay.
Erez.
Forgive me if I missed this the housing units.
And run that has been talked about in the past.
I don't.
I'm not sure if I heard an update on that maybe you could provide some color.
Well, we don't have any reason right now to believes that too that this is not the target that we would like to continue to stand behind.
Okay.
And finally.
The SEC subpoena when was the original request for documentation of information received.
When was it first received.
Okay.
As we.
As we fly as we said in our.
Finding today.
The written request for documentation from basic fee wasn't received on November eight.
November eight okay perfect gentlemen, thank you very much for the time and answering my questions. Thank you appreciate it.
You're more than welcome.
Thank you and our next question comes from Ravi Misra with <unk> capital. Your line is open.
Hey, good morning, guys. Good morning on <unk> at the mine.
So I wanted to just kind of go back to that 1000 unit production cycle that Youre discussing can you just kind of give us in light of the updated.
Carry out of the Korean facility I think you said second quarter.
And kind of the original commentary from earlier this year seeing some of these units will be produced in Israel.
What is the kind of production schedule right now as you see it in terms of where the first thousand will be made and I guess is there any.
To comment if there are delays.
In Korea that you are unable to hit that number next year.
So first of all we have not disclosed any specific on this one bear in mind that we have already.
Enough.
Chips that are willing.
It will enable us to.
To do what we do from the original manufacturer.
From the Japanese so currently we have a lot.
Which is independent to the.
The manufacturing of the Korean won.
Right now all the units are being assembled in Israel, and we have not made a decision yet.
Yet.
When we're going to switch to gear up to the.
To scale up the process of assembly once we do and I think it may be.
Some sometime during <unk>.
The first death.
First the third though for next year. If there are any changes we're going to.
Let the market.
Any changes that will be will take place on this one right now we don't see the.
We're making little odors and the supply chain in order to be ready.
Okay, and then on the kind of potential second submission to the FDA.
Just help us think about what is going to be the key difference between that and the original submission.
Uh huh.
I think that it was clear that it's not a second submission. Okay. We are planning a lot of some versions in the future.
Once we move on and we develop more applications and more.
More.
Releases in terms of the use of the system.
And then we're going to submit a further.
I think that after the <unk> when you see the the system you will probably be more.
Into the understanding of what has.
And what kind of further submission we would like to do in the future.
And is that RSA RNA is that are you going to be attending the event or is it going to be virtual like last year, and then I guess my last question.
Would be just on the SEC investigation.
Number eight I guess is when you.
Nick started first.
First line of inquiry.
The subpoena I guess it was risky, but today yesterday or a few days after that can you just help put some timing around that thank you. So now.
Ron to answer the.
The FCC and then I will address the arsenic.
Okay.
You said that for the FTC matter.
Pinot noir received on November eight.
We had informal and verbal discussions with the FCC.
That's it.
So with respect to the with respect to the <unk>.
The arc is going to be.
<unk> presented the virtual.
And then actually what used to be zebra has secured booth.
In present, the <unk> they are going to be another let's say you all would be presented there.
As people will be there.
Well impressed.
Part of our people will be either including people from the arc Division.
Okay. Thanks, and then just maybe one final clarification and thank you very much.
Peanuts November eight just curious when did the original FTC investigation begin thanks.
Present dwell short.
Before.
Yeah.
Yeah.
Okay. Our next.
Next question comes from Roswell rocket with lifestyle.
I don't think there's open.
Hey, guys. Thanks for taking the questions.
Two questions from me in terms of the upcoming filing maybe could you comment on the.
The.
X Ray tubes that you guys want to use maybe on what the <unk> could be or whether it's going to be glass ceramic tubing.
Maybe an update on the manufacturing there as well.
So first of all I think I mentioned it we are.
With the original process in <unk>.
<unk> for the manufacturing right now it's being done in Israel.
We have no.
Nothing to add in terms of the.
The JV that we have.
Already achieved it will be all presented.
Life in the.
Not not live.
In present, but thriving.
When when it takes place in the virtual presentation of the RSA, so you'll be able to see also answers.
To the question of the.
Of these.
The question that you asked.
In addition, I think that the more we go into the deployment process right now in the countries that we're going to operate in the initially start to implement and put our systems next year in place.
We.
Probably be more.
Exposed to what's further applications a request details has to be further presented and submitted to the FDA. So.
The more we go into the future of the better we know about this one as well.
Got it okay. Appreciate.
Great that color.
Just last one for me.
Once again congrats on one of the most recent contract maybe you could talk a little bit about the interest that you're seeing us geographically kind of where you guys expect to see a bit of interest or the next few contracts.
Thanks for taking the questions.
You mean next.
Perfect.
Yes looking forward.
[laughter] once we decide when we announced this week.
6K.
I would say that there is kind of a race between a few of the players that were trying to engage in future.
<unk>.
Who's going to sign first I'm I'm kidding, but seriously speaking I think that once we have more clarity on the next.
On the next agreement then we know what to tell and Gwen when it's going to be implemented but right now as you can imagine and see we are getting more and more attraction to the.
To future deals that are to be signed and as we speak there are a lot of the processing in the pipeline.
Got it good to hear I appreciate it guys. Thank you.
Yeah.
Thank you and we have a follow up from Jeffrey Cohen with Ladenburg Thalmann your.
Your line is open.
Thanks again for taking the question so I wondered on the regulatory front outside.
Outside the U S who are the the multi source is there any update or any progress.
Timing with regard to see in other territories.
Yeah.
No no thats.
Nothing new in this respect.
We will be working on the sea and simultaneously with the FDA once.
As you can imagine since we work on a global basis not everywhere we need.
You always see some countries.
We will require local so we generally speaking we work on a global basis to.
To get the FDA and to see in others, but at the same time, we're going to implement the deploying the other countries work not necessarily will required to do this.
Specific regulate regulatory.
<unk> approvals.
Okay perfect. Thanks again.
Yeah.
Thank you and I'm showing no other questions in the queue I'd like to turn the call back to <unk>.
Now for.
For closing comments.
So thanks for the support.
And for participating in this call will further discuss as Ron was saying.
We'll probably.
Having more discussions either on one of them went on or others that will come in the near future feel free to get in touch with the.
With Mike or with either.
One of us to further and thank you so for being part of today's call.
Thank you.