Q2 2024 Spectral AI Inc Earnings Call

August 12, 2024

Speaker Change: [music].

Operator: Good day, and welcome to the Spectral AI, Inc. Second Quarter 2024 Financial Results Conference Call. All participants will be in a listen-only mode.

Good day and welcome to the spectral AI, Inc. Second quarter 'twenty 'twenty four financial results conference call.

Speaker Change: All participants will be in a listen only mode should you need assistance. Please signal of a conference specialist by pressing the Starkey followed by zero.

Operator: Should you need assistance, please signal the conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Devin Sullivan of the Equity Group. Please go ahead.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.

Operator: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Devin Sullivan of the Equity Group. Please go ahead. Thank you, Nick. Good afternoon, everyone.

Speaker Change: To withdraw your question. Please press Star then two please.

Please note this event is being recorded.

Speaker Change: I'd now like to turn the conference over to Devin Sullivan of the equity group. Please go ahead.

Devin Sullivan: Thank you for joining us for Spectral AI's 2024 second quarter financial results conference call. Our speakers for today will be Peter Carlson, Chief Executive Officer, and Vince Capone, the company's Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, certain statements may be made that constitute forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements regarding the company's strategy, plans, objectives, initiatives, and financial outlook.

Devin Sullivan: Thank you, Nick. Good afternoon, everyone.

Devin Sullivan: Thank you Nick good afternoon, everyone. Thank you for joining us for spectral AI is 2024 second quarter financial results Conference call. Our speakers for today will be Peter Carlson, Chief Executive Officer, and Vince Capone, the company's Chief Financial Officer.

Devin Sullivan: When used during these discussions, the words estimates, projected, expects, anticipates, forecast, plans, intends, believes, seek, may, will, should, and variations of these words or similar expressions or the negative versions of such words or expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions, or results and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside the company's control.

Speaker Change: Before we begin I'd like to remind everyone that during this call certain statements may be made that constitute forward looking statements within the meaning of the safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements regarding the company's strategy plans objectives initiatives and financial outlook.

unknown: Swayampakula Ramakanth, Devin Sullivan, Vincent Capone, and Spectral AI

unknown: and the Association Reform Act of 1995, including statements regarding the company's strategy.

unknown: objectives, initiatives, and financial outlook. When used during these discussions, the words estimates, projected, expects, anticipates, forecast, plans, intends, believes, seek, may, will, should, and variations of these words or similar expressions or the negative versions of such words or expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions, or results and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside the company's control that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statement.

Devin Sullivan: It could cause actual results or outcomes to differ materially from those discussed in the forward-looking statement. As such, investors are cautioned not to place undue reliance on any forward-looking statement. Investors should carefully consider the foregoing factors and the other risks and uncertainties described in the risk factor sections of the company's filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statement. With that said, I would now like to turn the call over to Pete Carlson, Spectral AI's Chief Executive Officer. Pete, please go ahead. Thank you, Devin. And good afternoon, everyone.

unknown: As such, investors are cautioned not to place undue reliance on any forward-looking statements. Investors should carefully consider the foregoing factors and the other risks and uncertainties described in the risk factor sections of the company's filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements.

Speaker Change: When used during these discussions the words estimates projected expects anticipates forecasts plans intends believes seeks may will should and variations of these words or similar expressions or the negative versions of such words or expressions are intended to identify forward looking statements.

Speaker Change: These forward looking statements are not guarantees of future performance conditions or results and involve a number of known and unknown risks uncertainties assumptions and other important factors many of which are outside the company's control that could cause actual results or outcomes to differ materially from those discussed in the forward looking statements.

Speaker Change: As such investors are cautioned not to place undue reliance on any forward looking statements investors should carefully consider the foregoing factors and the other risks and uncertainties described in the risk factors sections of the company's filings with the SEC. These filings identify and address other important risks and uncertainties that could.

Speaker Change: Cause actual events and results to differ materially from those contained in the forward looking statements.

Devin Sullivan: With that said, I would now like to turn the call over to you.

Devin Sullivan: I would like to turn the call over to Pete Carlson, Spectral AI's Chief Executive Officer. Pete, please go ahead. Thank you, Devin. And good afternoon, everyone.

Speaker Change: But that said I would now like to turn the call over to Pete Carlson spectral a ice Chief Executive Officer Pete. Please go ahead.

Peter Carlson: We appreciate you joining us today for our second quarter financial results conference call. We had strong revenues in the second quarter, and I'm pleased to say we are making significant progress in advancing our proprietary AI-driven DeepView system wound assessment platform technology. Our focus as a company is to achieve product commercialization for a technology that we believe will improve patient outcomes while providing tangible economic and operational benefits across the healthcare system. We have spent more than 10 years creating the DeepView platform, which we believe is the only AI-driven predictive medical diagnostic tool that supports the delivery of a fast, accurate, and informed wound assessment. The development of DeepView reflects more than $250 million in non-Duluth government awards.

Peter Carlson: We appreciate you joining us today for our second quarter financial results conference call. We had strong revenues in the second quarter, and I'm pleased to say we are making significant progress in Advancing Our Proprietary AI-Driven DeepView System Wound Assessment Platform Technology. Our focus as a company is to achieve product commercialization for a technology that we believe will improve patient outcomes while providing tangible economic and operational benefits across the healthcare system. We have spent more than 10 years creating the DeepView platform, which we believe is the only AI-driven, predictive medical diagnostic tool that supports the delivery of a fast, accurate, and informed wound assessment. The development of DeepView reflects more than $250 million in non-Duluth government awards.

Pete Carlson: Thank you Devin and good afternoon, everyone. We appreciate you joining us today for our second quarter financial results Conference call.

Pete Carlson: We had strong revenues in the second quarter I am pleased to say, we are making significant progress in advancing our proprietary AI driven deep you system wound assessment platform technology.

Pete Carlson: Our focus as a company is to achieve product commercialization for a technology that we believe will improve patient outcomes, while providing tangible economic and operational benefits across the health care system.

Pete Carlson: We have spent more than 10 years, creating a deep view platform, which we believe is the only AI driven predictive medical diagnostic tool that supports the delivery of a fast accurate and then she informed wound assessment.

Pete Carlson: The development of feet view reflects more than $250 million of non dilutive government awards multi.

Pete Carlson: Multiple successful clinical trials that validate the accuracy and utility of our technology.

Pete Carlson: And a commitment from a dedicated group of executives engineers clinicians and partner institutions.

Peter Carlson: Multiple successful clinical trials that validate the accuracy and utility of our technology and a commitment from a dedicated group of executives, engineers, clinicians, and partner institutions. The evolution of our business from an exclusively clinical development stage company to development along with product commercialization will manifest with the first commercial sales of our DPU technology for the burn indication in the United Kingdom later this year. Although the initial impact of these commercial revenues will be modest, the validation provided by this landmark achievement should prove to be significant with respect to our plan for submission to the FDA in 2025 and the long-term commercial success of the DeepView system as a platform technology. I'll spend some time discussing our recent achievements and highlighting the catalysts we expect over the next several quarters.

Peter Carlson: Multiple successful clinical trials that validate the accuracy and utility of our technology and a commitment from a dedicated group of executives, engineers, clinicians, and partner institutions. The evolution of our business from an exclusively clinical development stage company to development along with product commercialization will manifest with the first commercial sales of our DeepView technology for the burn indication in the United Kingdom later this year. Although the initial impact of these commercial revenues will be modest, the validation provided by this landmark achievement should prove to be significant with respect to our plan for submission to the FDA in 2025 and the long-term commercial success of the DeepView system as a platform technology.

Pete Carlson: The evolution of our business from an exclusively clinical development stage company to development, along with product commercialization will manifest with the first commercial sales of our <unk> technology for the burn indication in the United Kingdom later this year.

Pete Carlson: Although the initial impact of these commercial revenues will be modest the validation provided by this landmark achievement should prove to be significant with respect to our planned submission to the FDA in 2025, and the long term commercial success of the deep view system is a platform technology.

Peter Carlson: I'll spend some time discussing our recent achievements and highlighting the catalysts we expect over the next several quarters. In addition to preparing for the commercial availability of DeepView for Byrne in the United Kingdom, we are taking important steps to establish a commercial presence in the United States and, over the longer term, other geographies.

Pete Carlson: I'll spend some time discussing our recent achievements and highlighting the catalyst we expect over the next several quarters.

Peter Carlson: In addition to preparing for the commercial availability of DeepView for burns in the United Kingdom, we are taking important steps to establish a commercial presence in the United States and, over the longer term, other geographies. We deployed a total of five Deepview AI burn devices at facilities across the UK following the February 2024 receipt of UKCA authorization. These initial deployments increase clinical familiarity of the device in advance of commercialization, provide real-world data that enhances the AI algorithm, and allow us to partner with these institutions as we gain a better understanding of how to commercialize, train, and deploy future. I'm pleased to announce that we have exceeded 85% enrollment of our desired total subject count at burn centers for our U.S. burn pivotal study and expect to complete enrollment for this portion of the study shortly As a reminder, it was just last month that we achieved 100% pediatric enrollment at Byrnes Center.

Pete Carlson: In addition to preparing for the commercial availability of deep view for burn in the United Kingdom, We are taking important steps to establish a commercial presence in the United States and over the longer term other geographies.

Peter Carlson: We deployed a total of five Deepview AI burn devices at facilities across the UK following the February 2024 receipt of UKCA authorization. These initial deployments increase clinical familiarity of the device in advance of commercialization, provide real-world data that enhances the AI algorithm, and allow us to partner with these institutions as we gain a better understanding of how to commercialize, train, and deploy future. I'm pleased to announce that we have exceeded 85% enrollment of our desired total subject count at burn centers for our U.S. burn pivotal study and expect to complete enrollment for this portion of the study shortly As a reminder, it was just last month that we achieved 100% pediatric enrollment at Byrnes Center.

Pete Carlson: We deployed a total of five GPU AI burn devices at facilities across the U K. Following the February 2020 for receipt of U K C. A authorization.

Pete Carlson: These initial deployments increased clinical familiarity of the device and advance of commercialization.

Pete Carlson: Provide real world data that enhances the AI algorithm.

Pete Carlson: And allow us to partner with these institutions as we gain a better understanding of how to commercialize train and deploy future units.

Pete Carlson: I'm pleased to announce that we have exceeded 85% enrollment of our desired total subject cow. It burn centers for our U S burn pivotal study and expect to complete enrollment for this portion of the study shortly.

Pete Carlson: As a reminder, it was just last month that we achieved 100% pediatric enrollment it burn centers.

Peter Carlson: This BIRN pivotal study is one of the largest BIRN studies ever conducted in the United States. It is designed to validate the AI-driven algorithm used by DeepView and will be the final clinical trial before we seek FDA approval in 2025. We've expanded the total number of U.S. clinical sites to 16, comprised of both burn centers and emergency departments or EDs. Enrollment at EDs will continue into 2025, as some of those sites are just now beginning to enroll, and more generally, conducting trials in EDs have longer enrollment periods than centers focused on a particular single practice. Why are there two different sites for the Pivotal Study?

Pete Carlson: This burn pivotal study as one of the largest burn studies ever conducted in the United States. It is designed to validate the AI driven algorithm used by GPU and will be the final clinical trial before we seek FDA approval in 2025.

Pete Carlson: We've expanded the total number of U S clinical sites to 16 comprised of both burn centers and emergency departments.

Speaker Change: Or E DS.

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Speaker Change: Enrollment eight E. DS will continue into 2025, there's some of those sites are just now beginning to enroll.

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Speaker Change: And more generally.

Speaker Change: Acting trials in E D have longer enrollment periods periods than centers focused on a particular single practice.

Peter Carlson: In fact, almost every ethernet that we rely on has a vendor. Enrollment at EDs will continue into 2025, as some of those sites are just now beginning to enroll, and more generally, conducting trials in EDs have longer enrollment periods than centers focused on a particular single practice. Why two different sites for the Pivotal Study? That reflects the structural limitations of wound care for Byrnes in the United States and how we believe that DeepView can address these care gaps.

Speaker Change: Why two different site for the pivotal study.

Peter Carlson: That reflects the structural limitations of wound care for Byrnes in the United States and how we believe that DeepView can address this care gap. In a nation of more than 330 million people, there are approximately 125 burn centers across the U.S. and less than 250 burn surgeons. Conversely, while the number of emergency departments exceeds 5000, they are generally limited in having burn care specialists on staff.

That reflects the structural limitations of wound care for Burns and the United States and how we believe the deep you can address this care gap.

Peter Carlson: In a nation of more than 330 million people, there are approximately 125 burn centers across the U.S. and less than 250 burn surgeons. Conversely, while the number of emergency departments exceeds 5000, they are generally limited in having burn care specialists on staff.

Speaker Change: And our nation of more than 330 million people. There are approximately 125 burn centers across the U S and less than 250 burn surgeons.

Speaker Change: Conversely.

Speaker Change: While the number of emergency Department.

Speaker Change: Number exceeds 5000, they are generally limited and having burn care specialists on staff.

Peter Carlson: To that end, any efficiencies that can be introduced to the workflow of the EDs by DeepVue would yield significant operational and economic benefits, allowing the most severely injured patients to be more accurately triaged and quickly treated. At Byrnes Centers, we believe that the predictive assessment offered by the DeepView technology can accelerate time to surgery for patients who require such treatment while avoiding unnecessary surgeries for those patients who are likely to heal on their own, at emergency departments, where we estimate that most burn wounds are initially assessed.

Speaker Change: To that end and the efficiencies that can be introduced to the workflow of the E. DS by deep you would yield significant operational and economic benefits.

Allowing the most severely injured patients to be more accurately triaged and quickly treated.

Speaker Change: The burn centers, we believe that the predictive assessment offered by the deep view technology can accelerate time to surgery for patients who require such treatment.

Speaker Change: Avoiding unnecessary surgeries for those patients who are likely to heal on their own.

Speaker Change: At emergency departments, where we estimate that most burn wounds are initially assessed.

Peter Carlson: DPU can avoid unnecessary transfers to a burn center or trauma units while adding confidence in deciding when a specialist should see a patient. In both scenarios, DeepView also provides uniformed imaging documentation and standardized total body surface area, or TBSA, measurements.

Peter Carlson: If you can avoid unnecessary transfers to a burn center or trauma units while adding confidence and deciding when a specialist should see a patient. In both scenarios, DeepView also provides uniformed imaging documentation and standardized total body surface area, or TBSA, measurements.

Speaker Change: Deep you can avoid unnecessary transfers to a burn center for trauma units.

Speaker Change: Adding confidence and deciding when our specialist should see a patient.

Speaker Change: In both scenarios deep you also provides uniformed imaging documentation and standardize total body surface area or T V. S. A measurements.

Peter Carlson: Reflecting the enrollment momentum in burn centers, we expect to submit the request for a de novo classification for use of DeepView AI burn treatment in burn centers in the first half of 2025. We believe this will result in commercialization in the U.S. early in 2026. After receipt of the de novo classification for use in burn centers, we plan to immediately submit the request for 510K approval for use in emergency departments, where we will have completed the remaining clinical trial work.

Speaker Change: Reflecting the enrollment momentum in burn centers, we expect to submit the request for a de Novo classification for use of deep view AI burn in burn centers in the first half of 2025.

Speaker Change: We believe this will result in commercialization in the U S. Early in 2026.

Speaker Change: After receipt of the de Novo classification for use in burn centers, we plan to immediately submit the request for five 10-K approval for use in emergency departments.

Speaker Change: We will have completed the remaining clinical trial work.

Peter Carlson: We anticipate that the sequence of commercialization would begin with deploying the DPU technology in U.S. burn centers to promote expert adoption of the technology, followed by deployment into emergency departments, where we would leverage this primary point of entry into the U.S. healthcare system. Beyond the UK and the US, we have an opportunity to establish a presence for deep view in multiple geographies, such as in Australia through our recent memorandum of understanding with PolyNovo Limited, one of the world's most respected providers of burn treatment solutions and an established market leader.

Speaker Change: We anticipate that the sequence of commercialization would begin with deploying the <unk> technology into those U S burn centers to promote expert adoption of the technology.

Speaker Change: Followed by the deployment into emergency departments, where we would leverage the primary point of entry into the U S health care system.

Speaker Change: Beyond the U K and the U S. We have an opportunity to establish a presence for deep view and multiple geographies such as in Australia through our recent memorandum of understanding with Poly Novo limited one of the world's most respected providers of burn treatment.

Peter Carlson: Under the MOU, PolyNova will support our application to the Australian Special Access Scheme, or SAS, with a goal of allowing Spectral AI to deploy two devices and lay the groundwork for an eventual commercial rollout based on clinical evaluations and experience. The significant benefit of our years of developing both the image capture technology and the AI algorithm is how DeepView can be applied to potential indications that extend beyond our current focus. To that end, we are making great progress in the development of DeepVue Snapshot M, a handheld version of our CART-based DeepVue technology that is intended for burn wound assessment in a combat and military setting.

Speaker Change: Solutions, and then an established market leader.

Peter Carlson: Under the MOU, PolyNova will support our application to the Australian Special Access team or SAS with a goal of allowing Spectral AI to deploy two devices and lay the groundwork for an eventual commercial rollout based on clinical evaluations and experience. The significant benefit of our years of developing both the image capture technology and the AI algorithm is how DeepView can be applied to potential indications that extend beyond our current focus.

Speaker Change: Under the Mou Holly Novo will support our application to the Australian special access scheme.

Speaker Change: Scheme.

With a goal of allowing spectral AI to deploy two devices to lay the groundwork for an eventual commercial rollout based on clinical evaluations and experiences.

Speaker Change: A significant benefit of our years of developing both the image capture technology and the a L. AI algorithm is how deep you can be applied to potential indications that extend beyond our current focus.

Peter Carlson: To that end, we are making great progress in the development of DeepView Snapshot M, a handheld version of our CART-based DeepView technology that is intended for burn wound assessment in a combat and military setting. Earlier this year, we inked a new contract valued at over $500,000 that brings the total for just the DeepView Snapshot M to more than $6 million. Deepview Snapshot M is designed to be an integral part of the battlefield triage process by providing a quick and accurate wound care assessment so that soldiers with more severe burn injuries can be prioritized for evacuation.

Speaker Change: To that end, we are making great progress in the development of deep view snapshot M. A handheld version of our cart based GPU technology that is intended for burn wound assessment in a combat and military setting.

Peter Carlson: Earlier this year, we inked a new contract valued at over $500,000 that brings the total for just the DeepView Snapshot M to more than $6 million. DeepView Snapshot M is designed to be an integral part of the battlefield triage process by providing a quick and accurate wound care assessment so that soldiers with more severe burn injuries can be prioritized for evacuation.

Speaker Change: Earlier this year we.

We inked a new contract valued at over $500000 that brings the total for just the deep you snapshot.

Speaker Change: Two more than $6 million.

Speaker Change: If you snap snapshot and is designed to be an integral part of the battlefield triage process by providing a quick and accurate wound care assessment.

Speaker Change: So that soldiers with more severe burn injuries can be prioritized for evacuation.

Peter Carlson: We believe that the potential applications of DPU-SNAPSHOT-N expand well beyond military use to serve our first responders and other health care providers with that more mobile unit. We are presenting an abstract titled Advancing Combat Burn Assessment of Deep-Fuse Handheld Device for Military Field Use at the upcoming 2024 Military Health System Research Symposium. This event is the Department of Defense's foremost scientific meeting, and we look forward to sharing our progress with the attendees.

Peter Carlson: We believe that the potential applications of DPU-SNAPSHOT-N expand well beyond military use to serve our first responders and other health care providers with that more mobile unit. We are presenting an abstract titled, Advanced Combat Burn Assessment of Deepfuse Handheld Device for Military Field Use at the upcoming 2024 Military Health System Research Symposium. This event is the Department of Defense's foremost scientific meeting, and we look forward to sharing our progress with the attendees.

Speaker Change: We believe that the potential applications of GPU snapshot and extend well beyond military youre use to serve our first responders and other health care providers with debt more mobile unit.

Speaker Change: We are presenting an abstract titled advancing combat burn assessment of deep views handheld device for military field use.

Speaker Change: At the upcoming 2024 military health system Research Symposium.

Speaker Change: This event is the department of Defense's foremost scientific meeting and we look forward to sharing our progress with the attendees.

Peter Carlson: Now let's talk a bit about the timing of revenues from our U.S. government contracts, which is helpful in assessing our future cash flows. Through the first six months of 2024, we will receive approximately $12 million in cash payments from BARDA, primarily from the base phase of the Project BioShield contract awarded in September 2023. This base phase of nearly $55 million will take us through the first quarter of 2026 in support of the clinical validation and FDA approval processes for the burn indication.

Speaker Change: Now, let's talk a bit about timing of revenues from our U S government contracts, which is helpful in assessing our future cash flows.

Speaker Change: Through the first six months of 2024, we have received approximately $12 million in cash payments from BARDA.

Speaker Change: Primarily from the base phase of the project Bioshield contract awarded in September 2023.

Speaker Change: This base phase of nearly $55 million will take us through the first quarter of 2026 and support of the clinical validation and FDA approval processes for the burn indication.

Peter Carlson: The next phases, which we expect to commence no later than the first half of 2026, are estimated to be $95 million for feature enhancement, security, and deployment of devices to burn centers and select emergency departments across the U.S.

Peter Carlson: The next phase is, which we expect to commence, no later than the first half of 2026, is estimated to be $95 million for feature enhancement and the securement and deployment of devices to burn centers and select emergency departments across the U.S. Specific timing of amounts under these remaining phases is subject to discussions with BARC. In summary, to date, BARDA has awarded contracts to Spectral totaling almost $250 million, and since 2013, it has paid over $113 million to the company under these contracts. Total U.S. government contracts awarded to Spectral since 2013, which include EMTEC and other government agencies, approximate $258 million.

Speaker Change: The next phases, which we expect to commence.

No later than the first half of 2026.

Speaker Change: Our estimated to be $95 million.

Speaker Change: <unk> feature enhancement.

Speaker Change: Procurement and deployment of devices to burn centers and select emergency departments across the U S.

Peter Carlson: Specific timing of amounts under these remaining phases is subject to discussions with BARDA. In summary, to date, BARDA has awarded contracts to Spectral totaling almost $250 million, and since 2013, it has paid over $113 million to the company under these contracts. Total U.S. government contracts awarded to Spectral since 2013, which include EMTEC and other government agencies, amount to $258 million. There are a couple more items to discuss before turning things over to Ben.

Speaker Change: Specific timing or amounts under these remaining phases are subject to discussions with BARDA.

Speaker Change: In summary to date BARDA has awarded contracts to spectral totaling almost $250 million.

Speaker Change: Since 2013 is paid over a $113 million to the company under these contracts.

Speaker Change: Total U S government contracts awarded to spectral since 2013, which include <unk> and other government agencies approximate $258 million.

Peter Carlson: A couple more items to discuss before turning things over to you. We were very happy to announce that our stock was added to the Russell Microcap Index effective July 1st. We continue to strengthen our intellectual property moat and increased our granted patents from 20 to 26 from 20. We also have an additional 38 pending patent applications worldwide. Finally, regarding our newly formed healthcare IP-focused subsidiary, Spectral IP, we continue to identify potential intellectual property for acquisition and to assess alternatives to leverage those assets. As a reminder, the activities associated with this subsidiary require limited management resources and no additional capital from the company. Additionally, no core operating assets of the company will be involved in this subsidiary.

Couple of more items to discuss before turning things over to Vince.

Peter Carlson: We were very happy to announce that our stock was added to the Russell Microcap Index effective July 1st. We continue to strengthen our intellectual property moat and increase our granted patents from 20 to 26 from 20. We also have an additional 38 pending patent applications worldwide. Finally, regarding our newly formed healthcare IP-focused subsidiary, Spectral IP, we continue to identify potential intellectual property for acquisition and to assess alternatives to leverage those assets.

Speaker Change: We were very happy to announce that our stock was added to the Russell Microcap Index effective July one.

Vince Capone: We continue to strengthen our intellectual property moat and increased our granted patents from 'twenty to 'twenty six from 'twenty.

Vince Capone: We also have an additional 38 pending patent applications worldwide.

Vince Capone: I am looking regardless regarding our newly formed healthcare IP focused subsidiary spectral IP.

Vince Capone: We continue to identify potential intellectual property for acquisition and to assess alternatives to leverage those assets.

Peter Carlson: As a reminder, the activities associated with this subsidiary require limited management resources and no additional capital from the company. Additionally, no core operating assets of the company will be involved in this subsidiary. Now, I'll turn the conversation over to Vin.

Vince Capone: As a reminder, the activities associated with this subsidiary require limited management resources and no additional capital from the company.

Vince Capone: Additionally, no core operating assets of the company will be involved in this subsidiary.

Vincent Capone: And I'll turn the conversation over to Vin. Thanks, Pete. Thank you all for joining us today. We issued our press release this afternoon, which includes additional details about our operating results, and we filed our 10-Q with the SEC this afternoon as well. With that in mind, I will focus my remarks on select financial highlights and key metrics. We are pleased to report that R&D revenue in the second quarter rose 76% to $7.5 million from $4.3 million in the second quarter of last year.

Vince Capone: I'll now turn the conversation over to Vince.

Vincent Capone: Thanks, Pete. Thank you all for joining us today. We issued our press release this afternoon, which contains additional details of our operating results. And we filed our 10-Q with the SEC this afternoon as well. With that in mind, I will focus my remarks on select financial highlights and key metrics.

Vince Capone: Thanks, Pete and thank you all for joining us today.

Vince Capone: We issued our press release this afternoon, which contains additional details of our operating results and we filed our 10-Q with the SEC This afternoon as well.

Vincent Capone: This growth reflects an increased level of activity under the BARDA project BioShield contract, as previously noted, which was awarded to the company in September 2020. Gross margin also rose to 44.3% from 42.1% in the second quarter of last year due to the higher reimbursement rate under the BARDA Project BioShield contract as compared to the reimbursement rate under the BARDA Burn II contract, which accounted for most of our operating revenue throughout 2018. General and administrative expenses during the second quarter of 2024 rose to $5.8 million as compared to $4.8 million, reflecting higher headcount during the comparable period. With that said, General and Administrative Expense as a percentage of revenue in the second quarter of 2024 decreased to 77% from 112% in last year's second quarter.

Vince Capone: With that in mind I will focus my remarks on select financial highlights and key metrics.

Vincent Capone: We are pleased to report that R&D revenue in the second quarter rose 76% to $7.5 million from $4.3 million in the second quarter of last year. This growth reflects an increased level of activity under the BARDA Project BioShield contract, as previously noted, which was awarded to the company in September 2023. Gross margin also rose to 44.3% from 42.1% in the second quarter of last year due to the higher reimbursement rate under the BARDA Project BioShield contract as compared to the reimbursement rate in the BARDA Burn II contract, which accounted for most of our operating revenue throughout 2020.

Vince Capone: We are pleased to report that R&D revenue in the second quarter rose, 76% to $7 5 million from $4 3 million in the second quarter of last year.

Vince Capone: This growth reflects an increased level of activity under the BARDA project Bioshield contract.

Vince Capone: As previously noted which was awarded to the company in September 2023.

Vince Capone: Gross margin also rose to 44, 3% from 42, 1%.

Vince Capone: In the second quarter of last year due to the higher reimbursement rate under the BARDA project Bioshield contract as compared to the reimbursement rate in the BARDA burn to contract, which accounted for most of our operating revenue throughout 2023.

Vincent Capone: General and administrative expenses during the second quarter of 2024 rose to $5.8 million, as compared to $4.8 million, reflecting higher headcount during the comparable period. With that said, general and administrative expenses as a percentage of revenue in the second quarter of 2024 decreased to 77% from 112% in last year's second quarter. Non-revenue-generating research and development activities decreased by approximately $100,000 for the three months ended June 30, 2024, as compared to the comparable period in 2023.

Vince Capone: General and administrative expenses during the second quarter of 2024 rose to $5 8 million as compared to $4 8 million.

Vince Capone: Afflicting higher head count during the comparable periods.

Vince Capone: With that said.

Vincent Capone: This decrease was offset by an increase of approximately $1.1 million related to other administrative expenses for the three months ended June 30, 2024, as compared to the same period in 2020. Other expenses for the second quarter of 2024 were up approximately $314,000 from the second quarter of 2023, primarily reflecting our new borrowing-related costs of $699,000 as compared to no costs in the second quarter of last year. This was due to debt issuance costs and payments from the convertible notes issued with the Standby Equity Purchase Agreement announced in March that were expensed during the quarter.

Vince Capone: General and administrative expense as a percentage of revenue in the second quarter of 2024 decreased to 77%.

Vince Capone: From 112% in last year's second quarter.

Vincent Capone: Non-revenue generating research and development activities decreased by approximately $100,000 for the three months ended June 30, 2024, as compared to the comparable period in 2023. This decrease was offset by an increase of approximately $1.1 million related to other administrative expenses for the three months ended June 30, 2024, as compared to the same period in 2020. Other expenses for the second quarter of 2024 were up approximately $314,000 from the second quarter of 2023, primarily reflecting our new borrowing-related costs of $699,000 as compared to no costs in the second quarter of last year.

Vince Capone: Non revenue generating research and development activities decreased by approximately $100000 for the three months ended June 32024, as compared to the comparable period in 2023.

Vince Capone: This decrease was offset by an increase of approximately $1 $1 million related to other administrative expenses for the three months ended June 32024.

Vince Capone: As compared to the same period in 2023.

Vince Capone: Other expenses for the second quarter of 2024 were up approximately $314000 from the second quarter of 2023.

Vince Capone: Primarily reflecting our new borrowing related costs of $699000 as compared to no costs in the second quarter of last year.

Vincent Capone: This was due to debt issuance costs and payments from the convertible notes issued with the Standby Equity Purchase Agreement announced in March that were expensed during the quarter. Lastly, we're pleased to announce we trimmed our net loss for the quarter to $2.9 million, or 16 cents per share, as compared to a net loss of $3.1 million in the second quarter of last year, or 23% per share. As of June 30, 2024, we had 17,606,367 shares outstanding.

Vince Capone: This was due to debt issuance costs and payments from the convertible notes issued with a standby equity purchase agreement announced in March that were expensed during the quarter.

Vincent Capone: Lastly, we're pleased to announce we trimmed our net loss for the quarter to $2.9 million, or $0.16 per share, as compared to a net loss of $3.1 million in the second quarter of last year, or 23% per share. As of June 30, 2024, we had 17,606,367 shares outstanding.

Vince Capone: Lastly, we're pleased to announce we trimmed our net loss for the quarter to $2 9 million or <unk> 16 per share as compared to a net loss of $3 1 million in the second quarter of last year or 23% per share.

Vince Capone: As of June 32024, we had 17 million 606367 shares outstanding.

Vincent Capone: Moving now to the balance sheet, as of June 30, 2024, cash and cash equivalents totaled $6.9 million, up from $4.8 million on December 31, 2023. Cash at June 30, 2024 included $900,000 in the company's newly formed wholly owned subsidiary, Spectral IP. As discussed on our last call, we enhanced our access to capital by completing a common stock purchase agreement with an investment bank and entering into a standby equity purchase agreement with a long-only investor. The Standby Equity Purchase Agreement has a total capacity of $30 million.

Vincent Capone: Moving now to the balance sheet, as of June 30, 2024, cash and cash equivalents totaled $6.9 million, up from $4.8 million on December 31, 2023. Cash at June 30, 2024 included $900,000 in the company's newly formed wholly owned subsidiary, Spectral AI. As discussed on our last call, we enhanced our access to capital by completing a common stock purchase agreement with an investment bank and entering into a standby equity purchase agreement with a long-only investor. The Standby Equity Purchase Agreement has a total capacity of $30 million.

Vince Capone: Moving now to the balance sheet as of June 32024, cash and cash equivalents totaled $6 $9 million up from $4 8 million on December 31 2023.

Vince Capone: Cash at June 32024 included $900000 in the company's newly formed wholly owned subsidiary spectral IP.

Vince Capone: As discussed on our last call, we enhanced our access to capital by completing a common stock purchase agreement with an investment bank and entering into a standby equity purchase agreement with a long only investor.

Vince Capone: The standby equity purchase agreement has a total capacity of $30 million that included $12 5 million of prepaid advances.

Vincent Capone: That included $12.5 million of prepaid advances. As of June 30, 2024, the company received a net $9.2 million in these prepaid advances. The final advance of $2.5 million was received by the company on July 15, 2024. As a reminder, any additional draws above the total prepaid advances of $12.5 million are at the sole discretion of the company.

Vince Capone: As of June 32024, the company received a net $9 $2 million in these prepaid advances.

Vince Capone: Final advance of $2 $5 million was received by the company on July 15 2024.

Speaker Change: As a reminder, any additional draws above the total prepaid advances of $12 $5 million or at the sole discretion of the company.

Vincent Capone: For 2024, we are reiterating our revenue guidance of approximately $28 million, an expected increase of about 55% from the $18.1 million we reported in 2023. This growth reflects our work on the BARDA Project BioShield contract, as well as additional governmental funding for the continued development of our handheld device. Thank you, Snapshot. Our guidance does not reflect contributions from any sales of the DeepView system for the burn indication in the U.K. that are expected to begin later this year or any other contributions that may result from the commercialization of our DeepView system.

Speaker Change: For 2024, we are reiterating our revenue guidance of approximately $28 million and expected increase of about 55% from the $18 $1 million, we reported in 2023.

Speaker Change: This growth reflects our work on the BARDA project Bioshield contract as well as additional governmental funding and it is the.

Speaker Change: The continued development of our handheld device.

Speaker Change: CPU snapshot.

Speaker Change: Our guidance does not reflect contributions from any sales of the <unk> system for the burn indication in the U K that are expected to begin later this year or any other contributions that may result from the commercialization of our deep UV system.

Vincent Capone: Our guidance does not reflect contributions from any sales of the DeepView system for the burn indication in the U.K. that are expected to begin later this year or any other contributions that may result from the commercialization of our DeepView system. With that, I thank you, and we'll turn the conversation back over. Thank you, Vince.

Peter Carlson: With that, I thank you, and we'll turn the conversation back over. Thank you, Vince. We are pleased with our progress through the first half of the year and are very optimistic about our future. Nick, let's open the call to questions. Thank you.

Speaker Change: That I, Thank you and we'll turn the conversation back over to Pete.

Pete Carlson: Thank you Vince.

Peter Carlson: We are pleased with our progress through the first half of the year and are very optimistic about our future. Nick, let's open the call for questions. Thank you. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Pete Carlson: We are pleased with our progress through the first half of the year and are very optimistic about our future.

Pete Carlson: Nick Let's open the call for questions. Thank you.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Ryan Zimmerman with BTIG. Please go ahead.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you were using a speakerphone. Please pick up your handset before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Ryan Zimmerman with BTIG. Please go ahead. Good afternoon, and congratulations on your progress. Maybe just to start, I have a couple questions, guys. First, just related to guidance. So last time, Vince, you guys suggested that maybe the second half would see a little bit more revenue from BARDA relative to the first half.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from Ryan Zimmerman with BTG. Please go ahead.

Ryan Zimmerman: Good afternoon, and congratulations on your progress. Maybe just to start, I have a couple of questions, guys. First, just on guidance. So I think last time, Vince, you guys suggested that maybe the second half would see a little bit more revenue from BARDA relative to the first half. I just want to confirm if that's still your expectation, you know, as we move into the second half, just based on the timing and, you know, the development milestones, et cetera, for the second half of the year, regarding the $28 million.

Ryan Zimmerman: Hi, good afternoon, and congrats on your progress maybe.

Ryan Zimmerman: Maybe just to start I have a couple of questions guys.

John Vandermosten: John Vandermosten, John Vandermosten, John Vandermosten, John Vandermosten[inaudible] Good day, and welcome to the Spectral AI Inc. 2nd, 2024 Financial Results Conference call. All participants will be in a listen-only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded.

Ryan Zimmerman: First just from an AR related to guidance. So I think last time Vince.

Speaker Change: You guys suggested that maybe the second half, let's say a little bit more revenue from BARDA.

Speaker Change: Relative to the first half I just want to confirm if that's still your expectation as we move into the second half just based on the timing and you know that.

Operator: I just want to confirm if that's still your expectation as we move into the second half, just based on the timing and the development milestones, et cetera, for the second half of the year regarding the $28 million. Yeah, Brian, nice to talk to you.

Speaker Change: Development milestones et cetera.

Speaker Change: Second half of the year.

Speaker Change: Regarding the $28 million.

Vincent Capone: Yeah, Ryan, nice to talk to you. Yeah, we continue to see the second half ramping up in our Part of revenue really is the clinical trials continuing to grow. I think as we sit here sitting on thirteen point eight million in the first half of revenue for twenty twenty four, you know, we feel we feel confident that twenty eight is something we can reiterate to the market, and we're excited to continue with our clinical trial development in the second half of this year. Okay.

Vincent Capone: Yeah, we continue to see the second half ramping up in our, part of revenue really is the clinical trials. I think as we sit here sitting on 13.8 million in the first half of revenue for 2024, you know, we feel we feel confident that 28 is something we can reiterate to the market, and we're excited to continue with our clinical trial development in the second half of this year. Okay. Very helpful.

Speaker Change: Yeah, Brian Nice to talk to you.

Speaker Change: Yes, we continue to see the second half.

Speaker Change: Ramping up in our.

Speaker Change: BARDA revenue really is the clinical trials continue to grow.

Speaker Change: I think as we as we sit here sitting on $13 8 million in the first half of revenue for 2024.

Speaker Change: We feel we feel confident that.

Speaker Change: 28 is is something that we can reiterate to the market and we're excited to continue with our clinical trial development in the second half of this year.

Speaker Change: Okay Alright.

Peter Carlson: Very helpful. And then, you know, Pete, as you think about yourself, you talked about this a little bit, but a commercial presence in the US, as you think about going after that burn market, you talked about kind of building that commercial presence. Well, what does that look like to you at this stage, either from a cost standpoint, or a size standpoint, or any kind of early thoughts around, you know, targeting that burn market?

Peter Carlson: And then, you know, Pete, as you think about yourself, you talked about this a little bit, but a commercial presence in the US, as you think about going after that burn market, you talked about kind of building that commercial presence. Well, what does that look like to you at this stage, either from a cost standpoint, or a size standpoint, or any kind of early thoughts around, you know, targeting that burn market? Ryan, it's good to talk.

Helpful. And then Pete as you think about your you talked about this a little bit, but our commercial presence in the U S. As you think about going after that burn market you talked about kind of building that commercial presence well what does that look like to you at this stage either from a cost standpoint.

Devin Sullivan: I would now like to turn the conference over to Devin Sullivan of the Equity Group. Please go ahead. Thank you, Nick.

Devin Sullivan: Good afternoon, everyone. Thank you for joining us for Spectral AI's 2024 Second Quarter Financial Results Conference call. Our speakers for today will be Peter Carlson, Chief Executive Officer, and Vince Capone, the company's Chief Financial Officer.

Speaker Change: Or a size standpoint, or any kind of early thoughts around targeting that burn market.

Devin Sullivan: Before we begin, I'd like to remind everyone that during this call, certain statements may be made that constitute forward-looking statements within the meaning of the safe harbor provisions of the United States' private securities litigation reform act of 1995, including statements regarding the company's strategy, plans, objectives, initiatives, and financial outlook. When used during these discussions, the words estimates projected expects, anticipates, forecast plans, intends, believes, seek, may, will, should, and variations of these words or similar expressions, or the negative versions of such words or expressions are intended to identify forward-looking statements.

Peter Carlson: Ryan, good to talk. As you look in particular at the burn centers, we have a partner in our distribution to the burn centers in BARDA. We do not need to build a large commercial operation to service that market, or, frankly, even the emergency department market. We need some resources, but this is a deployment of a device; it's sort of a one-time transaction. And really, where we'll have the volume of people, but it'll still be only moderate, is in field service, as we get the devices out into the emergency department. So, we do not see the need to build a large commercial operation with a significant sales force. Okay.

Peter Carlson: As you look in particular at the burn centers, you know, we have a partner in our distribution to the burn centers in BARDA. We do not need to build a large commercial operation to service that market, or, frankly, even the emergency department market. We need some resources, but this is a deployment of a device is sort of a one-time transaction, and really where we'll have the volume of people, but it'll still be only moderate, is in field service as we get the devices out into the emergency department. So we do not see the need to build a large commercial operation with a significant sales force. Okay. Very helpful.

Brian: Brian Good to talk.

Pete Carlson: As you look in particularly to the burn centers you know we have a partner in our distribution to the burn centers and BARDA.

Speaker Change: We do not need to build a large commercial our operation to service that market or frankly, even the emergency department market.

Speaker Change: We need some resources, but the you know this is a deployment of a device is sort of a one time.

Speaker Change: Transaction and really the.

Speaker Change: Where we will have the volume of people, but it'll still be only moderate is in field service.

Devin Sullivan: These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties assumptions, and other important factors, many of which are outside the company's control that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. As such, investors are cautioned not to place undue reliance on any forward-looking statements. Investors should carefully consider the foregoing factors and the other risks and uncertainties described in the risk factor sections of the company's filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statement.

Speaker Change: As we get the devices out into the emergency Department. So.

Speaker Change: We do not see the need to build a large commercial operation with Cigna.

Speaker Change: Significant sales force.

Speaker Change: Okay.

Peter Carlson: Very helpful. And then, just, uh, let me sneak one more in: the, the, wound trial in the U S, you guys reached 475 patients, it looks like. And, you know, what the current, um, Determination for what to do with that data, clearly prioritizing burns over wounds right now? Just help us understand what the timelines will be for DFU potentially in the U.S. based on completing those 475 patients.

Peter Carlson: And then just, uh, let me sneak one more in, uh, the, the, the wound trial, uh, in the U S you guys reached 475 patients, it looks like. And, you know, what, what is the current, um, Determination for what to do with that data, you know, clearly prioritizing burns over wounds right now. Just help us understand, you know, what the timelines will be for DFU potentially in the U.S. based on completing those 475 patients. Thanks for taking the questions. Yes.

Speaker Change: Very helpful and then just let.

Speaker Change: Let me sneak one more in.

The wound trial in the U S. You guys reached 475 patients it looks like and.

Speaker Change: What what is the current.

Speaker Change: Determination for what to do with that data.

Speaker Change: <unk>.

Speaker Change: Clearly prioritizing burns over wound right now just <unk>.

Speaker Change: Help us understand you know what the timelines will be for <unk> potentially.

Speaker Change: Potentially in the U S based on completing those 475 patients.

Peter Carlson: with that said, I would now like to turn the call over to Pete Carlson, Spectral AI's Chief Executive Officer. Pete, please go ahead. Thank you, Devin, and good afternoon, everyone.

Speaker Change: Thanks for taking the questions.

Speaker Change: Yes.

Peter Carlson: The, what we talked about kind of assessing the insights of the study, we'll get the final readouts internally here, probably early in the fourth quarter as the last patients go through the full trial. While we focus on the burn indication and application to the FDA, we do want to look at how the data, what the data set tells us, and how that relates to our best approach going forward, particularly from a reimbursement standpoint.

Speaker Change: The.

Speaker Change: What we talked about kind of assessing the insights of the study will get the final readouts internally.

Here, probably early fourth quarter is the last patients go through the.

Speaker Change: Full trial.

Speaker Change: And.

Speaker Change: While we work focus on the burn indication an application to the FDA.

Speaker Change: You want to look at.

Speaker Change: How the data, but the data set tells us.

Speaker Change: And how that relates to our best approach going forward, particularly from a re embody <unk> standpoint is it a particular indication like diabetic foot ulcers is it a broader indication of wounds.

Peter Carlson: We have spent more than 10 years creating the deep view platform, which we believe is the only AI driven predictive medical diagnostic tool that supports the delivery of a fast accurate and informed wound assessment. The development of deep view reflects more than $250 million of non-deluge government awards, multiple successful clinical trials that validate the accuracy and utility of our technology, and a commitment from a dedicated group of executives, engineers, clinicians, and partner institutions.

Peter Carlson: Is it a particular indication, like diabetic foot ulcers? Or is it a broader indication of wounds, wound bed preparedness, et cetera? And so we feel we have a very significant asset in this data set we are finalizing with this trial, and that's the assessment we're gonna look to do is what's the best strategic path forward given the results of that trial and where the market stands today. When you look at it on a broader basis, as we think about our near to midterm, you know, we see the vast majority of the economics coming from the burn indication.

Peter Carlson: Is it a broader indication of wounds, wound bed preparedness, et cetera? And so we feel we have a very significant asset in this data set we are finalizing with this trial, and that's the assessment we're gonna look to do is what's the best strategic path forward given the results of that trial and where the market stands today. When you look at it on a broader basis, as we think about our near to midterm, you know, we see the vast majority of the economics coming from the burn indication.

Speaker Change: <unk> prepared wound bed preparedness et cetera, and so we we we feel we have a very significant asset in this data set we are finalizing with this trial and that's the assessment, we're going to look to do is what how does that what's the best strategic path forward given the results of that.

Speaker Change: That trial and where the market stands today.

Speaker Change: When you look at it on a broader basis as we think about our near to mid term, we see the vast majority of the economics coming from the burn indication that would mean not only the burn centers, but meaningful penetration into the emergency department. So.

Peter Carlson: The evolution of our business from an exclusively clinical development stage company to development along with product commercialization will manifest with the first commercial sales of our deep view technology for the burn indication in the United Kingdom later this year. Although the initial impact of these commercial revenues will be modest, the validation provided by this landmark achievement should prove to be significant with respect to our play on submission to the FDA in 2025 and the long term commercial success of the deep view system as a platform technology.

Peter Carlson: That would mean not only the burn centers but meaningful penetration into the emergency department. So, relative to our longer-term plans for that second indication, it's not a very significant change in timing as you get when you look out three to five years.

Speaker Change: Relative to our longer term plans for that second indication, it's not a very significant change in timing.

Speaker Change: As you get as you look out three to five years.

Ryan Zimmerman: Thanks for taking the questions, Pete and Vince. Thanks, Ryan.

Speaker Change: Thanks for taking the questions.

Brian: Thanks, Brian.

Carl Byrnes: The next question comes from Carl Byrnes with Northland Capital Markets. Please go ahead.

Speaker Change: The next question comes from Carl Byrnes with Northland Capital markets. Please go ahead.

Carl Byrnes: Thanks for the question. Congratulations on the progress as well.

Carl Byrnes: Thanks for the question. Congratulations on the progress as well. Most of the questions have been answered here, but maybe you can drill a little bit further on the UK.

Carl Byrnes: Thanks for the question congratulations on the progress as well most of my questions have been answered here, but maybe you can drill a little bit further on U K.

Peter Carlson: I'll spend some time discussing our recent achievements and highlighting the catalysts we expect over the next several quarters. In addition to preparing for the commercial availability of deep view for burn in the United Kingdom, we are taking important steps to establish a commercial presence in the United States and over the longer term other geographies. We deployed a total of five deep view AI burn devices at facilities across the UK following the February 2024 receipt of UK CA authorization.

Carl Byrnes: Most of the questions have been answered here, but maybe you can drill a little bit further on the UK. I know you mentioned you had five deployments. What might you be looking for, you know, by the end of the year in terms of deployments in the UK? And I know that that's not included in the 28 million guidance in terms of contribution. Thanks.

Carl Byrnes: I know you mentioned you had five deployments. What might you be looking for, you know, by the end of the year in terms of deployments in the UK? And I know that that's not included in the 28 million guidance in terms of contribution.

Carl Byrnes: I know you decided you had five deployments what might you be looking for by the end of the year in terms of deployments in the U K and I know that's not included in the $28 million guidance in terms of contribution. Thanks.

Carl Byrnes:

Carl Byrnes: Thanks. Thanks, John. It's good to talk.

Peter Carlson: Thanks, John. It's good to talk.

Carl Byrnes: Thanks, John good to talk.

Peter Carlson: From a deployment standpoint, one or two more deployments are possible here as the year goes on. What's going to be important is that we convert some of these deployments into commercial revenue. We are not yet ready to further the impact..., rollout. But we also have a pretty neat opportunity coming up next week.

Peter Carlson: From a deployment standpoint, one or two more deployments are possible here as the year goes on. What's going to be important is that we convert some of these deployments into commercial revenue. We are not yet ready to further the impact or rollout. But we also have a pretty neat opportunity coming up next week.

Speaker Change: From a deployment standpoint there.

Speaker Change: One or two more deployments are possible here as the year goes on what's going to be important is that we're going to convert those to point some of these deployments into commercial revenues.

Peter Carlson: These initial deployments increase clinical familiarity of the device in advance of commercialization. Provide real world data that enhances the AI algorithm and allow us to partner with these institutions as we gain a better understanding of how to commercialize train and deploy future units. I'm pleased to announce that we have exceeded 85% enrollment of our desired total subject count at burn centers for our US burn pivotal study. An expected complete enrollment for this portion of the study shortly.

Speaker Change: We are not yet ready to.

Speaker Change: Further the.

Speaker Change: The impact or.

Peter Carlson: The International Society of Burns, Burn Indications, I think is the other I, has an annual conference, and they're going to be attendees from across the burn wound care or the burn care environment in the UK, but also a significant number of U.S. burn surgeons and burn health care providers in attendance. We'll have a significant presence there, including on the podium, and are excited to share output from the device with these burn healthcare participants. It's really going to be one of their first opportunities to see that output.

Peter Carlson: The International Society of Burns, Burn Indications, I think is the other I, has an annual conference, and there are going to be attendees from across the burn wound care or burn care environment in the UK but also a significant number of U.S. burn surgeons and burn health care providers in attendance. We'll have a significant presence there, including on the podium, and are excited to share output from the device with these burn health care participants.

Speaker Change: Rollout.

Speaker Change: But we also have a pretty neat opportunity coming up next week.

Speaker Change: National Society of burn.

Speaker Change: Burnt indications I think is the other eye has an annual conference and they're gonna be attend attendees from across the the burn wound care or the burn care environment in the U K, but also a significant number of U S.

Speaker Change: Byrne.

Peter Carlson: As a reminder, it was just last month that we achieved 100% pediatric enrollment at burn centers. This burn pivotal study is one of the largest burn studies ever conducted in the United States. It is designed to validate the AI-driven algorithm used by DPU and will be the final clinical trial before we seek FDA approval in 2025. We've expanded the total number of U.S, clinical sites to 16, comprised of both burn centers, and emergency departments for EDs.

Speaker Change: Surgeons and burden on health care providers in attendance will have a significant attendance their presence here ourselves including on the podium.

Speaker Change: And.

Speaker Change: Are excited to share output from the device with these burn.

Peter Carlson: It's really going to be one of their first opportunities to see that output. I mention that because that will help inform our next steps in the UK as we visit each of the sites we're already working with and get indications of interest from others.

Speaker Change: Health care participants, it's really going to be one of their first opportunity to see that output.

Peter Carlson: I mentioned that because that will help inform our next steps in the UK as we visit each of the sites we're already working with and get indications of interest from others. Got it, great, thanks, that's helpful. And then just another follow-up here. Do you think there are any other partnerships or alliances in the works similar to PolyNova in Australia that we might see in the next 6 to 12 months? Thanks. That's a very open-ended question.

Speaker Change: Mentioned that because that will help inform our next steps in the U K as we visit with each of the sites, we're already working with and get indications of interest from others.

Peter Carlson: Got it. Great. Thanks. That's helpful. And then just another follow-up here. Do you think there are any other partnerships or alliances in the works similar to PolyNova in Australia that we might see in the next six to 12 months? Thanks.

Speaker Change: Got it great. Thanks, that's helpful. And then just another follow up here.

Peter Carlson: Enrollment at EDs will continue into 2025 as some of those sites are just now beginning to enroll. And more generally, conducting trials in EDs have longer enrollment periods than centers focused on a particular single practice. Why two different sites for the pivotal study, that reflects the structural limitations of wound care for burns in the United States, and how we believe that DPU can address this care gap. In a nation of more than 330 million people, there are approximately 125 burn centers across the U.S., and less than 250 burn surgeons.

Speaker Change: Do you are there any other partnerships or alliances and new works.

Speaker Change: As you probably know that in Australia that we might see in the next six to 12 months.

Yeah.

Speaker Change: Yeah.

Peter Carlson: We appreciate that opportunity. The answer would be yes, but that's about all we'll be able to say is yes. We are talking with others both domestically and abroad and certainly hope to continue to have partnerships like that announced both, you know, in new geographies as well as with significant partners in current geography. No, I don't want to make any commitments one way or the other, though.

Peter Carlson: That's a very open-ended question. We appreciate that opportunity. The answer would be yes, but that's about all we'll be able to say is yes. We are talking with others both domestically and abroad and certainly hope to continue to have partnerships like that announced both, you know, in new geographies as well as with significant partners in current geographies. No, I don't want to make any commitments one way or the other, though. No, fair enough. Thanks so much. Thanks.

Speaker Change: That's a very open ended question. We appreciate that opportunity the answer would be yes, but that's about all we'll be able to say is yes, we are talking with others both domestically.

Speaker Change: Domestically and elsewhere.

Speaker Change: And certainly hope to continue to have partnerships like that announced both.

In new geographies as well as with.

Speaker Change:

Speaker Change: <unk> partners in current geographies.

Peter Carlson: And, virtually, while the number of emergency department, number exceeds 5,000, they are generally limited in having burn care specialists on staff. To that end, any efficiencies that can be introduced to the workflow of the EDs by DPU would yield significant operational and economic benefits, allowing the most severely injured patients to be more accurately triaged and quickly treated. At burn centers, we believe that the predictive assessment offered by the DPU technology can accelerate time to surgery for patients who require such treatment, while avoiding unnecessary surgeries for those patients who are likely to heal on their own.

Speaker Change: No I don't want to make any commitments, one way or the other though no.

Carl Byrnes: No, fair enough. Thanks so much.

Carl Byrnes: No, fair enough. Thanks so much. Thanks. Thanks, Carl. The next question comes from R.K. Ramakanth with H.C. Wainwright.

Speaker Change: Fair enough. Thanks, so much thanks.

Carl Byrnes: Thanks Carl.

Swayampakula Ramakanth: The next question comes from R.K. Ramakanth with H.C. Wainwright. Please go ahead.

Carl Byrnes: Our next question comes from RK <unk> with H C. Wainwright. Please go ahead.

Swayampakula Ramakanth: Thank you. Good afternoon, Pete and Vincent.

RK: Thank you good afternoon Pete.

Swayampakula Ramakanth: Please go ahead. Thank you. Good afternoon, Pete and Vincent.

Swayampakula Ramakanth: A couple of quick questions here. Regarding the UK deployment, I'm just trying to understand how, you know, how is it helping you in terms of designing your US commercialization, and also, is it possible for some of the folks in the UK to publish any of the data that can be used for reimbursement here in the US? Okay, thanks for the question. I'll give you my thoughts, and then I'll ask Jeremiah to share his thoughts, particularly leveraging his experience.

Swayampakula Ramakanth: A couple of quick questions here. So, regarding the UK deployment. I'm just trying to understand how, you know, how is it helping you in terms of designing your US commercialization? And also, is it possible for some of the folks in the UK to publish any of the data that can be used for reimbursement?

Speaker Change: Couple of quick questions here.

RK: Hello.

Speaker Change: Regarding the.

Speaker Change: Okay decline.

Speaker Change: So just trying to understand.

Speaker Change:

Speaker Change: How is that helping you in terms of design wins.

Speaker Change: Commercialization.

Speaker Change: Also.

Speaker Change: Is it possible.

Speaker Change: Some of them.

Speaker Change: Folks.

Speaker Change: Okay.

Peter Carlson: At emergency departments, where we estimate that most burn wounds are initially assessed, DPU can avoid unnecessary transfers to a burn center or trauma units, while adding confidence and deciding when a specialist should see a patient. In both scenarios, DPU also provides uniformed imaging documentation and standardized total body surface area or TVSA measurements. Reflecting the enrollment momentum in burn centers, we expect to submit the requests for a DNOVO classification for use of DPU AI burn in burn centers in the first half of 2025.

Speaker Change: Hey.

Speaker Change: Any of the data.

Speaker Change: It can be used for.

Speaker Change: For reimbursement.

Speaker Change: Yes.

Speaker Change: <unk>.

Speaker Change: Yes.

Peter Carlson: Okay, thanks for the question. I'll give you my thoughts, and then I'll ask Jeremiah to share his thoughts, particularly leveraging his experience. You know, we're excited about this early opportunity to work with clinicians, and we're already getting, or have been receiving, very positive and constructive feedback. So, it's informing not only device performance, but it's also informing our commercial rollout strategy, how we staff and support rollout, what types of skill sets we need, et cetera. Let me let Jeremiah give you his additional thoughts.

Speaker Change: Okay. Thanks for the question I'll give you my thoughts and then I'll ask Jeremiah to share his thoughts.

Jeremiah: Particularly leveraging his experience.

Peter Carlson: You know, we're excited about this early opportunity to work with clinicians, and we're already getting, or have been receiving, very positive and constructive feedback. So it's informing not only device performance, but it's also informing our commercial rollout strategy, how we staff and support rollout, what types of skill sets we need, et cetera. I'll let Jeremiah give you his additional thoughts. Thank you, Pete

Jeremiah: We're excited about this early opportunity to work with clinicians and we're already getting or have been receiving very positive and constructive feedback. So it's informing not only.

Jeremiah: The device performance, but it's also informing our commercial rollout strategy, how we staff.

Jeremiah: And support rollout with types of skill sets, we need et cetera.

Peter Carlson: We believe this will result in commercialization in the US early in 2026. After receipt of the DNOVO classification for use in burn centers, we plan to immediately submit the requests for 510K approval for use in emergency departments, where we will have completed the remaining clinical trial work. We anticipate that the sequence of commercialization would begin with deploying the DQ technology into those US burn centers to promote expert adoption of the technology followed by the deployment into emergency departments where we would leverage this primary point of entry into the US healthcare system.

Speaker Change: Let me let.

Speaker Change: Sure Mike gave you his additional thoughts.

Jeremiah: So I would just echo what Pete said; the ability for us to start and do these evaluations in the UK is giving us very good feedback, constructive feedback, and helping us understand the device better and how we would start the commercialization process in the US. Specifically, to your question about publications, that's definitely something that we're looking to work with these clinicians on as they move beyond the evaluation phase and publish their results so that we can get that information out to payers in the U.S., et cetera, and that will help us with reimbursement. Thank you.

Jeremiah: Thank you, Pete. So I would just echo what Pete said; the ability for us to Start and Do these evaluations in the UK is giving us very good feedback, constructive feedback, and helping us understand the device better and how we would start the commercialization process in the US. Specifically, to your question about publications, that's definitely something that we're looking to work with these clinicians on as they move beyond the evaluation phase and publish their results so that we can get that information out to payers in the US, et cetera, and that will help us with reimbursement.

Mike: Thank you Pete.

So I would just echo what Pete said the ability for us to.

Speaker Change: Start and do these evaluations in the U K is giving us very good feedback constructive feedback and helping us understand the device better and how we would.

Speaker Change: Start the commercialization process in the U S. Specifically to your question about publications, that's definitely something that we're looking to work with these clinicians on as they move beyond the evaluation phase and to publish their results so that.

Speaker Change: We can get that information out to.

To payers in the U S et cetera that will help us with the reimbursement.

Peter Carlson: Beyond the UK and the US, we have an opportunity to establish a presence for deep view in multiple geographies, such as in Australia, through our recent memorandum of understanding with Polly Novo Limited, one of the world's most respected providers of burn treatment solutions and then established market leader. Under the MOU, Polly Novo will support our application to the Australian Special Access Scheme, or SAS, with a goal of allowing spectral AI to deploy two devices to lay the groundwork for an eventual commercial rollout based on clinical evaluations and experiences.

Swayampakula Ramakanth: And then, in terms of label expectations in the U.S., I'm just trying to understand the inclusion of pediatric patients in your study. You know, one, how, you know, in terms of label expansion and also market expansion, how much of a market expansion did you get by getting pediatric patients included in the label at the first instance? Thanks, Arkay. When you look at pediatrics in the burn environment, you actually see that generally about 25% of... Admissions for Byrnes situations are PDF, and it can be, it can even go higher than that at times.

Speaker Change: Thank you.

Swayampakula Ramakanth: Thank you. And then, in terms of label expectations in the U.S., I'm just trying to understand the inclusion of pediatric patients in your study, you know, one, how, you know, in terms of label expansion and also market expansion, how much of a market expansion did you get by getting pediatric patients included?

Speaker Change: And it.

Speaker Change: In terms of label expectations in the U S. I'm just trying to understand.

Speaker Change: Yes.

Speaker Change: On the pediatric patients in their study.

Speaker Change: Yes.

Speaker Change: One.

Speaker Change: In terms of label expansion and also market expansion.

Speaker Change: How much of a market expansion.

Speaker Change: Bye.

Speaker Change: CBS.

Peter Carlson: to the neighborhood and the first. [inaudible] Thank you. Thank you. Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Peter Carlson: Thanks, Arkay. When you look at pediatrics in the burn environment, actually, generally about 25% of... Admissions for Byrnes situations are pediatric. And it can be, it can even go higher than that at times.

RK: Thanks RK.

RK: The.

RK: When you look at pediatrics and the burn environment you actually.

Speaker Change: Generally about 25%.

Peter Carlson: A significant benefit of our years of developing both the image capture technology and the AL AI algorithm is how deep view can be applied to potential indications that extend beyond our current focus. To that end, we are making great progress in the development of deep view snapshot M, a handheld version of our CARC based deep view technology that is intended for burn wound assessment in a combat and military setting. Earlier this year, we inked a new contract valued at over $500,000 that brings the total for just the deep view snapshot M to more than $6 million.

Speaker Change: Admissions for burn situations are pediatrics.

Speaker Change: And it can be it can even go higher than that at times. So it's always been a focus of BARDA and working with us to make sure. We included pediatrics in our studies.

Peter Carlson: So it's always been a focus of BARDA when working with us to make sure we included pediatrics in our study. We want to be able to serve that community. One of the technologies, and this is something we see in the U.K. as well as in the U.S., that exists today is called laser Doppler imaging. That technology takes several minutes to capture its image and thus requires sedation often of the pediatric patient.

Peter Carlson: So it's always been a focus of BARDA when working with us to make sure we included pediatrics in our study. We want to be able to serve that community. One of the technologies, and this is something we see in the U.K. as well as in the U.S., that exists today is called Laser Doppler Imaging. That technology takes several minutes to capture its image and thus requires sedation often of the pediatric patient. You can imagine a young child with a burn in pain out having to sit still.

Speaker Change: We want to be able to serve that community.

Speaker Change: One of the technologies and this is something we see in the U K as well as in the U S that exists today is called laser Doppler imaging.

Speaker Change: That technology takes.

Speaker Change: <unk>.

Speaker Change: Several minutes to capture its image.

Speaker Change: And thus requires sedation often of the pediatric patients you can imagine a young child with a burn in pain, having to sit still and this is where the benefit of our less than one second image capture comes in in a place where we see the.

Peter Carlson: Deep view snapshot M is designed to be an integral part of the battlefield triage process by providing a quick and accurate wound care assessment so that soldiers with more severe burn injuries can be prioritized for evacuation. We believe that the potential applications of deep view snapshot M extend well beyond military use to serve our first responders and other healthcare providers with that more mobile unit. We are presenting an abstract titled Advancing Combat Burn Assessment of deep views and health device for military field use at the upcoming 2024 military health system research symposium. This event is the Department of Defense's foremost scientific meeting and we look forward to sharing our progress with the attendees.

Peter Carlson: You can imagine a young child with a burn in pain, having to sit still. This is where the benefit of our less than one second image capture comes in, and in a place where we see the opportunity for it to be really useful in burns. But I don't know that it expands the market opportunity. I think it enhances the willingness and acceptance in the market. So I would tell you the numbers we generally have talked about have included the expectation of the pediatric portion of the burn community.

Peter Carlson: This is where the benefit of our less than one second image capture comes in and in a place where we see the opportunity for it to be really useful in burns. But I don't know that it expands the market opportunity. I think it enhances the willingness and acceptance in the market. So I would tell you the numbers we generally have talked about have included the expectation of the pediatric portion of the burn community.

Speaker Change: The opportunity to.

Speaker Change: You have to really be useful and burns.

Speaker Change: No that it expands the market opportunity I think it enhances the willingness and acceptance in the market. So I would tell you. The numbers. We generally have talked about have included the expectation of the pediatric portion of the burn community.

Peter Carlson: But similar to the measurement capabilities of the tool, we think the ease of use with a pediatric patient is something that will help increase interest in the market, thus helping our deployment and our penetration opportunity both in quantity and in speed.

Speaker Change: But similar to the measurement capabilities of the tool we think the ease of use with a pediatric patient are things that will help.

Speaker Change: Increase.

Speaker Change: <unk> in the market thus help.

Speaker Change: Help our deployment and our penetration opportunity both in quantity and in speed.

Speaker Change: Yeah.

Swayampakula Ramakanth: Thank you for that. I have one last question for you regarding the Australian market. How long do you think it will take Paul and Noah to stop marketing the product?

Speaker Change: Thank you one last question for me.

Peter Carlson: Now let's talk a bit about timing of revenues from our U.S, government contracts which is helpful in assessing our future cash flows. To the first six months of 2024, we have received approximately $12 million in cash payments from Barta, primarily from the base base of the project bio-shield contract awarded in September 2023. This base phase of nearly $55 million will take us through the first quarter of 2026 in support of the clinical validation and FDA approval processes for the burn indication.

Speaker Change: Regarding the Australian market.

Vincent Capone: How long do you think it will take Paul and Noah to start commercializing the product? And also, I think you started talking about trying to place a couple of centers initially in Australia. So is that part of initiating the commercialization process, or is that part of the application process such that Australian authorities would be okay to start commercializing the product? Vince, you want to take that, and we can. If Karamai has something to add, we'll let him do that.

Speaker Change: How long do you think that will take.

Speaker Change: Now I want to stop commercializing the product.

Vincent Capone: And also... I think you started talking about trying to place it in a couple of centers initially in Australia. So is that part of... initiating the commercialization process, or is that part of the application process where Australian authorities would give you the OK to start commercializing the product in Poland?

Speaker Change: Also.

Speaker Change: Thank you.

Speaker Change: Trying to please.

Speaker Change: Okay.

Speaker Change: We will ship.

Speaker Change: Australia.

Speaker Change: So.

Speaker Change: Awesome.

Speaker Change: Initiating the commercialization process, though is that as part of the application.

Speaker Change: We will send them on properties.

Speaker Change: Okay.

Speaker Change: Private proposal.

Peter Carlson: The next phase is, which we expect to commence, no later than the first half of 2026, are estimated to be $95 million for feature enhancement, procurement, and deployment of devices to burn centers and select emergency departments across the US. Pacific timing of amounts under these remaining phases are subject to discussions with Barda. In summary, today, Barda has awarded contracts to Spectral totaling almost $250 million, and since 2013 has paid over $113 million to the company under these contracts. Total US government contracts awarded to Spectral since 2013, which include MTECH and other data government agencies approximate $258 million.

Vincent Capone: Vince, you want to take that, and we can. If Karamai has something to add, we'll let him do that. Yeah, okay. Good to hear from you. I think with respect to the work we're doing in tangent with PolyNovo, their help to get us into the special access program is good for us to have a potential role out there of at least two machines. That's probably a good 12 months away, I would say, as we have to work through not just the special access program but also have to get through each of the different hospitals and ethics committees to ensure that everybody's on board with introducing our device there.

Speaker Change: Vince you want to take that and we can if care might have something to add we'll let him do that yes, our take good to hear from you.

Vincent Capone: Yeah, okay; good to hear from you. I think with respect to the work we're doing in tangent with PolyNovo, their help to get us into the special access program is good for us to have a potential role out there of at least two machines. That's probably a good 12 months away, I would say, as we have to work through not just the special access program but also have to get through each of the different hospitals' ethics committees to ensure that everybody's on board with introducing our device there.

Vince Capone: I think with respect to the work we're doing.

Speaker Change: In tangent with some with poly Novo.

Speaker Change: Theyre helped to get us into the special access program is it's good for us to have a potential rollout. There are at least two machines that that's probably a good 12 months away I would say is we have to work through not just the special access program, but also have to get through each of the different hospitals ethics committees.

Speaker Change: To ensure that everybody is onboard with introducing our device there.

Vincent Capone: So, you know, we look at it as really a partnership, the initial starting of a partnership there with them, more so, data gathering, more so than, you know, the commercial opportunity that it may present, subsequent to a 12-month period, beyond that into 2026, 2027.

Vincent Capone: So, you know, we look at it as really a partnership, the initial start of a partnership there with them, more so, data gathering, more so than, you know, the commercial opportunity that it may present, subsequent to a 12-month period, you know, beyond that into 2026, 2027. Thank you. Thanks for taking all your questions. Thanks, RK. Again, if you have a question, please press star then 1. The next question comes from John Vandermosten with Zax. Please go ahead. Hello, good afternoon, everyone, and good to speak with you again.

Speaker Change: So we look at it is it's really a partnership the initial starting of a partnership there with them more so and data gathering more so than the commercial opportunity that it may present.

Speaker Change: Subsequent to a 12 month period.

Speaker Change: Beyond that into 2026 2027.

Peter Carlson: A couple more items to discuss before turning things over to Vince. We were very happy to announce that our stock was added to the Russell microcap index effective July 1st. We continue to strengthen our intellectual property mode and increased our granted patents from 2226 from 20. We also have an additional 38 pending patent applications worldwide. Finally, regarding our newly formed healthcare IP focused subsidiary Spectral IP, we continue to identify potential intellectual property for acquisition and to assess alternatives to leverage those assets. As a reminder, the activities associated with this subsidiary require limited management resources and no additional capital from the company. Additionally, no core operating assets of the company will be involved in this subsidiary.

Swayampakula Ramakanth: Thank you. Thanks for taking all your questions.

Speaker Change: Thank you thanks for taking the questions.

Speaker Change: Thanks RK.

Operator: Again, if you have a question, please press star then 1. The next question comes from John Vandermosten with Zax. Please go ahead.

Speaker Change: Again, if you have a question. Please press Star then one.

Speaker Change: The next question comes from Jon Vander, most den with Zacks. Please go ahead.

John Vandermosten: Hello, good afternoon, everyone, and good to speak with you again. I want to explore some of the opportunities and challenges for the handheld Snapshot M. And I guess, first of all, what are some of the challenges that you have with developing that and getting that approved? By the time that's ready, you'll already have DeepView approved and deployed. So what are the incremental challenges for the mobile version of the product?

Jon Vander: Hello, Good afternoon, everyone and good to speak with you again.

John Vandermosten: I want to explore some of the opportunities and challenges for the handheld Snapshot M. And I guess, first of all, what are some of the challenges that you have with developing that and getting that approved? By the time that's ready, you'll already have DeepView approved and deployed. So what are the incremental challenges for the mobile version of the product? John, it's Pete.

Jon Vander: I wanted to explore some of the opportunities and challenges for the the handheld snapshot and I guess first of all what are some of the challenges I guess that you have with developing that and getting that approved.

Jon Vander: By the time that that's ready you know youll already have deep view.

Speaker Change: Proved in and deployed so what are the incremental challenges for the for the mobile version of the product.

Speaker Change: To get approval.

Peter Carlson: John, it's Pete. Good to talk to you. Certainly, miniaturization is the challenge. So, and you can see this on our website and in some of our materials, you know, the current image capture device associated with the cart-based version, I refer to it as sort of the size of a large household iron. And there are the images captured with four separate cameras; to get those four cameras into something that is portable, sturdy, portable, and easy to manipulate in difficult environments is a challenge, and it's It's been amazing to see the team and hear the team talk about the various ways and vendors they've worked with to get the cameras into smaller and smaller perspectives.

Peter Carlson: Good to talk. Certainly, miniaturization is the challenge. So, and you can see this on our website and in some of our materials, you know, the current image capture device associated with the cart-based version, I refer to it as sort of the size of a large household iron. And the image is captured with four separate cameras. To get those four cameras into something that is... portable, sturdy, portable, and easy to manipulate in difficult environments is a challenge, and it's been amazing to see the team and hear the And that's really the challenge, maintaining image capture quality while doing it in cameras that aren't much bigger, if not smaller than a push pin.

Pete Carlson: Yeah, John It's Pete good to talk certainly the miniaturization is the challenge so.

Speaker Change: You can see this out on our website and in some of our materials the current image capture.

Vincent Capone: We now turn the conversation over to Vince. Thanks, Pete.

John: Device associated with the cart based version.

Vincent Capone: Thank you all for joining us today. We issued our press release this afternoon, which contains additional details of our operating results, and we filed our 10Q with the SEC this afternoon as well. With that in mind, I will focus my remarks on select financial highlights and key metrics. We are pleased to report that R&D revenue in the second quarter rose 76% to 7.5 million from 4.3 million in the second quarter of last year.

Speaker Change: Referred to it as sort of the size of a large household iron.

Speaker Change: And then there are the images captured with four separate cameras.

Speaker Change: To get those four cameras into something that is.

Speaker Change: No.

Speaker Change: Portable.

Speaker Change: Sturdy portable and <unk>.

Speaker Change: Z to to manipulate in difficult environments is a challenge and it's.

Vincent Capone: This growth reflects an increased level of activity under the bar to project bio shield contract as previously noted, which was awarded to the company in September 2023. Rose margin also rose to 44.3% from 42.1% in the second quarter of last year due to the higher reimbursement rate under the bar to project bio shield contract as compared to the reimbursement rate in the bar to burn to contract, which accounted for most of our operating revenue throughout 20.

Speaker Change: It's been amazing to see the team and hear the team talk about the various ways and vendors they worked with to get the cameras into smaller and smaller perspective, and that's really the the challenge is maintaining the image capture quality.

Peter Carlson: And that's really the challenge, maintaining image capture quality while doing it in cameras that aren't much bigger, if not smaller than a push pin. And so we are, again, these are four high quality, high resolution cameras capturing images.

Speaker Change: While doing it in.

Speaker Change: Ultimately cameras that arent much bigger if not smaller than a pushed in and so we're again. These are for high quality high resolution cameras, capturing images and then there is the ability to.

Peter Carlson: And so we are, again, these are four high-quality, high-resolution cameras capturing images. And then there is the ability to have the data set either in the device or accessible, you know, sort of by satellite technology. So those are the couple of engineering-type aspects of the device miniaturization. Yes, sort of like I talked about in my prepared remarks, once we get one of the indications and uses through the regulatory approval process, we believe these other 510ks with the predicates will be easier or have a shorter time frame, not be easier, but will have a shorter time frame because it'll be a more narrow aspect that is being assessed. And that's the same thing.

Vincent Capone: 23 General administrative expenses during the second quarter of 2024 rose to 5.8 million as compared to 4.8 million reflecting higher head count during the comparable periods. With that said, general and administrative expense as a percentage of revenue in the second quarter of 2024 decreased to 77% from 112% in last year's second quarter. Non-revenue generating research and development activities decreased by approximately $100,000 for the three months ended June 30, 2024 as compared to the comparable period in 2023.

Peter Carlson: And then there is the ability to have the data set either in the device or accessible, you know, sort of by satellite technology. So those are a couple of engineering-type aspects of the device miniaturization. Yes, sort of like I talked about in my prepared remarks, once we get one of the indications and uses through the regulatory approval process, we believe these other 510ks with the predicates will be easier or have a shorter time frame, not be easier.

Speaker Change: Have the both the data set either in the device or accessible sorted by satellite technology. So those are the couple of Av.

Speaker Change: Engineering type aspects of the device miniaturization.

Speaker Change: Yes sort of like I talked about in my prepared remarks, once we get one of these.

Speaker Change: Patients in usage through the regulatory approval process. We believe these other five 10-K with the predicates will be easier or have a shorter timeframe not be easier. We will have a shorter timeframe because it'll be more narrow aspect that is being assessed and that's the same thing so what we would look.

Peter Carlson: We'll have a shorter time frame because it'll be a more narrow aspect that is being assessed. And that's the same thing. So what we would look to do with the miniature or the handheld version is demonstrate that the image capture is consistent and demonstrate that the ability of the AI to make the predictive wound assessment has the same performance statistics.

Vincent Capone: This decrease was offset by an increase of approximately $1.1 million related to other administrative expenses for the three months ended June 30, 2024 as compared to the same period in 2023. Other expenses for the second quarter of 2024 were up approximately $314,000 from the second quarter of 2023, primarily reflecting our new borrowing related costs of $699,000 as compared to no costs in the second quarter of last year. This was due to debt issuance costs and payments from the convertible notes issued with the standby equity purchase agreement announced in March that were expense during the quarter.

Peter Carlson: So what we would look to do with the miniature or the handheld version is demonstrate that the image capture is consistent and demonstrate that the ability of the AI to make its predictive wound assessment has sort of the same performance statistics. And you mentioned the regulatory side of things there a little bit. And what does that regulatory pathway look like for that machine?

Speaker Change: To do with the miniature or the handheld version is demonstrate that the image capture and the is consistent and demonstrate that the ability of the AI to make their predictive wound assessment has sort of the same performance statistics.

Speaker Change: Okay.

Peter Carlson: And you mentioned the regulatory side of things there a little bit. And what does that regulatory pathway look like for that machine? Will you be required to do, you know, a 200-some odd patient trial? Or are you just making sure that what worked on the large scale works on a handheld scale as well, in terms of, you know, just getting the regulatory nod from the regulator?

Speaker Change: And what you mentioned the regulatory side of things there a little bit and when does that regulatory pathway look like for that machine.

Peter Carlson: Will you be required to do, you know, a 200-some odd patient trial? Or are you just making sure that what works on the large scale works on a handheld scale as well, in terms of, you know, just getting the regulatory nod from the regulator? I think there's two paths to that. One is the regulatory path, and one is the commercial acceptance path. Again, we think, We're very pleased, let me step back. We're very pleased and proud to be working with these agencies supporting the DoD in developing a device that can help the military.

Speaker Change: Will you be required to do.

Speaker Change: 200, and some odd patient trial or are you just making sure that what worked on a large scale works on a on a handheld scale as well in terms of just getting the regulatory nod from the regulators.

Speaker Change: Yes.

Peter Carlson: I think there's two paths to that. One is the regulatory path, and one is the commercial acceptance path. Again, we think We're very pleased, let me step back. We're very pleased and proud to be working with these agencies supporting the DoD in developing a device that can help the military. We think this is an outstanding use of the technology. But we also think we have a really neat opportunity on behalf of our shareholders to take that technology and commercialize it in the field in multiple ways, and particularly when you get into other indications that you might do in normal practice, like a diabetic foot ulcer or other more chronic wound care that is done, say, in private offices. For them to have access to a more affordable, smaller device with the capabilities of this technology, we think it is going to be very powerful.

Speaker Change: I think there is two fold to that one is the regulatory path and one is the commercial acceptance path again, we think well.

Vincent Capone: Lastly, we're pleased to announce we trimmed our net loss for the quarter to $2.9 million or $16 per share as compared to a net loss of $3.1 million in the second quarter of last year or $23 per share. As of June 30, 2024, we had $17,606,367 shares outstanding. Moving now to the balance sheet as of June 30, 2024, cash and cash equivalence totaled $6.9 million up from $4.8 million on December 31, 2023.

Speaker Change: We're very pleased let me step back we're very pleased and proud to be working with the agency supporting the D O D and developing a device that can help the military. We think this is an outstanding use of the technology.

Peter Carlson: We think this is an outstanding use of the technology. But we also think we have a really neat opportunity on behalf of our shareholders to take that technology and commercialize it in the field in multiple ways, particularly when you get into other indications that you might do in normal practice, like a diabetic foot ulcer or other more chronic wound care that is done, say, in private offices for them to have access to. A more affordable, smaller device with the capabilities of this technology is going to be very powerful.

Speaker Change: But we also think we have a really need opportunity on behalf of our shareholders to take that technology and commercialize it in the field.

Speaker Change: In multiple ways and particularly when you get into other indications.

Speaker Change: That you might do in normal practice like the diabetic foot ulcer or other more chronic wound care that is Don say in private offices for them to have access to.

Vincent Capone: Cash at June 30, 2024 included $900,000 in the company's newly formed Holy Own subsidiary Spectral IP. As discussed on our last call, we enhanced our access to capital by completing a common stock purchase agreement with an investment bank and entering into a standby equity purchase agreement with a long-only investor. The standby equity purchase agreement has a total capacity of $30 million that included 12.5 million prepaid advances. As of June 30, 2024, the company received a net $9.2 million in these prepaid advances.

Speaker Change: More affordable smaller device with the capabilities of this technology, we think is going to be very powerful.

Peter Carlson: So, yes, do we need to do a little bit of a trial? We don't think it has to be a significantly large trial, but enough to be able to demonstrate that the technology is working similar to the cart-based technology. We haven't at this point tried to size that, but I certainly don't think it would be 450 patients like this current trial.

John Vandermosten: So, yes, do we need to do a little bit of a trial? We don't think it has to be a significantly large trial, but enough to be able to demonstrate that the technology is working similar to the CART-based technology. We haven't at this point tried to size that, but I certainly don't think it would be 450 patients like this current trial.

Speaker Change: So, yes, do we need to do a little bit of a trial.

Speaker Change: I think it has to be a significantly large trial, but enough to be able to demonstrate that the technology is working similar to the cart based technology.

Speaker Change: We haven't at this point tried to size that but.

Speaker Change: I certainly don't think it would be 450 patients like this current trial.

John Vandermosten: Okay. And the last question is on the size of the market and, I guess, the potential areas of the market. I think you guys have said, you know, ambulances might be a really good place to place these handheld items, and obviously, you're getting your grants to support military use of them. What are some of the areas that might be appropriate for this? And how is that market size compared to, kind of, the ED and burn center market size? Is it, you know, equal? Is it maybe just a fraction of it? Or maybe it is larger?

Vincent Capone: The final advance of $2.5 million was received by the company on July 15, 2024. As a reminder, any additional draws above the total prepaid advances of $12.5 million are at the sole discretion of the company. For 2024, we are reiterating our revenue guidance of approximately $28 million and expected increase of about 55% from the $18.1 million we reported in 2023. This growth reflects our work on the Barter Project BioShield contract as well as additional governmental funding in the continued development of our handheld device.

John Vandermosten: Okay, and last question is on the size of the market and, I guess, the potential areas of the market. I think you guys have said, you know, ambulances might be a really good place to place these handheld items, you know, and obviously, you're getting your grants to support military use of them. What are some of the other areas that might be appropriate for this, and how is that market size compared to the kind of ED and burn center market size?

Speaker Change: Okay.

Speaker Change: Last question is.

Speaker Change: On the size of the market and then I guess the potential areas of the market. I think you guys have said you know ambulances might be a really good.

Speaker Change: You play.

Speaker Change: Place to place. These these are handheld items, you know and obviously youre getting your grants to.

Speaker Change: To support military use of them what are some of the other areas that might be appropriate for this and how is that market size compared to kind of the E. D and burn center market size is it equal is it maybe just a fraction of it or maybe is it larger I mean any sense of that.

John Vandermosten: Is it, you know, equal? Is it maybe just a fraction of it, or maybe is it larger? I mean, any sense in that?

John Vandermosten: I mean, any sense of that? A couple of points here also, and let me give you my thoughts and I'll let Jeremiah round them out. Part of it is, how many would we get into a situation where there might be multiple units at one site? So a large hospital complex would want to have several of these smaller devices in various practice areas as well as, say, a cart-based device in a high-volume place like the emergency department or the burn center.

Peter Carlson: A couple of points here also, and let me give you my thoughts and I'll let Jeremiah round them out. Part of it is how many would we get into a situation where there might be multiple units at one site. So a large hospital complex would want to have several of these smaller devices in various practice areas as well as, say, a cart-based device in a high-volume place like the emergency department or the burn center.

Speaker Change: A couple of points here also and let me.

Give you my thoughts and I'll, let jeremiah rounded out.

Vincent Capone: Deepview Snapshot. Our guidance does not reflect contributions from any sales of the deep view system for the burn indication in the UK that are expected to begin later this year or any other contributions that may result from the commercialization of our deep view system.

Jeremiah: Part of it is how many would we get into a situation where there might be multiple units at one site.

Jeremiah: So a large hospital complex with you want to have several of these smaller.

Jeremiah: Devices and various practice areas as well as say a cart based device and a high volume place like the emergency department or the burn center.

Peter Carlson: That I thank you and we'll turn the conversation back over to Pete. Thank you, Vince. We are pleased with our progress through the first half of the year and are very optimistic about our future.

John Vandermosten: The other area it opens up is private practices. And what we've talked about in some of our material with a chronic wound like diabetic foot ulcers is, you know, not only the 1,100 wound care clinics that are out there dealing with situations like this, but also the 4,000 plus private practices as far as market opportunities go. And then, you know, so you get into those types of numbers that we think about, you know, if it was cost-effective, would it be?

Peter Carlson: The other it opens up is private practices. And what we've talked about in some of our material with a chronic wound like diabetic foot ulcers is, you know, not only the 1,100 wound care clinics that are out there dealing with situations like this, but also the 4,000 plus private practices as far as market opportunities go. And then, you know, so you get into those types of numbers that we think about, you know, the if it was cost effective, would it be, you know, in an ambulance? Yeah, it would be very helpful in that situation.

Jeremiah: The other it opens up is the private practices and what we've talked about in some of our material.

Unknown Executive: Nick, let's open the call for questions. Thank you. We'll now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Jeremiah: With a chronic wound like diabetic foot ulcers as you know the not only the 1100 wound care clinics that are out there dealing with situations like this but also the 4000 plus private practices as far as market opportunities.

Jeremiah: And then so you get into those types of numbers that we think about.

Speaker Change: If it was cost effective would it be.

Peter Carlson: And maybe that's thinking about the ambulance and the areas where you have the level one trauma centers, and maybe that's where the volume would justify this being carried on something like an ambulance so they could take somebody if there were no other factors directly to a burn center. So, let me let Jeremiah add his thoughts.

Peter Carlson: In an ambulance, yeah, it would be very helpful in that situation. And maybe that's thinking about the ambulance and the areas where you have level one trauma centers. And maybe that's where the volume would justify this being carried on something like an ambulance so they could take somebody if there were no other factors directly contributing to a burn.

Ryan Zimmerman: The first question comes from Ryan Zimmerman with BTIG. Please go ahead. Good afternoon and congrats on your progress. Maybe just to start, I have a couple questions guys. First, just from, I'm related to guidance. So I think last time, Vince, you guys suggested that maybe the second half would feel a little bit more revenue from Barta relative to the first half. I just want to confirm if that's still your expectation as we move into the second half, just based on the timing and the development, milestones, etc, for the second half of the year, you know, regarding the 28 million.

Speaker Change: In an ambulance yeah. It would be very helpful in that situation and maybe that's thinking about ambulance.

Speaker Change: The.

Speaker Change: Areas, where you have the level one trauma centers.

Speaker Change: And maybe that's where the volume would justify this being carried on something like up an ambulance. So they could take somebody if there were no other factors directly to a burn center.

Jeremiah: So, let me let Jeremiah add his thoughts. Thanks, Pete. No, I think Pete said it very well. And when we assess this, we're looking at both the indication, basically what types of wound types that we're looking at, also the site of service. There's the inpatient, there's the outpatient, and potentially even physician offices.

Speaker Change: So let me, let jeremiah at his thoughts.

Jeremiah: Thanks, Pete. No, I think Pete said it very well.

Jeremiah: Thanks Pete.

Jeremiah: I think Pete said, it very well and when we assess this we're looking at both.

Jeremiah: And when we assess this, we're looking at both the indication, basically, what types of wound types that we're looking at, also the site of service, there's the inpatient, there's the outpatient, and potentially even physician offices. So when you look at the indications again, and then, you know, potentially even ambulances, when you look at that, there really could be widespread adoption, but it really starts with what is the right indication? And then how do we get that into the clinician's hands? And then you couple that with reimbursement, and that'll be some major drivers as we look to assess the overall market.

Jeremiah: Both the indication.

John Vandermosten: Okay, great. Thank you.

Jeremiah:

Jeremiah: Basically what types of wound types that we're looking at also site of service.

Ryan Zimmerman: Yeah, Ryan, nice to talk to you. Yeah, we continue to see the second half ramping up in our Barta revenue. Really is the clinical trials continue to grow. I think as we as we sit here sitting on 13.8 million in the first half of revenue for 2024, you know, we feel confident that you know, 28 is something we can reiterate to the market and we're excited to continue with our clinical trial development in the second half of this year. Okay. Very helpful.

Jeremiah: There's the inpatient outpatient and potentially even physician offices. So when you look at the indications up again, and then potentially even ambulances. When you look at that there really could be widespread adoption, but it really starts with the what what is the right indication and then how do we get that into the clinicians.

Jeremiah: So when you look at the indications again, and then potentially even ambulances, when you look at that, there really could be widespread adoption, but it really starts with what is the right indication, and then how do we get that into the clinician's hands. And then you couple that with reimbursement, that'll be some major drivers as we look to assess the overall market. Okay, great. Thank you. This concludes our question and answer session.

Jeremiah: Hans.

Hans: And then you couple that with reimbursement that'll be some major drivers as we look to assess the overall market.

Speaker Change #100: Okay, great. Thank you.

Ryan Zimmerman: And then, you know, Pete, as you think about, you, you talked about this a little bit, but a commercial presence in the US, as you think about going after that burn market, you talked about kind of building that commercial presence.

Peter Carlson: This concludes our question and answer session. I would like to turn the conference back over to Pete Carlson for any closing remarks.

Speaker Change #100: This concludes our question and answer session I would like to turn the conference back over the P. Carlson for any closing remarks.

Jeremiah: I would like to turn the conference back over to Pete Carlson for any closing remarks. We certainly appreciate everybody's participation and your continued interest in Spectral AI. I do want to let you know there are a number of upcoming events, including the H.C. Wainwright Conference in New York City, September 9th through 11th, when we will be available for meetings. As always, we're also available for shareholders to interact with us outside of those formal meeting opportunities.

Peter Carlson: With that, I'll say thank you and have a good evening. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Copyright 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

Peter Carlson: We certainly appreciate everybody's participation and your continued interest in Spectral AI. I do want to let you know there are a number of upcoming events, including the H.C. Wainwright Conference in New York City, September 9th through 11th, where we will be available for meetings. As always, we're also available for shareholders to interact with us outside of those formal meeting opportunities. With that, I'll say thank you and have a good

P. Carlson: We certainly appreciate everybody's participation and your continued interest in spectral AI, but do you want to let you know there are a number of upcoming events, including the H C. Wainwright Conference in New York City.

Peter Carlson: What does that look like to you at this stage, either from a cost standpoint or a size standpoint, or any kind of early thought around, you know, targeting that burn market. Ryan, good to talk. You look and particularly to the burn centers, you know, we have a partner in our distribution to the burn centers in Barta. We do not need to build a large commercial or operation to service that market, or frankly, even the emergency department market.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change #102: September nine through 11, where we will be available for meetings.

Speaker Change #103: As always we're also.

Speaker Change #103: Available for shareholders to interact with us outside of those formal meeting opportunities.

Speaker Change #103: With that I'll say, thank you and have a good evening.

Speaker Change #104: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: You may now disconnect. Thank you.

Peter Carlson: We need some resources, but the, you know, this is a deployment of a device is sort of a one time transaction. And really, the, where we'll have the volume of people, but it'll still be only moderate is in field service as we get the devices out into the emergency department. So we do not see the need to build a large commercial operation with significant sales for us.

Speaker Change #104: Okay.

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Speaker Change #104: [music].

Speaker Change #104: Yes.

Speaker Change #104: [music].

Peter Carlson: Okay, very helpful and then just let me sneak one more in. The wound trial in the U.S, you guys reached 475 patients it looks like and you know what is the current determination for what to do with that data, you know, clearly prioritizing burns over wound right now just help us understand, you know, what the time lines will be for DFU potentially in the U.S, based on completing those born to 75 patients. Thanks for taking the questions.

Speaker Change #104: Yes.

Speaker Change #104: [music].

Speaker Change #104: Okay.

Peter Carlson: Yes, the what we talked about kind of assessing the insights of the study will get the final readouts internally here, probably early towards quarter as the last patients go through the full trial and while we work, focus on the burn indication and application to the FDA, we do want to look at, you know, how the data set what the data set tells us and how that relates to our best approach going forward, particularly from a reimbursement standpoint, is it a particular indication like diabetic foot ulcers, is it a broader indication of wounds, wound prepared wound bed preparedness, etc. And so we feel we have a very significant asset in this data set, we are finalizing with this trial and that's the assessment we're going to look to do is what, how does that, what's the best strategic path forward given the results of that trial and where the market stands today.

Peter Carlson: When you look at it on a broader basis, is we think about our near to midterm, you know, we see the vast majority economics coming from the burn indication, that would mean not only the burn centers, but meaningful penetration into the emergency department. So relative to our longer term plans for that second indication, it's not a very significant change in timing as you get, as you look out three to five years. Thanks for taking the questions and Ben. Thanks for that.

Carl Byrnes: The next question comes from Carl Burns with Northland Capital Markets. Please go ahead. Thanks for the question. Congratulations on the progress as well. Most of the questions have been answered here, but maybe you can drill a little bit further on UK. I know you cited you have five deployments. What might you be looking for, you know, by the end of the year in terms of deployments in the UK. And I know that that's not included in the 28 million guidance in terms of contribution.

Carl Byrnes: Thanks. Thanks, John. Good to talk. From a deployment standpoint there, we would want to more deployments are possible. Here is the year goes on. What's going to be important is that we're going to convert those deploying some of these deployments into commercial revenues. We are not yet ready to further the further the impact or that, and Rollout. But we also have a pretty neat opportunity coming up next week. The International Society of Burn has burn indications, I think, as the other eye, has an annual conference.

Carl Byrnes: And they're going to be attendees from across the burn, wound care, or the burn care environment in the UK, but also a significant number of U.S, burn surgeons and burn healthcare providers in attendance. We'll have a significant attendance there, presence there ourselves, including on the podium, and are excited to share output from the device with these burn healthcare participants. It's really going to be one of their first opportunities to see that output.

Carl Byrnes: I've mentioned that because that will help inform our next steps in the UK as we visit with each of the sites we're already working with and get indication of interest from others. Got a great thanks. That's helpful.

Unknown Executive: And then just another follow-up here.

Unknown Executive: Do you, are there any other partnerships or alliances in the works similar to Pada Nova in Australia that we might see in the next six to 12 months? Thanks. That's a very open-ended question. We appreciate that opportunity. The answer would be yes, but that's about all we'll be able to say is, yes, we are talking with others both domestically and elsewhere, and certainly hope to continue to have partnerships like that announced. Both, you know, in new geographies as well as with significant partners in current geographies.

Unknown Executive: No, I don't want to make any commitments one way or the other, though. No, fair enough. Thanks so much. Thanks. Thanks, Carl.

R.K. Ramakanth: Next question comes from R.K. Remacant with HC Wainwright. Please go couple of quick questions here. So regarding the U.K. Department, just to understand how, you know, how is it helping you in terms of designing your U.S, commercialization? And also, is it possible for some of the folks in the U.K, to publish any of the data that can be used for reimbursement here in the U.S.? Okay, thanks for the question. I'll give you my thoughts and then I'll ask Jeremiah to share his thoughts, particularly leveraging his experience.

R.K. Ramakanth: You know, we're excited about this early opportunity to work with clinicians, and we're already getting, or have been receiving, very positive and constructive feedback. So it's informing not only device performance, but it's also informing our commercial rollout strategy, how do we staff and support rollout with types of spillsets, we need, et cetera. Let me let Jeremiah give you his additional thoughts. Thank you, Pete. So I would just echo what Pete said.

R.K. Ramakanth: The ability for us to start and do these evaluations in the UK is giving us very good feedback, constructive feedback, and helping us understand the device better and how we would start the commercialization process in the US specifically to your question about publications. That's definitely something that we're looking to work with these clinicians on as they move beyond the evaluation phase and to publish their results so that we can get that information out to, to payers in the US, et cetera, that will help us with the reimbursement. Thank you.

Peter Carlson: And then in terms of label expectations in the US, I'm just trying to understand the inclusion of the pediatric patients in their study. You know, one, how, you know, in terms of label expansion and also market expansion. How much of a market expansion do you get by maintaining an pediatric influence to the label and the first instance? Thanks, okay. When you look at pediatrics in the burn environment, you actually generally about 25% of admissions for burn situations are pediatrics and it can be, it can even go higher than that at time.

Peter Carlson: So it's always been a focus of Varda and working with us to make sure we included pediatrics in our studies. We want to be able to serve that community. One of the technologies, and this is something we see in the UK as well as in the US, that exists today is called laser Doppler Imaging. That technology takes several minutes to capture its image and thus requires sedation often of the pediatric patients.

Peter Carlson: You can imagine a young child with a burn in pain, having to sit still. This is where the benefit of our less than one second image capture comes in and a place where we see the opportunity to really be useful and burns. I don't know that it expands the market opportunity. I think it enhances the willingness and acceptance in the market. So I would tell you the numbers we generally have talked about have included the expectation of the pediatric portion of the burn community.

Peter Carlson: But similar to the measurement capabilities of the tool, we think the ease of use with the pediatric patient are things that will help increase interest in the market, thus help our deployment and our penetration opportunity, both in quantity and in speed. Thank you very much.

Unknown Executive: One last question for me, this is regarding the Australian market.

Unknown Executive: How long do you think they will take the pollen out of the stock commercializing product? Also, I started talking about trying to place a couple of centers initially in Australia. So it is that part of initiating the commercialization process or is that part of the application process that Australian authorities would give you the okay to start utilizing the quality for them. Ben, do you want to take that and we can just care about something to add?

Unknown Executive: We'll let him do that. Yeah, we'll take good to hear from you. I think with respect to the work we're doing in Tangent with Polynovo. Their help to get us into this special access program is good for us to have a potential roll out there of these two machines. That's probably a good 12 months away, I would say, as we have to work through not just the special access program, but also have to get through each of the different hospitals, ethics committees to ensure that everybody's on board with introducing our device there.

Unknown Executive: We look at it as really a partnership, the initial starting of a partnership there with them, more so, and data gathering, more so than the commercial opportunity that it may present. You know, subsequent to a 12 month period beyond that into 2026, 2027.

Unknown Executive: Thank you. Thanks for being on the questions both.

Unknown Executive: Thanks, okay.

Unknown Executive: Again, if you have a question, please press star then one.

John Vandermosten: The next question comes from John VanderMoesden with Zach. Please go ahead.

John Vandermosten: Hello, good afternoon everyone and good to speak with you again. I want to explore some of the opportunities and challenges for the handheld snapshot M. And I guess first of all, what are some of the challenges I guess that you have with developing that and getting that approved, you know, by the time that that's ready, you know, you'll already have deep view approved and deployed. So what are the incremental challenges for the mobile version of the product to get approval?

John Vandermosten: Now, John, it's pretty good to talk. Certainly the miniaturization is the challenge. So, and you can see this out on our website and in some of our materials, you know, the current image capture device associated with the cart based version. I referred to it as sort of the size of a large household iron. And there are the images captured with four separate cameras to get those four cameras into something that is, you know, portable, sturdy, portable and easy to manipulate in difficult environments.

John Vandermosten: It's a challenge and it's amazing to see the team and hear the team talk about the various ways and vendors they've worked with to get the cameras into smaller and smaller perspective. And that's really the challenge is maintaining the image capture quality while doing it in ultimately cameras that aren't much bigger. If not smaller than a push pin. And so we are again, these are four high quality high resolution cameras capturing images.

John Vandermosten: And then there is the ability to have the both the data set either in the device or accessible, you know, sort of by satellite technology. So, those are the couple of.., of engineering type aspects of the device miniaturization. Yes, sort of like I talked about in my prepared remarks, once we get one of these indications and uses through the regulatory approval process, we believe these other 510Ks with the predicates will be easier or have a shorter time frame up easier.

John Vandermosten: We'll have a shorter time frame because it'll be a more of narrow aspect that is being assessed, and that's the same thing. So what we would look to do with the miniaturization or the handheld version is demonstrate that the image capture is consistent and demonstrate that the ability of the AI to make the predictive wound assessment has sort of the same performance statistics. Okay. And what, you know, you mentioned the regulatory side of things there a little bit, and what does that regulatory pathway look like for that machine?

John Vandermosten: Will you be required to do, you know, a 200-some odd patient trial, or are you just making sure that what worked on the large scale works on a handheld scale as well in terms of, you know, just getting the regulatory nod from the regulators? I think there's twofold to that. One is the regulatory path, and one is the commercial acceptance path. Again, we think we're very pleased. Let me step back. We're very pleased and proud to be working with these agencies supporting the DOD in developing a device that can help the military.

John Vandermosten: We think this is an outstanding use of the technology. But we also think we have a really neat opportunity on behalf of our shareholders to take that technology and commercialize it in the field in multiple ways, and particularly when you get into other indications that you might do in normal practice, like the diabetic puddles or other more chronic wound care that is done, say, in private offices. For them to have access to more affordable, smaller device with the capabilities of this technology, we think is going to be very powerful.

John Vandermosten: So yes, do we need to do a little bit of a trial? We don't think it has to be a significantly large trial, but enough to be able to demonstrate that the technology is working similar to the cart-based technology. We haven't at this point tried to size that, but I certainly don't think it would be 450 patients like this current trial. Okay.

Peter Carlson: And last question is on the size of the market, and then I guess the potential areas of the market. I think you guys have said, ambulances might be a really good place to place these handheld items. And obviously you're getting your grants to support military use of them. What are some of the other areas that might be appropriate for this? And how is that market size compared to kind of the ED and burn center market size?

Peter Carlson: Is it, you know, equal? Is it maybe just a fraction of it, or maybe is it larger? I mean, any sense of that? A couple of points here also, and let me give you my thoughts on I'll let Jeremiah round it out. Part of it is how many would we get into a situation where there might be multiple units at one site? So a large hospital complex would want to have several of the smaller devices in various practice areas as well as say a cart-based device in a high volume place like the emergency department or the burn.

Peter Carlson: Center. The other it opens up as the private practices and what we've talked about in some of our material with a chronic wound like diabetic foot ulcers is, you know, the not only the 1100 wooden care clinics that are out there dealing with situations like this, but also the 4000 plus private practices as far as market opportunities. And then, you know, so you get into those types of numbers that we think about, you know, the if it was cost effective, would it be, you know, in an ambulance?

Peter Carlson: Yeah, it would be very helpful in that situation. And maybe that's thinking about ambulance in the areas where you have the level 1 trauma centers. And maybe that's where the volume would justify this being carried on something like an ambulance so they could take somebody if there were no other factors directly to a burn center. Let me let Jeremiah at his thoughts. Thanks, Pete. No, I think Pete said it very well.

Peter Carlson: And when we assess this, we're looking at both both the indication. And basically what types of wound types that we're looking at also side of service, there's the impatient, there's the outpatient and potentially even physician offices. So when you look at the indications up again, and then, you know, potentially even ambulances, when you look at that, there really could be widespread adoption, but it really starts with the what is the right indication. And then how do we get that into the clinician's hands and the new couple that with reimbursement, that'll be some major drivers as we look to assess the overall market. Okay, great. Thank you.

Unknown Executive: This concludes our question and answer session.

Peter Carlson: I would like to turn the conference back over the Pete Carlson for any closing remarks. We certainly appreciate everybody's participation in your continued interest in spectral AI. But you want to let you know there are a number of upcoming events, including the H.C. Wainwright Conference in New York City September 9th through 11th, where we will be available for meetings. As always, we're also available for shareholders to interact with us outside of those formal meeting opportunities.

Peter Carlson: With that, I'll say thank you and have a good evening.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

John Vandermosten: You may now disconnect. John Vandermosten, John Vandermosten, John Vandermosten

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