Q2 2025 Spectral AI Inc Earnings Call

Speaker #2: Good afternoon, everyone, and welcome to the special AI Inc. Q2 2025 financial results conference call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Vincent Capone: Good afternoon, everyone, and welcome to the Spectral AI, Inc. Q2 2025 Financial Results Conference call. All participants will be in a listen-only mode. If you need assistance, please say no to a 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 and then one on your touch-tone telephones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. And at this time, I'd like to turn the floor over to Sara Prendergast, Assistant General Counsel. Please go ahead.

Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touchtone telephones.

Speaker #2: To withdraw your questions, you may press star and two. Please also note today's event is being recorded. And at this time, I'd like to turn the floor over to Sara Prendergast, Assistant General Counsel.

Speaker #2: Please go ahead.

Speaker #3: Thank you, Jamie. Good afternoon, everyone, and thank you for joining us for Spectral AI's 2025 second quarter financial results conference call. Our speakers for today will be Dr.Michael DiMaio, the company's Chairman of the Board, and Vincent Capone, the company's Chief Financial Officer.

Sara Prendergast: Thank you, Jamie. Good afternoon, everyone, and thank you for joining us for Spectral AI's 2025 second quarter financial results conference call. Our speakers for today will be Dr. Michael DiMaio, the company's Chairman of the Board, and Vincent Capone, the company's Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, certain statements made are 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 on this call, the words estimates, projected, expects, anticipates, forecasts, plans, intends, believes, seeks, may, will, should, future, propose, 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 #3: Before we begin, I'd like to remind everyone that during this call, certain statements made are forward-looking statements, within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995.

Speaker #3: Including statements regarding the company's strategy, plans, objectives, initiatives, and financial outlook. When used on this call, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose," 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 #3: 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.

Sara Prendergast: 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 of the company's control. That could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. As such, listeners are cautioned not to place undue reliance on any forward-looking statements. Investors should carefully consider the foregoing factors and other risks and uncertainties described in the risk factor sections of the company's filings with the SEC, including the registration statement and the other documents filed by the company. 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. With that said, I would now like to turn the call over to Dr.

Speaker #3: Many of which are outside of the company's control. That could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

Speaker #3: As such, listeners are cautioned not to place undue reliance on any forward-looking statements. Investors should carefully consider the foregoing factors and other risks and uncertainties described in the risk factors sections of the company's filings with the SEC.

Speaker #3: Including the registration statement and the other documents filed by the company. 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 #3: With that said, I would now like to turn the call over to Dr. DiMaio, Spectral AI's Chairman of the Board.

Sara Prendergast: DiMaio, Spectral AI's Chairman of the Board.

Speaker #4: Thank you, Sara. And good afternoon, everyone. We appreciate you joining us today for our second quarter financial results conference call. As part of my mantra to the company's employees, I have discussed the three Fs: finance, focus, and finish.

Dr. Michael DiMaio: Thank you, Sara, and good afternoon, everyone. We appreciate you joining us today for our second quarter financial results conference call. As part of my mantra to the company's employees, I have discussed the three Fs: Finance, Focus, and Finish. To these three points, we have firstly addressed our finance piece, as well as in the first quarter of 2025, as we will discuss further in a minute. Secondly, we are moving forward with our focus on our burn indication and our submission to our Genova application to the FDA, which has occurred in June, two months ago. Lastly, Finish is what we will continue to focus on as we look to work with our BARDA partners and bring the DPU system device to the commercial marketplace.

Speaker #4: To these three points, we will firstly address our finance piece, as well as in the first quarter of 2025, as we will discuss further in a minute.

Speaker #4: Secondly, we are moving forward with our focus on our burn indication and our submission to our GNOVO application to the FDA, which has occurred in June two months ago.

Speaker #4: Lastly, finish is what we will continue to focus on as we look to work with our BARDA partners and bring the DPU system device to the commercial marketplace.

Speaker #4: We had a strong start to the year, with significant accomplishments in our FDA submission being completed in the second quarter, of 2025, and continued operating efficiencies.

Dr. Michael DiMaio: We had a strong start to the year with significant accomplishments in our FDA submission being completed in the second quarter of 2025 and continued operating efficiencies. We also strengthened our financial profile in Q1 of 2025 and created a cash runway to support our growth initiatives through the foreseeable future. We have had some significant developments in the second quarter of 2025. First, financing. As previously announced in March of 2025, the company successfully completed a debt financing agreement with Avenue Venture Opportunities Fund II, a fund of Avenue Capital Group, of up to $15 million in funding with an initial draw of $8.5 million US. In connection with this debt financing, the company also raised $2.7 million of equity financing from institutional and existing investors.

Speaker #4: We also strengthened our financial profile in Q1 of 2025 and created a cash runway to support our growth initiatives through the foreseeable future. We have had some significant developments in the second quarter of 2025.

Speaker #4: First, financing. As previously announced in March 2025, the company successfully completed a debt financing agreement with Avenue Venture Opportunities Fund, a fund of Avenue Capital Group.

Speaker #4: Of up to $15 million in funding with an initial draw of $8.5 million, US. In connection with this debt financing, the company also raised $2.7 million of equity financing from institutional and existing investors.

Speaker #4: With total cash on hand at the end of June 2025 of over $10 million, potential access to an additional $6.5 million of debt and a reduced spending rate Spectral AI has significant financing on hand for the foreseeable future that enables us to continue to work on our product commercialization efforts.

Dr. Michael DiMaio: With total cash on hand at the end of June 2025 of over $10 million, potential access to an additional $6.5 million of debt, and a reduced spending rate, Spectral AI has significant financing on hand for the foreseeable future that enables us to continue to work on our product commercialization efforts, including the planned US launch of our DPU system. Second, our FDA submission. Our FDA submission in the second quarter of 2025 was a huge milestone in our company's development. I am very proud of our team for their hard work and dedication in meeting this very important timeline. The submission is a key driver in the evolution of our business, and I'd like to provide further information about this. We had a number of pre-submission meetings with the FDA, which also included our BARDA partners funding a majority of this burn indication.

Speaker #4: Including the planned U.S. launch of our DPU system. Second, our FDA submission. Our FDA submission in the second quarter of 2025 was a huge milestone in our company's development.

Speaker #4: I am very proud of our team for their hard work and dedication in meeting this very important timeline. The submission is a key driver in the evolution of our business, and I'd like to provide further information about this.

Speaker #4: We had a number of pre-submission meetings with the FDA which also included our BARDA partners funding a majority of this burn indication. Our team delivered the materials that we discussed back and forth with the FDA in the pre-submission meetings and we expect fully meet the expectation and requirements of the submission.

Dr. Michael DiMaio: Our team delivered the materials that we discussed back and forth with the FDA in the pre-submission meetings, and we expect to fully meet the expectation and requirements of the submission. We look forward to further interaction with the FDA on our Genova application in the months ahead. Next, Spectral IP. My last update is about our healthcare intellectual property-focused subsidiary, Spectral IP, Inc. We are fortunate to have Eric Spangenberg as our largest shareholder, who is an expert in this space. He's a well-known expert in intellectual property and a CEO of this subsidiary. His primary focus with respect to this entity has been to identify assets for this entity. This entity continues through the SEC registration process for its initial public offering. It is important to note once again that the activities of this IP-focused subsidiary require limited management resources and no additional capital from the company.

Speaker #4: We look forward to further interaction with the FDA on our GNOVO application in the months ahead. Next, Spectral IP. My last update is about our healthcare intellectual property focus subsidiary, Spectral IP Inc. We are fortunate to have Eric Spangenberg, as our largest shareholder, who is an expert in this space.

Speaker #4: He is a well-known expert in intellectual property and a CEO of the subsidiary, his primary focus with respect to this entity has been to identify assets for this entity.

Speaker #4: This entity continues through the SEC registration process for its initial public offering. It is important to note, once again, that the activities of this IP-focused subsidiary require limited management resources and no additional capital from the company.

Speaker #4: Additionally, no core operating assets of the company will be involved in the subsidiary. I thank you again for your attention to our company and with that, I will turn things over to our Chief Financial Officer, Vince Capone.

Dr. Michael DiMaio: Additionally, no core operating assets of the company will be involved in the subsidiary. I thank you again for your attention to our company, and with that, I will turn things over to our Chief Financial Officer, Vince Capone. Vince.

Speaker #4: Vince?

Speaker #5: Thank you, Dr. DiMaio. And again, thank you all for joining us this afternoon. We issued our earnings release earlier this afternoon which contains additional details of our operating results.

Vincent Capone: Thank you, Dr. DiMaio. And again, thank you all for joining us this afternoon. We issued our earnings release earlier this afternoon, which contains additional details of our operating results, and we will be filing our Form 10-Q with the SEC this evening. With that in mind, I will focus my remarks on select highlights and key financial items. Our research and development revenue in the second quarter of 2025 was reduced to $5.1 million from $7.5 million in the second quarter of last year. This reduction reflects our anticipated reduced reimbursements under the BARDA Project BioShield contract, which was awarded to the company in September 2023. In the second quarter of 2025, we also incurred less clinical trial and other reimbursed costs from the prior year's quarter.

Speaker #5: And we will be filing our Form 10-Q with the SEC this evening. With that in mind, I will focus my remarks on select highlights and key financial items.

Speaker #5: Our research and development revenue in the second quarter of 2025 was reduced to $5.1 million, from $7.5 million in the second quarter of last year.

Speaker #5: This reduction reflects our anticipated reduced reimbursements under the BARDA project bio shield contract, which was awarded to the company in September 2023. In the second quarter of 2025, we also incurred less clinical trial and other reimbursed costs from the prior year's quarter.

Speaker #5: Gross margin, decreased slightly to $45.2% from $46.6% in the second quarter of last year, due to a lower percentage of reimbursed expenses, under the project bio shield BARDA contract as well.

Vincent Capone: Gross margin decreased slightly to 45.2% from 46.6% in the second quarter of last year due to a lower percentage of reimbursed expenses under the Project BioShield BARDA contract as well. General and administrative expenses for the second quarter of 2025 were significantly reduced from $5.8 million in the second quarter of 2024 to $4.4 million. The reduction in general and administrative expenses primarily relates to our continued focus on operating efficiencies and our overall corporate focus on the completion of our DeNovo submission to the FDA. The company reported a net loss in the second quarter of 2025 of $7.9 million as compared to a net loss of $2.9 million in the second quarter of 2024, as the company recorded an increase in the fair value of its publicly traded warrant liability of $5.4 million.

Speaker #5: General and administrative expenses for the second quarter of 2025 were significantly reduced, from $5.8 million in the second quarter of 2024 to $4.4 million.

Speaker #5: The reduction in general and administrative expenses primarily relates to our continued focus on operating efficiencies and our overall corporate focus on the completion of our GNOVO submission to the FDA.

Speaker #5: The company reported a net loss in the second quarter of 2025 of $7.9 million, as compared to a net loss of $2.9 million in the second quarter of 2024, as the company recorded an increase in the fair value of its publicly traded warrant liability, of $5.4 million.

Speaker #5: Even with the larger warrant liability, for the six-month period ended 6/30/2025, the company reported a net loss of $5.1 million, as compared to a net loss of $6.1 million for the first six months of last year.

Vincent Capone: Even with the larger warrant liability for the six-month period ended 6/30/2025, the company reported a net loss of $5.1 million as compared to a net loss of $6.1 million for the first six months of last year, a reduction of over $1 million from the prior period. At June 30, 2025, we had 25,737,820 shares outstanding. Moving to the balance sheet, as of June 30, 2025, cash and cash equivalents totaled $10.5 million, up from $5.2 million on December 31, 2024. This is primarily due to the company completing its financing as earlier discussed. Please note that that financing also includes a second tranche, which would provide the company with an additional $6.5 million of debt and an attendant equity raise of $7 million upon FDA approval of our DeNovo application.

Speaker #5: A reduction of over $1 million from the prior period. At June 30, 2025, we had $25 million 737,820 shares outstanding. Moving to the balance sheet, as of June 30, 2025, cash and cash equivalents totaled $10.5 million, up from $5.2 million on December 31, 2024.

Speaker #5: This is primarily due to the company completing its financing as earlier discussed. Please note that that financing also includes a second tranche, which would provide the company with an additional $6.5 million of debt, and an attendant equity raise of $7 million, upon FDA approval of our GNOVO application.

Speaker #5: With our reduced spending levels, we believe this funding is sufficient to provide the company with the necessary capital to get us through the foreseeable future.

Vincent Capone: With our reduced spending levels, we believe this funding is sufficient to provide the company with the necessary capital to get us through the foreseeable future. For 2025, we are reiterating revenue guidance of approximately $21.5 million. Our revenue guidance does not include any contributions from sales of the DPU system for the burn indication in either the United Kingdom or Australia, which, if any, are not expected to be material for 2025. Thank you for your time and attention today. And with that, operator, let's open the call for questions from any participants.

Speaker #5: For 2025, we are reiterating revenue guidance of approximately $21.5 million. Our revenue guidance does not include any contributions from sales of the DPU system, for the burn indication in either the United Kingdom or Australia, which, if any, are not expected to be material for 2025.

Speaker #5: Thank you for your time and attention today. And with that, operator, let's open the call for questions from any participants.

Speaker #6: Ladies and gentlemen, at this time, we'll begin that question and answer session. To join the question queue, you may press star and then one using a touchtone telephone.

Operator: Ladies and gentlemen, at this time, we'll begin that question and answer session. To join the question queue, you may press star and then one using a touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. And our first question today comes from Ryan Zimmerman from BCIG. Please go ahead with your question.

Speaker #6: If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys. To ensure the best sound quality, to withdraw your questions, you may press star and two.

Speaker #6: Again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. And our first question today comes from Ryan Zimmerman from BTIG.

Speaker #6: Please go ahead with your question.

Speaker #7: Good afternoon. Thanks for taking our questions, and I appreciate the efficient remarks this afternoon. Maybe we could talk about the submission for DPU. Just, you know, how you're thinking about preparing for clearance here in the U.S., what you're doing to, you know, potentially start to think about a commercial organization, and any other thoughts you have on timing.

Ryan Zimmerman: Good afternoon. Thanks for taking our questions and appreciate the efficient remarks this afternoon. Maybe we could talk about the submission for DPU. Just, you know, how you're thinking about preparing for clearance here in the US, what you're doing to, you know, potentially start to think about a commercial organization, and any other thoughts you have on timing. I think we had previously expected about maybe first half, 26, for clearance. I just want to make sure that's still, you know, within the ballpark of what you guys are thinking. Thanks for taking the question.

Speaker #7: I think we had previously expected about maybe first half '26 for clearance. I just want to make sure that's still, you know, within the ballpark of what you guys are thinking.

Speaker #7: Thanks for taking the question.

Speaker #8: Hey, Ryan. Thank you. This is DiMaio, so I appreciate the question. And to refocus, we are, as you said, very proud that we've got this FDA submission in a timely manner.

Dr. Michael DiMaio: Hey, Ryan. Thank you. This is DiMaio. So I appreciate the question. And to refocus, we are, as you said, very proud that we've got this FDA submission in a timely manner. And so to that end, you know, we expect the appropriate time coming back and forth with the FDA. And yes, in the first half of next year, we expect clearance of that. You know, there's no guarantee, but we have all indications moving forward. And what we've begun is developing a very thorough commercialization plan. As I keep emphasizing, there's three Fs. The third F is Finish. We have spent a lot of energy to get to this point. So now we are turning our attention carefully to the commercialization plan. That involves BARDA as well. The contract does involve some participation in BARDA, helping us roll out.

Speaker #8: And so to that end, you know, we expect the appropriate time coming back and forth with the FDA and yes, in the first half of next year, we expect clearance of that.

Speaker #8: You know, there's no guarantee, but we have all indications moving forward. What we've begun is developing a very thorough commercialization plan. As I keep emphasizing this three Fs, the third F is finish.

Speaker #8: We have spent a lot of energy to get to this point. So now we are turning our attention carefully to the commercialization plan. We are there.

Speaker #8: That involves BARDA as well. The contract does involve some participation in BARDA. Helping us roll out and some fashion they will help us "purchase" the initial devices that will be rolled out upon the clearance by the FDA.

Dr. Michael DiMaio: In some fashion, they will help us quote "purchase," unquote, the initial devices that will be rolled out upon the clearance by the FDA. And in addition to that, we are discussing actively the second indication in addition to burns that will be able to have a more widespread use applicability in the medical community. There's also some additional monies in the BARDA contract to help us begin our commercialization plan.

Speaker #8: And in addition to that, we are discussing actively the second indication, in addition to burns, that will be able to have a more widespread use applicability in the medical community.

Speaker #8: There's also some additional monies in the BARDA contract to help us begin our commercialization plan.

Speaker #6: Got it. And I know you can't, you know, market to any expanded usage right now. I'm just curious, and I appreciate if you don't want to, you know, talk too much about this given that you're still exploring it.

Ryan Zimmerman: Got it. And I know you can't, you know, market to any expanded usage right now. I'm just curious, and I appreciate if you don't want to, you know, talk too much about this given that you're still exploring it. But where are you seeing utility outside of burns? Is it wound care? Is it, is there other assessments, maybe aesthetic? I'm just trying to kind of think about some of the potential opportunities that may exist out there.

Speaker #6: But where are you seeing utility outside of burns? Is it wound care? Is it there other assessments, maybe aesthetic? I'm just trying to kind of think about some of the potential opportunities that may exist out there.

Speaker #8: Well, thank you, Ryan. Yes, I'll be careful what I say because I don't want to restrict ourselves. But if you focus and understand, if you do understand that we are a wound imaging device, check that.

Dr. Michael DiMaio: Well, thank you, Ryan. Yes, I'll be careful what I say because I don't want to restrict ourselves. But if you focus and understand, you do understand that we are a wound imaging device. Check that. And then, of course, what we are able to differentiate is non-healing tissue. And in this case, with the burns, when you have a non-healing area, that tells the burn doctor to remove that and do skin grafting so that area will then have a new skin covering over that. If you can use your thoughts and imagination, there are other wounds that having a device that can differentiate what is not healing versus what is healing or what is not viable from what is viable, you can have a very broad understanding or application that can be pursued.

Speaker #8: And then, of course, what we are able to differentiate is non-healing tissue. And in this case, with the burns, when you have a non-healing area, that tells the burn doctor to remove that and do skin grafting so that area will then have a new skin covering over that.

Speaker #8: If you can use your thoughts and imagination that are other wounds, that having a device that can differentiate what is not healing versus what is healing, or what is not viable from what is viable, you can have a very broad understanding or application that can be pursued.

Speaker #8: And then lastly, if you have, as you have asked, Ryan, if you have something, a part of the body, a part of a wound, be it a traumatic, be it a elective, be it a ischemic, be it a infected or whatever, then you can also roll these out to companies that might find that useful in their products.

Dr. Michael DiMaio: And then lastly, as you have asked, Ryan, if you have something, a part of the body, a part of a wound, be they traumatic, be they elective, be they ischemic, be they infected or whatever, then you can also roll these out to companies that might find that useful in their products, be they skin substitutes, be they drugs, et cetera.

Speaker #8: Be they skin substitutes, be they drugs, et cetera.

Speaker #6: Yeah. Thank you, Dr. DiMaio. Appreciate the call.

Ryan Zimmerman: Yeah. Thank you, Dr. DiMaio. I appreciate the call.

Speaker #8: Thank you, Ryan. Appreciate your question.

Dr. Michael DiMaio: Thank you, Ryan. Appreciate your question.

Speaker #6: Our next question comes from John van der Mosten from Zax. Please go ahead with your question.

Operator: Our next question comes from John Vandermeesten from ZAPS. Please go ahead with your question.

Speaker #7: Great. And thank you, good afternoon, Dr. DiMaio and Vince. You know, when we look at, you mentioned the UK and Australia and how we're not going to really see anything from them or very much from them this year.

John Vandermosten: Great. And thank you. Good afternoon, Dr. DiMaio and Vince. You know, when we look at, you mentioned the UK and Australia and how we're not going to really see anything from them or very much from them this year. What activities are you taking for deployment in the UK and Australia coming up in coming years?

Speaker #7: What activities are you taking for deployment in the UK and Australia coming up and coming years?

Speaker #8: That's a good question. Thanks, John. So, working backwards, as you probably know, the UK market is, we've already approved there, with a certain release of it.

Dr. Michael DiMaio: That's a good question. Thanks, John. So working backwards, as you probably know, the UK market is, we've already approved there with certain release of it. And you may also know, maybe you don't know, that the UK burn doctors have found to be extremely useful, friendly for the care of the burn patients. So I want to emphasize that the UK market is actually a great opening salvo, if you will, to care for burn patients. And we want to use that and leverage that in the US market. And the same is for Australia. So I would say that it's not the sales that we're looking forward to as much, but rather the usage of it and the learning lessons that we can gather from that. In terms of sales, we are thinking about that because, you know, it's a different market.

Speaker #8: And you may also know, or maybe you don't know, that the UK burn doctors have been found to be extremely useful and friendly for the care of burn patients.

Speaker #8: So I want to emphasize that the UK market is actually a great opening salvo, if you will, to care for burn patients. And we want to use that and leverage that in the US market.

Speaker #8: And the same is for Australia. So I would say that it's not the sales that we're looking forward to as much, but rather the usage of it and the learning lessons that we can gather from that.

Speaker #8: In terms of sales, we are thinking about that because, you know, it's a different market. It's a single-payer market for all intents and purposes.

Dr. Michael DiMaio: It's a single-payer market for all intents and purposes. And the ability to get what's called the NICE approval, N-I-C-E, is something that's often useful and desired for the UK market to have more widespread applicability. So we're currently, again, to my third F of Finish, we're studying how much effort and purpose there is in the UK market, as I repeated earlier, to be able to have that market and the information gleaned from that market to be used in the US. And then to determine how much time and energy will be useful to be dedicated to the UK for more widespread sales.

Speaker #8: And the ability to get with what's called the NIS approval, NICE, is something that's often useful. And desired for the UK market to have more widespread applicability.

Speaker #8: So we're currently, again, to my third F of finish, we're trying, we're studying how much effort and purpose there is in the UK market, as I repeated earlier, to be able to have that market and the information gleaned from that market to be used in the US.

Speaker #8: And then to determine how much time and energy will be useful to be dedicated to the UK for more widespread sales.

Speaker #7: Okay. And looking at the snapshot and assuming you get approval for the DPU burn, what does the regulatory pathway look like for that? Because I think you have a little bit easier time of it since you've already got a predicate device.

Ryan Zimmerman: Okay. And looking at the snapshot, assuming you get approval for the DPU burn, what does the regulatory pathway look like for that? Because I think you have a little bit easier time of it since you've already got a predicate device.

Speaker #8: Yes, sir. And John, making sure you're calling snapshot. The handheld, is that what you're referring to, John?

Dr. Michael DiMaio: Yes, sir. And, John, making sure you're calling snapshot with the handheld. Is that what you're referring to, John?

Speaker #7: Yes, snapshot and the handheld, yeah, the portable one.

Ryan Zimmerman: Yes.

Dr. Michael DiMaio: So I'm just trying to.

Ryan Zimmerman: Yeah, snapshot and the handheld. Yeah, the portable one.

Speaker #8: Yep. Yep. So again, a great question, John. So the answer is, we are designing the, I'm going to call it handheld, for simplicity. There's two things happening in that space.

Dr. Michael DiMaio: Yep. Yep. So again, a great question, John. So the answer is we are designing the, I'm going to call it handheld for simplicity. There's two things happening in that space. Number one, it's being designed with the essential components similar or identical to the, what I call the cart-based, John, permit me to call it cart-based and handheld. And so that will have a pathway for a 510(k) regulatory pathway based upon the cart-based clearance. Does that make sense?

Speaker #8: Number one, it's being designed with the essential components similar or identical to the what I call the cart-based, John, for me to call it cart-based and handheld.

Speaker #8: And so that will have a pathway for a 510(k) regulatory pathway based upon the cart-based clearance. Does that make sense?

Speaker #7: Yes.

Ryan Zimmerman: Yeah.

Speaker #8: Yeah. And so the second part I want to tell you is that so far, the funding for that has been via a military pathway.

Dr. Michael DiMaio: Yeah. And so the second part I want to tell you is that so far, the funding for that has been via a military pathway, DOD, DHA, and now what's called MTECH or the military pathway. And what we're going to do as well is create a parallel or similar pathway for a commercial handheld device. So in summary, we will use the cart-based device as the predicate for the handheld device. And secondly, we're going to use the funding for the military handheld device to be able to craft a handheld commercial device.

Speaker #8: DOD, DHA, and now it's called MTEC or the Military Pathway. What we're going to do as well is create a parallel or similar pathway for a commercial handheld device.

Speaker #8: So in summary, we will use the cart-based device as a predicate for the handheld device. And secondly, we're going to use the funding for the military handheld device to be able to craft a handheld commercial device.

Speaker #7: Okay. Got it. All right. Thanks. I'll hop back in queue.

Ryan Zimmerman: Okay. Got it. All right. Thanks. I'll hop back in queue.

Speaker #8: Thanks, John. Thanks, John.

Dr. Michael DiMaio: Thanks, John.

Ryan Zimmerman: Thanks, John.

Speaker #6: And our next question comes from Carl Burns from Northland Capital Markets. Please go ahead with your question.

Operator: And our next question comes from Harold Burns from Northland Capital Markets. Please go ahead with your question.

Speaker #7: Thanks. So the question, and congratulations on your progress. I'm wondering if you can comment on any dialogue that you might be having with BARDA with respect to how systems roll out might transpire once approved.

John Vandermosten: Thanks for the question and congratulations on your progress. I'm wondering if you can comment on any dialogue that you might be having with BARDA with respect to how systems system rollout might transpire once approved in, you call it like year one, year two. Anything that you might be able to state there would be very helpful. Thanks.

Speaker #7: And you call it like year one, year two. Anything that you might be able to state there would be very helpful. Thanks.

Speaker #8: Thanks, Carl, for your question. Well, you've asked the most telling question because, as you well know, if you read the newspapers, there's a lot of events happening in the DC governmental space.

Dr. Michael DiMaio: Thanks, Carl, for your question. Well, you've asked the most telling question because, as you well know, if you read the newspapers, there's a lot of events happening in the DC governmental space. And I would be BARDA would not look upon me favorably if I tried to explain, share, guess what's going to happen. I will simply say that there is language in the contract that points towards some methodology of them helping us roll out devices and technology to the community. But, Carl, I would be very careful and remiss if I started trying to try to guess or predict to what Sara said at the beginning of this call, forward-looking statements of how BARDA is going to act. I don't mean to be facetious, Carl, but that would be a very treacherous spot for me to be in.

Speaker #8: And I would be BARDA, when I look upon me favorably, if I try to explain, share, guess what's going to happen, I will simply say that there is language in the contract that points towards some methodology of them helping us roll out devices and technology to the community.

Speaker #8: But Carl, I would be very careful and remiss if I started trying to guess or predict what Sarah said at the beginning of this call.

Speaker #8: Forward-looking statements about how BARDA is going to act. I don't mean to be facetious, Carl, but that would be a very treacherous spot for me to be in.

Speaker #6: Yeah, I hear you. Thanks so much. And congrats again.

John Vandermosten: I hear you. Thanks so much. And congrats again.

Speaker #7: Thanks, Carl.

Dr. Michael DiMaio: Thanks, Carl.

Speaker #8: Thank you.

John Vandermosten: Thank you.

Speaker #6: And ladies and gentlemen, with that, we'll wrap up today's question and answer session. I'd like to turn the conference call back over to Dr. DiMaio for any closing remarks.

Operator: And ladies and gentlemen, with that, we'll wrap up today's question and answer session. I'd like to turn the conference call back over to Dr. DiMaio for any closing remarks.

Speaker #8: Again, to everyone, thank you for your participation and continued interest in Spectral AI. We are very pleased with the progress we continue to make, and we remain optimistic about our prospects for the future.

Dr. Michael DiMaio: Again, to everyone, thank you again for your participation and continued interest in Spectral AI. We are very pleased with the progress we continue to make, and we remain optimistic about our prospects for the future. We have continued to focus on the three principles I mentioned earlier: Finance, Focus, and Finish. And we've done very well with the first two Fs. And now it's our time to focus on commercialization, and indeed, we will. We will please look forward to further announcements on our progress of these goals in the near term. Thanks to everyone, and have a good evening.

Speaker #8: We have continued to focus on the three principles I mentioned earlier. Finance, focus, and finish. And we've done very well with the first two Fs.

Speaker #8: And now it's our time to focus on commercialization and indeed, we will. We will please look forward to further announcements on our progress of these goals in the near term.

Speaker #8: Thanks to everyone, and have a good evening.

Operator: Ladies and gentlemen, that does conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.