Good afternoon, everyone, and welcome to the Spectral AI Inc. Q2 2025 Financial Results Conference Call. [Operator Instructions]. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Sara Prendergast, Assistant General Counsel. Please go ahead.

Thank you, Jamie. Good afternoon, everyone, and thank you for joining us for Spectral AI 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 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. 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 Factors section 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. DiMaio, Spectral AI's Chairman of the Board.

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 3 Fs, finance, focus and finish. To these 3 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. Secondly, we are moving forward with our focus on our indication and our submission of our de novo application to the FDA, which has occurred in June 2 months ago. Lastly, this is what we will continue to focus on as we look to work with our BARDA partners and bring the DeepView systemize to the commercial marketplace. 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 a 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 and funding with an initial draw of USD 8.5 million. In connection with this debt financing, the company also raised $2.7 million of equity financing from institutional and existing investors. 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 run…

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. 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 de novo 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. Even with the larger warrant liability for the 6-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 6 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 de novo application. 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 DeepView 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.

[Operator Instructions]. And our first question today comes from Ryan Zimmerman from BTIG.

Maybe we could talk about the submission for DeepView. Just how you're thinking about preparing for clearance here in the U.S., what you're doing to 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 within the ballpark of what you guys are thinking.

Hi, Ryan, 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, we expect the appropriate time coming back and forth to the FDA. And yes, in the first half of next year, we expect clearance of that. 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, this 3 Fs, the third F is finished. 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 -- that involves BARDA as well. The contract does involve some participation in BARDA, helping us roll out and in some fashion, they will help us "purchase" 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 we'll 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.

Got it. And I know you can't market to any expanded usage right now. I'm just curious, and I appreciate if you don't want to 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 there other assessments, maybe aesthetic? I'm just trying to kind of think about some of the potential opportunities that may exist out there.

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. 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. And then lastly, as you have asked, Ryan, if you have something, a part of the body, a part of a wound, be it a traumatic, be the 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.

Our next question comes from John Vandermosten from Zacks.

When we look at -- you mentioned the U.S., U.K. and Australia and how we're not going to really see anything from them or very much from them this year. What activity are you taking for deployment in the U.K. and Australia coming up in coming years?

That's a good question. Thanks, John. So working backwards, as you probably know, the U.K. market is -- we're already approved there with a certain release of it. And you may also know, maybe you don't know that the U.K. burn doctors and AI have found to be extremely useful, friendly for the care of their burn patients. So I want to emphasize that the U.K. 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 U.S. 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 rather the usage of it and the learning lessons that we can gather from that. In terms of sales, we are thinking about that. It's a different market. It's a single-payer market for all intents and purposes. And the ability to get with what's called the NICE approval, N-I-C-E is something that's often useful and desire for the U.K. market to have more widespread applicability. So we're currently, again, to my third F of finish, we're trying -- we're studying how much effort and purpose there is and the U.K. market, as I repeated earlier, to be able to have that market and the information clean from that market to be used in the U.S. and then to determine how much time and energy will be useful to be dedicated to the U.K. for more widespread sales.

Okay. And looking at the Snapshot assuming you get approval for the DeepView 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.

Yes, sir. And John, making sure you're calling Snapshot the handheld, is that what you're referring to, John?

Yes, yes. Snapshot, the handhand, the portable one.

Yes. So Again, great question, John. So the answer is we are designing the -- I'm going to call it handheld for simplicity. There's 2 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 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?

Yes.

Yes. 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 MTEC or the military of 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 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.

And our next question comes from Carl Byrnes from Northland Capital Markets.

I'm wondering if you can comment on any dialogue that you might be having with BARDA with respect to how system rollout might transpire once approved in, call it, like year 1, year 2? Anything that you might be able to state there would be very helpful.

Thanks, Carl, for your question. Well, you've asked the most telling question. As you well know, if you read the newspapers, there's a lot of events happening in the D.C. governmental space. And I would be -- BARDA would not 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. But Carl, I would be very careful and remiss if I started trying to guess or predict to what Sara said at the beginning of this call. Forward-looking statements 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.

I hear you. Thank you so much.

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

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 3 principles I mentioned earlier, finance, focus and finish, and we've done very well with the first 2 Fs. And now it's our time to focus on commercialization and indeed, 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.

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