Good day, and welcome to the Nano-X Q1 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would now like to turn the call over to Mike Cavanaugh, Investor Relations. You may begin.

Good afternoon and thank you for joining us today. Earlier today, Nano-X Imaging Ltd. released financial results for the quarter ended March 31, 2023. The release is currently available on the Investors section of the Company's website. Erez Meltzer, Chief Executive Officer; and Ran Daniel, Chief Financial Officer, will host this morning's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements regarding the Company's financial results, research and development, manufacturing and commercialization activities regulatory process operations and other matters. These statements are subject to risks, uncertainties and assumptions that are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing the Company's views as of any subsequent date. Factors that may cause such a difference include, but are not limited to, those described in the Company's filings with the Securities and Exchange Commission. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of the non-GAAP financial measures to the nearest GAAP financial measure is provided in our press release. The non-GAAP financial measures include non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses non-GAAP general and administrative expenses and non-GAAP gross loss per share. With that, I'd now like to turn the call over to Erez Meltzer.

Thank you, Mike. And thank you all for joining the call today. I will provide an overview of our recent operational accomplishments before handing the call over to Ran to review our financial results and then we will close, as usual, with a question-and-answer session. With that, I'll get right into it, and I'll start with the news that I'm sure is at the top of everyone's mind, which is the recent FDA clearance for Nanox.ARC system. As a reminder, on April 28, 2023, we received a 510(k) clearance from the FDA to market the Nanox.ARC, including the Nanox.CLOUD, it's a company cloud-based infrastructure. The approved device is intended to be used in professional health care facilities, our radiological environments such as hospitals, clinics, imaging center and other medical practices by radiographers, radiologist and physician. Representing a major advancement in the X-ray tube technology, the Nanox.ARC is a multistory 3D tomosynthesis system that utilizes novel cold cathode X-ray tubes, which the Company intends to offer using an innovative paper scan business model. We believe that the Nanox.ARC has the potential to increase availability to medical imaging globally once approved by local regulatory authorities and deployed and scale. We intend to deploy the version of the Nanox.ARC that was cleared by the FDA, which is the power level necessary to scan the MSK system. We believe the FDA clearance will assist in our efforts to gain regulatory clearance in certain other jurisdictions, including in other countries that are FDA clearance based market. Following this clearance, Nano-X will continue to work with the FDA to pursue additional regulatory clearances and intend to expand clinical indications. Other applications may be available in other markets to our local regulatory approvals. With FDA clearance secured, we are in the process of setting up a U.S.…

Thank you, Erez. We reported a GAAP net loss for the first quarter of 2023 of $11.8 million compared with a net loss of $21.7 million in the first quarter of 2022, which decrease was largely due to the decrease in earn-out liabilities in the amount of $5.0 million and the decrease in our general and administrative expenses in the amount of $3.5 million. Our non-GAAP network for the first quarter of 2023 was $10.5 million compared to a non-GAAP net loss of $11.6 million for the same period in 2022. Revenue for the first quarter of 2023 were $2.4 million and gross loss was $1.5 million on a GAAP basis. Revenue from teleradiology services for the same period was $2.4 million with a gross profit of $0.5 million on a GAAP basis and a gross profit of $1.1 million on a non-GAAP basis, which represents a gross profit margin of approximately 21% on a GAAP basis and 44% on a non-GAAP basis. The increase in the Company's revenue and gross profit margin in the first quarter of 2023 is mainly due to the increase in the amount of the radiologic interpretation or [indiscernible] and our rates for teleradiology services during the three months ended March 31, 2023, as compared to the comparable period. Research and development expenses for the first quarter of 2023 were $6.3 million as compared to $6.8 million for the comparable period in 2022. The decrease of $0.5 million was mainly due to the decrease in the Company's cost of labor in the amount of $0.5 million and a decrease in share-based compensation in the amount of $0.8 million, which was mitigated by an increase of $0.2 million in development expenses. General and administrative expenses for the first quarter of 2023 were $7.8 million as compared…

Thank you, operator, and thank you all once again for your support of Nano-X. I've been the CEO of Nano-X for over a year now and has been looking forward to sharing the welcome news of FDA clearance. The U.S. regulatory clearance also paves the way for Nanox.ARC to be approved in other countries that are FDA clearance based markets. Other applications will be available in other markets for local regulatory approvals. We will continue to push ahead on multiple fronts: commercialization and deployment across multiple geographies continue to strengthen our manufacturing capabilities of supply chains and continue to generating and collecting imaging data that supports the use of Nanox.ARC across multiple pathologies and users. I look forward to our next update call in August when we will discuss our Q2 results. In the meantime, and if you want to connect with us, please contact our Investor Relations partner at ICR Westwicke. Have a good day.

[Operator Instructions] Our first question comes from Jeffrey Cohen with Ladenburg Dolman. Your line is open.

So congratulations, again, on the clearance, it's very exciting. Can you walk us through and talk about a little bit as far as the backbone of production and where that's existing now and you mentioned fully operational and then talk about the -- all the components and subcomponents and to manufacturing and tie that into the facility in Korea as well?

Okay. Thank you, Jeff. First of all, indeed, we are very excited about the FDA clearance and the work that is ahead of us. We've indicated in the -- what we talked actually in the last 15 minutes. First -- and in the press release that we did that, a, we continue to manufacture the chips in Korea. Same goes with the tubes that currently we are manufacturing in Korea. We've indicated that in the future, we have planned to have more than one or two sources for each one of the components, so including the tubes, this will come in the future. In addition, in terms of the assembly, we've actually opened the facility at Jish in Israel, where we're going to manufacture all the systems that we're going to assemble this year and shift to the various locations that will be part of the deployment. So, this means -- this is what we mean by fully operational. In the future, we have already mentioned that we will consider and also explore opportunities to assemble in other countries when we go to the mass production other than Israel specifically as we do right now.

Thank you. Our next question comes from Ross Osborn with Cantor Fitzgerald. Your line is open.

Congrats on the progress. Thanks for taking my question. So maybe starting off, could you just provide an update out of Ghana and Nigeria, where does the Company stand and beginning to generate stands there and also related revenue?

Okay. So right now, it's -- we've just started. So, the revenues are expected later this year. In terms of the deployment that dose that you mentioned, we are working country by country with the local regulation starting with the import license and the local regulation in those countries that are FDA-based clearance and are not FDA based clearance and have their local regulation. We have indicated that we are focusing on Africa, and we are exploring and expanding the business in Africa. In Ghana, the system is already there, installed operating. In Nigeria, the system is there. We'll be operating shortly when we get all the permits and certificates to operate it. We have also indicated today that we signed another big agreement or a meaningful agreement in Morocco. The system is already at the hospital as we speak, and we have a team on the ground, which are going to operate it, and it will start to generate, of course, the images. This is with respect to Morocco. In terms of the others, right now, we're going one by one of the agreements that we have in order to ensure that we'll have a test and road map for the deployment. At the same time, we have indicated today something very important that originally, we thought that U.S. will be only next year. We really understand right now that we have to find a way and do our best in order to accelerate the process of the deployment and the go-to-market in the U.S., and it's going to be it's going to be this year. And we have already indicated that the first -- the demo center that we talked about in the script, in the PR, and also the machine that will be sent this quarter. We will start to [indiscernible] the process.

Maybe a follow-up on your Morocco contract. You mentioned you're deploying 270 units over three years. If you're able to receive the required license, let's say, tomorrow and begin deployment based upon your current manufacturing capabilities, would you be able to meet the three-year window?

The answer is there is no reason why not.

Okay. That's great to hear. And then maybe one more, if I may. Just on the U.S. commercialization. Is the plan to deploy systems in the U.S. also on a pay per scan model rather than a capital sale and then if so, should we think about price around $14 so much to your global average?

The short answer is -- without going into the details, the short answer is that basically, yes, but I think it's too early to say once we start the deployment, we'll see the various models that can be explored the various type of units or clinics or hospitals that we'll hear. Right now, from what we hear for the market, the answer is yes. We may explore and then decide something else, but this is too early to say. But I will say, once again, in general, the answer is yes. Not necessarily the $14 that was mentioned, but might be that it will be different or higher. But right now, that's the plan.

Thank you. That is all the time we have for questions. Thank you for your participation in today's conference. You may now disconnect. Everyone, have a great day.