Document And Entity Information
Document And Entity Information | Sep. 11, 2023 |
Document Information Line Items | |
Entity Registrant Name | SPECTRAL AI, INC. |
Document Type | 8-K |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | false |
Entity Central Index Key | 0001833498 |
Document Period End Date | Sep. 11, 2023 |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 001-40058 |
Entity Tax Identification Number | 85-3987148 |
Entity Address, Address Line One | 2515 McKinney Avenue |
Entity Address, Address Line Two | Suite 1000 |
Entity Address, City or Town | Dallas |
Entity Address, State or Province | TX |
Entity Address, Postal Zip Code | 75201 |
City Area Code | (972) |
Local Phone Number | 499-4934 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Common Stock, par value $0.0001 per share | |
Document Information Line Items | |
Trading Symbol | MDAI |
Title of 12(b) Security | Common Stock, par value $0.0001 per share |
Security Exchange Name | NASDAQ |
Redeemable Warrants, each whole warrant exercisable for one share of Common Stock, at an exercise price of $11.50 per share | |
Document Information Line Items | |
Trading Symbol | MDAIW |
Title of 12(b) Security | Redeemable Warrants, each whole warrant exercisable for one share of Common Stock, at an exercise price of $11.50 per share |
Security Exchange Name | NASDAQ |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 8,166 | $ 14,174 |
Accounts receivable, net | 1,520 | 2,294 |
Unbilled revenue | 91 | 618 |
Prepaid expenses | 342 | 331 |
Deferred offering costs | 1,124 | |
Other current assets | 598 | 270 |
Total current assets | 11,841 | 17,687 |
Non-current assets: | ||
Property and equipment, net | 16 | 21 |
Right-of-use assets | 1,141 | 1,008 |
Total Assets | 12,998 | 18,716 |
Commitments and contingencies (Note 7) | ||
Current liabilities: | ||
Accounts payable | 2,657 | 2,759 |
Accrued expenses | 2,394 | 2,631 |
Deferred revenue | 509 | |
Lease liabilities, short-term | 773 | 680 |
Notes payable | 175 | |
Warrant liability | 194 | 129 |
Total current liabilities | 6,527 | 6,374 |
Lease liabilities, long-term | 452 | 346 |
Total Liabilities | 6,979 | 6,720 |
Stockholders’ Equity | ||
Common stock ($0.001 par value); 400,000,000 shares authorized; 136,261,515 and 135,409,564 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 136 | 135 |
Additional paid-in capital | 24,496 | 23,795 |
Accumulated deficit | (18,613) | (11,934) |
Total stockholders’ equity | 6,019 | 11,996 |
Total Liabilities and Stockholders’ Equity | $ 12,998 | $ 18,716 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 136,261,515 | 136,261,515 |
Common stock, shares outstanding | 135,409,564 | 135,409,564 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Research and development revenue | $ 4,251 | $ 6,390 | $ 9,329 | $ 12,234 |
Cost of revenue | (2,460) | (3,678) | (5,357) | (7,132) |
Gross profit | 1,791 | 2,712 | 3,972 | 5,102 |
Operating costs and expenses: | ||||
General and administrative | 4,781 | 2,718 | 9,861 | 5,729 |
Total operating costs and expenses | 4,781 | 2,718 | 9,861 | 5,729 |
Operating loss | (2,990) | (6) | (5,889) | (627) |
Other income (expense): | ||||
Net interest income (expense) | 41 | 3 | 86 | (1) |
Change in fair value of warrant liability | (81) | (38) | (65) | 28 |
Foreign exchange transaction gain (loss) | (232) | 13 | (204) | |
Transaction costs | (738) | |||
Other income | 19 | 17 | ||
Total other income (expense) | (40) | (248) | (704) | (160) |
Loss before income taxes | (3,030) | (254) | (6,593) | (787) |
Provision for income taxes | (40) | (11) | (86) | (6) |
Net loss | $ (3,070) | $ (265) | $ (6,679) | $ (793) |
Net loss per share of common stock | ||||
Net loss per share of common stock basic (in Dollars per share) | $ (0.02) | $ 0 | $ (0.05) | $ (0.01) |
Weighted average common shares outstanding | ||||
Weighted average common shares outstanding basic (in Shares) | 136,198,713 | 135,347,064 | 136,097,641 | 135,323,279 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Operations (Parentheticals) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Net loss per share of common stock diluted | $ (0.02) | $ 0 | $ (0.05) | $ (0.01) |
Weighted average common shares outstanding diluted | 136,198,713 | 135,347,064 | 136,097,641 | 135,323,279 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 135 | $ 22,640 | $ (9,022) | $ 13,753 |
Balance (in Shares) at Dec. 31, 2021 | 135,034,564 | |||
Stock-based compensation | 333 | 333 | ||
Stock-based compensation (in Shares) | 187,500 | |||
Net loss | (528) | (528) | ||
Balance at Mar. 31, 2022 | $ 135 | 22,973 | (9,550) | 13,558 |
Balance (in Shares) at Mar. 31, 2022 | 135,222,064 | |||
Balance at Dec. 31, 2021 | $ 135 | 22,640 | (9,022) | 13,753 |
Balance (in Shares) at Dec. 31, 2021 | 135,034,564 | |||
Net loss | (793) | |||
Balance at Jun. 30, 2022 | $ 136 | 23,266 | (9,815) | 13,587 |
Balance (in Shares) at Jun. 30, 2022 | 135,559,564 | |||
Balance at Mar. 31, 2022 | $ 135 | 22,973 | (9,550) | 13,558 |
Balance (in Shares) at Mar. 31, 2022 | 135,222,064 | |||
Stock-based compensation | $ 1 | 293 | 294 | |
Stock-based compensation (in Shares) | 187,500 | |||
Stock option exercises | ||||
Stock option exercises (in Shares) | 150,000 | |||
Net loss | (265) | (265) | ||
Balance at Jun. 30, 2022 | $ 136 | 23,266 | (9,815) | 13,587 |
Balance (in Shares) at Jun. 30, 2022 | 135,559,564 | |||
Balance at Dec. 31, 2022 | $ 135 | 23,795 | (11,934) | $ 11,996 |
Balance (in Shares) at Dec. 31, 2022 | 135,409,564 | 135,409,564 | ||
Stock-based compensation | $ 1 | 299 | $ 300 | |
Stock-based compensation (in Shares) | 562,500 | |||
Stock option exercises | ||||
Stock option exercises (in Shares) | 104,451 | |||
Net loss | (3,609) | (3,609) | ||
Balance at Mar. 31, 2023 | $ 136 | 24,094 | (15,543) | 8,687 |
Balance (in Shares) at Mar. 31, 2023 | 136,076,515 | |||
Balance at Dec. 31, 2022 | $ 135 | 23,795 | (11,934) | $ 11,996 |
Balance (in Shares) at Dec. 31, 2022 | 135,409,564 | 135,409,564 | ||
Stock option exercises (in Shares) | 220,000 | |||
Net loss | $ (6,679) | |||
Balance at Jun. 30, 2023 | $ 136 | 24,496 | (18,613) | $ 6,019 |
Balance (in Shares) at Jun. 30, 2023 | 136,261,515 | 135,409,564 | ||
Balance at Mar. 31, 2023 | $ 136 | 24,094 | (15,543) | $ 8,687 |
Balance (in Shares) at Mar. 31, 2023 | 136,076,515 | |||
Stock-based compensation | 396 | 396 | ||
Stock-based compensation (in Shares) | 125,000 | |||
Stock option exercises | 6 | 6 | ||
Stock option exercises (in Shares) | 60,000 | |||
Net loss | (3,070) | (3,070) | ||
Balance at Jun. 30, 2023 | $ 136 | $ 24,496 | $ (18,613) | $ 6,019 |
Balance (in Shares) at Jun. 30, 2023 | 136,261,515 | 135,409,564 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (6,679) | $ (793) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation expense | 5 | 6 |
Stock-based compensation | 696 | 627 |
Amortization of right-of-use assets | 350 | 251 |
Change in fair value of warrant liability | 65 | (28) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 774 | (431) |
Unbilled revenue | 527 | (681) |
Prepaid expenses | (11) | 415 |
Other current assets | (322) | (107) |
Other assets | 40 | |
Accounts payable | (752) | 1,587 |
Accrued expenses | (405) | (548) |
Deferred revenue | 509 | |
Lease liabilities | (284) | (300) |
Net cash (used in) provided by operating activities | (5,527) | 38 |
Cash flows from financing activities: | ||
Payments of deferred offering costs | (306) | |
Payments for notes payable | (175) | (583) |
Net cash used in financing activities | (481) | (583) |
Net decrease in cash and cash equivalents | (6,008) | (545) |
Cash and cash equivalents, beginning of period | 14,174 | 16,121 |
Cash and cash equivalents, end of period | 8,166 | 15,576 |
Supplemental cash flow information: | ||
Cash paid for interest | 3 | 11 |
Noncash operating and financing activities disclosure: | ||
Recognition of Right-of-use assets and related lease liabilities upon adoption of ASC 842 | 624 | |
Recognition of Right-of-use assets and related lease liabilities upon lease amendment | 483 | |
Unpaid deferred offering costs | 818 | |
Broker receivable for stock option exercises | $ 6 |
Organization, Nature of Busines
Organization, Nature of Business and Liquidity | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Nature of Business and Liquidity [Abstract] | |
ORGANIZATION, NATURE OF BUSINESS AND LIQUIDITY | 1. ORGANIZATION, NATURE OF BUSINESS AND LIQUIDITY Spectral MD Holdings, Ltd, (the “Company”), headquartered in Dallas, Texas, was incorporated in Delaware on March 9, 2009. The Company currently trades on the AIM market of the London Stock Exchange (the “AIM”). The Company is devoting substantially all of its efforts towards research and development of its DeepView® Wound Imaging System. The Company has not generated any product revenue to date. The Company currently generates revenue from contract development and research services by providing such services to governmental agencies, primarily to the Biomedical Advanced Research and Development Authority (“BARDA”). The Company operates in one segment. On April 11, 2023, the Company entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time), by and among Rosecliff Acquisition Corp I (“Rosecliff”), Rosecliff Ghost Merger Sub I Inc. and Ghost Merger Sub II LLC, whereby all of the Company’s shares were exchanged with Rosecliff for 17,000,000 ordinary shares of Rosecliff with an aggregate equity value of $170.0 million (the “Business Combination”). Pursuant to the Business Combination Agreement, on the Closing, in sequential order: (a) Ghost Merger Sub I will merge with and into the Company, with the Company continuing as the surviving company as a wholly owned subsidiary of Rosecliff (the “Spectral Merger”) and then, (b) the Company will merge with and into Ghost Merger Sub II (the “SPAC Merger”, together with the Spectral Merger (the “Merger”)), with Ghost Merger Sub II surviving the SPAC Merger as a direct wholly-owned subsidiary of Rosecliff. Ghost Merger Sub II will be renamed Spectral AI, Inc. (the “Combined Company”). Liquidity As of June 30, 2023 and December 31, 2022, the Company had approximately $8.2 million and $14.2 million, respectively, in cash, and an accumulated deficit of $18.6 million and $11.9 million, respectively. The Company has historically funded its operations through the issuance of notes and the sale of preferred stock and common stock. During 2022, the Company was awarded additional funding of $8.2 million associated with option 1B of the contract with BARDA. During 2021, the Company executed Options 1A and 1B of the contract with BARDA for funding of $39.4 million and during 2022 was awarded additional funding of $8.2 million associated with option 1B, resulting in aggregated funding for Options 1A and 1B of $47.6 million, of which $4.1 million is remaining as of June 30, 2023. The BARDA contract funding is to execute the clinical training study of DeepView ® |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The accompanying condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations and stockholders’ equity for the three and six months ended June 30, 2023 and 2022, and statements of cash flows for the six months ended June 30, 2023 and 2022 are unaudited. The interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in management’s opinion, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2023 and its results of operations and cash flows for the three and six months ended June 30, 2023 and 2022. The results of operations for the three and six months ended June 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full fiscal year or any other period. These interim condensed consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2022. Certain reclassifications have been made to prior year financial statements to conform with current year presentation. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Spectral MD, Inc. and Spectral MD UK. Significant inter-company transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, revenue recognition, warrant liability, stock-based compensation expense, and income tax valuation allowances. Actual results could differ from these estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. All cash and cash equivalents are held in US financial institutions. Accounts Receivable, Net and Unbilled Revenue Accounts receivable represent amounts due from US government agencies pursuant to research and development contracts associated with the Company’s DeepView® Wound Imaging System. Accounts receivable amounted to approximately $1.5 million and $2.3 million as of June 30, 2023 and December 31, 2022, respectively. The Company evaluates the collectability of its receivables based on a variety of factors, including the length of time the receivables are past due, the financial health of its customers and historical experience. Based upon the review of these factors, the Company recorded no allowance for doubtful accounts as of June 30, 2023 and December 31, 2022. The Company records unbilled revenue when revenue is recognized prior to billing customers. Unbilled revenue amounted to approximately $0.1 million and $0.6 million as of June 30, 2023 and December 31, 2022, respectively. Concentrations of Credit Risk Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents and accounts receivable. Primarily all cash and cash equivalents are held in US financial institutions which, at times, exceed federally insured limits. The Company has not recognized any losses from credit risks on such accounts. The Company believes it is not exposed to significant credit risk on cash and cash equivalents. Additional credit risk is related to the Company’s concentration of receivables. As of June 30, 2023 and December 31, 2022, receivables were concentrated from one customer (which is a US. government agency) representing 71% and 96% of total net receivables, respectively. No One customer (which is a U.S. government agency) accounted for 95% and 96% for the three and six months ended June 30, 2023, respectively, and 87% and 92%, for the three and six months ended June 30, 2022, respectively, of the recognized research and development revenue. Deferred offering costs Deferred offering costs consist of legal, accounting and other direct expenses incurred through the balance sheet date that are directly related to the Business Combination and that will be charged to stockholders’ equity upon the completion of the Business Combination. Should the Business Combination prove to be unsuccessful these deferred costs, as well as additional expenses to be incurred, will be charged to other expense. Offering costs in excess of proceeds from the Business Combination, if any, will be charged to other expense. As of June 30, 2023, the Company recorded $1.1 million of deferred offering costs, of which $0.8 million are unpaid. Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 - Unadjusted quoted prices in active markets that are assessable at the measurement date for identical, unrestricted assets or liabilities. Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Fair Value of Financial Instruments Financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. Foreign Currency The reporting currency for the condensed consolidated financial statements of the Company is the US dollar. The functional currency of the Company and its wholly owned subsidiary Spectral MD, Inc. is the US dollar. The functional currency of Spectral MD UK is its local currency, the British pound. The assets and liabilities of Spectral MD UK is translated into US. dollars at exchange rates in effect at the end of each reporting period, and the revenues and expenses are translated at average exchange rates in effect during the applicable period. Translation adjustments are included in accumulated other comprehensive income as a component of stockholders’ equity. As of June 30, 2023 and December 31, 2022, the Company’s translation adjustments are not material. Monetary assets and liabilities denominated in currencies other than the functional currency are translated at exchange rates in effect at the balance sheet date. Resulting unrealized gains and losses are included in other income, net in the condensed consolidated statements of operations. For the three and six months ended June 30, 2023 the Company recorded approximately $0 and $13,000, respectively, of foreign exchange transaction gain. For the three and six months ended June 30, 2022, the Company recorded approximately $0.2 million foreign exchange transaction loss for both periods, primarily related to the Company’s bank account denominated in British Pounds and accounts payable denominated in British Pounds, included in foreign exchange transaction loss in the condensed consolidated statements of operations. Leases The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded in the condensed consolidated balance sheets as both a right of use asset and a lease liability, calculated by discounting fixed lease payments at the rate implicit in the lease or the Company’s incremental borrowing rate factoring the term of the lease. The incremental borrowing rate used by the Company is an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. Because the Company does not generally borrow on a collateralized basis, it uses the interest rate it pays on its noncollateralized borrowings as an input to deriving an appropriate incremental borrowing rate, adjusted for the amount of lease payments, the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use assets and lease liabilities, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the requirement to capitalize right of use assets and liabilities as an accounting policy election. For the three and six months ended June 30, 2023 and 2022, the Company did not have any finance leases. Warrant Liability On June 22, 2021, in conjunction with the closing of the Company’s IPO, the Company issued 762,712 warrants, with strike price of $0.89 and a five-year life, to SP Angel Corporate Finance LLP (“SP Angel”), who acts as nominated adviser and broker to the Company for the purposes of the AIM Rules. As of June 30, 2023, there are 762,712 warrants outstanding with an exchange rate adjusted exercise price of $0.75. The Company accounts for its warrants issued to SP Angel as derivative liabilities in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). Accordingly, the Company recognizes the instruments as liabilities at fair value, determined using the Black-Scholes option-pricing model, and adjusts the instruments to fair value at the end of each reporting pferiod. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s condensed consolidated statements of operations. Research and Development Revenue The Company recognizes revenue when the Company’s customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services by analyzing the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. In order to transfer control to the customer for contract development and manufacturing services, the Company must have a present right to payment, legal title must have passed to the customer, and the customer must have the significant risks and rewards of ownership. Research and development revenue contracts are generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time. The Company generates research and development revenue primarily from cost-plus-fee contracts associated with development of certain product candidates. Revenues from reimbursable contracts are recognized as costs are incurred, generally based on allowable costs incurred during the period, plus any recognizable earned fee. The Company uses this input method to measure progress as the customer has the benefit of access to the development research under these projects and therefore benefits from the Company’s performance incrementally as research and development activities occur under each project. We consider fixed fees under cost-plus-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue for long-term development contracts is considered variable consideration because the deliverable is dependent on the successful completion of development and is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with satisfying the performance obligation over time. The Company was awarded multiyear contracts in 2019 and 2021 (modified for additional funding in 2022) by BARDA for the development of the Company’s DeepView ® Payments from customers are generally received within 30 days of when the invoice is sent. Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Research and Development Expense The Company expenses research and development costs as operating expenses as incurred. These expenses include salaries for research and development personnel, consulting fees, product development, pre-clinical studies, clinical trial costs, and other fees and costs related to the development of the technology. For the three months ended June 30, 2023 and 2022, research and development expense was $3.7 million and $4.0 million, respectively, of which $2.5 million and $3.7 million, respectively, is related to the BARDA contract and included in cost of revenue and $1.2 million and $0.3 million, respectively, is included in general and administrative expenses. For the six months ended June 30, 2023 and 2022, research and development expense was $7.7 million and $7.9 million, respectively, of which $5.4 million and $7.1 million, respectively, is related to the BARDA contract and included in cost of revenue and $2.3 million and $0.8 million, respectively, is included in general and administrative expenses. Stock-Based Compensation The Company accounts for all stock-based payments to employees and non-employees, including grants of stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and stock options with non-market performance conditions (“PSOs”) to be recognized in the condensed consolidated financial statements, based on their respective grant date fair values. The Company estimates the fair value of stock option grants and PSOs using the Black-Scholes option pricing model. The RSUs and RSAs are valued based on the fair value of the Company’s common stock on the date of grant. The assumptions used in calculating the fair value of the Company’s stock and stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company expenses stock-based compensation related to stock options, RSUs and RSAs over the requisite service period. As the PSOs have performance conditions, compensation expense is recognized for each award if and when the Company’s management deems it probable that the performance conditions will be satisfied. Forfeitures are recorded as they occur. Compensation previously recorded for unvested equity awards that are forfeited is reversed upon forfeiture. The Company expenses stock-based compensation to employees over the requisite service period, on a straight-line basis, based on the estimated grant-date fair value of the awards. Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company has no uncertain tax positions as of June 30, 2023 and December 31, 2022 that qualify for either recognition or disclosure in the condensed consolidated financial statements under this guidance. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the condensed consolidated statements of operations. There were no amounts accrued for interest or penalties for the three and six months ended June 30, 2023 and 2022. Comprehensive Loss Comprehensive loss is equal to net loss as presented in the condensed consolidated statements of operations, as the Company did not have any material other comprehensive income or loss for the periods presented. Net Loss per Share of Common Stock Basic net loss share of common stock is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock adjusts basic earnings per share for the potentially dilutive impact of unvested restricted stock, stock options and warrants. Dilutive securities having an anti-dilutive effect on diluted net earnings per share are excluded from the calculation. The dilutive effect of the unvested restricted stock and stock options is calculated using the treasury stock method. For warrants that are liability-classified, during periods when the impact is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares calculated using the treasury stock method. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which was subsequently amended by ASU 2018-19 and ASU 2019-10. This standard requires the measurement of expected credit losses for financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions and reasonable forecasts. The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The Company adopted this standard on January 1, 2023, with no impact on its condensed consolidated financial statements and related disclosures. Recently Issued Accounting Standards In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments in this update are effective for the Company on January 1, 2025. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is still evaluating the impact of this pronouncement on the condensed consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | 3. FAIR VALUE MEASUREMENTS The following table presents information about the Company’s financial liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, by level within the fair value hierarchy (in thousands): Fair value measured as of June 30, 2023 Quoted prices in Significant Significant Fair value at June 30, active markets observable inputs unobservable inputs 2023 (Level 1) (Level 2) (Level 3) Warrant liability $ 194 $ - $ - $ 194 Fair value measured as of December 31, 2022 Quoted prices in Significant other Significant Fair value at December 31, active markets observable inputs unobservable inputs 2022 (Level 1) (Level 2) (Level 3) Warrant liability $ 129 $ - $ - $ 129 There were no transfers between Level 1, 2 or 3 during the three and six months ended June 30, 2023 and 2022. The following table presents changes in Level 3 liabilities measured at fair value for the three and six months ended June 30, 2023 and 2022 (in thousands). Balance - January 1, 2023 $ 129 Change in fair value (16 ) Balance - March 31, 2023 $ 113 Change in fair value 81 Balance - June 30, 2023 $ 194 Balance - January 1, 2022 $ 186 Change in fair value (66 ) Balance - March 31, 2022 $ 120 Change in fair value 38 Balance - June 30, 2022 $ 158 Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs. The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement: June 30, December 31, 2023 2022 Strike price (per share) $ 0.75 $ 0.71 Contractual term (years) 4.0 4.5 Volatility (annual) 71.2 % 72.6 % Risk-free rate 4.1 % 4.0 % Dividend yield (per share) 0.0 % 0.0 % |
Research and Development Revenu
Research and Development Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Research and Development Revenue [Abstract] | |
RESEARCH AND DEVELOPMENT REVENUE | 4. RESEARCH AND DEVELOPMENT REVENUE For the three and six months ended June 30, 2023 and 2022, the Company’s revenues disaggregated by the major sources was as follows (in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 BARDA $ 4,020 $ 6,255 $ 8,963 $ 11,963 Other U.S governmental authorities 231 135 366 271 Total revenue $ 4,251 $ 6,390 $ 9,329 $ 12,234 |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses [Abstract] | |
ACCRUED EXPENSES | 5. ACCRUED EXPENSES Accrued expenses consist of the following as of June 30, 2023 and December 31, 2022 (in thousands): June 30, December 31, 2023 2022 Salary and wages $ 1,106 $ 1,135 Provision operating expenses 414 736 Benefits 790 650 Franchise tax 84 110 Total accrued expenses $ 2,394 $ 2,631 |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2023 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | 6. NOTES PAYABLE Insurance Note In June 2022 and 2021, the Company entered into financing agreements for a portion of its insurance premium for approximately $0.4 million (the “2022 Insurance Note”) and $0.5 million (the “2021 Insurance Note”), respectively. The 2022 Insurance Note and 2021 Insurance Note bear interest at 6.7% per annum and 5.7% per annum, respectively, and are each payable in equal monthly payments of principal and interest maturing in May 2023 and February 2022, respectively. The Company determined that the carrying amounts of the 2022 Insurance Note and 2021 Insurance Note approximate fair value due to the short-term nature of borrowings and current market rates interest rates. During the six months ended June 30, 2023, the Company repaid the remaining balance of approximately $0.2 million of principal and interest for the 2022 Insurance Note. As of December 31, 2022, the Company had an outstanding balance of $0.2 million, respectively, for the 2022 Insurance Note. During the six months ended June 30, 2022, the Company repaid the remaining balance of approximately $0.2 million, respectively, for the 2021 Insurance Note. There was no outstanding balance for the 2021 Insurance Note as of December 31, 2022. PPP Loan On April 13, 2020, the Company entered into a promissory note with JPMorgan Chase Bank, N.A., as lender, pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) for $768,575 (the “PPP Loan”). The PPP Loan, which matured on April 13, 2022 and bears interest at 1% per annum, can be prepaid at any time prior to maturity with no prepayment penalties. The Company could defer interest and principal payments until September 13, 2021. Beginning on September 13, 2021, the Company was required to make equal monthly payments of principal and interest until the loan maturity on April 13, 2022. The PPP Loan is subject to customary terms for payment defaults and breaches of representations and warranties. The Company did not request the PPP Loan to be forgiven. During the six months ended June 30, 2022, the Company repaid the remaining $0.4 million of principal and interest for the PPP Loan. There was no outstanding balance for the PPP Loan as of December 31, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 7. Commitments and Contingencies Legal Matters The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
LEASES | 8. Leases The Company leases office space for its principal office in Dallas, Texas, which was extended during 2022 to expire in May 2024. This lease was extended again in 2023 to expire in December 2024. During 2022, the Company entered into a lease for office space in the United Kingdom under a lease that expires in May 2023. During 2023, the Company entered into a lease for office space in the United Kingdom for annual payments of $0.1 million under a lease that expires in March 2024. The lease has been excluded from the tables below as the term is twelve months. The following table summarizes quantitative information about the Company’s operating leases for the three and six months ended June 30, 2023 and 2022 (dollars in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Operating cash flows from operating leases $ 212 $ 158 $ 327 $ 313 Right-of-use assets exchanged for operating lease liabilities $ 483 $ 15 $ 483 $ 624 Weighted average remaining lease term – operating 1.5 0.7 1.5 0.7 Weighted average discount rate – operating leases 8.5 % 6.7 % 8.5 % 6.7 % The following table provides the components of the Company’s lease cost included in general and administrative expense in the condensed consolidated statement of operations (in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Operating leases Operating lease cost $ 198 $ 132 $ 392 $ 264 Variable lease cost 133 49 192 93 Total rent expense $ 331 $ 181 $ 584 $ 357 Variable lease cost is primarily attributable to amounts paid to lessors for utility charges and property taxes under an office space lease. As of June 30, 2023, future minimum payments under the non-cancelable operating leases under ASC 842 were as follows (in thousands): Six months ending December 31, 2023 $ 417 Year ending December 31, 2024 894 Total 1,311 Less: imputed interest (86 ) Operating lease liabilities $ 1,225 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | 9. Stockholders’ Equity The Company was authorized to issue 400,000,000 shares of common stock, par value $0.001 per share as of June 30, 2023 and December 31, 2022. The Company had 136,261,515 and 135,409,564 shares of common stock issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Stock-based Compensation [Abstract] | |
STOCK-BASED COMPENSATION | 10. Stock-based Compensation 2018 Long Term Incentive Plan On July 24, 2018, the Company’s Board adopted the 2018 Long Term Incentive Plan (the “2018 Plan”) which permits granting of incentive stock options (they must meet all statutory requirements), non-qualified stock options, stock appreciation rights, restricted stock, stock units, performance shares, performance units, incentive bonus awards, and other cash-based or stock-based awards. In June 2021, in connection with the IPO, the 2018 Plan was amended so that stock issued pursuant to the 2018 Plan would be the common stock of the Company. Pursuant to the 2018 Plan, stock options must expire within 10 years and must be granted with exercise prices of no less than the fair value of the common stock on the grant date, as determined by the Board of Directors. As of June 30, 2023, 38,354,118 shares of common stock were authorized for issuance under the 2018 Plan, of which 584,952 remain available for issuance. 2022 Long Term Incentive Plan On September 27, 2022, the Company’s stockholders approved the adoption of the 2022 Long Term Incentive Plan (the “2022 Plan”) which permits granting of incentive stock options (they must meet all statutory requirements), non-qualified stock options, stock appreciation rights, restricted stock, stock units, performance shares, performance units, incentive bonus awards, and other cash-based or stock-based awards. Pursuant to the 2022 Plan, stock options must expire within 10 years and must be granted with exercise prices of no less than the fair value of the common stock on the grant date, as determined by the Board of Directors. As of June 30, 2023, 20,000,000 shares of common stock were authorized for issuance under the 2022 Plan, of which 18,485,000 remain available for issuance. Restricted Stock Awards The RSAs generally vest over four years. A summary of RSA activities for the six months ended June 30, 2023 are presented below: Number of Shares Weighted Average Nonvested as of January 1, 2023 312,502 $ 0.10 Vested (312,502 ) $ 0.10 Nonvested as of June 30, 2023 - $ - Restricted Stock Units The RSUs generally vest over three years. A summary of RSU activities for the six months ended June 30, 2023 are presented below: Number of Shares Weighted Average Grant Date Fair Value per Share US$ Nonvested as of January 1, 2023 - $ - Granted 600,000 $ 0.45 Nonvested as of June 30, 2023 600,000 $ 0.45 Stock Options The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company’s common stock became publicly traded on July 22, 2021 and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the simplified method by taking an average of the vesting periods and the original contractual terms for each award. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the US. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. In applying the Black Scholes option pricing model, the Company used the following assumptions for stock options granted in the six months ended June 30, 2023: Six Months Ended June 30, 2023 Exercise price (per share) $ 0.44 Expected term (years) 6.0 Volatility (annual) 72 % Risk-free rate 3.5 % Dividend yield (per share) 0 % A summary of stock options activity for the six months ended June 30, 2023 is presented below: Stock Options Weighted Average Exercise Price US$ Weighted Average Remaining Contractual (in years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2023 36,124,000 $ 0.20 7.3 $ 6,831 Options granted 2,511,000 $ 0.44 Options forfeited (163,334 ) $ 0.35 Options exercised (220,000 ) $ 0.17 Options cancelled (210,000 ) $ 0.19 Outstanding as of June 30, 2023 38,041,666 $ 0.21 7.0 $ 12,426 Options vested and exercisable as of June 30, 2023 30,265,209 $ 0.17 6.6 $ 11,244 The Company recorded stock-based compensation expense for stock options and restricted stock of $0.3 million and $0.7 million for the three and six months ended June 30, 2023, respectively, and $0.3 million and $0.6 million for the three and six months ended June 30, 2022, respectively, in general and administrative expenses in the condensed consolidated statements of operations. As of June 30, 2023, there was approximately $1.7 million and $0.2 million of unrecognized stock-based compensation related to stock option grants and restricted stock unit grants, respectively, that will be amortized over a weighted average period of 1.2 years and 1.3 years, respectively. During the year ended December 31, 2018, the Company granted of 10,039,926 stock options to investors (the “Investor Options”) that were approved by the Board of Directors outside of the 2018 Plan. As of June 30, 2023, 9,681,354 Investor Options are outstanding and will expire in November 2023. The Investor Options have an exercise price of $0.20 per share. As of June 30, 2023, there is no unrecognized stock-based compensation expense related to the Investor Options. As of June 30, 2023, the Company has outstanding stock options, issued to an investor, to purchase 210,000 shares of the Company’s common stock (the “ASC 815 Options”) at a price of $0.19 per share that expire in December 2023. The ASC 815 Options have a grant date fair value of $0.21 per share and are equity-classified stock options in accordance with ASC 815. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Taxes [Abstract] | |
INCOME TAXES | 11. INCOME TAXES The Company recorded a provision for income taxes of approximately $40,000 and $86,000 for the three and six months ended June 30, 2023, respectively, and $11,000 and $6,000 for the three and six months ended June 30, 2022, respectively. The effective tax rate was 1.3% for the three and six months ended June 30, 2023, and 4.3% and 0.8% for the three and six months ended June 30, 2022, respectively. The tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in that quarter. The Company’s effective tax rate differs from the U.S. statutory tax rate in the three and six months ended June 30, 2023 primarily due to changes in valuation allowances on deferred tax assets as it is more likely than not that some or all of the Company’s deferred tax assets will not be realized. The Company evaluates its tax positions on a quarterly basis and revises its estimate accordingly. The Company recorded immaterial interest and penalties during the three and six months ended June 30, 2023. |
Net Loss Per Common Share
Net Loss Per Common Share | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss Per Common Share [Abstract] | |
NET LOSS PER COMMON SHARE | 12. NET LOSS PER COMMON SHARE Basic and diluted net loss per common share attributable to common stockholders are the same for the three and six months ended June 30, 2023 and 2022, since the inclusion of all potential shares of common stock outstanding would have been anti-dilutive due to the Company’s net loss. The table below summarizes potentially dilutive securities that were excluded from the computation of net loss per common share as of the periods presented because including them would be anti-dilutive. 2023 2022 Common stock options 47,933,020 46,163,926 Common stock warrants 762,712 762,712 Unvested restricted stock units 600,000 - Unvested restricted stock - 687,502 Potentially dilutive securities 49,295,732 47,614,140 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 13. RELATED PARTY TRANSACTIONS For the three and six months ended June 30, 2023 and 2022, the Company did not have any transactions with related parties. |
Subsequent events
Subsequent events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent events [Abstract] | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS Share Issuances and Business Combination In September 2023, prior to the closing of the Business Combination, the Company completed the Equity Raise. On September 11, 2023 (the “Closing”), the Company consummated the Business Combination with Rosecliff, whereby all of the Company’s 137,701,673 shares of common stock and the Equity Issuance common stock were exchanged by Rosecliff for 13,316,464 and 744,667, respectively, ordinary shares of Rosecliff, at an exchange ratio of 10.31. Pursuant to the Business Combination Agreement, on the Closing, in sequential order: (a) Ghost Merger Sub I merged with and into the Company, with the Company continuing as the surviving company as a wholly owned subsidiary of Rosecliff (the “Spectral Merger”) and then, (b) the Company merged with and into Ghost Merger Sub II (the “SPAC Merger”, together with the Spectral Merger (the “Merger”)), with Ghost Merger Sub II surviving the SPAC Merger as a direct wholly-owned subsidiary of Rosecliff. Rosecliff was renamed Spectral AI, Inc. (“Spectral AI” or the “Combined Company”). In conjunction with the closing, options to purchase 46,592,862 shares of the Company’s common stock and 600,000 RSUs were exchanged for options to purchase 4,519,191 shares of Spectral AI’s ordinary shares and 58,196 RSUs of Spectral AI. Additionally, the warrants to purchase 762,712 of the Company’s common stock were exchanged for warrants to purchase 73,978 ordinary shares of Spectral AI’s common stock. On September 12, 2023, Spectral AI began trading its shares on the NASDAQ stock exchange after delisting its shares from the AIM market of the London Stock Exchange on September 7, 2023. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The accompanying condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations and stockholders’ equity for the three and six months ended June 30, 2023 and 2022, and statements of cash flows for the six months ended June 30, 2023 and 2022 are unaudited. The interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in management’s opinion, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2023 and its results of operations and cash flows for the three and six months ended June 30, 2023 and 2022. The results of operations for the three and six months ended June 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full fiscal year or any other period. These interim condensed consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2022. Certain reclassifications have been made to prior year financial statements to conform with current year presentation. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Spectral MD, Inc. and Spectral MD UK. Significant inter-company transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, revenue recognition, warrant liability, stock-based compensation expense, and income tax valuation allowances. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. All cash and cash equivalents are held in US financial institutions. |
Accounts Receivable, Net and Unbilled Revenue | Accounts Receivable, Net and Unbilled Revenue Accounts receivable represent amounts due from US government agencies pursuant to research and development contracts associated with the Company’s DeepView® Wound Imaging System. Accounts receivable amounted to approximately $1.5 million and $2.3 million as of June 30, 2023 and December 31, 2022, respectively. The Company evaluates the collectability of its receivables based on a variety of factors, including the length of time the receivables are past due, the financial health of its customers and historical experience. Based upon the review of these factors, the Company recorded no allowance for doubtful accounts as of June 30, 2023 and December 31, 2022. The Company records unbilled revenue when revenue is recognized prior to billing customers. Unbilled revenue amounted to approximately $0.1 million and $0.6 million as of June 30, 2023 and December 31, 2022, respectively. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents and accounts receivable. Primarily all cash and cash equivalents are held in US financial institutions which, at times, exceed federally insured limits. The Company has not recognized any losses from credit risks on such accounts. The Company believes it is not exposed to significant credit risk on cash and cash equivalents. Additional credit risk is related to the Company’s concentration of receivables. As of June 30, 2023 and December 31, 2022, receivables were concentrated from one customer (which is a US. government agency) representing 71% and 96% of total net receivables, respectively. No One customer (which is a U.S. government agency) accounted for 95% and 96% for the three and six months ended June 30, 2023, respectively, and 87% and 92%, for the three and six months ended June 30, 2022, respectively, of the recognized research and development revenue. |
Deferred offering costs | Deferred offering costs Deferred offering costs consist of legal, accounting and other direct expenses incurred through the balance sheet date that are directly related to the Business Combination and that will be charged to stockholders’ equity upon the completion of the Business Combination. Should the Business Combination prove to be unsuccessful these deferred costs, as well as additional expenses to be incurred, will be charged to other expense. Offering costs in excess of proceeds from the Business Combination, if any, will be charged to other expense. As of June 30, 2023, the Company recorded $1.1 million of deferred offering costs, of which $0.8 million are unpaid. |
Fair Value | Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 - Unadjusted quoted prices in active markets that are assessable at the measurement date for identical, unrestricted assets or liabilities. Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. |
Foreign Currency | Foreign Currency The reporting currency for the condensed consolidated financial statements of the Company is the US dollar. The functional currency of the Company and its wholly owned subsidiary Spectral MD, Inc. is the US dollar. The functional currency of Spectral MD UK is its local currency, the British pound. The assets and liabilities of Spectral MD UK is translated into US. dollars at exchange rates in effect at the end of each reporting period, and the revenues and expenses are translated at average exchange rates in effect during the applicable period. Translation adjustments are included in accumulated other comprehensive income as a component of stockholders’ equity. As of June 30, 2023 and December 31, 2022, the Company’s translation adjustments are not material. Monetary assets and liabilities denominated in currencies other than the functional currency are translated at exchange rates in effect at the balance sheet date. Resulting unrealized gains and losses are included in other income, net in the condensed consolidated statements of operations. For the three and six months ended June 30, 2023 the Company recorded approximately $0 and $13,000, respectively, of foreign exchange transaction gain. For the three and six months ended June 30, 2022, the Company recorded approximately $0.2 million foreign exchange transaction loss for both periods, primarily related to the Company’s bank account denominated in British Pounds and accounts payable denominated in British Pounds, included in foreign exchange transaction loss in the condensed consolidated statements of operations. |
Leases | Leases The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded in the condensed consolidated balance sheets as both a right of use asset and a lease liability, calculated by discounting fixed lease payments at the rate implicit in the lease or the Company’s incremental borrowing rate factoring the term of the lease. The incremental borrowing rate used by the Company is an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. Because the Company does not generally borrow on a collateralized basis, it uses the interest rate it pays on its noncollateralized borrowings as an input to deriving an appropriate incremental borrowing rate, adjusted for the amount of lease payments, the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use assets and lease liabilities, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the requirement to capitalize right of use assets and liabilities as an accounting policy election. For the three and six months ended June 30, 2023 and 2022, the Company did not have any finance leases. |
Warrant Liability | Warrant Liability On June 22, 2021, in conjunction with the closing of the Company’s IPO, the Company issued 762,712 warrants, with strike price of $0.89 and a five-year life, to SP Angel Corporate Finance LLP (“SP Angel”), who acts as nominated adviser and broker to the Company for the purposes of the AIM Rules. As of June 30, 2023, there are 762,712 warrants outstanding with an exchange rate adjusted exercise price of $0.75. The Company accounts for its warrants issued to SP Angel as derivative liabilities in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). Accordingly, the Company recognizes the instruments as liabilities at fair value, determined using the Black-Scholes option-pricing model, and adjusts the instruments to fair value at the end of each reporting pferiod. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s condensed consolidated statements of operations. |
Research and Development Revenue | Research and Development Revenue The Company recognizes revenue when the Company’s customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services by analyzing the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. In order to transfer control to the customer for contract development and manufacturing services, the Company must have a present right to payment, legal title must have passed to the customer, and the customer must have the significant risks and rewards of ownership. Research and development revenue contracts are generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time. The Company generates research and development revenue primarily from cost-plus-fee contracts associated with development of certain product candidates. Revenues from reimbursable contracts are recognized as costs are incurred, generally based on allowable costs incurred during the period, plus any recognizable earned fee. The Company uses this input method to measure progress as the customer has the benefit of access to the development research under these projects and therefore benefits from the Company’s performance incrementally as research and development activities occur under each project. We consider fixed fees under cost-plus-fee contracts to be earned in proportion to the allowable costs incurred in performance of the contract. Revenue for long-term development contracts is considered variable consideration because the deliverable is dependent on the successful completion of development and is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with satisfying the performance obligation over time. The Company was awarded multiyear contracts in 2019 and 2021 (modified for additional funding in 2022) by BARDA for the development of the Company’s DeepView ® Payments from customers are generally received within 30 days of when the invoice is sent. Because the Company’s contracts have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. |
Research and Development Expense | Research and Development Expense The Company expenses research and development costs as operating expenses as incurred. These expenses include salaries for research and development personnel, consulting fees, product development, pre-clinical studies, clinical trial costs, and other fees and costs related to the development of the technology. For the three months ended June 30, 2023 and 2022, research and development expense was $3.7 million and $4.0 million, respectively, of which $2.5 million and $3.7 million, respectively, is related to the BARDA contract and included in cost of revenue and $1.2 million and $0.3 million, respectively, is included in general and administrative expenses. For the six months ended June 30, 2023 and 2022, research and development expense was $7.7 million and $7.9 million, respectively, of which $5.4 million and $7.1 million, respectively, is related to the BARDA contract and included in cost of revenue and $2.3 million and $0.8 million, respectively, is included in general and administrative expenses. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for all stock-based payments to employees and non-employees, including grants of stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and stock options with non-market performance conditions (“PSOs”) to be recognized in the condensed consolidated financial statements, based on their respective grant date fair values. The Company estimates the fair value of stock option grants and PSOs using the Black-Scholes option pricing model. The RSUs and RSAs are valued based on the fair value of the Company’s common stock on the date of grant. The assumptions used in calculating the fair value of the Company’s stock and stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company expenses stock-based compensation related to stock options, RSUs and RSAs over the requisite service period. As the PSOs have performance conditions, compensation expense is recognized for each award if and when the Company’s management deems it probable that the performance conditions will be satisfied. Forfeitures are recorded as they occur. Compensation previously recorded for unvested equity awards that are forfeited is reversed upon forfeiture. The Company expenses stock-based compensation to employees over the requisite service period, on a straight-line basis, based on the estimated grant-date fair value of the awards. |
Income Taxes | Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company has no uncertain tax positions as of June 30, 2023 and December 31, 2022 that qualify for either recognition or disclosure in the condensed consolidated financial statements under this guidance. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the condensed consolidated statements of operations. There were no amounts accrued for interest or penalties for the three and six months ended June 30, 2023 and 2022. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is equal to net loss as presented in the condensed consolidated statements of operations, as the Company did not have any material other comprehensive income or loss for the periods presented. |
Net Loss per Share of Common Stock | Net Loss per Share of Common Stock Basic net loss share of common stock is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock adjusts basic earnings per share for the potentially dilutive impact of unvested restricted stock, stock options and warrants. Dilutive securities having an anti-dilutive effect on diluted net earnings per share are excluded from the calculation. The dilutive effect of the unvested restricted stock and stock options is calculated using the treasury stock method. For warrants that are liability-classified, during periods when the impact is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares calculated using the treasury stock method. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which was subsequently amended by ASU 2018-19 and ASU 2019-10. This standard requires the measurement of expected credit losses for financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions and reasonable forecasts. The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The Company adopted this standard on January 1, 2023, with no impact on its condensed consolidated financial statements and related disclosures. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments in this update are effective for the Company on January 1, 2025. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is still evaluating the impact of this pronouncement on the condensed consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurements [Abstract] | |
Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis | The following table presents information about the Company’s financial liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, by level within the fair value hierarchy (in thousands): Fair value measured as of June 30, 2023 Quoted prices in Significant Significant Fair value at June 30, active markets observable inputs unobservable inputs 2023 (Level 1) (Level 2) (Level 3) Warrant liability $ 194 $ - $ - $ 194 Fair value measured as of December 31, 2022 Quoted prices in Significant other Significant Fair value at December 31, active markets observable inputs unobservable inputs 2022 (Level 1) (Level 2) (Level 3) Warrant liability $ 129 $ - $ - $ 129 |
Schedule of Changes in Level 3 Liabilities Measured at Fair Value | The following table presents changes in Level 3 liabilities measured at fair value for the three and six months ended June 30, 2023 and 2022 (in thousands). Balance - January 1, 2023 $ 129 Change in fair value (16 ) Balance - March 31, 2023 $ 113 Change in fair value 81 Balance - June 30, 2023 $ 194 Balance - January 1, 2022 $ 186 Change in fair value (66 ) Balance - March 31, 2022 $ 120 Change in fair value 38 Balance - June 30, 2022 $ 158 |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs | The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement: June 30, December 31, 2023 2022 Strike price (per share) $ 0.75 $ 0.71 Contractual term (years) 4.0 4.5 Volatility (annual) 71.2 % 72.6 % Risk-free rate 4.1 % 4.0 % Dividend yield (per share) 0.0 % 0.0 % |
Research and Development Reve_2
Research and Development Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Research and Development Revenue [Abstract] | |
Schedule of Revenues Disaggregated | For the three and six months ended June 30, 2023 and 2022, the Company’s revenues disaggregated by the major sources was as follows (in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 BARDA $ 4,020 $ 6,255 $ 8,963 $ 11,963 Other U.S governmental authorities 231 135 366 271 Total revenue $ 4,251 $ 6,390 $ 9,329 $ 12,234 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consist of the following as of June 30, 2023 and December 31, 2022 (in thousands): June 30, December 31, 2023 2022 Salary and wages $ 1,106 $ 1,135 Provision operating expenses 414 736 Benefits 790 650 Franchise tax 84 110 Total accrued expenses $ 2,394 $ 2,631 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Operating Leases | The following table summarizes quantitative information about the Company’s operating leases for the three and six months ended June 30, 2023 and 2022 (dollars in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Operating cash flows from operating leases $ 212 $ 158 $ 327 $ 313 Right-of-use assets exchanged for operating lease liabilities $ 483 $ 15 $ 483 $ 624 Weighted average remaining lease term – operating 1.5 0.7 1.5 0.7 Weighted average discount rate – operating leases 8.5 % 6.7 % 8.5 % 6.7 % |
Schedule of Lease Cost Included in General and Administrative Expense in the Condensed Consolidated Statement of Operations | The following table provides the components of the Company’s lease cost included in general and administrative expense in the condensed consolidated statement of operations (in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Operating leases Operating lease cost $ 198 $ 132 $ 392 $ 264 Variable lease cost 133 49 192 93 Total rent expense $ 331 $ 181 $ 584 $ 357 |
Schedule of Minimum Payments Under the Non-Cancelable Operating Leases | As of June 30, 2023, future minimum payments under the non-cancelable operating leases under ASC 842 were as follows (in thousands): Six months ending December 31, 2023 $ 417 Year ending December 31, 2024 894 Total 1,311 Less: imputed interest (86 ) Operating lease liabilities $ 1,225 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Stock-based Compensation (Tables) [Line Items] | |
Schedule of Black Scholes Option Pricing Model | In applying the Black Scholes option pricing model, the Company used the following assumptions for stock options granted in the six months ended June 30, 2023: Six Months Ended June 30, 2023 Exercise price (per share) $ 0.44 Expected term (years) 6.0 Volatility (annual) 72 % Risk-free rate 3.5 % Dividend yield (per share) 0 % |
Schedule of Stock Options Activity | A summary of stock options activity for the six months ended June 30, 2023 is presented below: Stock Options Weighted Average Exercise Price US$ Weighted Average Remaining Contractual (in years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2023 36,124,000 $ 0.20 7.3 $ 6,831 Options granted 2,511,000 $ 0.44 Options forfeited (163,334 ) $ 0.35 Options exercised (220,000 ) $ 0.17 Options cancelled (210,000 ) $ 0.19 Outstanding as of June 30, 2023 38,041,666 $ 0.21 7.0 $ 12,426 Options vested and exercisable as of June 30, 2023 30,265,209 $ 0.17 6.6 $ 11,244 |
RSA [Member] | |
Stock-based Compensation (Tables) [Line Items] | |
Schedule of RSA and RSUs Activities | A summary of RSA activities for the six months ended June 30, 2023 are presented below: Number of Shares Weighted Average Nonvested as of January 1, 2023 312,502 $ 0.10 Vested (312,502 ) $ 0.10 Nonvested as of June 30, 2023 - $ - |
RSUs [Member] | |
Stock-based Compensation (Tables) [Line Items] | |
Schedule of RSA and RSUs Activities | A summary of RSU activities for the six months ended June 30, 2023 are presented below: Number of Shares Weighted Average Grant Date Fair Value per Share US$ Nonvested as of January 1, 2023 - $ - Granted 600,000 $ 0.45 Nonvested as of June 30, 2023 600,000 $ 0.45 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss Per Common Share [Abstract] | |
Schedule of Summarizes Potentially Dilutive Securities that were Excluded from the Computation of Net Loss Per Common Share | The table below summarizes potentially dilutive securities that were excluded from the computation of net loss per common share as of the periods presented because including them would be anti-dilutive. 2023 2022 Common stock options 47,933,020 46,163,926 Common stock warrants 762,712 762,712 Unvested restricted stock units 600,000 - Unvested restricted stock - 687,502 Potentially dilutive securities 49,295,732 47,614,140 |
Organization, Nature of Busin_2
Organization, Nature of Business and Liquidity (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Apr. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 11, 2023 | |
Organization, Nature of Business and Liquidity (Details) [Line Items] | ||||||
Cash | $ 8,200,000 | $ 14,200,000 | ||||
Accumulated deficit | 18,600,000 | 11,900,000 | ||||
Additional funding amount | 8,200,000 | |||||
Aggregated funding options | 4,100,000 | 47,600,000 | $ 39,400,000 | |||
Additional fund | 8,200,000 | |||||
Received amount | $ 4,000,000 | |||||
common stock issued | $ 136,000 | $ 135,000 | ||||
Common Stock, Discount on Shares | $ 3,400,000 | |||||
Potential fund | 96,900,000 | |||||
Common Stock [Member] | ||||||
Organization, Nature of Business and Liquidity (Details) [Line Items] | ||||||
common stock issued | $ 7,679,198 | |||||
Rosecliff [Member] | ||||||
Organization, Nature of Business and Liquidity (Details) [Line Items] | ||||||
Ordinary shares (in Shares) | 17,000,000 | |||||
Aggregate equity value | $ 170,000,000 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Jun. 22, 2021 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||
Accounts receivable, net | $ 1,520 | $ 1,520 | $ 2,294 | |||
Unbilled revenue | 100 | 100 | 600 | |||
Allowance for doubtful accounts | ||||||
Deferred offering cost | 1,100 | 1,100 | ||||
Deferred cost, unpaid | 800 | |||||
Foreign exchange transaction gain | $ 0 | $ 13 | ||||
Foreign exchange transaction loss | $ 200 | $ 200 | ||||
Warrants issued (in Shares) | 762,712 | |||||
Strike price (in Dollars per share) | $ 0.89 | |||||
Warrants outstanding (in Shares) | 762,712 | 762,712 | 762,712 | 762,712 | ||
Exercise price (in Dollars per share) | $ 0.75 | |||||
Research and development expense | $ 3,700 | $ 4,000 | $ 7,700 | $ 7,900 | ||
Cost of revenue | 2,500 | 3,700 | 5,400 | 7,100 | ||
General and administrative expenses | $ 1,200 | $ 300 | $ 2,300 | $ 800 | ||
One Customer [Member] | ||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||
Net receivables percentage | 71% | 96% | ||||
Recognized research and development revenue percentage | 95% | 87% | 96% | 92% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurements (Details) - Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Line Items] | ||
Warrant liability | $ 194 | $ 129 |
Quoted prices in active markets (Level 1) [Member] | ||
Fair Value Measurements (Details) - Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Line Items] | ||
Warrant liability | ||
Significant other observable inputs (Level 2) [Member] | ||
Fair Value Measurements (Details) - Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Line Items] | ||
Warrant liability | ||
Significant unobservable inputs (Level 3) [Member] | ||
Fair Value Measurements (Details) - Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Line Items] | ||
Warrant liability | $ 194 | $ 129 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details) - Schedule of Changes in Level 3 Liabilities Measured at Fair Value - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | |
Schedule of Changes in Level3 Liabilities Measured at Fair Value [Abstract] | ||||
Balance beginning | $ 113 | $ 129 | $ 120 | $ 186 |
Change in fair value | 81 | (16) | 38 | (66) |
Balance ending | $ 194 | $ 113 | $ 158 | $ 120 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details) - Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs - Level 3 [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Strike price (per share) (in Dollars per share) | $ 0.75 | $ 0.71 |
Contractual term (years) | 4 years | 4 years 6 months |
Volatility (annual) | 71.20% | 72.60% |
Risk-free rate | 4.10% | 4% |
Dividend yield (per share) | 0% | 0% |
Research and Development Reve_3
Research and Development Revenue (Details) - Schedule of Revenues Disaggregated - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 4,251 | $ 6,390 | $ 9,329 | $ 12,234 |
BARDA [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,020 | 6,255 | 8,963 | 11,963 |
Other U.S governmental authorities [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 231 | $ 135 | $ 366 | $ 271 |
Accrued Expenses (Details) - Sc
Accrued Expenses (Details) - Schedule of Accrued Expenses - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Accrued Expenses [Abstract] | ||
Salary and wages | $ 1,106 | $ 1,135 |
Provision operating expenses | 414 | 736 |
Benefits | 790 | 650 |
Franchise tax | 84 | 110 |
Total accrued expenses | $ 2,394 | $ 2,631 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 6 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Jun. 30, 2021 | Apr. 13, 2020 | |
Note payable [Line items] | |||||
Fnancing agreements for insurance premium | $ 400,000 | $ 500,000 | |||
Insurance note bearing interest percentage | 6.70% | 5.70% | |||
Repaid of remaining balance amount | $ 200,000 | ||||
Outstanding balance amount | $ 200,000 | ||||
Remaining balance amount | $ 200,000 | ||||
Loan amount | $ 768,575 | ||||
Maturity date | Apr. 13, 2022 | ||||
Bears interest rate of per annum | 1% | ||||
PPP Loan [Member] | |||||
Note payable [Line items] | |||||
Repaid of remaining balance amount | $ 400,000 |
Leases (Details)
Leases (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Leases [Abstract] | |
Annual lease payments | $ 0.1 |
Lease expiration term | 12 months |
Leases (Details) - Schedule of
Leases (Details) - Schedule of Operating Leases - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Operating Leases [Abstract] | ||||
Operating cash flows from operating leases | $ 212 | $ 158 | $ 327 | $ 313 |
Right-of-use assets exchanged for operating lease liabilities | $ 483 | $ 15 | $ 483 | $ 624 |
Weighted average remaining lease term – operating leases (in years) | 1 year 6 months | 8 months 12 days | 1 year 6 months | 8 months 12 days |
Weighted average discount rate – operating leases | 8.50% | 6.70% | 8.50% | 6.70% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of Lease Cost Included in General and Administrative Expense in the Condensed Consolidated Statement of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Operating leases | ||||
Operating lease cost | $ 198 | $ 132 | $ 392 | $ 264 |
Variable lease cost | 133 | 49 | 192 | 93 |
Total rent expense | $ 331 | $ 181 | $ 584 | $ 357 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of Minimum Payments Under the Non-Cancelable Operating Leases $ in Thousands | Jun. 30, 2023 USD ($) |
Schedule of Minimum Payments Under the Non-Cancelable Operating Leases [Abstract] | |
Six months ending December 31, 2023 | $ 417 |
Year ending December 31, 2024 | 894 |
Total | 1,311 |
Less: imputed interest | (86) |
Operating lease liabilities | $ 1,225 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Stockholders' Equity [Abstract] | ||
Common stock , share athorized | 400,000,000 | 400,000,000 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares issued | 136,261,515 | 136,261,515 |
Common stock shares outstanding | 135,409,564 | 135,409,564 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2018 | Sep. 27, 2022 | Jul. 24, 2018 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Expected dividend yield | 0% | ||||||
Stock-based compensation expense (in Dollars) | $ 0.3 | $ 0.3 | $ 0.7 | $ 0.6 | |||
Unrecognized stock-based compensation (in Dollars) | $ 1.7 | $ 0.2 | |||||
Weighted average period | 1 year 2 months 12 days | 1 year 3 months 18 days | |||||
Investor options are outstanding | 2,511,000 | ||||||
Investor options exercise price per share (in Dollars per share) | $ 0.2 | $ 0.2 | |||||
Purchase of shares | 210,000 | ||||||
Purchase of price per share (in Dollars per share) | $ 0.19 | ||||||
Grant options fair value per share (in Dollars per share) | $ 0.21 | ||||||
Stock Options [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Granted stock options to investors | 10,039,926 | ||||||
Investor Options [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Investor options are outstanding | 9,681,354 | ||||||
2018 Long Term Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Expire term | 10 years | ||||||
Common stock authorized for issuance | 38,354,118 | ||||||
Remaining shares of issuance | 584,952 | 584,952 | |||||
2022 Long Term Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Expire term | 10 years | ||||||
Common stock authorized for issuance | 20,000,000 | ||||||
Remaining shares of issuance | 18,485,000 | 18,485,000 |
Stock-based Compensation (Det_2
Stock-based Compensation (Details) - Schedule of RSA and RSUs Activities - Restricted Stock Award [Member] | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Shares, Nonvested beginning balance | shares | 312,502 |
Weighted Average Grant Date Fair Value per Share, Nonvested beginning balance | $ / shares | $ 0.1 |
Number of Shares, Vested | shares | (312,502) |
Weighted Average Grant Date Fair Value per Share, Vested | $ / shares | $ 0.1 |
Number of Shares, Nonvested ending balance | shares | |
Weighted Average Grant Date Fair Value per Share, Nonvested ending balance | $ / shares |
Stock-based Compensation (Det_3
Stock-based Compensation (Details) - Schedule of RSA and RSUs Activities - Restricted Stock Units [Member] | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Shares, Nonvested beginning balance | shares | |
Weighted Average Grant Date Fair Value per Share, Nonvested beginning balance | $ / shares | |
Number of Shares, Granted | shares | 600,000 |
Weighted Average Grant Date Fair Value per Share, Granted | $ / shares | $ 0.45 |
Number of Shares, Nonvested ending balance | shares | 600,000 |
Weighted Average Grant Date Fair Value per Share, Nonvested ending balance | $ / shares | $ 0.45 |
Stock-based Compensation (Det_4
Stock-based Compensation (Details) - Schedule of Black Scholes Option Pricing Model | 6 Months Ended |
Jun. 30, 2023 $ / shares | |
Schedule of Black Scholes Option Pricing Model [Abstract] | |
Exercise price (per share) (in Dollars per share) | $ 0.44 |
Expected term (years) | 6 years |
Volatility (annual) | 72% |
Risk-free rate | 3.50% |
Dividend yield (per share) | 0% |
Stock-based Compensation (Det_5
Stock-based Compensation (Details) - Schedule of Stock Options Activity - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2023 | |
Schedule of Stock Options Activity [Abstract] | |
Stock Options, Outstanding Beginning Balance | 36,124,000 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ 0.2 |
Weighted Average Remaining Contractual Life, Outstanding Beginning Balance | 7 years 3 months 18 days |
Aggregate Intrinsic Value, Outstanding Beginning Balance | $ 6,831 |
Stock Options, Options granted | 2,511,000 |
Weighted Average Exercise Price, Options granted | $ 0.44 |
Stock Options, Options forfeited | (163,334) |
Weighted Average Exercise Price, Options forfeited | $ 0.35 |
Stock Options, Options exercised | (220,000) |
Weighted Average Exercise Price, Options exercised | $ 0.17 |
Stock Options, Options cancelled | (210,000) |
Weighted Average Exercise Price, Options cancelled | $ 0.19 |
Stock Options, Outstanding ending Balance | 38,041,666 |
Weighted Average Exercise Price, Outstanding ending Balance | $ 0.21 |
Weighted Average Remaining Contractual Life, Outstanding ending Balance | 7 years |
Aggregate Intrinsic Value, Outstanding ending Balance | $ 12,426 |
Stock Options, Options vested and exercisable | 30,265,209 |
Weighted Average Exercise Price, Options vested and exercisable | $ 0.17 |
Weighted Average Remaining Contractual Life, Options vested and exercisable | 6 years 7 months 6 days |
Aggregate Intrinsic Value, Options vested and exercisable | $ 11,244 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Taxes [Abstract] | ||||
Provision for income taxes | $ 40,000 | $ 11,000 | $ 86,000 | $ 6,000 |
Effective tax rate | 1.30% | 4.30% | 1.30% | 0.80% |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - Schedule of Summarizes Potentially Dilutive Securities that were Excluded from the Computation of Net Loss Per Common Share - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule Of Summarizes Potentially Dilutive Securities That Were Excluded From The Computation Of Net Loss Per Common Share Abstract | ||
Common stock options | 47,933,020 | 46,163,926 |
Common stock warrants | 762,712 | 762,712 |
Unvested restricted stock units | 600,000 | |
Unvested restricted stock | 687,502 | |
Potentially dilutive securities | 49,295,732 | 47,614,140 |
Subsequent events (Details)
Subsequent events (Details) | Sep. 11, 2023 shares |
Subsequent events (Details) [Line Items] | |
Conversion ratio | 10.31 |
Warrants to purchase common stock | 762,712 |
Common Stock [Member] | |
Subsequent events (Details) [Line Items] | |
Shares exchanged | 13,316,464 |
Number of options to purchase shares for exchange | 46,592,862 |
Equity Issuance common stock [Member] | |
Subsequent events (Details) [Line Items] | |
Shares exchanged | 744,667 |
Rosecliff [Member] | |
Subsequent events (Details) [Line Items] | |
Sale of stock | 137,701,673 |
Spectral AI [Member] | |
Subsequent events (Details) [Line Items] | |
Warrants to purchase common stock | 73,978 |
Spectral AI [Member] | Common Stock [Member] | |
Subsequent events (Details) [Line Items] | |
Number of options to purchase shares for exchange | 4,519,191 |
RSU [Member] | |
Subsequent events (Details) [Line Items] | |
Number of options to purchase shares for exchange | 600,000 |
RSU [Member] | Spectral AI [Member] | |
Subsequent events (Details) [Line Items] | |
Number of options to purchase shares for exchange | 58,196 |