Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 06, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Entity Information [Line Items] | ||
Entity Registrant Name | SPECTRALAI, INC. | |
Entity Central Index Key | 0001833498 | |
Entity File Number | 000-00000 | |
Entity Tax Identification Number | 85-3987148 | |
Entity Incorporation, State or Country Code | DE | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Contact Personnel [Line Items] | ||
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 | |
Entity Phone Fax Numbers [Line Items] | ||
City Area Code | (972) | |
Local Phone Number | 685-1260 | |
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 17,482,333 | |
Common Stock, par value $0.0001 per share | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | MDAI | |
Security Exchange Name | NASDAQ | |
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 | |
Trading Symbol | MDAIW | |
Security Exchange Name | NASDAQ |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash | $ 10,157 | $ 4,790 |
Accounts receivable, net | 1,828 | 2,346 |
Inventory | 228 | 230 |
Deferred offering costs | 283 | |
Prepaid expenses | 1,581 | 1,452 |
Other current assets | 1,090 | 801 |
Total current assets | 14,884 | 9,902 |
Non-current assets: | ||
Property and equipment, net | 9 | 12 |
Right-of-use assets | 590 | 778 |
Total Assets | 15,483 | 10,692 |
Commitments and contingencies (Note 8) | ||
Current liabilities: | ||
Accounts payable | 3,306 | 2,683 |
Accrued expenses | 3,818 | 4,300 |
Deferred revenue | 2,177 | 2,311 |
Lease liabilities, short-term | 660 | 853 |
Notes payable | 218 | 436 |
Notes payable - at fair value | 4,534 | |
Warrant liabilities | 1,798 | 1,818 |
Total current liabilities | 17,511 | 12,401 |
Total Liabilities | 17,511 | 12,401 |
Stockholders’ Equity (Deficit) | ||
Preferred stock ($0.0001 par value); 1,000,000 shares authorized; no shares issued and outstanding as of March 31, 2024 and December 31, 2023 | ||
Common stock ($0.0001 par value); 80,000,000 shares authorized; 17,482,333 and 16,294,935 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 2 | 2 |
Additional paid-in capital | 33,953 | 31,065 |
Accumulated other comprehensive income | 10 | 12 |
Accumulated deficit | (35,993) | (32,788) |
Total Stockholders’ Equity (Deficit) | (2,028) | (1,709) |
Total Liabilities and Stockholders’ Equity (Deficit) | 15,483 | 10,692 |
Related Party | ||
Current liabilities: | ||
Notes payable - related party | $ 1,000 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Common stock, shares issued | 17,482,333 | 16,294,935 |
Common stock, shares outstanding | 17,482,333 | 16,294,935 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Research and development revenue | $ 6,326 | $ 5,078 |
Cost of revenue | (3,381) | (2,897) |
Gross profit | 2,945 | 2,181 |
Operating costs and expenses: | ||
General and administrative | 5,088 | 5,079 |
Total operating costs and expenses | 5,088 | 5,079 |
Operating loss | (2,143) | (2,898) |
Other income (expense): | ||
Net interest income | 14 | 44 |
Borrowing related costs | (276) | |
Change in fair value of warrant liability | 20 | 16 |
Change in fair value of notes payable | 66 | |
Foreign exchange transaction gain (loss), net | (16) | 13 |
Other expenses, including transaction costs | (848) | (738) |
Total other expense, net | (1,040) | (665) |
Loss before income taxes | (3,183) | (3,563) |
Income tax provision | (22) | (46) |
Net loss | $ (3,205) | $ (3,609) |
Net loss per share of common stock | ||
Basic net income (loss) per share (in Dollars per share) | $ (0.19) | $ (0.27) |
Weighted-average common shares outstanding | ||
Weighted average common shares outstanding,Basic (in Shares) | 16,560,298 | 13,190,600 |
Other comprehensive income: | ||
Foreign currency translation adjustments | $ (2) | $ 1 |
Total comprehensive loss | $ (3,207) | $ (3,608) |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss (Parentheticals) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Diluted net income (loss) per share | $ (0.19) | $ (0.27) |
Weighted average common shares outstanding diluted | 16,560,298 | 13,190,600 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Balance at Dec. 31, 2022 | $ 1 | $ 23,929 | $ (11,934) | $ 11,996 | |
Balance (in Shares) at Dec. 31, 2022 | 13,170,148 | ||||
Stock-based compensation | 300 | 300 | |||
Stock-based compensation (in Shares) | 18,186 | ||||
Stock option exercises | |||||
Stock option exercises (in Shares) | 10,129 | ||||
Cumulative translation adjustment | 1 | 1 | |||
Net loss | (3,609) | (3,609) | |||
Balance at Mar. 31, 2023 | $ 1 | 24,229 | 1 | (15,543) | 8,688 |
Balance (in Shares) at Mar. 31, 2023 | 13,198,463 | ||||
Balance at Dec. 31, 2022 | $ 1 | 23,929 | (11,934) | 11,996 | |
Balance (in Shares) at Dec. 31, 2022 | 13,170,148 | ||||
Balance at Dec. 31, 2023 | $ 2 | 31,065 | 12 | (32,788) | (1,709) |
Balance (in Shares) at Dec. 31, 2023 | 16,294,935 | ||||
Stock-based compensation | 283 | $ 283 | |||
Stock option exercises (in Shares) | |||||
Sale of common stock | 2,605 | $ 2,605 | |||
Sale of common stock (in Shares) | 1,187,398 | ||||
Cumulative translation adjustment | (2) | (2) | |||
Net loss | (3,205) | (3,205) | |||
Balance at Mar. 31, 2024 | $ 2 | $ 33,953 | $ 10 | $ (35,993) | $ (2,028) |
Balance (in Shares) at Mar. 31, 2024 | 17,482,333 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net loss | $ (3,205) | $ (3,609) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 3 | 2 |
Stock-based compensation | 283 | 300 |
Amortization of right-of-use assets | 188 | 173 |
Change in fair value of warrant liabilities | (20) | (16) |
Change in fair value of notes payable | (66) | |
Costs from issuance of common stock | 147 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 518 | 410 |
Inventory | 2 | |
Unbilled revenue | 230 | |
Prepaid expenses | (129) | (128) |
Other assets | (289) | (12) |
Accounts payable | 697 | (741) |
Accrued expenses | (482) | (271) |
Deferred revenue | (134) | |
Lease liabilities | (193) | (93) |
Net cash used in operating activities | (2,680) | (3,755) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 2,667 | |
Proceeds from notes payable | 4,600 | |
Proceeds from notes payable - related party | 1,000 | |
Payments for notes payable | (218) | (104) |
Net cash provided by (used in) financing activities | 8,049 | (104) |
Effect of exchange rate changes on cash | (2) | 1 |
Net increase (decrease) in cash | 5,367 | (3,858) |
Cash, beginning of period | 4,790 | 14,174 |
Cash, end of period | 10,157 | 10,316 |
Supplemental cash flow information: | ||
Cash paid for interest | (2) | |
Cash paid for taxes |
Nature of the Business
Nature of the Business | 3 Months Ended |
Mar. 31, 2024 | |
Nature of the Business [Abstract] | |
NATURE OF THE BUSINESS | 1. NATURE OF THE BUSINESS Business Combination Spectral AI, Inc., a Delaware corporation formerly known as Rosecliff Acquisition Corp I (“Spectral AI” or the “Company”) was formed as a blank check company on November 17, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On September 11, 2023, the Company consummated a business combination (the “Business Combination”), pursuant to the business combination agreement dated April 11, 2023 by and among the Company, Ghost Merger Sub I, a Delaware Corporation, Ghost Merger Sub II, a Delaware corporation and Spectral MD Holdings, Ltd., a Delaware corporation incorporated on March 9, 2009 and headquartered in Dallas, Texas (“Legacy Spectral”). Upon closing of the Business Combination (the “Closing”), in sequential order: (a) Ghost Merger Sub I merged with and into the Legacy Spectral, with Legacy Spectral continuing as the surviving company as a wholly owned subsidiary of the Company (the “Spectral Merger”) and then, (b) Legacy Spectral merged with and into Ghost Merger Sub II (renamed Spectral MD Holdings LLC) (the “SPAC Merger”, together with the Spectral Merger (the “Business Combination”)), with Ghost Merger Sub II surviving the SPAC Merger as a direct wholly-owned subsidiary of the Company. See Note 3. Upon the Closing, the Company changed its name from Rosecliff Acquisition Corp I to Spectral AI, Inc. In conjunction with the Business Combination, the Company cancelled the redeemable warrants that it issued to Rosecliff Acquisition Sponsor I LLC, a Delaware limited liability company (the “Sponsor”), in a private placement in connection with the Company’s initial public offering on February 17, 2021 (the “Initial Public Offering”) at Closing, but the 8,433,333 redeemable warrants issued to the public in the Initial Public Offering (the “Public Warrants”) remain outstanding. Prior to the Business Combination, (“Rosecliff”) had 280,485 shares of Class A common stock, par value $0.0001 per share, issued and outstanding and held by public shareholders (the “Public Shares”) and 6,325,000 shares of Class B common stock, par value $0.0001 per share, issued and outstanding and held by the Sponsor (the “Sponsor Shares”). Upon the Closing, 5,445,000 of the Sponsor Shares were forfeited, in accordance with a letter agreement with the Sponsor, and the remaining 880,000 Sponsor Shares and 280,485 Public Shares, no longer designated Class A and Class B, were included in shares of the Company’s common stock, par value $0.0001 per share (the “Company Common Stock”). Prior to the Business Combination, Legacy Spectral’s shares of common stock, par value $0.001 per share (“Legacy Spectral Common Stock”) were listed on the AIM market on the London Stock Exchange (delisted on September 7, 2023). In September 2023, prior to the Closing, Legacy Spectral issued 7,679,198 shares of Legacy Spectral Common Stock to certain investors in a private placement, in exchange for $3.4 million (the “Equity Raise”). ll of Legacy Spectral’s issued and outstanding 145,380,871 shares of Legacy Spectral Common Stock, including the shares from the Equity Raise, were exchanged for 14,094,450 shares of Company Common Stock at an exchange ratio of 10.31 (the “Exchange Ratio”), meaning that the Company issued one share of Company Common Stock in exchange for 10.31 shares of Legacy Spectral Common Stock. On September 12, 2023, the Company began trading the Company Common Stock and the Public Warrants on the NASDAQ Capital Market (“NASDAQ”) under the symbols “MDAI” and “MDAIW”, respectively. Nature of Operations Spectral AI is devoting substantially all of its efforts towards research and development of its DeepView ® In September 2023, the Company executed its third contract with BARDA for a multi-year Project BioShield (“PBS”) contract, valued at up to approximately $150.0 million (the “PBS BARDA Contract”). This multi-year contract includes an initial award of nearly $54.9 million to support the clinical validation and FDA clearance of DeepView ® In April 2023, the Company received a $4.0 million grant from MTEC for a project that is expected to be completed by April 2025 (the “MTEC Agreement”). The MTEC Agreement is for the development of a handheld version of the DeepView System . The project has three phases, beginning with planning, design and testing; followed by development, design modification and buildout of the handheld device; and then the manufacturing of the handheld device. On March 7, 2024, the Company formed a new wholly-owned subsidiary, Spectral IP, Inc., a Delaware corporation (“Spectral IP”), to be utilized to advance artificial intelligence intellectual property with a specific emphasis on healthcare. On March 19, 2024, the Company announced that Spectral IP received a $1.0 million investment from an affiliate of its largest shareholder for the development of its artificial intelligence intellectual property portfolio. The investment is structured as a note payable with a one-year maturity, an interest rate of 8%, and requiring earlier prepayment if the Company spins off Spectral IP to the Company’s shareholders or if Spectral IP is sold to a third party. Risks and Uncertainties The Company is subject to a number of risks common to development stage companies in the medical technology industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, dependence on key personnel, protection of proprietary technology, reliance on third party organizations, risks of obtaining regulatory approval for any products that it may develop, development by competitors of technological innovations, compliance with government regulations and the need to obtain additional financing. Liquidity As of March 31, 2024 and December 31, 2023, the Company had approximately $10.2 million and $4.8 million, respectively, in cash, and an accumulated deficit of $36.0 million and $32.8 million, respectively. As of March 31, 2024 and December 31, 2023, the Company had approximately $5.8 million and $0.4 million, respectively, in notes payable and no long-term debt as of either period. On December 26, 2023, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and related Registration Rights Agreement with B. Riley Principal Capital II, LLC (“B. Riley”). Upon the terms and subject to the satisfaction of the conditions set forth in the Purchase Agreement, the Company has the right, in our sole discretion, to sell to B. Riley up to $10.0 million in aggregate gross proceeds of newly issued shares of the Company’s Common Stock (the “ELOC”). On March 20, 2024, the Company also entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership (“Yorkville”) pursuant to which the Company has the right to sell to Yorkville up to $30.0 million in shares of Company Common Stock, subject to certain limitations and conditions set forth in the SEPA (such transaction, the “Yorkville Transaction”). In connection with the SEPA, and subject to the conditions set forth therein, Yorkville has agreed to advance to the Company in the form of convertible promissory notes an aggregate principal amount of up to $12.5 million (the “Pre-Paid Advance”), which will be paid in three tranches. The first Pre-Paid Advance was disbursed on March 20, 2024 in the amount of $4.6 million, which is the $5.0 million Pre-Paid Advance net of $0.4 million of the 8% original issue discount, with a fixed conversion price of $3.16, the second Pre-Paid Advance shall be in a principal amount of $5.0 million and advanced two business days following the later of the registration statement registering the resale of the shares of Common Stock issuable under the SEPA being declared effective and shareholder approval to exceed the 19.99% threshold of the aggregate number of shares of Company Common Stock issued pursuant to the SEPA (the “Exchange Cap”) (the “Second Pre-Advance Closing”), and the third Pre-Paid Advance shall be in a principal amount of $2.5 million and advanced sixty days following the Second Pre-Advance Closing. In connection with the execution and delivery of the SEPA, the Company is authorized to drawdown an additional $3.0 million from the ELOC prior to utilizing the SEPA. The effective date of the registration statement was April 18, 2024. The shareholder vote is expected on May 14, 2024. In March 2024, the Company received an additional $0.5 million award from the Defense Health Agency to further the development related to the MTEC Agreement. With the PBS BARDA Contract, the MTEC Agreement, the B. Riley ELOC, and the Yorkville Transaction, the Company believes it will have sufficient working capital to fund operations for at least one year beyond the release date of these condensed consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant 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”) or an Accounting Standards Update (“ASU”). The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Legacy Spectral was determined as the accounting acquirer and the Company as the acquired company for financial reporting purposes. Recapitalization Legacy Spectral was determined to be the accounting acquiror based on evaluation of the following facts and circumstances: (i) Legacy Spectral’s former shareholders have a majority of the voting power of Spectral AI; (ii) Legacy Spectral’s senior management comprises all of the senior management of Spectral AI; (iii) Legacy Spectral selected five of the six directors for the Board of Directors of Spectral AI; (iv) Legacy Spectral’s relative size of assets and operations compared to Rosecliff; and (v) Legacy Spectral’s operations comprise the ongoing operations of Spectral AI. All historical financial information presented in the condensed consolidated financial statements represents the accounts of Legacy Spectral at their historical values as if Legacy Spectral is the predecessor to the Company. The condensed consolidated financial statements following the Closing reflect the results of the combined entity’s operations. All issued and outstanding shares of Legacy Spectral Common Stock and warrants, stock options, restricted stock units (“RSUs”), and restricted stock awards (“RSAs”) of Legacy Spectral and the per share amounts contained in the condensed consolidated financial statements for the periods presented prior to the Closing have been retroactively restated to reflect the Exchange Ratio (as defined in Note 1). Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Spectral MD Holdings LLC, Spectral MD Inc., Spectral MD UK Limited (“Spectral MD UK”), Spectral DeepView Limited, and Spectral IP. Significant inter-company transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the 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 liabilities, the fair value of short term notes payable, fair value of the B. Riley and Yorkville derivative instruments, stock-based compensation expense, stock issued for transaction costs, the net realizable value of inventory, right-of-use assets, and income tax valuation allowances. Actual results could differ from these estimates. Segments Operating segments are defined as components of an enterprise for which separate and discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on an aggregate basis for the purpose of allocating resources. Cash The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. All cash is held in US, UK, & Ireland 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 ® 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 March 31, 2024 and December 31, 2023. Certain third-party costs that are prepaid per the terms of the contract are billable to customers prior to recognition of related expenses. The Company records deferred revenue when the customers have been billed prior to recognizing revenue. The Company records unbilled revenue when revenue is recognized prior to billing customers. Comprehensive Loss Comprehensive loss includes net loss, as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. Concentrations of Credit Risk Financial instruments which potentially subject the Company to credit risk consist principally of cash and accounts receivable. Primarily all cash is 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. Additional credit risk is related to the Company’s concentration of receivables. As of March 31, 2024 and December 31, 2023, receivables were concentrated from one customer (which is a US. Government agency) representing 98% and 92% of total net receivables, respectively. One customer (which is a U.S. government agency) accounted for 96% for the three months ended March 31, 2024 and 97% for the three months ended March 31, 2023 of the recognized research and development revenue. Inventory Inventory is comprised of finished goods, purchased from a third-party manufacturer, and is stated at the lower of cost (average cost) or net realizable value. For the three months ended March 31, 2024 and the three months ended March 31, 2023, the Company did not have write-downs for obsolete inventory. 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). 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 subsidiaries Spectral MD Holdings LLC, Spectral MD, Inc., and Spectral IP is the US dollar. The functional currency of Spectral MD UK is its local currency, the British pound. The functional currency of Spectral DeepView Limited is its local currency, the Euro. The assets and liabilities of Spectral MD UK and Spectral DeepView Limited, are 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 reporting period. Translation adjustments are included in Accumulated other comprehensive income as a component of stockholders’ equity. As of March 31, 2024 and March 31, 2023, the Company’s translation adjustments are not material. Monetary assets and liabilities denominated in currencies other than the US dollar are translated at exchange rates in effect at the balance sheet date. Resulting unrealized gains and losses are included in other income (expense), net in the condensed consolidated statements of operations. For the three months ended March 31, 2024 the Company recorded approximately $16,000 of net foreign exchange transaction losses. For the three months ended March 31, 2023, the Company recorded approximately $13,000 of net foreign exchange transaction gains primarily related to one of the Company’s bank accounts being denominated in British Pounds and certain accounts payable denominated in British Pounds. Property and Equipment, Net Property and equipment, net is recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the related assets, which are as follows: Estimated Useful Life Computer equipment 3 years Manufacturing equipment 5 years Furniture and equipment 5 years Laboratory equipment 5 years Leasehold improvements Shorter of remaining lease term or useful life Purchased assets that are not yet in service are recorded to construction-in-process and no depreciation expense is recorded. Once they are placed in service, they are reclassified to the appropriate asset class. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in the Company’s condensed consolidated statements of operation and comprehensive loss. Expenditures for maintenance and repairs are expensed as incurred. Impairment of Long-Lived Assets Long-lived assets consist of property and equipment. The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for impairment, the Company first compares the estimated undiscounted future cash flows expected to result from the use or disposition of that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss would be recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market prices and third-party independent appraisals, as considered necessary. Leases Under lease guidance, arrangements meeting the definition of a lease are classified as operating or financing leases. Operating leases 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 has elected 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. During the three months ended March 31, 2024 and 2023, the Company did not have any financing leases. Warrant Liabilities On September 11, 2023, in conjunction with the Business Combination, the Company assumed the Public Warrants which have an exercise price of $11.50 per share, are exercisable 30 days after the Business Combination and expire five years after the Business Combination or upon redemption. The Company may redeem the Public Warrants if the Company’s Common Stock equals or exceeds $18.00 per share for 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the holders of Public Warrants. As of March 31, 2024, there are 8,433,333 Public Warrants Outstanding. Each warrant entitles the registered holder to purchase one share of Company Common Stock at an exercise price of $11.50 per full share. Pursuant to the Warrant Agreement, a holder of Public Warrants may exercise its Public Warrants only for a whole number of shares of Company Common Stock. This means that only a whole warrant may be exercised at any given time by a holder of Public Warrants. The Company maintains a redemption right with respect to the Public Warrants in that the Company can redeem some or all of the Public Warrants for $0.10 per Public Warrant based on certain market conditions and the market price of the Company Common Stock. In September 2021, Legacy Spectral issued 73,978 warrants, with a strike price of $7.32 and a five-year life, to SP Angel Corporate Finance LLP (“SP Angel”), who acted as nominated adviser and broker to the Company for the purposes of the AIM Rules (“SP Angel Warrants”). In conjunction with the Business Combination, the SP Angel Warrants were converted into warrants to purchase Company Common Stock based on the Exchange Ratio. As of March 31, 2024, there are 73,978 SP Angel Warrants to purchase Company Common Stock outstanding. The Company accounts for its Public Warrants and the SP Angel Warrants as derivative liabilities. Accordingly, the Company recognizes the instruments as liabilities at fair value, determined using the closing price of the observable market quote in an active market (the NASDAQ) for the Public Warrants and the Black-Scholes option-pricing model for the SP Angel Warrants, and adjusts the instruments to fair value at the end of each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, redeemed or expired, and any change in fair value is recognized in the Company’s condensed consolidated statements of operations within other income (expense). 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. The Company generates research and development revenue, primarily from the contracts with BARDA and MTEC. Each contract for BARDA and MTEC has a single performance obligation. The contracts with BARDA are cost-plus-fee contracts associated with development of certain product candidates. BARDA reimburses the Company based on allowable costs plus any recognizable earned fee. Revenues from these reimbursable costs are recognized as the costs are incurred. The MTEC Agreement provides for installment payments after the completion of milestone events. The installment payments are considered variable consideration as the entitlement depends on successful completion of research. However, the payments are not constrained from inclusion in the transaction price as it is not probable that a significant reversal of cumulative revenue will be reversed when the underlying uncertainty is resolved. Revenue for the MTEC Agreement is recognized over time based upon the cost-to-cost measure of progress, using 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. The Company measures progress of performance by comparing the actual costs incurred to-date to the total estimated cost of the project. The Company will adjust the measure of progress at the end of each reporting period and reflect any changes to the estimated cost of the project on a prospective basis. The Company elected the practical expedient not to adjust the transaction price for the effects of a significant financing component as the period between performance (satisfaction of a performance obligation) and payment is one year or less. Payments from customers are generally received within 30 days of when the invoice is sent. Research and Development Expense The Company expenses research and development costs 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 March 31, 2024 and 2023, research and development expense was $4.3 million and $4.0 million, respectively, of which $3.4 million and $2.9 million, respectively, is related to the combined BARDA and MTEC contracts and included in cost of revenue and $0.9 million and $1.1 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 and RSUs based on their respective grant date fair values. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The RSUs are valued based on the fair value of the Company’s common stock on the date of grant. The fair value of RSUs with market based vesting conditions were determined using a Monte-Carlo Simulation to reflect the effects of the market conditions. The assumptions used in calculating the fair value of the Company’s 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 and RSUs over the requisite service period. 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. For RSUs with market-based conditions, compensation is not reversed if these awards are forfeited based solely on failing to meet such market-based conditions. Income Taxes The Company records its 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. 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 March 31, 2024 and December 31, 2023 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. The Company did not have any interest and penalties during the three months ended March 31, 2024 and 2023 and did not have any interest or penalties accrued as of March 31, 2024. Net Loss per Share of Common Stock Basic net loss per 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. 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. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss), which includes foreign currency translation adjustments. For the purposes of comprehensive income (loss) disclosures, the Company does not record tax provisions or benefits for the net changes in the foreign currency translation adjustment, as it intends to indefinitely reinvest undistributed earnings of its foreign subsidiaries. Accumulated other comprehensive income (loss) is reported as a component of stockholders’ equity. Recently Adopted Accounting Standards In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses, which was subsequently amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU 2019-10, ASU No. 2019-11, ASU No. 2020-03, and ASU No. 2022-02. These ASUs have provided for various minor technical corrections and improvements to the codification as well as other transition matters. Smaller reporting companies who file with the SEC are required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. 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. In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. The Company adopted this standard on January 1, 2024, with no impact on its condensed consolidated financial statements and related disclosures. In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The FASB issued 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. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company adopted this standard on January 1, 2024, with no impact on its condensed consolidated financial statements and related disclosures. In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842) — Common Control Arrangements, which require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset. It also requires such leasehold improvements to be accounted for as a transfer between entities under common control through an adjustment to entity if, and when, the lessee no longer controls the use of the underlying asset. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company adopted this standard on January 1, 2024, with no impact on its condensed consolidated financial statements and related disclosures. Recently Issued Accounting Standards In October 2023, the FASB issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”), which modifies certain disclosure and presentation requirements of a variety of Topics in the Codification and is intended to both clarify or improve such requirements and align the requirements with the SEC’s regulations. The effective date for each amendment is the effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited. The Company will apply the provisions prospectively as such provisions become effective and does not expect ASU 2023-06 to have a material impact on the condensed consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update is effective for the Company in the consolidated financial statements for the year ending December 31, 2024, and interim periods beginning after January 1, 2025. The Company is currently evaluating the impact that the adoption of this standard will have on its condensed consolidated financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires more detailed income tax disclosures, requiring entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. This update will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its condensed consolidated financial statements and disclosures. |
Recapitalization
Recapitalization | 3 Months Ended |
Mar. 31, 2024 | |
Recapitalization [Abstract] | |
RECAPITALIZATION | 3. RECAPITALIZATION As discussed in Note 1, on September 11, 2023, the Company consummated the Business Combination, with Legacy Spectral surviving the merger as a wholly-owned subsidiary of the Company. On the date of the Business Combination, the Company recorded net liabilities of $2.4 million, with an offsetting decrease to additional paid-in capital. The following table provides the elements of the Business Combination: Cash $ 660 Other current assets 127 Accounts payable (860 ) Accrued expenses (277 ) Warrant liabilities (2,024 ) Net liabilities assumed in exchange for common stock (2,374 ) Less: Cash (660 ) Non-cash net liabilities assumed in exchange for common stock $ (3,034 ) Upon the Closing, the Company issued 33,333 shares of Company Common Stock, with a fair value of $0.2 million, to settle an assumed liability to the Sponsor as a payment for an administrative fee. The Company recorded transaction costs, consisting of legal, accounting and other professional services incurred by Legacy Spectral related to the Business Combination, of $7.6 million (the “Transaction Costs”), in other income (expense) in the consolidated statement of operations for the year ended December 31, 2023 and no costs were capitalized. As of March 31, 2024, $0.8 million of the Transaction Costs are included in accounts payable and $0.5 million are included in accrued expenses. During the year ended December 31, 2023, the Company paid $1.9 million of Transaction Costs in cash and issued 966,667 shares of Company Common Stock with a fair value of $4.4 million. Prior to the Business Combination, the Company incurred $0.7 million of transaction costs, included in other income (expense) in the consolidated statement of operations for the year ended December 31, 2023, for professional services incurred by Legacy Spectral that were related to potential business combinations that did not occur. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | 4. 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 March 31, 2024 and December 31, 2023, by level within the fair value hierarchy (in thousands): Fair value measured as of March 31, 2024 Fair value at Quoted prices Significant other Significant inputs (Level 3) Warrant liabilities $ 1,798 $ 1,771 $ - $ 27 Short-term notes payable – Yorkville 4,534 - - 4,534 $ 6,332 1,771 - $ 4,561 Fair value measured as of December 31, 2023 Fair value at Quoted prices Significant other Significant Warrant liabilities $ 1,818 $ 1,771 $ - $ 47 There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2024. Fair values of cash, accounts receivable, accounts payable, accrued expenses, and short-term debt (other than the notes payable with Yorkville) are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The fair value of the Public Warrants, which trade in active markets, is based on quoted market prices and classified in Level 1 of the fair value hierarchy. The SP Angel Warrants are classified within Level 3 of the fair value hierarchy because their fair values are based on significant inputs that are unobservable in the market. The following table presents changes in Level 3 warrant liabilities measured at fair value for the three months ended March 31, 2024 and 2023 (in thousands): Balance – January 1, 2024 $ 47 Change in fair value (20 ) Balance – March 31, 2024 $ 27 Balance – January 1, 2023 $ 129 Change in fair value (16 ) Balance – March 31, 2023 $ 113 Both observable and unobservable inputs were used to determine the fair value of warrants 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 warrant liability fair value measurements inputs at their measurement: March 31, December 31, 2024 2023 Strike price (per share) $ 7.32 $ 7.32 Contractual term (years) 3.2 3.5 Volatility (annual) 65.6 % 71.2 % Risk-free rate 4.4 % 4.0 % Dividend yield (per share) 0.0 % 0.0 % Valuation of short-term notes payable – Yorkville The Company elected the fair value option to account for the financial instrument with Yorkville signed on March 20, 2024 (see Note 7). The estimate of the fair value as of March 31, 2024 was determined using a binomial lattice model. The fair value measurement of the debt is determined using Level 3 inputs and assumptions unobservable in the market. Changes in the fair value of debt that is accounted for at fair value, inclusive of related accrued interest expense, are presented as gains or losses as a component of other income (expense) in the accompanying condensed consolidated statements of operations and comprehensive loss under change in fair value of debt, with the exception of changes due to the Company’s credit risk, which are presented as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. The actual settlement of the short-term debt could differ from current estimates based on the timing of when and if Yorkville elects to convert amounts into common shares, potential cash repayment by the Company prior to maturity, and movements in the Company’s common stock price. The following table provides a rollforward of the aggregate fair values of the Company’s Yorkville debt for which fair values are determined using Level 3 inputs: Liabilities: Balance as of December 31, 2023 $ - Addition of short-term notes payable 4,600 Fair value adjustment (66 ) Balance as of March 31, 2024 $ 4,534 The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement: March 31, 2024 Expected term (years) 0.34 Volatility (annual) 80.3 % Risk-free rate 5.36 % Valuation of forward options in B. Riley ELOC and Yorkville SEPA The B. Riley ELOC and Yorkville SEPA are accounted for as derivatives and will be recognized at fair value. Any changes in fair value between the carrying amount of the forward issuance contracts and the settlement amounts will be recognized in other income (expense) in the condensed consolidated statement of operations and comprehensive loss. For the three months ended March 31, 2024, the Company determined there were immaterial changes in derivative liability fair value related to the B. Riley ELOC the Yorkville SEPA. The Company recognized no change in derivative liability fair value for the three months ended March 31, 2024. |
Research and Development Revenu
Research and Development Revenue | 3 Months Ended |
Mar. 31, 2024 | |
Research and Development Revenue [Abstract] | |
RESEARCH AND DEVELOPMENT REVENUE | 5. RESEARCH AND DEVELOPMENT REVENUE For the three months ended March 31, 2024 and 2023, the Company’s revenues disaggregated by the major sources was as follows (in thousands): Three Months Ended 2024 2023 BARDA $ 6,101 $ 4,943 Other U.S governmental authorities 225 135 Total revenue $ 6,326 $ 5,078 The following table presents the activity in the Company’s contract liabilities during the three months ended March 31, 2024 (in thousands): December 31, Additions Reductions March 31, Contract liabilities: Deferred revenue $ 2,311 $ 572 $ (706 ) $ 2,177 Total contract liabilities $ 2,311 $ 572 $ (706 ) $ 2,177 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2024 | |
Accrued Expenses [Abstract] | |
ACCRUED EXPENSES | 6. ACCRUED EXPENSES Accrued expenses consist of the following as of March 31, 2024 and December 31, 2023 (in thousands): March 31, December 31, 2024 2023 Salary and wages $ 2,157 $ 1,910 Operating expenses 1,060 1,563 Benefits 563 720 Taxes 38 107 Total accrued expenses $ 3,818 $ 4,300 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2024 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | 7. NOTES PAYABLE The Company entered into the Yorkville Convertible Notes, the Related Party Note, and financing arrangements for a portion of its Directors and Officers insurance premiums, as follows (in thousands): Principal Repayments Outstanding Balance Amount Three Months Ended March 31, December 31, Financed Interest Rate 2024 2023 2024 2023 Yorkville Convertible Notes $ 5,000 0.0 % $ - $ - $ 4,534 $ - Related Party Note 1,000 8.0 % - - 1,000 - 2023 Insurance Note 631 8.6 % 218 - 218 436 2022 Insurance Note 376 6.7 % - 104 - - $ 218 $ 104 $ 5,752 $ 436 Yorkville Convertible Notes On March 20, 2024, the Company entered into the SEPA with Yorkville pursuant to which the Company has the right to sell to Yorkville up to $30.0 million of its shares of Company Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA (such transaction, the “Yorkville Transaction”). In connection with the SEPA, and subject to the conditions set forth therein, Yorkville has agreed to advance to the Company in the form of convertible promissory notes (the “Convertible Notes”) an aggregate principal amount of up to $12.5 million (the “Pre-Paid Advance”), which will be paid in three tranches. The first Pre-Paid Advance was disbursed on March 20, 2024 in the amount of $5.0 million with a fixed conversion price of $3.16. The Company received $4.6 million in cash, net of the 8% original issue discount. The second Pre-Paid Advance shall be in a principal amount of $5.0 million and advanced two business days following the later of the registration statement registering the resale of the shares of Common Stock issuable under the SEPA being declared effective and shareholder approval to exceed the 19.99% threshold of the aggregate number of shares of Common Stock (the “Exchange Cap”) issued pursuant to the SEPA with a fixed conversion price equal to 120% of the average VWAP during the three trading days immediately prior to the issuance of the note (the “Second Pre-Advance Closing”), and the third Pre-Paid Advance shall be in a principal amount of $2.5 million and advanced sixty days following the Second Pre-Advance Closing with a fixed conversion price equal to 120% of the average VWAP during the three trading days immediately prior to the issuance of the note. The purchase price for the Pre-Paid Advance is 92.0% of the principal amount of the Pre-Paid Advance. Interest shall accrue on the outstanding balance of any Pre-Paid Advance at an annual rate equal to 0%, subject to an increase to 18% upon an event of default as described in the Convertible Notes. Beginning on the forty-fifth (45th) day following the issuance date of the Convertible Note issued in connection with the first Pre-Paid Advance, and continuing on the same day of each successive month thereafter, (each, an “Installment Date”), the Company shall repay a portion of the outstanding balance of the Pre-Paid Advance in an amount equal to (i) $1,750,000, provided however, in respect of any Installment Date prior to the closing of the second Pre-Paid Advance, $750,000 (the “Installment Principal Amount”), plus (ii) the a payment premium of 7% of such Installment Principal Amount, and (iii) accrued and unpaid interest hereunder as of each Installment Date. The maturity date of the Convertible Notes issue in connection with each Pre-Paid Advance will be 12 months after the issuance date of such Convertible Notes. The Company received a deferment on the repayment of the first Pre-Paid Advance until May 17, 2024. As the SEPA is an equity-linked contract that does not qualify for equity classification, any expenses incurred will be recognized in the consolidated statements of operations and comprehensive loss within transaction costs. For the three months ended March 31, 2024, the Company recognized $0.3 million in issuance costs related to the SEPA. The Company also incurred costs related to issuance of the convertible notes which are recognized in borrowing related costs within other income (expense) in the consolidated statements of operations and comprehensive loss. Borrowing related costs incurred for the three months ending March 31, 2024 were $0.3 million. Related Party Note On March 19, 2024, the Company announced that Spectral IP received a $1.0 million investment from an affiliate of its largest shareholder for the development of its health care related artificial intelligence intellectual property portfolio. The investment is structured as a note payable with a one-year maturity, at an interest rate of 8%, and requiring earlier prepayment if the Company spins off Spectral IP to the Company’s shareholders or if Spectral IP is sold to a third party. Insurance Notes The Company determined that the carrying amounts of all of the insurance notes approximate fair value due to the short-term nature of borrowings and current market rates of interest. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Legal Matters The Company is not a party to any material legal proceedings or pending claims. The Company is aware of a material threatened claim that it believes is without merit. 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, none of which we believe are material or would be expected to have, individually or in the aggregate, a material adverse effect on our business, financial condition, cash flows or results of operations. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
LEASES | 9. 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 expired 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 expired 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 months ended March 31, 2024 and 2023 (in thousands): Three Months Ended 2024 2023 Operating cash flows used in operating leases $ 210 $ 115 Right-of-use assets exchanged for operating lease liabilities $ - $ - Weighted average remaining lease term (in years) 0.8 1.2 Weighted average discount rate 8.5 % 8.5 % 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 2024 2023 Operating leases Operating lease cost $ 205 $ 194 Variable lease cost 105 59 Operating lease expense 310 253 Short-term lease rent expense 42 - Total rent expense $ 352 $ 253 Variable lease cost is primarily attributable to amounts paid to lessors for utility charges, parking, and property taxes under an office space lease. As of March 31, 2024, future minimum payments under the non-cancelable operating leases were as follows (in thousands): Remaining period ended December 31, 2024 $ 683 Total 683 Less: imputed interest (23 ) Operating lease liabilities $ 660 |
Stockholders_ Equity
Stockholders’ Equity | 3 Months Ended |
Mar. 31, 2024 | |
Stockholders’ Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | 10. STOCKHOLDERS’ EQUITY In conjunction with the Closing, the Company’s certificate of incorporation was amended and restated to authorize the issuance of 80,000,000 shares of Company Common Stock, $0.0001 par value and 1,000,000 shares of preferred stock, $0.0001 par value (the “Company Preferred Stock”). On December 26, 2023, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and related Registration Rights Agreement with B. Riley Principal Capital II, LLC (“B. Riley”). Upon the terms and subject to the satisfaction of the conditions set forth in the Purchase Agreement, the Company has the right, in our sole discretion, to sell to B. Riley up to $10.0 million in aggregate gross proceeds of newly issued shares of the Company’s Common Stock (the “ELOC”). During the three months ended March 31, 2024 the Company issued 1,187,398 shares to B. Riley under the ELOC for $2.7 million in aggregate gross proceeds. During the three months ended March 31, 2024, the Company recognized $0.4 million of related stock issuance costs and $0.1 million of service fee costs which are included in transaction costs within the condensed consolidated statements of operations and comprehensive loss. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Stock-Based Compensation [Abstract] | |
STOCK-BASED COMPENSATION | 11. STOCK-BASED COMPENSATION Each option and warrant to purchase common stock of Legacy Spectral was converted into an option and warrant, respectively, to purchase Spectral AI’s common stock based on the Exchange Ratio, with corresponding adjustments to the exercise price. Accordingly, the options and warrants to purchase 46,592,862 and 762,712, respectively, shares of the common stock of Legacy Spectral were converted into options and warrants to purchase 4,519,191 and 73,978, respectively, shares of Spectral AI’s common stock. Legacy Spectral’s 600,000 RSUs were converted into 58,197 Spectral AI RSUs, based on the Exchange Ratio. 2018 Long Term Incentive Plan On July 24, 2018, Legacy Spectral’s Board of Directors adopted the 2018 Long Term Incentive Plan (the “2018 Plan”) which permits granting of incentive stock options (which 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 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 Legacy Spectral’s Board of Directors. As of March 31, 2024, 3,526,200 shares of common stock were authorized for issuance under the 2018 Plan, of which 193,889 remain available for issuance. 2022 Long Term Incentive Plan On September 27, 2022, Legacy Spectral’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 Legacy Spectral’s Board of Directors. As of March 31, 2024, under the 2022 Plan, 88,749 shares of common stock were issuable upon exercise of outstanding options and 508,197 restricted stock units (“RSUs”) were issuable. Under the 2022 Plan, 1,342,918 shares remain available for issuance through grants of future options. RSUs awarded under the 2022 Plan for the purchase of common stock will vest based on continued service which is generally three years or based on the achievement of market terms as set forth in the individual awards. The grant date fair value of the award will be recognized as compensation expense over the requisite service period. The fair value of the RSUs is estimated on the date of grant based on the fair value of the Company’s common stock. The 2022 Plan provides that the Compensation Committee shall determine the vesting conditions of awards granted under the 2022 Plan, and the Compensation Committee has from time-to-time approved vesting schedules for certain awards that deviate from the vesting conditions described in the previous sentence. Restricted Stock Units On January 3, 2024, pursuant to the 2022 Plan, the Company granted its then-CFO a market condition RSU of up to 150,000 shares of the Company’s common stock. The award had a grant date fair value of approximately $0.4 million using a Monte Carlo simulation model. The RSUs under this market-based award will vest partially based on achievement of stock price targets of the Company’s common stock. 50,000 RSUs vest when the 180-day VWAP meets or exceeds $8.00 per share, 50,000 RSUs vest when the 180-day VWAP meets or exceeds $12.00 per share, and 50,000 RSUs are not market-based and will vest over the continued service period of three years. These market-based conditions must be met in order for portions of the RSU award to vest, and it is therefore possible that certain awards ultimately would not vest. The grant date fair value of each RSU grant is expensed over the requisite service period. Compensation expense relating to share-based awards with market-based conditions is not reversed if these awards are forfeited based solely on failing to meet such market-based conditions. On February 29, 2024, pursuant to the 2022 Plan, the Company granted both its CFO and CEO awards of RSUs up to 150,000 shares of the Company’s common stock. The awards had a grant date fair value of approximately $0.6 million using a Monte Carlo simulation model. The portion of RSUs that are market-based awards will vest partially based on achievement of stock price targets of the Company’s common stock. 37,500 RSUs vest when the 180-day VWAP meets or exceeds $8.00 per share, 37,500 RSUs vest when the 180-day VWAP meets or exceeds $10.00 per share. The market-based conditions must be met in order for the market-based portion of the RSU awards to vest, and it is therefore possible that certain awards ultimately would not vest. 75,000 RSUs are not market-based and will vest over the continued service period of three years. The grant date fair value of each RSU grant is expensed over the requisite service period. Compensation expense relating to share-based awards with market-based conditions is not reversed if these awards are forfeited based solely on failing to meet such market-based conditions. On February 29, 2024, the Company amended the terms of the January 3, 2024 RSU grant to its then-CFO to provide for identical vesting terms to those provided in the February 29, 2024 RSU grant. The Company determined the amended RSU grant represents a modification of the original award, however, the incremental compensation cost of the amendment was not material. A summary of RSU activities for the three months ended March 31, 2024 are presented below: Number of Weighted Nonvested as of January 1, 2024 58,197 $ 4.65 Granted 450,000 $ 2.16 Nonvested as of March 31, 2024 508,197 $ 1.97 During the three months ended March 31, 2024, the Company granted 450,000 restricted stock units with a weighted-average grant date fair value of $2.16 per share. As of March 31, 2024, total unrecognized compensation expense related to restricted stock units was $1.1 million, which is expected to be recognized over a weighted-average period of 2.2 years. The Company did not grant any restricted stock units during the three months ended March 31, 2023. 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. Legacy Spectral’s stock became publicly traded on July 22, 2021 on the AIM Market of the London Stock Exchange, and lacks company-specific historical and implied volatility information. On September 11, 2023 the Company completed the Business Combination and was listed on NASDAQ under the symbol MDAI. Legacy Spectral estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Spectral AI continues to estimate 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 Legacy Spectral’s and Spectral AI’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 Legacy Spectral and Spectral AI have never paid cash dividends and Spectral AI does not expect to pay any cash dividends in the foreseeable future. The Company’s stock options generally vest ratably annually over 3 years and have a contractual term of 10 years. There were no options granted in the three months ended March 31, 2024 and 2023. A summary of stock options activity for the three months ended March 31, 2024 is presented below: Stock Options Weighted Weighted Aggregate Outstanding at January 1, 2024 3,578,579 $ 2.20 6.5 $ 8,041 Options granted - $ - Options forfeited - $ - Options cancelled - $ - Options exercised - $ - Outstanding as of March 31, 2024 3,578,579 $ 2.20 6.3 $ 8,041 Options vested and exercisable as of December 31, 2024 3,126,216 $ 1.87 5.9 $ 6,092 The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the respective date. As of March 31, 2024, there was approximately $1.0 million of unrecognized stock-based compensation related to stock option grants that will be amortized over a weighted average period of 0.9 The Company recorded stock-based compensation expense for stock options, RSUs, and restricted stock awards of $0.3 million and $0.2 million for the three months ended March 31, 2024 and March 31, 2023, respectively, in general and administrative expenses in the condensed consolidated statements of operations. During the year ended December 31, 2018, the Company granted 973,803 stock options to investors (the “Investor Options”) that were approved by the Board of Directors outside of the 2018 Plan. During the year ended December 31, 2023, 34,779 of the Investor Options were exercised and the remaining 904,245 Investor Options expired in November 2023. The Investor Options had an exercise price of $2.06 per share. As of March 31, 2024, there is no unrecognized stock-based compensation expense related to the Investor Options. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Taxes [Abstract] | |
INCOME TAXES | 12. INCOME TAXES The Company recorded an income tax provision of approximately $22,000 for the three months ended March 31, 2024, and an income tax provision of approximately $46,000 for the three months ended March 31, 2023. The effective tax rate was 0.7% for the three months ended March 31, 2024, and 1.3% for the three months ended March 31, 2023. 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 months ended March 31, 2024 primarily due to changes in valuation allowances on deferred tax assets as it is more likely than not that 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. |
Net Loss Per Common Share
Net Loss Per Common Share | 3 Months Ended |
Mar. 31, 2024 | |
Net Loss Per Common Share [Abstract] | |
NET LOSS PER COMMON SHARE | 13. NET LOSS PER COMMON SHARE Basic and diluted net loss per common share attributable to common stockholders are the same for the three months ended March 31, 2024 and 2023, 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. Three Months Ended 2024 2023 Common stock options 3,578,579 4,427,253 Common stock warrants 8,507,311 73,978 Unvested restricted stock units 508,197 - Unvested restricted stock - 12,132 Potentially dilutive securities 12,594,087 4,513,363 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 14. RELATED PARTY TRANSACTIONS On March 7, 2024, the Company formed a new wholly-owned subsidiary, Spectral IP, to be utilized to advance artificial intelligent intellectual property with a specific emphasis on healthcare. On March 19, 2024, the Company announced that Spectral IP received a $1.0 million investment from an affiliate of its largest shareholder for the development of its artificial intelligence intellectual property portfolio. The investment is structured as a note payable with a one-year maturity, an interest rate of 8%, and requiring earlier prepayment if the Company spins off Spectral IP to the Company’s shareholders or if Spectral IP is sold to a third party. For the year ended December 31, 2023, the Company did not have any transactions with related parties. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 15. SUBSEQUENT EVENTS Dallas Lease In April 2024, the Company entered into a fourth amendment (the “Fourth Amendment”) to the Lease Agreement (the “Lease Agreement”), dated as of August 23, 2021, by and between the Company and Chateau Plaza Holdings, L.P, (the “Lessor”). The Fourth Amendment extends the lease of approximately 18,845 square feet of office space in Dallas, Texas by approximately three years, until February 29, 2028. The minimum rent payable by the Company under the Fourth Amendment will be approximately $0.1 million per month. The Company will also continue to be required to pay its proportionate share of operating expenses, as defined in the Lease Agreement. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (3,205) | $ (3,609) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant 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”) or an Accounting Standards Update (“ASU”). The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Legacy Spectral was determined as the accounting acquirer and the Company as the acquired company for financial reporting purposes. Recapitalization Legacy Spectral was determined to be the accounting acquiror based on evaluation of the following facts and circumstances: (i) Legacy Spectral’s former shareholders have a majority of the voting power of Spectral AI; (ii) Legacy Spectral’s senior management comprises all of the senior management of Spectral AI; (iii) Legacy Spectral selected five of the six directors for the Board of Directors of Spectral AI; (iv) Legacy Spectral’s relative size of assets and operations compared to Rosecliff; and (v) Legacy Spectral’s operations comprise the ongoing operations of Spectral AI. All historical financial information presented in the condensed consolidated financial statements represents the accounts of Legacy Spectral at their historical values as if Legacy Spectral is the predecessor to the Company. The condensed consolidated financial statements following the Closing reflect the results of the combined entity’s operations. All issued and outstanding shares of Legacy Spectral Common Stock and warrants, stock options, restricted stock units (“RSUs”), and restricted stock awards (“RSAs”) of Legacy Spectral and the per share amounts contained in the condensed consolidated financial statements for the periods presented prior to the Closing have been retroactively restated to reflect the Exchange Ratio (as defined in Note 1). |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Spectral MD Holdings LLC, Spectral MD Inc., Spectral MD UK Limited (“Spectral MD UK”), Spectral DeepView Limited, and Spectral IP. Significant inter-company transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the 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 liabilities, the fair value of short term notes payable, fair value of the B. Riley and Yorkville derivative instruments, stock-based compensation expense, stock issued for transaction costs, the net realizable value of inventory, right-of-use assets, and income tax valuation allowances. Actual results could differ from these estimates. |
Segments | Segments Operating segments are defined as components of an enterprise for which separate and discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on an aggregate basis for the purpose of allocating resources. |
Cash | Cash The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. All cash is held in US, UK, & Ireland 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 ® 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 March 31, 2024 and December 31, 2023. Certain third-party costs that are prepaid per the terms of the contract are billable to customers prior to recognition of related expenses. The Company records deferred revenue when the customers have been billed prior to recognizing revenue. The Company records unbilled revenue when revenue is recognized prior to billing customers. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss includes net loss, as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments which potentially subject the Company to credit risk consist principally of cash and accounts receivable. Primarily all cash is 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. Additional credit risk is related to the Company’s concentration of receivables. As of March 31, 2024 and December 31, 2023, receivables were concentrated from one customer (which is a US. Government agency) representing 98% and 92% of total net receivables, respectively. One customer (which is a U.S. government agency) accounted for 96% for the three months ended March 31, 2024 and 97% for the three months ended March 31, 2023 of the recognized research and development revenue. |
Inventory, Policy [Policy Text Block] | Inventory Inventory is comprised of finished goods, purchased from a third-party manufacturer, and is stated at the lower of cost (average cost) or net realizable value. For the three months ended March 31, 2024 and the three months ended March 31, 2023, the Company did not have write-downs for obsolete inventory. |
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). |
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 subsidiaries Spectral MD Holdings LLC, Spectral MD, Inc., and Spectral IP is the US dollar. The functional currency of Spectral MD UK is its local currency, the British pound. The functional currency of Spectral DeepView Limited is its local currency, the Euro. The assets and liabilities of Spectral MD UK and Spectral DeepView Limited, are 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 reporting period. Translation adjustments are included in Accumulated other comprehensive income as a component of stockholders’ equity. As of March 31, 2024 and March 31, 2023, the Company’s translation adjustments are not material. Monetary assets and liabilities denominated in currencies other than the US dollar are translated at exchange rates in effect at the balance sheet date. Resulting unrealized gains and losses are included in other income (expense), net in the condensed consolidated statements of operations. For the three months ended March 31, 2024 the Company recorded approximately $16,000 of net foreign exchange transaction losses. For the three months ended March 31, 2023, the Company recorded approximately $13,000 of net foreign exchange transaction gains primarily related to one of the Company’s bank accounts being denominated in British Pounds and certain accounts payable denominated in British Pounds. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net is recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the related assets, which are as follows: Estimated Useful Life Computer equipment 3 years Manufacturing equipment 5 years Furniture and equipment 5 years Laboratory equipment 5 years Leasehold improvements Shorter of remaining lease term or useful life Purchased assets that are not yet in service are recorded to construction-in-process and no depreciation expense is recorded. Once they are placed in service, they are reclassified to the appropriate asset class. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in the Company’s condensed consolidated statements of operation and comprehensive loss. Expenditures for maintenance and repairs are expensed as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets consist of property and equipment. The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for impairment, the Company first compares the estimated undiscounted future cash flows expected to result from the use or disposition of that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss would be recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market prices and third-party independent appraisals, as considered necessary. |
Leases | Leases Under lease guidance, arrangements meeting the definition of a lease are classified as operating or financing leases. Operating leases 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 has elected 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. During the three months ended March 31, 2024 and 2023, the Company did not have any financing leases. |
Warrant Liabilities | Warrant Liabilities On September 11, 2023, in conjunction with the Business Combination, the Company assumed the Public Warrants which have an exercise price of $11.50 per share, are exercisable 30 days after the Business Combination and expire five years after the Business Combination or upon redemption. The Company may redeem the Public Warrants if the Company’s Common Stock equals or exceeds $18.00 per share for 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the holders of Public Warrants. As of March 31, 2024, there are 8,433,333 Public Warrants Outstanding. Each warrant entitles the registered holder to purchase one share of Company Common Stock at an exercise price of $11.50 per full share. Pursuant to the Warrant Agreement, a holder of Public Warrants may exercise its Public Warrants only for a whole number of shares of Company Common Stock. This means that only a whole warrant may be exercised at any given time by a holder of Public Warrants. The Company maintains a redemption right with respect to the Public Warrants in that the Company can redeem some or all of the Public Warrants for $0.10 per Public Warrant based on certain market conditions and the market price of the Company Common Stock. In September 2021, Legacy Spectral issued 73,978 warrants, with a strike price of $7.32 and a five-year life, to SP Angel Corporate Finance LLP (“SP Angel”), who acted as nominated adviser and broker to the Company for the purposes of the AIM Rules (“SP Angel Warrants”). In conjunction with the Business Combination, the SP Angel Warrants were converted into warrants to purchase Company Common Stock based on the Exchange Ratio. As of March 31, 2024, there are 73,978 SP Angel Warrants to purchase Company Common Stock outstanding. The Company accounts for its Public Warrants and the SP Angel Warrants as derivative liabilities. Accordingly, the Company recognizes the instruments as liabilities at fair value, determined using the closing price of the observable market quote in an active market (the NASDAQ) for the Public Warrants and the Black-Scholes option-pricing model for the SP Angel Warrants, and adjusts the instruments to fair value at the end of each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, redeemed or expired, and any change in fair value is recognized in the Company’s condensed consolidated statements of operations within other income (expense). |
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. The Company generates research and development revenue, primarily from the contracts with BARDA and MTEC. Each contract for BARDA and MTEC has a single performance obligation. The contracts with BARDA are cost-plus-fee contracts associated with development of certain product candidates. BARDA reimburses the Company based on allowable costs plus any recognizable earned fee. Revenues from these reimbursable costs are recognized as the costs are incurred. The MTEC Agreement provides for installment payments after the completion of milestone events. The installment payments are considered variable consideration as the entitlement depends on successful completion of research. However, the payments are not constrained from inclusion in the transaction price as it is not probable that a significant reversal of cumulative revenue will be reversed when the underlying uncertainty is resolved. Revenue for the MTEC Agreement is recognized over time based upon the cost-to-cost measure of progress, using 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. The Company measures progress of performance by comparing the actual costs incurred to-date to the total estimated cost of the project. The Company will adjust the measure of progress at the end of each reporting period and reflect any changes to the estimated cost of the project on a prospective basis. The Company elected the practical expedient not to adjust the transaction price for the effects of a significant financing component as the period between performance (satisfaction of a performance obligation) and payment is one year or less. Payments from customers are generally received within 30 days of when the invoice is sent. |
Research and Development Expense | Research and Development Expense The Company expenses research and development costs 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 March 31, 2024 and 2023, research and development expense was $4.3 million and $4.0 million, respectively, of which $3.4 million and $2.9 million, respectively, is related to the combined BARDA and MTEC contracts and included in cost of revenue and $0.9 million and $1.1 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 and RSUs based on their respective grant date fair values. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The RSUs are valued based on the fair value of the Company’s common stock on the date of grant. The fair value of RSUs with market based vesting conditions were determined using a Monte-Carlo Simulation to reflect the effects of the market conditions. The assumptions used in calculating the fair value of the Company’s 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 and RSUs over the requisite service period. 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. For RSUs with market-based conditions, compensation is not reversed if these awards are forfeited based solely on failing to meet such market-based conditions. |
Income Taxes | Income Taxes The Company records its 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. 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 March 31, 2024 and December 31, 2023 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. The Company did not have any interest and penalties during the three months ended March 31, 2024 and 2023 and did not have any interest or penalties accrued as of March 31, 2024. |
Net Loss per Share of Common Stock | Net Loss per Share of Common Stock Basic net loss per 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. 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. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss), which includes foreign currency translation adjustments. For the purposes of comprehensive income (loss) disclosures, the Company does not record tax provisions or benefits for the net changes in the foreign currency translation adjustment, as it intends to indefinitely reinvest undistributed earnings of its foreign subsidiaries. Accumulated other comprehensive income (loss) is reported as a component of stockholders’ equity. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses, which was subsequently amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU 2019-10, ASU No. 2019-11, ASU No. 2020-03, and ASU No. 2022-02. These ASUs have provided for various minor technical corrections and improvements to the codification as well as other transition matters. Smaller reporting companies who file with the SEC are required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. 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. In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. The Company adopted this standard on January 1, 2024, with no impact on its condensed consolidated financial statements and related disclosures. In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The FASB issued 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. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company adopted this standard on January 1, 2024, with no impact on its condensed consolidated financial statements and related disclosures. In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842) — Common Control Arrangements, which require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset. It also requires such leasehold improvements to be accounted for as a transfer between entities under common control through an adjustment to entity if, and when, the lessee no longer controls the use of the underlying asset. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company adopted this standard on January 1, 2024, with no impact on its condensed consolidated financial statements and related disclosures. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In October 2023, the FASB issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”), which modifies certain disclosure and presentation requirements of a variety of Topics in the Codification and is intended to both clarify or improve such requirements and align the requirements with the SEC’s regulations. The effective date for each amendment is the effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited. The Company will apply the provisions prospectively as such provisions become effective and does not expect ASU 2023-06 to have a material impact on the condensed consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update is effective for the Company in the consolidated financial statements for the year ending December 31, 2024, and interim periods beginning after January 1, 2025. The Company is currently evaluating the impact that the adoption of this standard will have on its condensed consolidated financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires more detailed income tax disclosures, requiring entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. This update will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its condensed consolidated financial statements and disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net is recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the related assets, which are as follows: Estimated Useful Life Computer equipment 3 years Manufacturing equipment 5 years Furniture and equipment 5 years Laboratory equipment 5 years Leasehold improvements Shorter of remaining lease term or useful life |
Recapitalization (Tables)
Recapitalization (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Recapitalization [Abstract] | |
Schedule of Elements of the Business Combination | The following table provides the elements of the Business Combination: Cash $ 660 Other current assets 127 Accounts payable (860 ) Accrued expenses (277 ) Warrant liabilities (2,024 ) Net liabilities assumed in exchange for common stock (2,374 ) Less: Cash (660 ) Non-cash net liabilities assumed in exchange for common stock $ (3,034 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Measurements (Tables) [Line Items] | |
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 March 31, 2024 and December 31, 2023, by level within the fair value hierarchy (in thousands): Fair value measured as of March 31, 2024 Fair value at Quoted prices Significant other Significant inputs (Level 3) Warrant liabilities $ 1,798 $ 1,771 $ - $ 27 Short-term notes payable – Yorkville 4,534 - - 4,534 $ 6,332 1,771 - $ 4,561 Fair value measured as of December 31, 2023 Fair value at Quoted prices Significant other Significant Warrant liabilities $ 1,818 $ 1,771 $ - $ 47 |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs at their Measurement | The following table presents changes in Level 3 warrant liabilities measured at fair value for the three months ended March 31, 2024 and 2023 (in thousands): Balance – January 1, 2024 $ 47 Change in fair value (20 ) Balance – March 31, 2024 $ 27 Balance – January 1, 2023 $ 129 Change in fair value (16 ) Balance – March 31, 2023 $ 113 |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs | The following table provides quantitative information regarding Level 3 warrant liability fair value measurements inputs at their measurement: March 31, December 31, 2024 2023 Strike price (per share) $ 7.32 $ 7.32 Contractual term (years) 3.2 3.5 Volatility (annual) 65.6 % 71.2 % Risk-free rate 4.4 % 4.0 % Dividend yield (per share) 0.0 % 0.0 % |
Schedule of Rollforward of the Aggregate Fair Values of the Company’s Yorkville Debt | The following table provides a rollforward of the aggregate fair values of the Company’s Yorkville debt for which fair values are determined using Level 3 inputs: Liabilities: Balance as of December 31, 2023 $ - Addition of short-term notes payable 4,600 Fair value adjustment (66 ) Balance as of March 31, 2024 $ 4,534 |
Fair Value Measurements [Member] | |
Fair Value Measurements (Tables) [Line Items] | |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs at their Measurement | The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement: March 31, 2024 Expected term (years) 0.34 Volatility (annual) 80.3 % Risk-free rate 5.36 % |
Research and Development Reve_2
Research and Development Revenue (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Research and Development Revenue [Abstract] | |
Schedule of Revenue Disaggregated | For the three months ended March 31, 2024 and 2023, the Company’s revenues disaggregated by the major sources was as follows (in thousands): Three Months Ended 2024 2023 BARDA $ 6,101 $ 4,943 Other U.S governmental authorities 225 135 Total revenue $ 6,326 $ 5,078 |
Schedule of Company's Contract Liabilities | The following table presents the activity in the Company’s contract liabilities during the three months ended March 31, 2024 (in thousands): December 31, Additions Reductions March 31, Contract liabilities: Deferred revenue $ 2,311 $ 572 $ (706 ) $ 2,177 Total contract liabilities $ 2,311 $ 572 $ (706 ) $ 2,177 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accrued Expenses [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consist of the following as of March 31, 2024 and December 31, 2023 (in thousands): March 31, December 31, 2024 2023 Salary and wages $ 2,157 $ 1,910 Operating expenses 1,060 1,563 Benefits 563 720 Taxes 38 107 Total accrued expenses $ 3,818 $ 4,300 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Notes Payable [Abstract] | |
Schedule of Convertible Notes, Related Party Note, and Financing Arrangements | The Company entered into the Yorkville Convertible Notes, the Related Party Note, and financing arrangements for a portion of its Directors and Officers insurance premiums, as follows (in thousands): Principal Repayments Outstanding Balance Amount Three Months Ended March 31, December 31, Financed Interest Rate 2024 2023 2024 2023 Yorkville Convertible Notes $ 5,000 0.0 % $ - $ - $ 4,534 $ - Related Party Note 1,000 8.0 % - - 1,000 - 2023 Insurance Note 631 8.6 % 218 - 218 436 2022 Insurance Note 376 6.7 % - 104 - - $ 218 $ 104 $ 5,752 $ 436 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Operating Lease | The following table summarizes quantitative information about the Company’s operating leases for the three months ended March 31, 2024 and 2023 (in thousands): Three Months Ended 2024 2023 Operating cash flows used in operating leases $ 210 $ 115 Right-of-use assets exchanged for operating lease liabilities $ - $ - Weighted average remaining lease term (in years) 0.8 1.2 Weighted average discount rate 8.5 % 8.5 % |
Schedule of Lease Cost Included In General And Administrative Expense | 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 2024 2023 Operating leases Operating lease cost $ 205 $ 194 Variable lease cost 105 59 Operating lease expense 310 253 Short-term lease rent expense 42 - Total rent expense $ 352 $ 253 |
Schedule of Non-Cancelable Operating Lease | As of March 31, 2024, future minimum payments under the non-cancelable operating leases were as follows (in thousands): Remaining period ended December 31, 2024 $ 683 Total 683 Less: imputed interest (23 ) Operating lease liabilities $ 660 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Stock-Based Compensation [Abstract] | |
Schedule of RSU activities | A summary of RSU activities for the three months ended March 31, 2024 are presented below: Number of Weighted Nonvested as of January 1, 2024 58,197 $ 4.65 Granted 450,000 $ 2.16 Nonvested as of March 31, 2024 508,197 $ 1.97 |
Schedule of Stock Options Activity | A summary of stock options activity for the three months ended March 31, 2024 is presented below: Stock Options Weighted Weighted Aggregate Outstanding at January 1, 2024 3,578,579 $ 2.20 6.5 $ 8,041 Options granted - $ - Options forfeited - $ - Options cancelled - $ - Options exercised - $ - Outstanding as of March 31, 2024 3,578,579 $ 2.20 6.3 $ 8,041 Options vested and exercisable as of December 31, 2024 3,126,216 $ 1.87 5.9 $ 6,092 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Net Loss Per Common Share [Abstract] | |
Schedule of 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. Three Months Ended 2024 2023 Common stock options 3,578,579 4,427,253 Common stock warrants 8,507,311 73,978 Unvested restricted stock units 508,197 - Unvested restricted stock - 12,132 Potentially dilutive securities 12,594,087 4,513,363 |
Nature of the Business (Details
Nature of the Business (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |||||||
Mar. 20, 2024 | Mar. 19, 2024 | Feb. 17, 2021 | Sep. 30, 2023 | Apr. 30, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 26, 2023 | |
Nature of the Business [Line Items] | |||||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |||||||
Common stock exchange ratio price (in Dollars per share) | $ 10.31 | ||||||||
Contract value | $ 150,000 | ||||||||
Contract initial award value | $ 54,900 | ||||||||
Received amount | $ 4,000 | ||||||||
Investment from shareholders | $ 1,000 | ||||||||
Interest rate | 8% | ||||||||
Cash | 10,157 | $ 4,790 | |||||||
Accumulated deficit | (35,993) | (32,788) | |||||||
Notes payable | 5,800 | 400 | |||||||
Aggregate gross purchase price | $ 10,000 | ||||||||
Obligation to sell | $ 30,000 | ||||||||
Pre-paid advance | 12,500 | ||||||||
Prepaid advance disbursed amount | 4,600 | ||||||||
Prepaid advance net discount amount | $ 400 | ||||||||
Prepaid advance net discount percentage | 8% | ||||||||
Pre-paid advance amount | 218 | $ 104 | |||||||
Percentage of shares of common stock issued | 19.99% | ||||||||
Additional authorized amount | $ 3,000 | ||||||||
Additional development amount | $ 500 | ||||||||
First Pre-Paid Advance [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Customer Advances and Deposits | $ 5,000 | ||||||||
Conversion price (in Dollars per share) | $ 3.16 | ||||||||
Second Pre-Paid Advance [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Pre-paid advance amount | $ 5,000 | ||||||||
Third Pre-Paid Advance [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Pre-paid advance amount | $ 2,500 | ||||||||
Sponsor [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Common stock shares issued (in Shares) | 5,445,000 | ||||||||
Letter Agreement [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Common stock shares issued (in Shares) | 880,000 | ||||||||
Legacy Spectral Common Stock [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Common stock shares issued (in Shares) | 7,679,198 | ||||||||
Issuance of private placement | $ 3,400 | ||||||||
Common stock excess shares outstanding (in Shares) | 145,380,871 | ||||||||
Common stock excess shares issued (in Shares) | 145,380,871 | ||||||||
Common stock exchange ratio shares (in Shares) | 14,094,450 | ||||||||
Common stock exchange ratio price (in Dollars per share) | $ 10.31 | ||||||||
Cash [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Cash | $ 10,200 | 4,800 | |||||||
Biomedical Advanced Research and Development Authority [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Accumulated deficit | $ 32,800 | ||||||||
Class A Common Stock [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Common stock shares issued (in Shares) | 280,485 | ||||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | ||||||||
Class B Common Stock [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Common stock shares issued (in Shares) | 6,325,000 | ||||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | ||||||||
Common Stock [Member] | Legacy Spectral Common Stock [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Common stock, par value (in Dollars per share) | $ 0.001 | ||||||||
Private Placement [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Sale of warrant (in Shares) | 8,433,333 | ||||||||
Public Share [Member] | |||||||||
Nature of the Business [Line Items] | |||||||||
Common stock shares issued (in Shares) | 280,485 | ||||||||
Common stock, par value (in Dollars per share) | $ 0.0001 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Sep. 11, 2023 | |
Summary of Significant Accounting Policies [Line Items] | |||||
Net foreign exchange transaction losses | $ 16,000 | $ 13,000 | |||
Warrants price per share (in Dollars per share) | $ 11.5 | ||||
Warrant expire term | 5 years | ||||
Research and development expense | 4,300 | 4,000 | |||
General and administrative expenses | 3,400 | 2,900 | |||
Cost of revenue | $ 900 | $ 1,100 | |||
Warrant [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Warrants price per share (in Dollars per share) | $ 0.1 | ||||
Exceeds per share (in Dollars per share) | $ 11.5 | ||||
Public warrants outstanding (in Shares) | 73,978 | ||||
Sale of Stock, Number of Shares Issued in Transaction (in Shares) | 1 | ||||
Number of warrants issued (in Shares) | 73,978 | ||||
Warrant per share (in Dollars per share) | $ 7.32 | ||||
Customer Concentration Risk [Member] | One Customer [Member] | Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Net receivables, percentage | 98% | 92% | |||
Customer Concentration Risk [Member] | One Customer [Member] | Research and Development Revenue [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Net receivables, percentage | 96% | 97% | |||
Public Warrants [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Exceeds per share (in Dollars per share) | $ 18 | ||||
Public warrants outstanding (in Shares) | 8,433,333 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2024 | |
Computer Equipment [Member] | |
Schedule of Property and Equipment, Net [Line Items] | |
Estimated useful lives of the assets | 3 years |
Manufacturing Equipment [Member] | |
Schedule of Property and Equipment, Net [Line Items] | |
Estimated useful lives of the assets | 5 years |
Furniture and Equipment [Member] | |
Schedule of Property and Equipment, Net [Line Items] | |
Estimated useful lives of the assets | 5 years |
Laboratory Equipment [Member] | |
Schedule of Property and Equipment, Net [Line Items] | |
Estimated useful lives of the assets | 5 years |
Leasehold Improvements [Member] | |
Schedule of Property and Equipment, Net [Line Items] | |
Leasehold improvements | Shorter of remaining lease term or useful life |
Recapitalization (Details)
Recapitalization (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Recapitalization [Line Items] | ||
Net liabilities | $ 2,400 | |
Fair value | 200 | |
Transaction costs | $ 700 | |
Accounts payable | 860 | |
Accrued expenses | $ 277 | |
Sponsor [Member] | ||
Recapitalization [Line Items] | ||
Issued of common shares (in Shares) | 33,333 | |
Legacy Spectral [Member] | ||
Recapitalization [Line Items] | ||
Transaction costs | 7,600 | |
Accounts payable | $ 800 | |
Accrued expenses | $ 500 | |
Issuance of shares for transaction costs (in Shares) | 966,667 | |
Common Stock [Member] | Legacy Spectral [Member] | ||
Recapitalization [Line Items] | ||
Fair value | $ 4,400 | |
Transaction costs | $ 1,900 |
Recapitalization (Details) - Sc
Recapitalization (Details) - Schedule of Elements of the Business Combination $ in Thousands | Mar. 31, 2024 USD ($) |
Schedule of Recapitalization [Abstract] | |
Cash | $ 660 |
Other current assets | 127 |
Accounts payable | (860) |
Accrued expenses | (277) |
Warrant liabilities | (2,024) |
Net liabilities assumed in exchange for common stock | (2,374) |
Less: Cash | (660) |
Non-cash net liabilities assumed in exchange for common stock | $ (3,034) |
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 | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Abstract] | ||
Warrant liabilities | $ 1,798 | $ 1,818 |
Short-term notes payable – Yorkville | 4,534 | |
Total | 6,332 | |
Quoted prices in active markets (Level 1) [Member] | ||
Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Abstract] | ||
Warrant liabilities | 1,771 | 1,771 |
Short-term notes payable – Yorkville | ||
Total | 1,771 | |
Significant other observable inputs (Level 2) [Member] | ||
Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Abstract] | ||
Warrant liabilities | ||
Short-term notes payable – Yorkville | ||
Total | ||
Significant unobservable inputs (Level 3) [Member] | ||
Schedule of Financial Liabilities that are Measured at Fair Value on a Recurring Basis [Abstract] | ||
Warrant liabilities | 27 | $ 47 |
Short-term notes payable – Yorkville | 4,534 | |
Total | $ 4,561 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details) - Schedule of Changes in Level 3 Warrant Liabilities Measured at Fair Value - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Changes in Level 3 Liabilities Measured at Fair Value [Abstract] | ||
Balance beginning | $ 47 | $ 129 |
Change in fair value | (20) | (16) |
Balance ending | $ 27 | $ 113 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details) - Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs | Mar. 31, 2024 | Dec. 31, 2023 |
Strike price [Member] | ||
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs [Line Items] | ||
Warrant liability fair value measurements inputs | 7.32 | 7.32 |
Contractual term [Member] | ||
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs [Line Items] | ||
Warrant liability fair value measurements inputs | 3.2 | 3.5 |
Volatility [Member] | ||
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs [Line Items] | ||
Warrant liability fair value measurements inputs | 65.6 | 71.2 |
Risk-free rate [Member] | ||
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs [Line Items] | ||
Warrant liability fair value measurements inputs | 4.4 | 4 |
Dividend yield [Member] | ||
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs [Line Items] | ||
Warrant liability fair value measurements inputs | 0 | 0 |
Fair Value Measurements (Deta_4
Fair Value Measurements (Details) - Schedule of Rollforward of the Aggregate Fair Values of the Company’s Yorkville Debt - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Liabilities: | ||
Balance at beginning | ||
Addition of short-term notes payable | 4,600 | |
Fair value adjustment | (66) | |
Balance at ending | $ 4,534 |
Fair Value Measurements (Deta_5
Fair Value Measurements (Details) - Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs at their Measurement - Fair Value Measurements [Member] - Level 3 [Member] | Mar. 31, 2024 |
Expected term (years) [Member] | |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs at their Measurement [Line Items] | |
Fair value measurements input | 0.34 |
Volatility (annual) [Member] | |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs at their Measurement [Line Items] | |
Fair value measurements input | 80.3 |
Risk-free rate [Member] | |
Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs at their Measurement [Line Items] | |
Fair value measurements input | 5.36 |
Research and Development Reve_3
Research and Development Revenue (Details) - Schedule of Revenue Disaggregated - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Revenue Disaggregated [Abstract] | ||
Revenue | $ 6,326 | $ 5,078 |
BARDA [Member] | ||
Schedule of Revenue Disaggregated [Abstract] | ||
Revenue | 6,101 | 4,943 |
Other U.S Governmental Authorities [Member] | ||
Schedule of Revenue Disaggregated [Abstract] | ||
Revenue | $ 225 | $ 135 |
Research and Development Reve_4
Research and Development Revenue (Details) - Schedule of Company's Contract Liabilities $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Schedule of CompanySchedule of Company's Contract Liabilities [Line Items] | |
Balance at beginning | $ 2,311 |
Additions | 572 |
Reductions | (706) |
Balance at ending | 2,177 |
Deferred revenue [Member] | |
Schedule of CompanySchedule of Company's Contract Liabilities [Line Items] | |
Balance at beginning | 2,311 |
Additions | 572 |
Reductions | (706) |
Balance at ending | $ 2,177 |
Accrued Expenses (Details) - Sc
Accrued Expenses (Details) - Schedule of Accrued Expenses - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Accrued Expenses [Abstract] | ||
Salary and wages | $ 2,157 | $ 1,910 |
Operating expenses | 1,060 | 1,563 |
Benefits | 563 | 720 |
Taxes | 38 | 107 |
Total accrued expenses | $ 3,818 | $ 4,300 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 3 Months Ended | ||
Mar. 20, 2024 | Mar. 31, 2024 | Mar. 19, 2024 | |
Notes Payable [Line Items] | |||
Sell Shares of common stock | $ 30,000,000 | ||
Principal amount | 12,500,000 | ||
Cash | $ 4,600,000 | ||
Original issue discount | 8% | ||
Shares of common stock rate | 19.99% | ||
Rate of pre-paid advance | 92% | ||
Annual rate of outstanding balance | 0% | ||
Convertible notes rate | 18% | ||
Installment principal amount | $ 750,000 | ||
Premium rate | 7% | ||
Issuance costs | $ 300,000 | ||
Borrowing related costs | 300,000 | ||
Investment | $ 1,000,000 | ||
First Pre-Paid Advance [Member] | |||
Notes Payable [Line Items] | |||
Advance amount | $ 5,000,000 | ||
Pre-Paid Advance [Member] | |||
Notes Payable [Line Items] | |||
Principal amount | $ 1,750,000 | ||
Yorkville Convertible Notes [Member] | |||
Notes Payable [Line Items] | |||
Fixed conversion price (in Dollars per share) | $ 3.16 | ||
Interest rate | 0% | ||
Second Pre-Paid Advance [Member] | |||
Notes Payable [Line Items] | |||
Principal amount | $ 5,000,000 | ||
Conversion price rate | 120% | ||
VWAP [Member] | |||
Notes Payable [Line Items] | |||
Conversion price rate | 120% | ||
Third Pre-Paid Advance [Member] | |||
Notes Payable [Line Items] | |||
Principal amount | $ 2,500,000 | ||
Related Party Note [Member] | |||
Notes Payable [Line Items] | |||
Interest rate | 8% | 8% |
Notes Payable (Details) - Sched
Notes Payable (Details) - Schedule of Convertible Notes, Related Party Note, and Financing Arrangements - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 19, 2024 | Dec. 31, 2023 | |
Schedule of Convertible Notes, Related Party Note, and Financing Arrangements [Line Items] | ||||
Principal Repayments | $ 218 | $ 104 | ||
Outstanding Balance | 5,752 | $ 436 | ||
Yorkville Convertible Notes [Member] | ||||
Schedule of Convertible Notes, Related Party Note, and Financing Arrangements [Line Items] | ||||
Amount Financed | $ 5,000 | |||
Interest Rate | 0% | |||
Principal Repayments | ||||
Outstanding Balance | 4,534 | |||
Related Party Note [Member] | ||||
Schedule of Convertible Notes, Related Party Note, and Financing Arrangements [Line Items] | ||||
Amount Financed | $ 1,000 | |||
Interest Rate | 8% | 8% | ||
Principal Repayments | ||||
Outstanding Balance | 1,000 | |||
2023 Insurance Note [Member] | ||||
Schedule of Convertible Notes, Related Party Note, and Financing Arrangements [Line Items] | ||||
Amount Financed | $ 631 | |||
Interest Rate | 8.60% | |||
Principal Repayments | $ 218 | |||
Outstanding Balance | 218 | 436 | ||
2022 Insurance Note [Member] | ||||
Schedule of Convertible Notes, Related Party Note, and Financing Arrangements [Line Items] | ||||
Amount Financed | $ 376 | |||
Interest Rate | 6.70% | |||
Principal Repayments | $ 104 | |||
Outstanding Balance |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Leases [Line Items] | |||
Lease | $ 352 | $ 253 | |
Expiration term | 12 months | ||
United Kingdom [Member] | |||
Leases [Line Items] | |||
Lease | $ 100 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of Operating Lease - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Operating Lease [Abstract] | ||
Operating cash flows used in operating leases | $ 210 | $ 115 |
Right-of-use assets exchanged for operating lease liabilities | ||
Weighted average remaining lease term (in years) | 9 months 18 days | 1 year 2 months 12 days |
Weighted average discount rate | 8.50% | 8.50% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of Lease Cost Included In General And Administrative Expense - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating leases | ||
Operating lease cost | $ 205 | $ 194 |
Variable lease cost | 105 | 59 |
Operating lease expense | 310 | 253 |
Short-term lease rent expense | 42 | |
Total rent expense | $ 352 | $ 253 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of Non-Cancelable Operating Lease - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Non-Cancelable Operating Lease [Abstract] | ||
Remaining period ended December 31, 2024 | $ 683 | |
Total | 683 | |
Less: imputed interest | (23) | |
Operating lease liabilities | $ 660 | $ 853 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Stockholders’ Equity [Line Items] | ||
Common stock, shares authorized (in Shares) | 80,000,000 | 80,000,000 |
Common stock par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in Shares) | 1,000,000 | 1,000,000 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Aggregate gross proceeds | $ 2,605 | |
Shares issued (in Shares) | 1,187,398 | |
Stock issuance costs | $ 400 | |
Service fee costs | 100 | |
B. Riley [Member] | ||
Stockholders’ Equity [Line Items] | ||
Aggregate gross proceeds | 10,000 | |
ELOC [Member] | ||
Stockholders’ Equity [Line Items] | ||
Aggregate gross proceeds | $ 2,700 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Feb. 29, 2024 | Jan. 03, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2018 | Dec. 30, 2023 | |
Stock Based Compensation [Line Items] | |||||||
Granted restricted stock units | |||||||
Fair value (in Dollars) | $ 0.6 | ||||||
Exceeds per share (in Dollars per share) | $ 12 | ||||||
Investor options exercised | |||||||
Exercise price (in Dollars per share) | $ 2.2 | $ 2.2 | |||||
Equity Option [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Share purchased | 46,592,862 | ||||||
Warrants [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Share purchased | 762,712 | ||||||
Restricted Stock Units [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Granted restricted stock units | 150,000 | 150,000 | 450,000 | ||||
Fair value (in Dollars) | $ 0.4 | ||||||
Grant date fair value (in Dollars per share) | $ 2.16 | ||||||
Unrecognized compensation expense (in Dollars) | $ 1.1 | ||||||
Weighted-average period | 2 years 2 months 12 days | ||||||
Weighted average period | 328 days | ||||||
Stock Option [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Contractual term | 3 years | 10 years | |||||
Share-Based Payment Arrangement [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Unrecognized stock-based compensation (in Dollars) | $ 1 | ||||||
General and Administrative Expense [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Stock-based compensation expense (in Dollars) | $ 0.3 | $ 0.2 | |||||
Share-Based Payment Arrangement, Tranche One [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Restricted stock unit vest | 37,500 | ||||||
Exceeds per share (in Dollars per share) | $ 8 | ||||||
Share-Based Payment Arrangement, Tranche One [Member] | Restricted Stock Units [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Restricted stock unit vest | 50,000 | ||||||
Share-Based Payment Arrangement, Tranche Two [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Exceeds per share (in Dollars per share) | $ 10 | $ 8 | |||||
Share-Based Payment Arrangement, Tranche Two [Member] | Restricted Stock Units [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Restricted stock unit vest | 37,500 | 50,000 | |||||
Share-Based Payment Arrangement, Tranche Three [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Restricted stock unit vest | 75,000 | 50,000 | |||||
Legacy Spectral [Member] | Equity Option [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Purchase common stock | 4,519,191 | ||||||
Legacy Spectral [Member] | Restricted Stock Units [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Share purchased | 600,000 | ||||||
Parent Company [Member] | Warrant [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Purchase common stock | 73,978 | ||||||
Parent Company [Member] | Restricted Stock Units [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Share purchased | 58,197 | ||||||
2018 Long Term Incentive Plan [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Common stock, authorized issuance | 3,526,200 | ||||||
Stock remain available for issuance | 193,889 | ||||||
Exercise price (in Dollars per share) | $ 2.06 | ||||||
2018 Long Term Incentive Plan [Member] | Investor [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Stock options, options granted | 973,803 | ||||||
Investor options exercised | 34,779 | ||||||
Investor options are outstanding | 904,245 | ||||||
2022 Long Term Incentive Plan [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Common stock, authorized issuance | 88,749 | ||||||
2022 Long Term Incentive Plan [Member] | Restricted Stock Units [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Common stock, authorized issuance | 508,197 | ||||||
2022 Long Term Incentive Plan [Member] | |||||||
Stock Based Compensation [Line Items] | |||||||
Stock remain available for issuance | 1,342,918 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - Schedule of RSU activities | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Schedule of RSU activities [Abstract] | |
Number of Shares, Nonvested beginning balance | shares | 58,197 |
Weighted Average Grant Date Fair Value per Share, Nonvested beginning balance | $ / shares | $ 4.65 |
Number of Shares, Granted | shares | 450,000 |
Weighted Average Grant Date Fair Value Per Share, Granted | $ / shares | $ 2.16 |
Number of Shares, Nonvested ending balance | shares | 508,197 |
Weighted Average Grant Date Fair Value per Share, Nonvested ending balance | $ / shares | $ 1.97 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details) - Schedule of Stock Options Activity - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Mar. 31, 2024 | |
Schedule of Stock Options Activity [Abstract] | ||
Stock Options, Outstanding Ending Balance | 3,578,579 | |
Weighted Average Exercise Price, Outstanding Ending Balance | $ 2.2 | |
Weighted Average Remaining Contractual Life, Outstanding Ending Balance | 6 years 6 months | |
Aggregate Intrinsic Value, Outstanding Ending Balance | $ 8,041 | |
Stock Options, Options granted | ||
Weighted Average Exercise Price, Options granted | ||
Stock Options, Options forfeited | ||
Weighted Average Exercise Price, Options forfeited | ||
Stock Options, Options cancelled | ||
Weighted Average Exercise Price, Options cancelled | ||
Stock Options, Options exercised | ||
Weighted Average Exercise Price, Options exercised | ||
Stock Options, Outstanding Ending Balance | 3,578,579 | |
Weighted Average Exercise Price, Outstanding Ending Balance | $ 2.2 | |
Weighted Average Remaining Contractual Life, Outstanding Ending Balance | 6 years 3 months 18 days | |
Aggregate Intrinsic Value, Outstanding Ending Balance | $ 8,041 | |
Stock Options, Options vested and exercisable | 3,126,216 | |
Weighted Average Exercise Price, Options vested and exercisable | $ 1.87 | |
Weighted Average Remaining Contractual Life, Options vested and exercisable | 5 years 10 months 24 days | |
Aggregate Intrinsic Value, Options vested and exercisable | $ 6,092 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Taxes [Abstract] | ||
Income tax provision | $ 22 | $ 46 |
Effective tax rate, percentage | 0.70% | 1.30% |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - Schedule of Computation of Net Loss Per Common Share - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Computation of Net Loss Per Common Share [Line Items] | ||
Potentially dilutive securities | 12,594,087 | 4,513,363 |
Common Stock Options [Member] | ||
Schedule of Computation of Net Loss Per Common Share [Line Items] | ||
Potentially dilutive securities | 3,578,579 | 4,427,253 |
Common Stock Warrants [Member] | ||
Schedule of Computation of Net Loss Per Common Share [Line Items] | ||
Potentially dilutive securities | 8,507,311 | 73,978 |
Unvested Restricted Stock Units [Member] | ||
Schedule of Computation of Net Loss Per Common Share [Line Items] | ||
Potentially dilutive securities | 508,197 | |
Unvested Restricted Stock [Member] | ||
Schedule of Computation of Net Loss Per Common Share [Line Items] | ||
Potentially dilutive securities | 12,132 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | Mar. 19, 2024 USD ($) |
Related Party Transactions [Abstract] | |
Investment from an affiliate | $ 1 |
Interest rate, percentage | 8% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] $ in Millions | Apr. 30, 2024 USD ($) ft² |
Subsequent Events [Line Items] | |
Square feet of office space | ft² | 18,845 |
Rent payable | $ | $ 0.1 |