Accounting Policies, by Policy (Policies) |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Recent Accounting Pronoucements [Abstract] | |
| Business Combination | 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. On September 11, 2023, the Company consummated a business combination (the “Business Combination”), pursuant to the business combination agreement dated April 11, 2023 (the “Business Combination Agreement”) 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”), 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 at the Closing that it previously issued to Rosecliff Acquisition Sponsor I LLC, a Delaware limited liability company in connection with the Company’s initial public offering on February 17, 2021, but the 8,433,333 redeemable warrants that were previously issued to the public (the “Public Warrants”) remain outstanding. |
| Revision of Prior Period Financial Information | Revision of Prior Period Financial Information During the fourth quarter of 2023, management deferred certain costs associated with a stock offering which was completed during 2024, at which time the costs were recorded as a reduction of additional paid-in capital. Management subsequently determined that these costs should have been expensed during the fourth quarter of 2023. Accordingly, the Company has revised its consolidated statements of changes in stockholders’ deficit as of December 31, 2024, and 2023 to increase both the accumulated deficit and additional paid-in capital by $283,000. Additionally, during the third quarter of 2023 in conjunction with the accounting for the Business Combination, the Company recognized an income tax receivable asset which should not have been recorded due to uncertainties about collectability. This receivable was written off during the fourth quarter of 2024 through income tax expense. Accordingly, the Company has revised its consolidated statement of changes in stockholders’ deficit to reduce both the accumulated deficit and additional paid-in capital by $157,000 as of December 31, 2024 and to adjust Additional paid-in capital and $283,000 in Accumulated Deficit as of December 31, 2023. The Company has revised its consolidated statements of operations and comprehensive loss for the year ended December 31, 2024 to reduce income tax provision and net loss by $157,000 and to revise the net loss per share accordingly as well. The net effect of the two corrections described above is a $126,000 increase to both the accumulated deficit and additional paid-in capital as of December 31, 2024, and 2023. The Company has determined that the errors were immaterial to all impacted periods and has corrected the impacted periods as an immaterial correction of an error. |
| 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”). These condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023. The condensed consolidated balance sheet as of December 31, 2024 included herein was derived from the audited consolidated financial statements as of that date. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2025, or any other period. Except as described elsewhere in Note 2 under the heading “Recently accounting pronouncements,” there have been no material changes to the Company’s significant accounting policies as described in the audited consolidated financial statements as of December 31, 2024 and 2023. |
| 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, Inc. (“Spectral IP”). 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, fair value of certain debt, 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 Chairman of the Board in conjunction with the Company’s executive management team manages the Company’s operations on an aggregate basis for the purpose of allocating resources. The Company has one operating segment. The accounting policies of the Company’s single operating and reportable segment are the same as those described in the summary of significant accounting policies. The Company’s method for measuring profitability includes net loss, which the chief operating decision-maker uses to assess performance and make decisions for resource allocation, consistent with the measurement principals for net income(loss) as reported on the Company’s consolidated statement of operations. The significant expenses regularly reviewed by the chief operating decision-maker are consistent with those reported on the Company’s consolidated statement of operations as well as research and development expenses which are disclosed in the footnotes to these financial statements. Certain expenses are reviewed for purposes of assessing operating activities and resource allocation for the Company. The measure of segment assets is reported on the consolidated balance sheets as total assets. |
| Income Taxes | Income Taxes The Company recorded an income tax provision for Texas Franchise Tax of approximately ($19,000) and $52,000 during the three and six month periods ended June 30, 2025, respectively. The Company recorded an income tax provision of approximately $69,000 and $91,000 for the three and six month periods ended June 30, 2024, respectively. The effective tax rate was (0.2%) and 1.0% for the three and six month periods ended June 30, 2025, respectively, and 2.5% and 1.5% for the three and six month periods ended June 30, 2024, respectively. The tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in that quarter. The Company’s effective tax rate differs from the U.S. statutory tax rate in the six months ended June 30, 2025, 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. |
| 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 accounts receivable. As of June 30, 2025 and December 31, 2024, accounts receivable were concentrated from one customer (which is a US. government agency) representing 94% and 98% of total net receivables, respectively. allowance for doubtful accounts were recorded as of June 30, 2025 and December 31, 2024. One customer (which is a U.S. government agency) accounted for 92% and 94% for the three and six months ended June 30, 2025, respectively and 94% and 95% for the three and six months ended June 30, 2024, respectively of the recognized research and development revenue. |
| Risks and Uncertainties | 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 | Liquidity As of June 30, 2025 and December 31, 2024, the Company had approximately $10.5 million and $5.2 million, respectively, in cash, and an accumulated deficit of $53.3 million and $48.2 million, respectively. As of June 30, 2025 and December 31, 2024, the Company had approximately $7.7 million and $2.8 million, respectively, of debt outstanding of which $7.6 million and $0 represented long-term debt as of such periods. On March 24, 2025, the Company completed an equity financing and entered into a long-term debt financing agreement with Avenue Venture Opportunities Fund II, L.P., a fund of Avenue Capital Group (the “Avenue Financing”), which provides for the ability to borrow up to $15.0 million with an initial draw-down of $8.5 million, see Note 6. In addition to the Avenue Financing, during the six months ended June 30, 2025, the Company also raised approximately $2.7 million from the issuance of common stock and warrant to institutional investors, as well as existing UK investors, see Note 8. With the PBS BARDA Contract, the MTEC Agreement, and the Avenue Financing, the Company believes it has sufficient working capital to fund operations for at least one year beyond the release date of the condensed consolidated financial statements. |