John Vandermosten: Let me start out with a question. And Vince, you touched on this a bit in the — in your prepared remarks, how the $55 million is allocated. I guess you do work and then you bill the government. Is that a monthly or quarterly event for that process?
Vincent Capone: Sure. No, , it’s — so we actually do it on a monthly basis. And we have a lot of experience with BARDA. And so for us, it’s a process that we go through monthly, and we generally get paid within the following month. It’s a few weeks. And so it’s not quarterly. It’s a monthly total on R&D expense as we progress through the year.
John Vandermosten: Okay. And regarding that program, is there a certain proportion of, I guess, total cost of advancing the candidate to approval that the program tries to cover? Or is it covering the whole amount?
Vincent Capone: Yes, it covers the clinical trial cost.
John Vandermosten: Okay. Plus that extra kind of overhead amount.
Vincent Capone: Yes. Correct.
John Vandermosten: Okay. Great. And then going to the U.K. again, in previous rollouts of devices in the U.K. I’ve seen that they do it by country, Wales. Northern Ireland, Scotland and England. They’re all kind of a little bit separate as part of the NHS. I don’t know if that applies here. But I was wondering if there are any more regulatory hoops or anything you need to jump through to get broader expansion into the U.K.
Peter Carlson: Nothing significant, no. This is a U.K.-wide mark. The UKCA is a post-Brexit regulatory approval or access point, you would think of the broader known CE mark across the continent, and the U.K. had to have their own once they exited the European Union.
John Vandermosten: Okay. And then last question is on the way you structure the arrangement. I’m assuming that there’s a subscription component to the AI part, which is always updating, I guess, with new information. Is that how that works?
Peter Carlson: Yes. There’s the opportunity for revenue on the device deployment itself, device sale, as well as annual annuity revenue, if you will. Really, there’s 2 or 3 components. The largest is the license for the AI, but there’s a service component and a maintenance component. The run rate, the annuity is the annual fees.
John Vandermosten: Okay. And that part, I guess, that’s driving the analysis of the images, is that constantly updating or like annually updating, or is there some periodicity to that?
Peter Carlson: Right now, the device has been developed to be stand-alone. This is a requirement for the contract with the U.S. government. Remember that our government partner’s primary motive is mass casualty event response. So they want the device to be able to be stand-alone. There’s even a battery requirement for the device. And so at this point, we are looking at batch updates or annual updates to the AI model. Again, we’re already at 340 billion pixels or data points. So there’s a very robust data set in there. But we do want to build on the machine learning over time.
Operator: Your next question is from [indiscernible] with Partner Cap Group.
Unidentified Analyst: Yes. Two brief questions for you. The first, circling back to your regulatory authorization in the U.K. My understanding, correct me, obviously, if I’m mistaken, but my understanding is that quite often out of the Middle East, various regulatory authorities, health regulatory authorities, wait for the U.K. to authorize devices and procedures, and they go ahead and authorize the same. Are there any developments in the near to medium term that you guys can begin to allude to out of the Middle East in that regard? And then the second question, very briefly, is in regard to the $28 million that you’re forecasting for this fiscal year. Do you have any conception of what your margins, specifically gross and operating margins, might look like for fiscal ’24?
Peter Carlson: Cliff, good to talk. On the Middle East situation, you are correct, the GCC or Gulf Council Countries, are able to leverage the U.K. regulatory mark or approval for access into those regions. We are in discussion with parties in the Middle East about this. We have attended multiple conferences in the Middle East. It is an active market for wounds, particularly diabetic foot ulcers. And so we do see that as a market opportunity. We haven’t given any specific guidance or time line just given sort of the logistics over there. But we are in active — actively pursuing that opportunity. As far as the margins, the $28 million, they’re going to be relatively consistent with what you’ve seen this year, particularly in the fourth quarter, maybe a touch higher.
