Mr. Chris Seto reports

SPECTRAL MEDICAL ANNOUNCES THIRD QUARTER RESULTS AND PROVIDES CORPORATE UPDATE

Spectral Medical Inc. today released its financial results for the third quarter ended Sept. 30, 2023, and provided a corporate update.

During the third quarter, the company continued to experience momentum in Tigris Trial enrolment. Management is pleased to report positive progress on these initiatives to increase Tigris Trial enrolment, specifically:

• During and subsequent to the third quarter the company enrolled an additional 11 patients, of which nine or approximately 80 per cent came from new sites opened for enrolment in 2023;
• 76 patients enrolled to date and the company continues to close in on its interim target of 90 patients, an important milestone as Spectral's strategic commercial partner, Baxter (BAX: NYSE), will have the opportunity to view the data as well as provide a second milestone payment to Spectral;
• Addition of two new trial sites, the Mayo Clinic and Emory Healthcare, subsequent to the third quarter bringing current total trial sites to 20;
• During the third quarter, full transition from the incumbent CRO, Beaufort, was completed;
• Spectral Medical was featured in an episode of the "The Balancing Act" airing on Lifetime TV (Advancing Therapeutic Options for Sepsis and Endotoxic Septic Shock -- The Balancing Act) focused on advancing therapeutic options for sepsis and endotoxic septic shock, which was aired during the quarter;
• On Sept. 7, 2023, Spectral completed a private placement of convertible notes for gross proceeds of $4,553,000 (U.S.) led by the company's strategic investors Baxter and Pinnacle Island LP.

Dr. John Kellum, chief medical officer of Spectral Medical, stated: "We continue to experience patient enrolment momentum supported by new sites we have on-boarded during 2023. We continue to make progress opening additional sites, which should positively impact the pace of enrolment. Over all, we are rapidly advancing our Tigris trial and remain highly encouraged by the outlook, given the fact preliminary mortality data continues to exceed our expectations."

"We are taking measured, yet rapid, action to maintain and even increase momentum in patient enrolment with a view to enrolling our interim count of 90 patients, which is expected to play as a major catalyst for the company," said Chris Seto, chief executive officer of Spectral Medical. "Based on the pace of patient enrolment in the past number of months, and our activities around site additions, we continue to drive toward the 90 patient interim milestone."

Financial review

Revenue for three months ended Sept. 30, 2023, was $397,000 compared with $362,000 for the same period last year, representing an increase of $35,000, or 9.7 per cent. Revenue for six months ended Sept. 30, 2023, was $1,233,000 and $1,114,000 for the same period last year, representing an increase of $119,000, or 10.7 per cent. This increase was mainly due to an increase in proprietary biochemicals product revenue.

Operating expenses for the three months ended Sept. 30, 2023, were $3,658,000, compared with $2,705,000 for the same period in the prior year, an increase of $953, or 35.2 per cent. The change is primarily due to an increase in consulting and professional fees by $265,000 primarily due to increased site and patient fees related to the Tigris trial and Eden observational study. Interest expense increased $167,000 primarily related to the notes payable, which was not outstanding in the same period in the prior year. Foreign exchange loss increased by $127,000 over the same period in the prior year, primarily related to FX loss on United States-dollar cash balances. Operating expenses for the nine months ended Sept. 30, 2023, were $10,215,000, compared with $7,552,000 for the same period in the preceding year, an increase of $2,663, or 35.2 per cent. The change is due to an increase in share-based compensation of $295,000. In addition, consulting and professional fees increased by $1.24-million primarily due to increased site and patient fees related to the Tigris trial and Eden observational study. Interest expense increased $410,000 primarily related to the notes payable, which was not outstanding in the same period in the prior year. Lastly, loss incurred on joint arrangement was $205,000 which was not incurred for the same period in the prior year.

Loss for the three months ended Sept. 30, 2023, was $3,391,000, or one cent per share, compared with a loss of $3,135,000, or one cent per share, for the same quarter last year. The increased loss of $256,000 was due to increased operating expenses, partially offset by a reduction in loss from discontinued operations of $662,000 related to the reduction in Dialco operating expenses. Loss for the nine months ended Sept. 30, 2023, was $9,107,000, or two cents per share, compared with a loss of $8,778,000, or one cent per share, for the same period last year. The increased loss of $329,000 was due to increased operating expenses, partially offset by a reduction in loss from discontinued operations of $2,215,000 related to the prior Dialco operating expenses.

The company concluded the third quarter of 2023 with cash of $5,031,000 compared with $8,414,000 of cash on hand as of Dec. 31, 2022.

The total number of common shares outstanding for the company was 278,576,261 at Sept. 30, 2023.

About Spectral Medical Inc.

Spectral is a phase 3 company seeking United States Food and Drug Administration (FDA) approval for its unique product for the treatment of patients with septic shock, Toraymyxin (PMX). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream and is guided by the company's endotoxin activity assay (EAA), the only FDA-cleared diagnostic for the risk of developing sepsis.

PMX is approved for therapeutic use in Japan and Europe and has been used safely and effectively on more than 340,000 patients to date. In March, 2009, Spectral obtained the exclusive development and commercial rights in the United States for PMX and, in November, 2010, signed an exclusive distribution agreement for this product in Canada. In July, 2022, the U.S. FDA granted breakthrough device designation for PMX for the treatment of endotoxemic septic shock. Approximately 330,000 patients are diagnosed with septic shock in North America each year.

We seek Safe Harbor.