CurveBeam AI Limited (CVB) Earnings Call Transcript

Thanks for standing by, and welcome to the CurveBeam AI Investor Webinar for the quarter ended September 2026. [Operator Instructions]. On the webinar from CurveBeam AI today, we have Managing Director and CEO, Greg Brown; and its CFO, Philip Auckland. The presentation will last for approximately 25 to 30 minutes, and then we'll get into the questions, but I'll hand it over to Greg to kick off.

Thanks, Matt, and welcome, everybody, to our quarter 1 -- just to set the platform upfront. We've had 2 major milestone announcements and there was a lot of interest from shareholders to ask questions around those milestones. As the balance sheet of the company would be of interest, we felt that we would bring forward the 4C into this webinar and hence, why we've taken it out of its normal cycle. But because of these 2 major milestones, we felt it was best to cover it all off in the webinar today, so welcome. I bring your attention to the forward-looking statements and disclaimer and to the key highlights for quarter 1 fiscal year '27. So for the first quarter, we placed 5 high-rise devices globally, 3 of those internationally, 2 in the U.S. It's the strongest Q1 for us to date since listing. The Northern Hemisphere and the holiday period is usually a more difficult quarter, but we were very encouraged with the start in our first quarter, which these audits. Now the other major event for us was the company was able to announce another key milestone, which was the FDA 510(k) clearance of bone mineral density on multidetector MDCT. Now this is the first step in the regulatory strategy to deliver BMD on the high rich, but it's a very pivotal step. It's also a quantitative BMD. So it's under a different rig than the screening for low bone density. This is a quantitative BMD result. So a significant event. We were able to announce that, and I'll go through a bit more detail on that on a separate slide further into the presentation. The other major milestone, of course, is the Chinese FDA or the NMPA clearance for the HiRise in China. That is another big announcement for us. We did guide the market to the end of the year. So we're happy that on October 12 to receive that NMPA currency, it was a really positive move for us. It also means that it triggers another milestone payment under our Chinese contracts with WEGO weigh in, that $1 million is placed at Premier [ $0.40 ] per share. Now we start to move in to now with the NMPA place to start moving to start creating orders from China. There's been a lot of premarket activity that we've been supporting for quite some time. So we're quite aware quite optimistic that we should see our first order in this quarter. Now there are other milestones associated with this -- they include for the first 10 HiRise, it will be another milestone payment. And then for the next 40, representing the first 50 as another milestone payment of $2 million. And that's also associated with the revenue that's associated with those sales, of which we recognize about 50% on the order being placed, 20% from the pickup in the U.S. facility of the devices, and we are at stock. So we have the stock ready and then 30% when it's placed with the customer. So we're quite excited. We remain very optimistic for this fiscal year, and this was a pivotal event and we were very encouraged to see it come through earlier in the quarter. The other key highlights in this quarter and which was a concern in the last for some investors was that there had been some rejected scans due to movement within the validation system that we were doing with a major robotic system. Now that trial or the latest trial data. We implemented a series of strategies that have been in the wings for quite some time with both hardware and software changes to address these movement issues. And just visually, so I can help you understand -- if somebody is doing a multidetector CT, they're lying down, and it might be a 10, 15-minute scale. But you're lying down and your weight supported. And if you've got advanced osteoarthritis with a sale or a IP, then you're less likely to move. Now 5% of those patients will move. But when you're standing on that so knee or saw a hip and you have to stand stationery for 5 minutes, and that's what happens with a high-rise, the tolerance for acceptance of movement in the CT scan for processing a captive for these robotic systems can be very tight. So it's like a 3-millimeter to 4-millimeter movement times. And so hence, why if you've got to stand stationary for 5 minutes, you need some support to be able to not moved during that 5 minutes. So we have a new patient stabilizer. We had the new strapping and we had an upgraded refine engine and post-processing to address these issues. And we are very delighted to show that in this quarter's update, that we have now double-digit patients that have been run and processed through that software part of movement. So from where we were in the last -- to where we are, these new strategies to address movement, we're very encouraged by this milestone. Now we will continue to move forward in the formal validation process now to cover off me and then followed by the hip. Now in addition to the major robotic system, in me and HIP utilizing CT. We are also working with all the other robotic companies as well. Now the success of the CT-based robotic system is really now creating a demand from J&J, [ Stefan Depew, Time Biomet ], they are all now moving to having CT capability in their surgical plan. And also for the requirements for patient-specific implants like with and in the case of Medacta, these patient-specific requirements. We're working with all of these vendors to make sure that our CT is agnostic and that they're able to use it for multiple robots. Just like we do ample way now in China for their robot, but we'll be able to offer it for multiple robots because a lot of these group surgeon settings, you may have a surgeon working with Rose and a surgeon working with the maker. If we can handle all of these systems, then multiple surges in the traditional ones using a parcel can still use our platform because we're trying to make it as agnostic as possible to support that group surgeon settled. So for the cash analysis, the company in the first quarter, we raised $7.35 million. This was in -- for replacement of $0.02, and we did an SPP and a shortfall offer at [ $0.018 ] per share, that's $7.35 million. We finished the Q1 at just under $6 million. And we had cash from operations was around $1.36 million versus $2.4 million in Q4. So that was a reduction on quarter-on-quarter by about 44%. Our cash balance is, as I said, just under $6 million. it shows under the 4C around 4 quarters of cash. Now we made some pretty significant steps in the quarter to manage the cash. We modified our operating expense. We made reduction in our operating expense, and we're now running that at around $15 million annually. So we've moved on both cutting the cost, cutting the cloth raising the capital and now really putting our effort into driving our revenue and our receipts going forward to manage our cash. And with the NPA coming through with our BMD starting to move forward, we feel that these are events that can really help us to start moving the devices in the market. So on that purchase order analysis, I'd like to point out that we had $4.2 million in purchase orders and receivables into Q1, and we're carrying $4.9 million into Q2. So from a revenue recognition cycle, which takes about 2 to 6 months depending on the setting some group surgeon settings can be quite fast, but a hospital, a bureaucracy that can be involved can take longer with room modifications. Now when you start to look at the order analysis, what you'll see is, we really are starting the year on a very good platform, 5 high-rise orders in the first quarter. I mean traditionally, we average about 16 HiRise a year, that run rate is a very nice way to start the year in our Q1. We have 5 HiRise and now with the NPA, we remain optimistic and quite confident in the pipelines across the globe, are really having a positive year. Now I'm going to take a bit of time on this slide because there are a lot of questions and the Bonevue BMD FDA clearance. I want to just, first of all, explain the strategy, the regulatory strategy and then the clinical significance and then the reimbursement and where this becomes exciting from a SaaS perspective. So the first point is the regulatory strategy. So we wanted a quantitative BMD. And we decided to go with supplying multi to take multiple detector CT scanners, which -- it's a lying down patient. We've all seen 1 with most of it had work. But in the case of the MDC team, we felt that doing Bonevue and getting the FDA cleared their first and then expanding that FDA clearance for another CT device because we've got multiple DCT devices covered within that clearance. But now we're going to look to expand our CT platform to HiRise is the second step. So this was always the strategy. The multidetector supine, BMD, Bonevue first, followed by moving that clearance, expanding that clearance onto another CT, the high-rise. And this, we're targeting the special 510(k). They end up as a traditional, but we're targeting a special 510(k) for that clearance on the high rot. Now timing wise, we expect if the special goes through, that will be around middle of next year for the HiRise to have a 510(k) clearance for BMD. Now that's the regulatory strategy. And it made a lot of sense. MDCT was far more accessible. If you wanted to do the HiRise that was adding a lot more scanning requirement. So the MDC was the first step in store. Now with that first clearance, we've got quantitative BMD. Now there is some more additional features that we want. We want to be able to report the official TNZ scores, which are just a mathematical equation and we'll also want to validate our region of interest -- automated region of interest. So that's the second, and that is a special 510(k) and we expect to see that in first quarter, which then allows the reporting of schools, and it also has a fully automated function now. So there's no manual component other than a surgeon accepting the region of interest. So this regulatory strategy, it's MDCT first. I want to take a BMD. And why is quantitative BMD so important? Well, qualitative BMD gives you the ability to identify poor bone quality but more importantly, to monitor that poor bone quality over to, especially if there's a therapy or if there's an implant involved, and you want to monitor that, then it gives you the ability of monitoring as well as identifying where there's a bone quality issue. Now that's the regulatory strategy, and we're stepping the process MDCT expanding to the reporting structures and the automated region of interest and then expanding to HiRise. Now clinically, this is quite important. And the reason this is quite important in orthopedics is that your fixation strategy today is often done in clinical notes when you get in there and you've done the first cut, you're looking at the bone. You're going to make some decisions on which end plan and my going. What am I going to cement or not cement this. Now not cementing its faster procedure, but it's also better for the patient longer term. In case there is a revision dealing with a cemented implant can make it very difficult in a revision surgery. So clinically, this is an important requirement in preparing the patient. Now with where we are today, we now have Bonevue cleared on MDCT. And there's an opportunistic market that's available for utilizing this in radiology. Now BMDCT has been available for many years in radiology. So the approval process and the reimbursement is clear. as a category 1 code. The problem at the moment is that there is no coverage for opportunistic screen. Now it's encouraging to read some of the payer policies where they see this as being gathered service in the future. But at this point in time, it's not a covered service and it's why it hasn't been highly utilized to date in this deeper surface screening opportunistic screening in the market. Now it is coming, and we have an ongoing vigilance in watching the progression there. And if you want to see a positive statement, look at the segment policy, they clearly see it's part of the future, and we'll be vigilant to keep an ongoing monitoring around that. Now today, where we see the opportunity in a supplying CT and we've done a bit of a significant amount of market research on was where you've got a fracture punch. It might be hip fracture patients, bema fracture. They come into the acute care setting, the part A medical reimbursement. So that's a prospective payment to manage that patient to release. So Part A versus Part B, which is a retrospective payment where you're using coding, payment and coverage or reimbursing the fee for service. Now in the case in the fee-for-service market is really not a covered service at this point. Where it is, we believe, covered will be in a acute care setting where they need a stat result because they want to make their fixation strategy there and then on whether they do a cemented implant for a hip or need or whether they do a noncemented implant. Now in this case, what we did and what the market research is showing is that this is where we want to start to build some of our clinical data. We're working with a prom site on a trial. And this is designed to show that this can offer a stat BMD. Now most bone density tests today are done on a dual energy X-ray. And what it shows is that can be anywhere from 2 weeks to up to 3 months to get a bone mineral density on a dexa scanner. Now that is the gold standard. It's what we get our substantial equivalence to on our first Bonevue clearance. But the important point here is that from a stat capability, that's on a feasible option. So in that acute care setting, we're looking at it. What the data is showing is about 90% of patients coming in with a hip fracture, only 10% of them will receive the BMDCT. Most of them only have an extra -- but with the clinical studies we want to set up, we want to show that the CT against them additional information in their surgical planning, but also now a real-time BMD. So if there's 300,000 head fractures, there's only about 30,000 today. That would be across 2,000 acute came settings in the U.S. that would be reimbursable under par. So it's not a big opportunity, but it is an opportunity that we're going to start to explore with just showing the availability of the stat result and how that can help manage a function, especially through that first 90 days for the episode of care under a Part A service. Now where we see a very exciting opportunity is, of course, on the high as -- now on the HiRise, this is a fee for service, and there's coding requirements, there's payment and there's coverage. Now on the coding, there's a category on CPT code in place. And that's 77078. Now that BMD CT code, again, it's a category 1, not category 3, which will have a T unit. The T codes are classify experimental and investigational where with category 1, it's a nonnumerical non-leaded code, it's fulling there. Now under that, that category 1 is already assigned by the AM. It's descriptor is a CT Bonevue mineral density study of one or more sites of the axl skeleton. And of course, we chose the fem tech, which is what we get from the scan on a HiRise. So it's -- the code is correct for that application. Now the coding and the approval for the use of that coating, you do it through the AMR, but you need your FDA clearance in place to do that. Now FDA clearance in radiology would already be there because there's been technology that's manual that's been available. So they have their AMA confirmation that they can use this coding in supply and CT. But for when we get our FDA clearance we will need a similar letter of endorsement that, that coding can be used on the highlights. But with that CPT card, you've then got to have the appropriate linkage to the ICD 10 cuts. And that's how a Medicare coverage state works is we have a list of ICD terms that have the linkage to the that if the doctor is coded in diagnostic codes correctly, then it's automatically processed through the Medicare national coverage determination. So when it comes to the HiRise, you have coding in place category payments are already set, and you also have coverage with Medicare under NCD, and most privates are covering as well. Now be aware some of the commercial payers explicitly require no access to a deep before they would cover a CT score. Now the beauty for us is because we're going after that group surgeon setting, they've got their ICD 10 codes. The linkage is already set up on a category 1 CPT but there will also be a requirement for a place of service to. And those places of service codes, if you're a radiology, it's most probably a 40A if it's a group surgeon setting, it's a 52. And then how I'll track that -- now your place of service or your BOS code, where your ICD-10 and your CPT linkage is already set up, we would need that endorsement letter. Once it's FDA cleared on the HiRise, but that coverage, we believe, is already existing. It just needs a surgeon to properly code their visit on the ICD-10 to get that linkage. Now what's important here is, unlike an opportunistic setting, this is a clinically driven requirement. So if you've got a total joint replacement patient coming in, there'll be several visits because you're trying to prevent an implant initially, but eventually, it will come with that decision they need an imply. So in that visit when they do their CT scan, with a wake bearing that's to diagnose the osteoarthritis, but also to do their cut guides in the future or their surges or today. But if the BMD results is also available they can now make their decisions around my what's my fixation strategy here? Am I going to cement the implant or not? What size of implant will they use on this patient. There's a number of decisions that are supported within the OS, the American Association of orthopedic surgeons medical guidelines. And within those guidelines, there is a recommendation for Bonevue quality assessment, not only in implant selection but also in fixation strategy. So with all of this in place, you now got medical guidelines, you've already got your coding your payment, your coverage in place. So if you were to get a rejection, you could bring in the medical guidelines and support. It's very favorable position, and it's going to be in that group surgeon settle and it's only for me in IP. So that's the biggest part of the market, knee and hip. It's in that group surgeon setting that we feel that there's a very favorable coverage position to drive that SaaS more. Now payment varies. Medicare can be anywhere from $100 to $130 -- sorry, United and [ ETNA ], they cover around $160. Some of the Blue Cross Blue Shields are anywhere from $200 to $240. And I think there's one other -- I just want to remember -- yes, Cigna covers [ $260 ]. So the BMD average we've been using is around $140, and we're going to target a pricing at $90 in that group, surgeon setting, I think is if you're in a hospital, there's more inoculate could be rejected for that. If you're a radiology center, you're more than likely going to have a tax. So it's going to be potentially rejected for that. But in that group, surgeon said that point of service coding is critical because that's where we feel there's a very favorable position that they get covered and paid on that BMD result in addition to the CT payment on that scan. Now this is why this is such an important driver of our SaaS business is the reimbursement position you have in that group surgeon setting and then hit. And it's why -- we need those robotic systems validated. It's why we need those PSIs validated. That's what gets this into that segment. So the footprint that we can build in that group surgeon setting, but there really allows us to leverage a favorable reimbursement position to drive that SaaS revenue for Bonevue density and for driving their fixation strategies and whether they're monitoring that patient because they start from on a treatment. Now there was an interesting consensus paper that was published in Osteoporosis International in literally June this year. And it really talks to the fact that diagnosing osteoporosis is a determinant to a failed implant and/or the use of therapies to prevent failure of an implant. And so hence, having that qualitative BMD and not a low BMD assessment tool, by going to that high standard, we were able to establish that ability to not only identify those patients but manage those patients. So that's a lot covered in one slide. I just wanted to explain the coding, the coverage and the point the place of service requirements and why it's different for a radiology setting to a group surgeon setting and why that mean hipping plant is so important for driving that SaaS mill. Now we will look very closely at relationships here. Look, all the big robotic players have CT scans, we'll look at some business-to-business opportunities with those robotic companies that bring in all of those CT scans. We're looking at multiple options to monetize the primary clearance, but the secondary clearance within that regulatory strategy is the real driver of the SaaS mall. So the footprint. We've got to get it into those knee and hip or what they call adult reconstruction surgeons in the U.S. And that's where we have coverage for BMD. I should make that board clear. It's only in the U.S. that today that BMD is covered. Now it's more than likely going to be covered. I think in Germany, they do it as well or the fixation strategy. But right now, the U.S. market is where there is clear favorable reimbursement for this in a circuit setting. So we've got to get our device in that setting, and that's why this major robotic system that utilizes CT scans and solving that mediation was so important. So I wanted to give you a bit of a visual of the hardware changes that were implemented. And this is the patient stabilizer, which the patient is struck to. You've got the support rails that lower so that the patient can be in a standing position and control their movement. So they have supported the rails. They've got the patient stabilized that their legs are up against and have a strapping to. And this is proving to be quite a successful hard work and software strategy with the post-processing tool and the new recall engine. So with this and the fact that we've been able to process double-digit patients now successfully processed than software. We see that as a major step forward in being able to complete our validation requirements going forward. So that's where we are on the robotic system. I do add a slide here I often talk about these robotic systems. It's always too good to have a visual. Now the first thing and what we built our Chinese relationships on a orthopedics, waving. This is a major player in China. So I think the largest medical device in China. They have -- orthopedics, their own robotic system. They are moving straight to wait bearing CT for their pipelines. So that's why that's such a nice marriage for us for China. Now in the rest of the globe, MAKO is the dominant system. That was the first CT-based system for preplanning surgery. And because of that 3D print planning, they have a very, very precise cut care. And this has been validated in Level 1 studies. It's a very precise cut guide. And as a result, patients can be up and walking same day or the next day. So from a combo assets perspective, it's a huge step forward. Now they have around 2,600 placements in the U.S. and today, that robot takes all of its cut guides off a supply in CT. That's the ecosystem. But the patient has to be referred out all that CT scale. But we're wanting to do is offer a CT scan that can process the cut within the surgeon's office so that it's 1 patient visit, 1 scale. The patient goes in, they diagnose the osteoarthritis. They do their surgical cut guide and they look at their BMD results for their fixation strategy and their implant selection. So it becomes on 1 visit, 1 scan ecosystem in robotics. So this is why this is such an important driver to get to 10% of this position is 260 placements where we want that footprint for our BMD. We are also working with all the major robotic systems. All robotic systems are now moving to have a capability of CT preplanning depending on what the surge was. So we are working with all the players in this field around CT preplan. Now some new emerging compete emerging robots. We're also in discussions with. But really, on the top 4, we really have outreach and continue to look at programs and working with all the major players to be that agnostic platform. So finally, just those definitions on purchase order receipts in revenue and how we recognize our revenue and the palomino resets. These are our definitions. So on that note, I'll open it up to questions.

[Operator Instructions]. The first question is, has CurveBeam obtained a former U.S. reimbursement assessment confirming that Bonevue's FDA-cleared analysis of an existing CT examination qualifies for separate billing under CPT-77078. And has that assessment considered CMS' previous position on Bone CT analysis services.

So I've done this for many years. I think the first one I did was for PCR in 1993. And you go to the AMA and you ask them, is this code inappropriate. And with that, it forms part of your payer compendium or when you're billing. Now the first thing you need is the FDA clearance. So BMD CT has been available since 2004. So all of that paperwork for radiology is already in place and would have been there for many, many years. But for the high rise to get that document out of AMA, we have to wait to have our FDA clearance to then formally get that review and endorsement that the billing is appropriate to the HiRise. I don't see there's much risk in that. I just -- at this point, we can't really do that application until it's actually cleared.

The next question is, what gives management confidence that we can deliver the first 50 Chinese units materially faster than the company has achieved in its established U.S. market.

Well, I'll break that into 2 parts. Look, Wave provides a dedicated massive distribution platform across China's health care system, number one. As I said, the largest medical device. They have well-established relationships, well-established cells. They have a significant position in orthopedics. I think they're #1 in spine. I think they've got to be top 3 and median hit. I mean they're a major plant. They're moving to validate white bearing, not just the CT, but white bearing onto their robotic system. So that's been a big limitation was the delays in that validation in the U.S. market. So I think that based on the distribution reach, their established relationships, it's not a guarantee that it's faster, but the fact that it's a different market that's not so dominant to one robot that there's a lot of traditional still. There is a lot of robots. But you're a major player, which we don't have the holdups that we've had previously in the U.S. market. So that's why I think we have a lot more confidence in what we can do in China. Now having said that, customer conversion and will come down to the hospital procurement cycles and how we go execute on their business plan. They've just been exceptional in the professionalism and their commitment as a partner to really building this market and the prospects in this market. I mean, it's been a real pleasure to work with way down in this opportunity in China. And that's one -- some really key points there that really do give us a very optimistic outlook for what we can achieve with way down in China. Now having said that, I also want to point out some of the limitations previously with the U.S. So in the U.S. market, this is USD 450,000 piece of equipment. And you're stuck in these annual capitalized budgets where you're competing for other capital equipment in orthopedics, that means the robots, $1.5 million or $1 million. There's a lot of instrumentation now in orthopedic. So you're competing against other capital requirements within these annual capital budgets. And what we've found and what we've stated in previous 4 Cs is this is leading to quite a lengthy capital expense budget approval process. And so anywhere from 2 to 3 years to get approval to buy a system. Now some of the other issues that impact on that capital expense budgeting process is the business case. And they want confidence in the reimbursement for the return on investment. And previously, preauthorization was introduced by page. You can have your coding, your payment in place and your coverage in place, but payers then brought in these preauthorizations, meaning if a patient is coming in, you still have to get a preauthorization from the payer to pay for that scheme and sometimes that can take a day or it can take a few days or 2 weeks. And preauthorization did have a big impact on the risks around return on investment. It's one of the reasons why make is such a powerful driver replacement is that through making you get the co-pay and or out-of-pocket expense as part of adopting the robotic platform where that out-of-pocket will go pay covers the surgeon for about $400 a scale. So significantly more than the average, say, in April, $220. And that $400, if you're a knee surgeon doing 10 patients a day for 3 days a week, that's $4,000, that's $12,000 with really does help drive your return on investment. That's why we make such a powerful driver. And so will these other robotic systems when they bring up their CT functionality. But right now, there's been another change on preauthorization where there's several states have adopted the Gold Card. And in Orthopedics 99% of denied payments get covered for preauthorization. And under these gold states, if they can show 6 months that they didn't -- they didn't have any of their pre-authorizations rejected. They get a gold card, and they no longer need to do preauthorization. They can go ahead without preauthorization knowing that, that patient will be covered under existing fee-for-service. So for us, Texas, California, is $70 million just in 2 states. That becomes quite a nice reduction in hurdles for preauthorization. So we think that will help us in the U.S. going forward. And we're also looking at and we refer to it in the business, in the annual report, is the imaging as a service model, where we can get the decisions out of CapEx. It's a new business model. It's a servicing model where we supply the device, we own the device and they pay for a servicing fee to run that device so that it's captured in the OpEx, not their CapEx. And they get to experience offering that solution for what would be around anywhere from $13,000 a month, they're paying for that service. But it's going through their OpEx. So they get the opportunity to test their reimbursement. So in those gold card states, it's a very nice business model, and it's a new business model that can reduce that sell cycle in the U.S. So I think it's also important to note that we're encouraged in China for the reasons I've given, but also we feel there's change starting to occur in the U.S., and we're getting ready to move on that to offer this imaging as a service, it has worked quite well for MRI in these group surgeon settings in orthopedics and why we want to emulate that business model.

The next question is with regards to restore 3D, has this progressed into ongoing clinical utilization or a broader commercial relationship?

Look, as I was saying before, we're going to work with everyone, not only in robotics, but like Restore 3D, they have a patient-specific implant. So they need a CT to get a perfect mold that patients and then you have your own individualized implant that comes for the surgery. So it's a very nice product. I mean, I love their new product. It's very nice. But we've worked with -- they don't have a big position in the market. I mean, it's a very small segment, but they've been very targeted and where they're going after very prominent KOLs. And this ability to size our implant specifically to a patient, reduces your train requirement, you know exactly the trade you need. What we want to do and what we're building to do with -- 3D is that BMD on a high rise once they've got that, they don't have to have multiple trains based on what will be their fixation strategy. They'll be able to know exactly, is it a noncemented or a cemented implant. And you'll have an individualized implant. So your trade requirements in the operating group reduced significantly and your ability to process patients if you're not cementing them, you can do an extra patient a day by some of the time savings and just the logistics of managing the trains in the operating theater or that we can help deliver through that new BMD. So right now, I think we're just recently placed a high rise with one of the KOLs in North Carolina. And we continue to work with them. We'll be -- we regularly meet with them. I was meeting with them recently with one of the -- with one of the -- so yes, look, it's an important relationship, but it's not a big footprint right now. 2,600 MAKO is important. There's, I think, like 1,200 ROSA. There's a lot of other systems out there that we're going to also cover.

The next question is the European manufacturer, the identity of the manufacturer progress with technical and clinical validation for total hip replacement and what's the potential for a formal commercial agreement?

On the commercial agreement will be limited by a Stryker agreement in the U.S. We could do more internationally, except in Australia and New Zealand. But that relationship continues. We're now working on these. And when we've done enough validation and they're satisfied, then we would look to do a joint announcement. Again, this is so that we're keeping an agnostic position. So if a HiRise is placed by our partner and that group surgeons saying has multiple robotics, which is priced quite often, and you have multiple traditionals doing different applications like the store 3D or the doctor in those settings by being agnostic, it really gives the power of our device to meet everybody's requirement. So we see that right now, that capability on the high-rise with multiple robots really puts us in a nice differentiated position and why we want to move and get a formal announcement not only with them, but with other companies that are moving to this capability as well.

The next question is, can you clarify what -- how the WEGO agreement -- sorry, let me start again, can you clarify how the WEGO arrangement is expected to work commercially once Chinese manufacturing commences.

So in China, to get into the big state systems, and remember, there's 38,000 hospitals in China. With that locally manufactured product under the volume procurement policies of China to get into those live contracts, which really gets you a large number of placements, having a locally produced product is an enormous step forward and with a player of the size of way down, that really opens up the whole Chinese market. Now the U.S. distribution is very much focused on the KOL sites, establishing the scientific and clinical validity of the product and the benefits. So that when they launched the China manufactured product, it's going through the volume procurement policies of China to the large volume placement. So that's why there's that local manufacturing. And also with that economies of scale and scope delivers us a lower priced product to be more price competitive and improve our margins in China markets and ex U.S. U.S. will always keep a manufacturing capability for managing risks on tariffs and the like in supply. But in Europe, South America, Southeast Asia, Australia, New Zealand, Japan career, we see there's some great opportunities here that access a Chinese manufacturing product. Hopefully, that's done on a major scale through the volume procurement meeting the standard requirements, that then allows us to develop some of these other markets that are more price sensitive.

Thank you. The next question is just with reference to sales levels historically, what gives you confidence that the issue is simply timing rather than a fundamental challenge with market adoption? And is there any measurable sales targets you're prepared to commit to over the coming quarters?

Look, retentive forecasts, but what we can say is that we've got to shorten the capital sales side. And in orthopedics, there's just too much competition capital equipment, whether it's MRI, whether it's digital x-ray, whether it's seating, whether it's robotics, some of these group practices, they may want to make and they may want about others may want restore 3D's capability. So they're competing against a lot of other capital priorities. And if you miss 1 year, you put into the next year. And if there's no way of getting you increased on the priority list, you end up in the sales cycles that can get drawn out. And we feel that this imaging as a service, is a new business model that would allow OpEx decisions. And we've found with our pilot that we're running that it is being well received and is a decision that no longer requires the CEO and the Board to sign off, they can do it through their OpEx budget. And we're now developing that imaging as a service model, not only for placing the device and the account can establish that servicing capability for a year or 2 years. They then got solid data on their reimbursement, how much money they're making on it can help accelerate what start-up as a service agreement and turns it into a capital purchase down the pipeline. So Imaging as a service is a very strict model. We always on that device. But we feel that it's a much faster way of addressing the capital sales cycle. And it will just be 1 of 3 models that we will offer. We'll offer vendor financing, we will offer rental agreements, and we will offer imaging as a service. So we feel that we're trying to help move through our pipeline with utilizing this imaging as a service, and getting the decisions done through OpEx. We'll be very targeted in that. And I think where we've got the new Gold Card states, I think we have a nice reduced hurdle concern around ROI that we can make that were working for us, that gives us an ongoing recurring revenue stream in our business model that we can depend on. And that's the experience with MRI. Very few -- I think 20% got converted 80% just stayed as a servicing model because everyone is worried about the next version of MRI that's coming. Same with CT, so to manage that risk, they like in service agreements. So that's why we're introducing a servicing model. And we hope that, that will have an impact in reducing the sales cycle, number one. And I think that once the BMD comes through on the high-rise platform, that in itself generates a whole new form of reimbursement for the surgeons because they get an extra patient a day in an -- potentially, and that's what we're looking to validate in some of these trials. So it becomes quite a compelling return even without the direct reimbursement on scan.

Thanks, Greg. Then there's been a couple of questions just come through with regards to breakeven and cash flow positive. So what quarterly revenue and gross margin does the business become operating cash flow positive and are able to provide a realistic time frame for reaching that point without further shareholder dilution.

Well, we can't do forecasts -- what we can do is what is available, which is we give everyone the GP. So I'll give back to you, Phil.

Sure. So look, our GP varies China is going to be about 1/3, so about 33%. On our full-tilt direct sale to a clinician, it's about 58%. And on the strike of sale, it's about 45%. So it depends on the sales mix in a month. And so the breakeven any unit sensors between sort of 11 and 20-ish devices.