QT Imaging(QTI) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Financial Statements (Unaudited) The unaudited condensed financial statements reflect GigCapital5, Inc.'s SPAC activities, significant share redemptions, and going concern doubt Condensed Balance Sheets Total assets decreased from $233.6 million to $41.7 million due to redemptions, creating a $1.8 million working capital deficit Condensed Balance Sheet Comparison (Unaudited) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $485,657 | $421,549 | | Cash and marketable securities held in Trust Account | $40,487,648 | $232,304,005 | | Total Assets | $41,715,265 | $233,632,998 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $2,645,545 | $633,641 | | Deferred underwriting fee payable | $9,200,000 | $9,200,000 | | Total liabilities | $11,869,395 | $10,247,041 | | Common stock subject to possible redemption | $40,870,287 | $232,304,195 | | Total stockholders' deficit | ($11,024,417) | ($8,918,238) | Condensed Statements of Operations and Comprehensive Loss The company reported no revenue, with a $1.4 million net loss for the nine months ended September 30, 2022, driven by general and administrative expenses Statement of Operations Highlights (Unaudited) | Metric | Nine Months Ended Sep 30, 2022 | Period from Inception to Sep 30, 2021 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | General and administrative expenses | $2,688,382 | $178,720 | | Loss from operations | ($2,688,382) | ($178,720) | | Interest income on Trust Account | $1,285,818 | $127 | | Net loss and comprehensive loss | ($1,401,775) | ($239,977) | | Basic and diluted net loss per share | ($0.35) | ($0.03) | Condensed Statements of Stockholders' Deficit The accumulated deficit increased to $11.0 million as of September 30, 2022, primarily due to a $1.4 million net loss for the nine-month period - For the nine months ended September 30, 2022, the accumulated deficit increased by $2.1 million, primarily due to a net loss of $1.4 million and a reclassification from additional paid-in capital of $0.7 million[17] Condensed Statements of Cash Flows Net cash used in operating activities was $659 thousand, while investing activities provided $192.7 million from Trust Account withdrawals for redemptions - A total of $192.1 million was used for the redemption of Public Units during the nine months ended September 30, 2022[20] - Net cash used in operating activities was $659,089 for the nine months ended September 30, 2022[20] Notes to Unaudited Condensed Financial Statements Notes detail the business combination deadline extension, significant share redemptions, and management's conclusion of substantial doubt about the company's ability to continue as a going concern - The company is a blank check company (SPAC) formed to enter into a business combination and had not commenced any operations as of September 30, 2022[22][23] - On September 23, 2022, stockholders approved extending the business combination deadline from September 28, 2022, up to March 28, 2023, through monthly extensions[30] - In connection with the extension, stockholders elected to redeem 18,985,950 shares, representing approximately 82.6% of the shares sold in the IPO[32] - Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern due to its liquidity condition and the potential for mandatory liquidation[48] - Subsequent to the quarter end, on October 3, 2022, the company entered into an exclusive, non-binding term sheet for a business combination with QT Imaging, Inc[108] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a SPAC with no operations, a $1.4 million net loss, limited liquidity, and reiterates the going concern risk - The company has not engaged in any operations or generated any revenues to date, with activities limited to organizational tasks, IPO preparation, and searching for a business combination target[117] Results of Operations Summary | Period | Net Loss | Key Drivers | | :--- | :--- | :--- | | Q3 2022 | $395,766 | Operating expenses of $1.1M, partially offset by $968k interest income | | Nine Months 2022 | $1,401,775 | Operating expenses of $2.7M, partially offset by $1.3M interest income | - As of September 30, 2022, the company had $485,657 in cash outside the Trust Account and believes these funds may be insufficient to operate until the March 28, 2023 deadline, potentially requiring additional financing from the Sponsor[137][139] - The company has contractual obligations to pay an affiliate of the Founder $30,000 per month for administrative services and its CFO $2,500 per month (potentially increasing to $15,000)[143][144] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, the company is not required to provide the information under this item[159] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting - Based on an evaluation as of September 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[161] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[163] PART II. OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal proceedings, nor are any threatened against it or its officers or directors - The company is not currently subject to any material legal proceedings[164] Risk Factors This section highlights new and heightened risks, including a potential 1% U.S. federal excise tax on redemptions, proposed SEC rules, macroeconomic risks, and substantial doubt about the company's ability to continue as a going concern - A new 1% U.S. federal excise tax, effective in 2023, could be imposed on the company in connection with share redemptions, potentially affecting investment value[166] - Proposed SEC rules for SPACs, if adopted, may materially impact the company's ability to negotiate and complete its initial Business Combination, increasing costs and time[168][169] - The company's financial condition, including a working capital deficit of $1.8 million and reliance on completing a business combination by its deadline, raises substantial doubt about its ability to continue as a going concern[172] - There is no assurance that a definitive agreement for the business combination with QT Imaging, Inc. will be executed or that the transaction will be consummated[183] Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered sales of Founder Shares and Private Placement Units, and the use of IPO proceeds, including a $192.1 million withdrawal from the Trust Account for redemptions - The Founder purchased 5,735,000 Founder Shares for $25,000 and 795,000 Private Placement Units at $10.00 per unit in unregistered transactions exempt under Section 4(a)(2) of the Securities Act[220][222] - The IPO and concurrent private placement generated total gross proceeds of $237.95 million, with net proceeds of $232.3 million placed into the Trust Account[229][230][231] - Following stockholder elections to redeem, $192,138,312 was withdrawn from the Trust Account on September 27, 2022[235] Defaults Upon Senior Securities This item is not applicable as the company has no senior securities upon which to default - Not Applicable[237] Mine Safety Disclosures This item is not applicable as the company is not engaged in mining operations - Not Applicable[238] Other Information There is no other information to report for the period - None[239] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL documents[241]