Financial Performance - The company has incurred a net loss of $4,298,590 and used $5,975,515 in cash for operating activities during the three months ended March 31, 2024, contributing to an accumulated deficit of $22,068,735 [174]. - Revenue increased to $1,362,163 for Q1 2024, up from $7,564 in Q1 2023, primarily due to the sale of three QT Breast Scanners [212]. - Cost of revenue rose to $602,083 in Q1 2024, compared to $46,577 in Q1 2023, driven by the same scanner sales [213]. - Net loss for Q1 2024 was $4,298,590, compared to a loss of $1,882,947 in Q1 2023, reflecting a 128% increase in losses [211]. - As of March 31, 2024, the accumulated deficit was $22,068,735, up from $17,770,145 as of December 31, 2023 [222]. - Interest expense increased to $598,959 in Q1 2024 from $130,282 in Q1 2023, primarily due to higher amortization of debt discounts [221]. - Net cash used in operating activities for the three months ended March 31, 2024 was $5,975,515, significantly higher than $992,716 for the same period in 2023 [240][241]. - Net cash provided by financing activities for the three months ended March 31, 2024 was $11,431,060, primarily due to $10,525,000 from long-term debt issuance and $1,238,530 from the Merger [244]. Funding and Financial Support - The company received nearly $18 million in financial support from the U.S. National Institutes of Health to develop a novel body imaging technology [167]. - The company raised $1,000,000 through a private secured convertible bridge financing, with four of five investors opting for cash repayment totaling $960,000 [178]. - A pre-paid advance of $9,025,000 was received from Yorkville, accruing interest at 6% annually, convertible into shares of common stock [182]. - The company received a Pre-Paid Advance of $10,000,000 from Yorkville in March 2024, with an outstanding amount of $2,227,062 as of March 31, 2024 [232]. - Future funding requirements will depend on various factors, including the progress of trials and regulatory approvals for the QT Breast Scanner [248]. - The company expects to finance cash needs through public or private equity offerings, debt financings, and strategic partnerships [250]. Business Development and Agreements - The company entered into a Sales Agent Agreement with NXC Imaging for the sale of QT Imaging products in the U.S. and U.S. territories, with one QT Breast Scanner delivered as of March 31, 2024 [170]. - A non-binding letter of intent was signed with Canon Medical Systems for the acquisition of two QT Breast Scanners, with 50% of the payment completed by January 31, 2024 [171]. - The company has engaged in a Feasibility Study Agreement with Canon to evaluate the QT Breast Scanner's business, technical, and clinical values, lasting until December 2024 [172]. - A Data Use and License Agreement was established with QT Imaging Center for the use of de-identified health information in research related to the QT Ultrasound Breast Scanner [198]. - QTI Holdings entered into a Standby Equity Purchase Agreement allowing the sale of up to $50.0 million in common stock over 36 months following the Business Combination [182]. Research and Development - Research and development expenses are expected to increase substantially as the company invests in the development of the QT Breast Scanner and a full-body scanner for orthopedic and pediatric use [205]. - Research and development expenses increased by 52% to $642,546 in Q1 2024 from $421,887 in Q1 2023, mainly due to higher employee compensation costs [214]. - The company plans to incur substantial costs for research and development, regulatory clearances, and building a U.S. sales and marketing team [246]. Operational Expenses - Selling, general and administrative expenses are anticipated to rise to support expanding headcount, public company operations, and commercialization efforts [209]. - Selling, general and administrative expenses surged by 341% to $5,696,211 in Q1 2024 from $1,291,765 in Q1 2023, largely due to transaction expenses related to a business combination [215]. Accounting and Compliance - The company prepares its condensed consolidated financial statements in accordance with GAAP, requiring estimates and judgments that may materially affect reported amounts of assets, liabilities, revenues, and expenses [260]. - Revenue is recognized when a customer obtains control of promised goods or services, reflecting the consideration expected to be received [262]. - The company identifies performance obligations based on distinct goods or services that can benefit the customer, including product sales, maintenance contracts, and other services [265]. - Inventory is stated at the lower of cost or net realizable value, with periodic reviews leading to write-offs for obsolete items [269]. - The company accounts for leases as operating leases, recording right-of-use assets and lease liabilities on the balance sheet [270]. - Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis, evaluated annually for realizability [272]. - Stock-based compensation is measured at grant date fair market value and recognized as expense over the requisite service period [275]. - The company adopted ASU 2020-06 effective January 1, 2024, with no material impact on financial statements [276]. - ASU No. 2023-07, effective after December 15, 2023, requires improved segment disclosures, currently under evaluation for impact [277]. - ASU 2023-09, effective after December 15, 2024, aims to enhance income tax disclosures, with the company planning to adopt it on a prospective basis [278]. Legal and Regulatory Matters - The company is subject to occasional lawsuits, but management is not aware of any pending claims that will materially impact financial statements [256]. - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay adopting new accounting standards [257]. - The company may need to relinquish rights to technologies or revenue streams if it raises funds through collaborations or partnerships [251].
QT Imaging(QTI) - 2024 Q1 - Quarterly Report