Financial Performance - The company has incurred a net loss of $9,166,958 during the nine months ended September 30, 2024, with an accumulated deficit of $32,122,605[179]. - Revenue increased by $931,313 to $955,970 for the three months ended September 30, 2024, compared to $24,657 for the same period in 2023, primarily due to the sale of two QT Breast Scanners[195]. - Cost of revenue increased by $326,868 to $350,667 for the three months ended September 30, 2024, from $23,799 for the same period in 2023, attributed to the sale of two QT Breast Scanners[196]. - Net loss for the three months ended September 30, 2024, was $3,619,494, compared to a net loss of $1,375,939 for the same period in 2023, reflecting an increase of $2,243,555[198]. - Revenue increased to $4,032,168 for the nine months ended September 30, 2024, up from $35,404 in the same period of 2023, representing a change of $3,996,764[206]. - Cost of revenue rose to $1,792,234 for the nine months ended September 30, 2024, compared to $73,497 in 2023, an increase of $1,718,737[207]. - Gross profit improved to $2,239,934 for the nine months ended September 30, 2024, from a loss of $(38,093) in 2023, a change of $2,278,027[206]. - Net loss for the nine months ended September 30, 2024, was $(9,166,958), worsening from a net loss of $(4,588,900) in 2023, a change of $(4,578,058)[215]. Expenses - Research and development expenses rose by $613,385 to $925,214 for the three months ended September 30, 2024, from $311,829 for the same period in 2023, driven by increased employee compensation and professional services costs[197]. - Selling, general and administrative expenses increased by $1,075,153 to $2,007,277 for the three months ended September 30, 2024, from $932,124 for the same period in 2023, primarily due to higher employee compensation and insurance costs[199]. - Research and development expenses increased by 130% to $2,492,842 for the nine months ended September 30, 2024, from $1,083,373 in 2023[208]. - Selling, general and administrative expenses surged by 221% to $9,873,029 for the nine months ended September 30, 2024, compared to $3,072,720 in 2023[209]. - Interest expense, net increased by $1,322,462 to $1,455,306 for the three months ended September 30, 2024, from $132,844 for the same period in 2023, mainly due to increased amortization of debt discount[203]. - Interest expense increased significantly to $(3,149,315) for the nine months ended September 30, 2024, from $(394,714) in 2023, an increase of $2,754,601[213]. Financing and Capital Structure - The company has a Pre-Paid Advance of $9,025,000 from Yorkville, with a Yorkville Note accruing interest at an annual rate of 6%[181]. - The principal balance of the Yorkville Note was $8,600,000 following the conversion of $254,593 of outstanding principal into 384,059 shares of common stock at a conversion price of $0.6629 per share[184]. - The Company entered into a PIPE agreement for the issuance of shares and warrants with an aggregate purchase price of $2,560,000, resulting in the issuance of 4,383,558 shares at $0.584 per share[185]. - The company received a Pre-Paid Advance of $10,000,000 from Yorkville on March 4, 2024, as part of its financing strategy[224]. - The company made a payment of $1,521,581 to Yorkville, which included $1,145,407 of principal, $318,904 of accrued interest, and $57,270 of early payment premium[225]. - As of September 30, 2024, the outstanding amount of the Yorkville Note was $2,980,159, net of unamortized discount of $5,874,434 and accrued interest of $24,744[226]. - The company executed the Second Amendment to extend the maturity date of the Yorkville Note to March 31, 2026, with monthly payments of $500,000 plus a 5% premium starting February 15, 2025[227]. - Yorkville converted $254,593 of outstanding principal into 384,059 shares of common stock at a conversion price of $0.6629 per share, resulting in a principal balance of $8,600,000 for the Yorkville Note[228]. - Net cash used in operating activities was $8,806,402 for the nine months ended September 30, 2024, compared to $1,965,772 for the same period in 2023[236]. - Net cash provided by financing activities was $10,220,475 for the nine months ended September 30, 2024, primarily due to proceeds from long-term debt and the Merger[239]. - The company plans to raise additional capital through equity issuance, borrowings, and potential strategic alliances[242]. Strategic Partnerships and Agreements - The company entered into a Distribution Agreement with NXC Imaging, appointing them as the exclusive reseller of QT Breast Scanners in the U.S. and U.S. territories[174]. - The company plans to engage in a good faith discussion to develop a binding Original Equipment Manufacturer (OEM) agreement with Canon Medical Systems, targeted for execution in Q4 2024[178]. - The company has entered into a Feasibility Study Agreement with Canon Medical Systems to evaluate the QT Breast Scanner's business and clinical values[177]. - The company has partnered with strategic business channels to expand market access for the QT Breast Scanner, targeting hospitals and radiology centers[174]. Future Outlook and Expectations - The company expects to incur additional recurring administrative expenses as a publicly traded company, including compliance costs and audit fees[180]. - The company expects research and development expenses to increase substantially as it continues to invest in the development of the QT Breast Scanner and a full-body scanner product candidate[190]. - The Company anticipates selling, general and administrative expenses will rise to support expanding operations and commercialization efforts[194]. - The company expects to derive future liquidity primarily through revenues and the sale of equity securities[214]. - The company expects to incur significant expenses for research and development, regulatory clearances, and building a U.S. sales and marketing team[240]. - Future funding requirements will depend on various factors, including cash to repay debt obligations, manufacturing expansion, and regulatory clearances[241]. - The company is unable to estimate exact operating capital requirements due to numerous risks and uncertainties associated with product development and commercialization[243]. - The company expects to finance its cash needs through a combination of public or private equity offerings, debt financings, collaborations, and strategic partnerships[245]. Compliance and Reporting - The company is an emerging growth company (EGC) and intends to rely on exemptions and reduced reporting requirements provided by the JOBS Act until certain conditions are met[252][255]. - The company has no off-balance sheet arrangements during the periods presented[249]. - The company recognizes revenue when a customer obtains control of promised goods or services, with performance obligations including product sales and maintenance contracts[258][259]. - The company evaluates the realizability of deferred tax assets annually, assessing the likelihood of realization based on future taxable income forecasts[263]. - The company adopted ASU 2020-06 effective January 1, 2024, with no material impact on its condensed consolidated financial statements[265]. - The company is currently evaluating the impact of ASU No. 2023-07 on its financial statements, which requires incremental segment information disclosures[266]. - The company plans to adopt ASU 2023-09 on a prospective basis, aimed at improving income tax disclosures[267]. - The company is subject to occasional lawsuits and claims but is not aware of any pending claims that will materially impact its financial statements[251].
GigCapital5(GIA) - 2024 Q3 - Quarterly Report