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), an increase of $(4,578,058) from a net loss of $(4,588,900) in 2023[206]. - Interest expense increased to $3,149,315 for the nine months ended September 30, 2024, up from $394,714 in 2023, a change of $2,754,601[213]. Research and Development - The company expects to continue investing in research and development, particularly for the QT Breast Scanner and a full-body scanner product candidate, which may lead to increased costs[190]. - 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, mainly due to increased employee compensation and professional services costs[197]. - 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]. Financing and Capital - The company issued a Yorkville Note for a Pre-Paid Advance of $10 million, with a payment of $1,521,581 made to Yorkville on September 13, 2024[181]. - 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 plans to raise additional capital through equity issuance, borrowings, and potential strategic alliances to support commercialization efforts[242]. - The company expects to fund its current operating plan for at least the next 12 months through additional cash received from financing arrangements and revenues[217]. - Net cash provided by financing activities for the nine months ended September 30, 2024 was $10,220,475, primarily from $10,525,000 of net proceeds from long-term debt issuance and $1,238,530 from the Merger[239]. Operational 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 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 plans to engage in a binding Original Equipment Manufacturer (OEM) agreement with Canon Medical Systems, targeting execution in Q4 2024[178]. Expenses and Liabilities - The company expects to incur additional recurring administrative expenses associated with being a publicly traded company, including compliance costs and audit fees[180]. - 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, driven by higher employee compensation and insurance costs[199]. - 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]. - The company has outstanding Related Party Convertible Notes Payable amounting to $3,143,725 as of September 30, 2024, with accrued interest of $507,029[231]. - The Cable Car Loan outstanding amount as of September 30, 2024 was $1,247,374, net of issuance costs of $252,626[230]. Cash Flow and Financial Position - As of September 30, 2024, cash and cash equivalents were $1,564,169, significantly up from $184,686 as of December 31, 2023[215]. - Net cash used in operating activities for the nine months ended September 30, 2024 was $8,806,402, compared to $1,965,772 for the same period in 2023, primarily due to funding research and development and general administrative expenses[236]. - The company has a cash flow increase of $1,379,483 for the nine months ended September 30, 2024, compared to a decrease of $420,586 for the same period in 2023[235]. Regulatory and Compliance - The company is an emerging growth company (EGC) and intends to rely on exemptions provided by the JOBS Act, delaying the adoption of new accounting standards until certain conditions are met[252]. - The company has total annual gross revenue of at least $1.235 billion, which will affect its status as an EGC[255]. - The company is currently evaluating the impact of new accounting standards issued in November and December 2023 on its financial statements[266][267]. Legal and Tax Matters - The company is subject to occasional lawsuits and claims, but management is not aware of any pending claims that will materially impact financial statements[251]. - The company evaluates the realizability of deferred tax assets annually, considering future taxable income and available tax planning strategies[263]. - The company adopted ASU 2020-06 effective January 1, 2024, with no material impact on its financial statements[265]. Revenue Recognition - The company recognizes revenue when a customer obtains control of promised goods or services, with specific steps outlined for revenue recognition[258].
QT Imaging(QTI) - 2024 Q3 - Quarterly Report