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, with an accumulated deficit of $22,068,735 as of the same date [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 sale of the QT Breast Scanners [213]. - Net loss for Q1 2024 was $4,298,590, compared to a net 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]. - The company expects to remain cash flow negative for the foreseeable future, despite potential positive quarterly cash flows [222]. - 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 [240][244]. Funding and Capital Structure - 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]. - QTI Holdings entered into a Standby Equity Purchase Agreement allowing the sale of up to $50.0 million of common stock over 36 months post-Business Combination [182]. - A pre-paid advance of $9,025,000 was received from Yorkville, accruing interest at 6% annually, convertible into common stock [182]. - A Pre-Paid Advance of $10,000,000 was received from Yorkville in March 2024, with an annual interest rate of 6% [232]. - The company anticipates that additional financing may be required in the future, which could involve restrictive covenants and potential dilution for existing shareholders [224]. - The company has an outstanding balance of $1,560,000 on the Extension Note, which does not bear interest and cannot be repaid prior to the repayment of the Pre-Paid Advance from Yorkville [239]. - As of March 31, 2024, the outstanding amount of the 2020 Notes was $3,143,725 with accrued interest of $420,700 [237]. Research and Development - Research and development expenses are expected to increase substantially as the company invests in 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 continue incurring substantial costs for research and development, particularly for the QT Breast Scanner, and expects to raise additional capital through equity and debt financing [246][247]. Sales and Marketing - 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, delivering one QT Breast Scanner to a customer as of March 31, 2024 [170]. - The company has entered into the NXC Agreement to enhance sales and marketing capabilities in the U.S. market for its products [246]. - 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, which will last until December 2024 [172]. Expenses and Cost Management - Selling, general and administrative expenses are anticipated to rise to support expanding headcount and operations, and the development of a commercial infrastructure [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]. - The company anticipates that cost of revenue will increase in absolute dollars but decrease as a percentage of revenues over time due to new manufacturing processes [202]. 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]. - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay adopting new accounting standards [257]. - 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 incremental segment information disclosures, currently under evaluation for impact [277]. - ASU 2023-09, effective after December 15, 2024, aims to improve income tax disclosures, with the company evaluating its impact [278].
GigCapital5(GIA) - 2024 Q1 - Quarterly Report