QT IMAGING HOLDINGS, INC.
For the period ended Dec 31, 2025. Filed Mar 25, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 25, 2026
QTI$2.03-1.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001844505-25-000038
Item 7. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-25.
0001628280-26-020909
Item 7. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 201 previous paragraphs and 188 current paragraphs.
111 unchanged; 30 reworded; 42 added; 55 removed; 5 previous and 5 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (42)
Current report
On August 21, 2025, we entered into the Gulf Medical Distribution Agreement with GMC, a corporation organized and existing under the laws of Saudi Arabia, for an Initial Term of three years . Under the terms of the Gulf Medical Distribution Agreement, we shall authorize and grant to GMC the exclusive right to market, advertise and sell the QT Breast Scanners and the QTI Cloud SaaS platform subscriptions in the GMC Territory. If GMC has met the GMC Minimum Purchase Requirements during the Initial Term, the Gulf Medical Distribution Agreement shall automatically be extended for an additional one-year term. GMC agrees to meet or exceed the GMC Minimum Purchase Requirements during the Initial Term. In the event GMC fails to meet these GMC Minimum Purchase Requirements in any year during the Initial Term, we may, at its sole option, (a) terminate GMC’s exclusive distributorship rights for the sale and promotion of the Approved Products granted under this Agreement and appoint other distributors for the GMC Approved Products in the GMC Territory, or (b) terminate the Gulf Medical Distribution Agreement. Should we elect to so terminate GMC’s exclusive distributorship in the Territory, we may continue to sell the GMC Approved Products to GMC for GMC to distribute on a non-exclusive basis in the Territory in accordance with the terms and conditions of the Gulf Medical Distribution Agreement, and GMC’s ongoing obligations with regard to its GMC Minimum Purchase Requirements for the GMC Approved Products shall terminate. Should the Company be unable to furnish GMC with sufficient quantities of the GMC Approved Products, as may be requested by GMC in its Release Orders (as defined below) submitted to us in accordance with the terms of the Gulf Medical Distribution Agreement, then GMC’s Minimum Purchase Requirement shall be reduced by the quantity of GMC Approved Products that the Company is unable to deliver as requested. GMC shall secure all required governmental approvals, permits, licenses, customs clearances, and authorizations required for shipment to and use of the QT Breast Scanners in the Territory. We shall provide training and professional services to GMC during the term of the Gulf Medical Distribution Agreement and shall retain all intellectual property rights. Except as GMC and we may otherwise mutually agree in writing, provided that GMC maintains a credit limit with our credit insurance provider that has been approved in writing by us, GMC shall pay the Company fifty percent (50%) of the total price of the GMC Release Order upon order placement and fifty percent (50%) within 45 days from the date of shipping of the GMC Approved Products to GMC’s designated location(s), or in any of the agreed upon payment terms. We have provided for a limited warranty of at least one year, and up to five years, depending on the purchase price paid by a client of GMC for a GMC Approved Product. The Gulf Medical Distribution Agreement can be terminated only with…
Excerpt shortened here; the source contains the full paragraph.
Current report
On January 19, 2026, we entered into an exclusive distribution agreement for the Company’s Breast Acoustic CT scanners and QTI Cloud SaaS Platform in the UAE with Al Naghi Medical Co., a leading distributor of medical devices. The agreement provides for MOQs of seven scanners in 2026 (starting in the second quarter), increasing to 16 scanners in 2027 and 20 scanners in 2028, for a total minimum of 43 scanners representing revenue of more than $24 million upon FDA approval in the UAE.
Current report
In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity dates on both the Convertible Note Payable and Working Capital Notes were extended to October 21, 2027.
Current report
On April 9, 2025, we entered into a Securities Purchase Agreement (the “First Securities Purchase Agreement”) by and between the Company, on the one hand, and Dr. Avi Katz, the Chairman of the board of directors, and Dr. Raluca Dinu, the Chief Executive Officer and a member of the board of directors, on the other hand, for the “April 2025 Private Placement”). On April 24, 2025, at the closing of the April 2025 Private Placement, we issued (i) 261,644 shares of common stock at a per share purchase price of $1.911, which represented 110% of the volume weighted trading price for the common stock on April 9, 2025; and (ii) the Ten Year Common Warrants with a term of ten years from the initial exercise date to purchase up to an additional 523,286 shares of common stock with a per share exercise price of $2.16. The aggregate gross proceeds to us from the April 2025 Private Placement was approximately $0.5 million, before deducting the offering expenses payable by us, which expenses consisted solely of legal fees.
Current report
On May 12, 2025, we entered into a Securities Purchase Agreement (the “Second Securities Purchase Agreement”) for the Second Private Placement in an amount of approximately $0.2 million, pursuant to which we issued 68,447 shares of common stock plus the Recanati Warrant to purchase 68,447 shares of common stock. The Second Private Placement provides a per share purchase price of $2.922, which represents 110% of the five-day volume weighted trading price for the common stock through May 9, 2025, and the per share exercise price of the Recanati Warrant is $3.36.
Current report
On August 19, 2025 our stockholders approved the Certificate of Amendment to effect a reverse stock split of the outstanding shares of our common stock, par value $0.0001 per share, at a specific ratio within a range of 2:1 to 20:1, with the specific ratio to be fixed within this range by our board of directors in its sole discretion without further stockholder approval. Our board of directors fixed the Reverse Stock Split ratio at 3:1, such that each three shares of common stock were combined and reconstituted into one share of common stock effective October 23, 2025. In connection with the Reverse Stock Split, the CUSIP number of the common stock has changed to 746962307. The common stock began trading on the OTCQB Venture Market on a reverse split-adjusted basis on October 24, 2025. Except as noted, all share, stock option, warrant, and per share information throughout these consolidated financial statements have been retroactively adjusted to reflect this Reverse Stock Split.
Current report
On August 26, 2025, the Company and Lynrock Lake entered into the First Amendment to the Lynrock Lake Credit Agreement (the “Lynrock Lake Amended Credit Agreement”) to add an additional tranche of $5.0 million (“Tranche B”) and increase the aggregate principal amount of the Lynrock Lake Term Loan to $15.1 million. The proceeds of Tranche B were used to repurchase the Yorkville Warrant and was subsequently repaid in full, along with repayment premium and accrued interest, on October 6, 2025.
Current report
On September 30, 2025, we entered into a Securities Purchase Agreement, (the “Third Securities Purchase Agreement”), by and between us, on the one hand, and certain accredited investors and qualified institutional buyers, led by Sio Capital Management, LLC, on the other hand, (together, the “Purchasers”) for a private placement (the “October 2025 Private Placement”) of securities. At the closing of the October 2025 Private Placement on October 3, 2025, we issued (i) 2,232,243 shares of our common stock, par value $0.0001 per share; (ii) the Subscription Warrants with a term of five years from the initial exercise date to purchase up to an additional 4,040,272 shares of common stock; and (iii) the Pre‑Funded Warrants to purchase up to an additional 1,808,055 shares of common stock, exercisable any time after its issuance. The purchase price of each share of common stock is $4.50 (the “Per Share Purchase Price”) and the purchase price for each Pre‑Funded Warrant is $4.4997 (the “Per Pre-Funded Warrant Purchase Price”). Both of these amounts were paid by the Purchasers at the closing of the October 2025 Private Placement. The aggregate gross proceeds to us from the October 2025 Private Placement was approximately $18.2 million, before deducting the offering expenses payable by us, which expenses consist solely of legal fees and the amounts provided for pursuant to a placement agency agreement In addition, the per share exercise price of each Subscription Warrant is $4.50 and the per share exercise price of each Pre-Funded Warrant is $0.0003.
Current report
On January 22, 2026, the Company and the Chairman of its Board of Directors, entered in a Securities Purchase Agreement for a private placement of securities (the “January 2026 Private Placement”). At the closing of the 2026 Private Placement, the Company issued 24,107 shares of the Company’s common stock (the “January 2026 Shares”), par value $0.0001 per share, and the January 2026 Warrant with a term of ten years from the initial exercise date to purchase up to an additional 48,214 shares of common stock. The January 2026 Warrant will be exercisable beginning six months after its issuance at the closing of the January 2026 Private Placement. The purchase price of the January 2026 Shares is $6.43, which represents 110% of the 5-day volume weighted trading price for the common stock on January 22, 2026, and the per share exercise price of the January 2026 Warrant is $6.43. The aggregate gross proceeds to the Company from the January 2026 Private Placement was approximately $0.2 million. The Company intends to use the net proceeds from the offering for working capital purposes.
Current report
Effective January 28, 2026, upon meeting all of the Nasdaq listing requirements, the Company’s common stock was uplisted from the OTCQB Venture Market to the Nasdaq Capital Market and began trading under the ticker symbol “QTI.”
Current report
*Not meaningful.
Current report
Cost of revenue increased by $8.1 million to $10.3 million for the year ended December 31, 2025 from $2.2 million for the year ended December 31, 2024. The increase was primarily due to the sale of 40 QT Breast Scanners for the year ended December 31, 2025 as compared with twelve scanners sold for the year ended December 31, 2024. Gross margin decreased to 45% for the year ended December 31, 2025, as compared to 54% for the year ended December 31, 2024, due to the sale of 18 Model B scanners with a higher cost in 2025, the sale of 3 scanners manufactured by Canon at a higher cost in 2025, and a $1.7 million increase in the allocation of overhead from selling, general and administrative expenses to cost of revenue.
Current report
Research and development expenses increased by $0.7 million to $3.9 million for the year ended December 31, 2025 from $3.3 million for the year ended December 31, 2024. The increase was primarily due to an increase in professional service expenses of $0.5 million and an increase in employee compensation expenses of $0.3 million.
Current report
Selling, general and administrative expenses decreased by $2.5 million to $9.1 million for the year ended December 31, 2025 from $11.6 million for the year ended December 31, 2024. The decrease was mainly attributable to a $4.3 million decrease in transaction expenses related to the Business Combination in 2024, an increase in the allocation of overhead of $1.7 million from selling, general and administrative expenses to cost of revenue, and a $0.3 million decrease in insurance expenses, partially offset by an increase in employee compensation expenses of $2.7 million, an increase in professional services expenses of $0.5 million, and an increase in technology infrastructure expenses of $0.2 million.
Current report
Other expense, net increased by $8.2 million to $8.8 million for the year ended December 31, 2025 from an expense of $0.6 million for the year ended December 31, 2024. The increase was primarily due to $6.6 million in noncash expense incurred at issuance of the Lynrock Lake Term Loan, and $2.2 million in expense due to an extinguishment loss and modification charges for the Yorkville Note and Cable Car Note during the year ended December 31, 2025, which was partially offset by the modification expense of $0.2 million related to the decrease in exercise price of our private placement warrants and working capital note warrants in the year ended December 31, 2024.
Current report
Change in fair value of warrant liability changed by $3.8 million to an expense of $3.6 million for the year ended December 31, 2025 from an income of $0.2 million for the year ended December 31, 2024. The change was primarily due to increases in the market value of the Lynrock Lake Warrant and Yorkville Warrant, which were issued in the first quarter of 2025 and subsequently revalued on June 11, 2025 upon modification.
Current report
Change in the fair value of earnout liability changed by $5.0 million to an expense of $1.8 million for the year ended December 31, 2025 from income of $3.2 million for the year ended December 31, 2024. The change was primarily due to changes to the probability of outcome related to our revenue assumptions.
Current report
Interest expense, net decreased by $1.9 million to $2.6 million for the year ended December 31, 2025 from $4.5 million for the year ended December 31, 2024. The decrease is primarily due to the extinguishment of the Yorkville Note and the Cable Car loan in February 2025, resulting in decreases in interest expense and amortization of the debt discount of $3.2 million for the Yorkville Note and $0.3 million for the Cable Car Note in the 2025 period, and a decrease in interest expense of $0.2 million from the private secured convertible bridge financing extinguished in 2024, partially offset by an increase in interest expense and amortization of the debt discount of $1.9 million for the Lynrock Lake Term Loan.
Current report
On February 26, 2025, we entered into the Lynrock Lake Credit Agreement that provides the Lynrock Lake Term Loan with Lynrock Lake in the aggregate principal amount of $10.1 million, which was used to repay the Car Note issued in February 2024, fully settled its obligations under the Yorkville Note issued on March 4, 2024, and terminated the SEPA with Yorkville by paying $3.0 million in cash and issuing the Yorkville Warrant. Net of these payments, we had $5.4 million of net proceeds for working capital purposes. In addition, on August 26, 2025, we and Lynrock Lake entered into the Lynrock Lake Amended Credit Agreement to add Tranche B in the amount of $5.0 million and increase the aggregate principal amount of the Lynrock Lake Term Loan to $15.1 million. The proceeds of Tranche B were used to repurchase the Yorkville Warrant and Tranche B was subsequently repaid in full, along with repayment premium and accrued interest, on October 6, 2025.
Current report
We completed a series of PIPE transactions, where we received cash in exchange for the issuance of shares of common stock plus warrants for the purchase of common stock.
Current report
•On April 24, 2025, we entered into the First Securities Purchase Agreement for a PIPE investment in an amount of approximately $0.5 million from related persons. We used the net proceeds from the offering for working capital purposes.
Current report
•On May 12, 2025, we entered into the Second Securities Purchase Agreement for a PIPE investment in an amount of approximately $0.2 million. We used the net proceeds from the offering for working capital purposes.
Current report
•On September 30, 2025, we entered into the Third Securities Purchase Agreement for a PIPE investment in an amount of approximately $18.2 million, before deducting the offering expenses payable by us. We used the net proceeds from the offering for working capital purposes and to repay Tranche B of the Lynrock Lake Term Loan.
Current report
•On January 22, 2026, we entered in a Securities Purchase Agreement for the January 2026 Private Placement with the Chairman of our Board of Directors. The aggregate gross proceeds to us from the January 2026 Private Placement was approximately $0.2 million. We intend to use the net proceeds from the offering for working capital purposes.
Current report
We entered into several distribution agreements which provided us with MOQs as follow:
Current report
•On June 18, 2024, as amended on December 11, 2024 and further amended on March 28, 2025, we entered into the Amended NXC Distribution Agreement with NXC, which provides us with MOQs amounting to expected cash inflows of up to $28.5 million in 2026.
Current report
•On August 21, 2025, we entered into the Gulf Medical Distribution Agreement with GMC, a corporation organized and existing under the laws of Saudi Arabia, for an initial term of three years. Under the terms of the Gulf Medical Distribution Agreement, we granted to GMC the exclusive right to market, advertise and sell the Company’s Breast Acoustic CT scanners and the QTI Cloud SaaS platform subscriptions in Saudi Arabia, with MOQs amounting to $11.2 million to $12.3 million in 2026.
Current report
•On January 19, 2026, we entered into an exclusive distribution agreement for the Company’s Breast Acoustic CT scanners and QTI Cloud SaaS Platform in the UAE with Al Naghi Medical Co., a leading distributor of medical devices. The agreement provides for MOQs of seven scanners in 2026 (starting in the second quarter), increasing to 16 scanners in 2027 and 20 scanners in 2028, for a total minimum of 43 scanners representing revenue of more than $24 million.
Current report
We believe that the additional cash received from the Lynrock Lake Term Loan, the PIPE investments, and the additional expected revenue from MOQs per the Amended NXC Distribution Agreement and new distribution partners in the Gulf region, Gulf Medical and Al Naghi Medical Co., will be sufficient to fund our current operating plan for at least the next 12 months.
Current report
Lynrock Lake Term Loan
Current report
On February 26, 2025, we entered into the Lynrock Lake Credit Agreement that provides the Lynrock Lake Term Loan with Lynrock Lake. The Lynrock Lake Credit Agreement is secured by a first priority lien on substantially all of our assets and provides for a term loan in the aggregate principal amount of $10.1 million at an interest rate of 10.0% per annum, compounded quarterly. The maturity date of the Lynrock Lake Credit Agreement is March 31, 2027. The Lynrock Lake Term Loan shall be repaid on the maturity date in an amount equal to the aggregate principal amount outstanding, together with all accrued and unpaid principal and any outstanding and payable fees.
Current report
Subject to the payment of the Make-Whole Amount (as defined in the Lynrock Lake Credit Agreement), we may at any time prior to the maturity date optionally prepay the term loan, in full or in part, upon irrevocable written notice of three business days prior to the proposed prepayment; provided that if such prepayment is to be funded with the proceeds of a refinancing or disposition, such notice of prepayment may be revoked if the financing or disposition is not consummated; provided further, that any such prepayment made in connection with, or in anticipation of, a Change of Control (as defined in the Lynrock Lake Credit Agreement) will also be subject to a prepayment premium equal to 20% of the amount of principal being prepaid (the “Prepayment Premium”). Partial prepayments of the term loan shall be in an aggregate principal amount of $0.3 million or a whole multiple thereof.
Current report
Subject to the payment of the Make-Whole Amount (as defined in the Lynrock Lake Credit Agreement), at the option of Lynrock Lake, we will make mandatory repayments of the term loan upon the following occurrences:
Current report
• If on any date we or any of our subsidiaries will receive any cash proceeds from any Extraordinary Receipt (as defined in the Lynrock Lake Credit Agreement) in an amount equal to or exceeding $0.3 million in the aggregate, we shall prepay the term loan within 5 business days of receipt of such cash proceeds, in an amount equal to 100% percent of the cash proceeds of such Extraordinary Receipt;
Current report
• If any indebtedness will be incurred by us or any subsidiary thereof (excluding any indebtedness that the Lynrock Lake Credit Agreement permits us to incur), an amount equal to 100% of the net cash proceeds thereof shall be applied on the date of incurrence or receipt toward the prepayment of the term loan;
Current report
• If on any date we or any of our subsidiaries will receive net cash proceeds in an amount equal to or exceeding (i) $0.3 million in any single transaction or series of related transactions or (ii) $0.3 million in the aggregate for all transactions during the term of the Lynrock Lake Credit Agreement from any Asset Sale (as defined in the Lynrock Lake Credit Agreement) or Recovery Event (as defined in the Lynrock Lake Credit Agreement) then we or our subsidiary shall prepay the term loan, on or prior to the date which is five business days after the date of the realization or receipt by us or our subsidiary in an amount equal to 100% percent of such proceeds; and
Current report
• Subject to the payment of the Prepayment Premium in addition to the Make-Whole Amount (as defined in the Lynrock Lake Credit Agreement), in the event that a Change of Control (as defined in the Lynrock Lake Credit Agreement) will occur, we shall prepay all of the outstanding term loan, on or prior to the date which is two business days after the date of such Change of Control (as defined in the Lynrock Lake Credit Agreement).
Current report
There are no requirements to make any prepayment in the event that we sell any of our capital stock. In addition, at the option of Lynrock Lake, we shall also make mandatory repayments of the term loan on a monthly basis, no later than five business days after the end of each month (provided that such date for payment is prior to the maturity date), if we or our subsidiaries receive payment of accounts receivable on or after January 1, 2026, in an amount equal to 15% percent of the aggregate amount of payments of accounts receivable actually received during such prior month, net of any cost of collection incurred not in the ordinary course of business. No Make-Whole Amount (as defined in the Lynrock Lake Credit Agreement) or Prepayment Premium is due or payable on any such mandatory prepayment as a result of receipt of accounts receivable on or after January 1, 2026. As of December 31, 2025, Lynrock Lake has not elected the repayment option in the amount equal to 15% percent of the aggregate amount of payments of accounts receivable actually received on or after January 1, 2026.
Current report
Upon issuance of the Lynrock Lake Term Loan, we recorded a loss of $6.6 million, including debt issuance costs of $0.2 million, in other expense, net within the consolidated statements of operations and comprehensive loss for the year ended December 31, 2025
Current report
On August 26, 2025, we entered into the Lynrock Lake Amended Credit Agreement to add Tranche B in the amount of $5.0 million to the loan and increase the aggregate principal amount of the Lynrock Lake Term Loan to $15.1 million. The proceeds of Tranche B were used to repurchase the Yorkville Warrant for an aggregate price of $5.0 million. On October 6, 2025, the Company repaid Tranche B, plus accrued interest and a 6% premium.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Removed paragraphs (55)
Previous report
We have also entered into the Canon Letter of Intent with CMSU and CMSC pursuant to which CMSC purchased and acquired two QT Breast Scanners in the first half of 2024. The Canon Letter of Intent provided that CMSC would conduct, and pursuant to the Feasibility Study Agreement, CMSC conducted, the Feasibility Study on the QT Breast Scanners that it acquired, including product quality validation, development and manufacturing studies, clinical evaluation, regulatory investigation and marketing validation. The Feasibility Study was completed in the second half of 2024.
Previous report
The Canon Letter of Intent provided that upon successful conclusion of the Feasibility Study, we and CMSC intended to engage in a good faith discussion to develop a binding OEM manufacturing agreement with CMSC.
Previous report
On March 28, 2024, we entered into the Feasibility Study Agreement with CMSC. The term of the Feasibility Study Agreement commenced on March 28, 2024 and remained in force until the end of December 2024. In connection with the Feasibility Study Agreement, CMSC initiated studies to evaluate the business, technical, and clinical values of our ultrasound QT Breast Scanner including product quality validation, development and manufacturing studies, clinical evaluation, regulatory investigation, and market validation. CMSC has no right to reverse engineer the QT Breast Scanner and may only modify and disassemble the QT Breast Scanner as necessary to conduct the Feasibility Study.
Previous report
On November 15, 2023, we entered into the SEPA with GigCapital5 and Yorkville, pursuant to which, upon the Closing of the Business Combination, we can sell to Yorkville up to $50.0 million of our common stock at our request any time during the 36 months following the Closing of the Business Combination. In addition, pursuant to the SEPA, we were entitled to and did request a “Pre-Paid Advance” from Yorkville and issued Yorkville the Yorkville Note in the amount of $10.0 million at the closing of the Business Combination for such Pre-Paid Advance. As consideration for the Pre-Paid
Previous report
Advance, immediately prior to, and substantially concurrently with, the closing of the Business Combination, we issued to Yorkville the Company Shares which were that number of QT Imaging shares which converted in the aggregate into 1,000,000 shares of our common stock upon the completion of the Business Combination. On March 4, 2024, we received the Pre-Paid Advance of $9,025,000 from Yorkville and issued Yorkville the Yorkville Note that was originally due 15 months from the date of issuance, and accrues interest on the outstanding balance of the Yorkville Note at an annual rate equal to 6%, subject to an increase to 18% upon an event of default as described in the Yorkville Note. The Yorkville Note is convertible by Yorkville into shares of our common stock.
Previous report
On September 13, 2024, a “Trigger Event” occurred under the terms of the Yorkville Note that resulted in us making a payment of $1,521,581 to Yorkville, which comprised of $1,145,407 of principal, $318,904 of accrued interest, and $57,270 of 5% early payment premium. On September 26, 2024, we and Yorkville entered into the Omnibus Amendment, pursuant to which we and Yorkville agreed to amend certain terms of the Yorkville Note to reduce the our obligations resulting from the occurrence of the Trigger Event. Pursuant to the Omnibus Amendment, the maturity date of the Yorkville Note was extended approximately six months from June 4, 2025 to December 15, 2025. Further, the Omnibus Amendment acknowledged our obligation to make monthly payments to Yorkville in the amount of the Trigger Principal Amount due to the occurrence of the Trigger Event and revised the Yorkville Note to provide that no further monthly payments will be owed during the period beginning on the date of the Omnibus Amendment and ending on January 15, 2025. In exchange for this relief, beginning on January 15, 2025, and continuing on the same day of each successive calendar month until and including November 15, 2025, whether or not a Trigger Event has occurred and is continuing as of such dates, we agreed to make monthly payments in an amount equal to $500,000 of principal plus the payment premium of 5% and accrued and unpaid interest under the Yorkville Note as of each payment date. Such monthly payments under the Omnibus Amendment were not to be reduced or offset by any amount, including, but not limited to, any net sales proceeds of the Company Shares or any value of the Company Shares based on the volume-weighted average price (“VWAP”) as quoted by Bloomberg, LP. The Omnibus Amendment also provided that 100% of the proceeds of the sale of the remaining 400,000 Company Shares held at the time of entry into the Omnibus Amendment by Yorkville shall be retained by Yorkville and shall not be used to offset or reduce any amounts owed under the Yorkville Note, as amended by the Omnibus Amendment, or to otherwise benefit us in any way. The Omnibus Amendment also provided that in the event that the common stock is delisted from trading on the Nasdaq Stock Market, Yorkville consents to the occurrence of such delisting from the Nasdaq Stock Market, if it is to happen, and that it will not constitute an Event of Default as per the Omnibus Amendment, provided that (i) we us our best efforts to have the common stock relisted on The Nasdaq Capital Market as soon as possible and (ii) Company’s common stock is listed on the OTC Markets’ OTCQX market tier within 30 days in the event that a delisting from the Nasdaq Stock Market occurs.
Previous report
On October 31, 2024, we and Yorkville executed the Second Amendment, pursuant to which the maturity date of the Yorkville Note was extended from December 15, 2025 to March 31, 2026. Further, the Second Amendment acknowledged our obligation to make monthly payments to Yorkville in the amount of the Trigger Principal Amount due to the occurrence of the Trigger Event and no further monthly payments will be owed during the period beginning on the date of the Second Amendment and ending on February 15, 2025. In exchange for this relief, beginning on February 15, 2025, and continuing on the same day of each successive calendar month until and including February 15, 2026, whether or not a Trigger Event has occurred and is continuing as of such dates, we agreed to make monthly payments in an amount equal to $500,000 plus the payment premium plus accrued and unpaid interest as of each such payment date. Such monthly payments under the Second Amendment were not to be reduced or offset by any amount, including, but not limited to, any net sales proceeds of the Company Shares or any value of the Company Shares based on the VWAP as quoted by Bloomberg, LP. Further, pursuant to the terms of the Second Amendment, we elected to reduce the Floor Price to $0.50 per share, effective as of the date of the Second Amendment. The Second Amendment also provides that in the event that the common stock is delisted from trading on the Nasdaq Stock Market, Yorkville consents to the occurrence of such delisting from the Nasdaq Stock Market, if it is to happen, and that it will not constitute an Event of Default as defined per the Omnibus Amendment, provided that (i) we use our best efforts to have the common stock relisted on the Nasdaq Stock Market as soon as possible and (ii) the common stock is listed on the OTC Markets’ OTCQX or OTCQB market tiers within 30 days in the event that a delisting from the Nasdaq Stock Market occurs.
Previous report
On November 4, 2024, Yorkville converted $254,593 of outstanding principal into 384,059 shares of common stock with an applicable conversion price of $0.6629 per share. The principal balance of the Yorkville Note was $8,600,000 following the November 4, 2024 conversion notice received from Yorkville. On December 6, 2024, Yorkville converted an additional $259,588 of outstanding principal under the Yorkville Note into 519,177 shares of common stock with an applicable conversion price of $0.50 per share. The principal balance of the Yorkville note was $8,340,411 following the December 6, 2024 conversion notice received from Yorkville.
Previous report
On November 12, 2024, we and certain related parties entered into the Securities Purchase Agreement for the issuance of shares of common stock plus warrants for the purchase of common stock with an aggregate purchase price of $2,560,000 in exchange for 4,383,558 shares of common stock at an issuance price of $0.584 per share and 4,383,558 warrants with an exercise price of $0.672 per share.
Previous report
On January 9, 2025, we and Yorkville entered into the Third Amendment, pursuant to which, we and Yorkville agreed that for $1.5 million of the then current outstanding balance due under the Yorkville Note (principal and unpaid accrued interest), the Fixed Price for conversion shall be modified to $0.584 per share, and for the remainder of the balance, the Fixed Price shall not be changed but shall remain $4.61395 per share as provided for in the Yorkville Note when we issued it on March 4, 2024. Further, the Third Amendment removed our obligation to make monthly payments to Yorkville, previously owing due to the occurrence of the Trigger Event, such that no further monthly payments will be owed during the period beginning on the date of the Third Amendment and ending on the maturity date of the Yorkville Note of March 31, 2026. In exchange for this relief, the aggregate purchase price owed to us from the first Advance that occurs pursuant to the terms of the SEPA shall be paid by Yorkville offsetting the amount of the Advance Proceeds against an equal amount outstanding under the Yorkville Note (first towards accrued and unpaid interest, and then towards outstanding principal and the corresponding payment premium in respect of such principal amount, if applicable), and that for any subsequent Advances pursuant to the terms of the SEPA, Yorkville shall pay half of such Advance Proceeds directly to us and the other half of such Advance Proceeds shall be paid by Yorkville offsetting the amount of the Advance Proceeds against an equal amount outstanding under the Yorkville Note (first towards accrued and unpaid interest, and then towards outstanding principal and the corresponding payment premium in respect of such principal amount, if applicable). On January 9, 2025, we delivered our first Advance Notice under the SEPA for the sale of 885,000 shares of common stock. This resulted in the reduction of an additional $182,682 in principal of the Yorkville Note.
Previous report
On January 9, 2025, we also entered into the Cable Car Amendment with Cable Car to amend certain terms of the Cable Car Note, including a reduction of the conversion price for the Cable Car Note to $0.584 per share. Further, the Cable Car Amendment provides that the maturity date for the Cable Car Note shall be extended to March 31, 2026, in consideration for which, the Company shall pay a fee of $90,000 to Cable Car for the extension, with such fee being added to the amount due and payable on such maturity date, unless the Cable Car Note is earlier converted pursuant to its terms, in which event the Extension Fee shall also be converted. No interest shall accrue or be due on the Extension Fee. Pursuant to the Cable Car Amendment, interest shall accrue on the outstanding principal balance of the Cable Car Note at an annual rate equal to 6%, with interest being calculated based on a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest shall be due and payable on the maturity date for the Cable Car Note, unless the Cable Car Note is earlier converted pursuant to its terms, in which event such accrued and unpaid interest shall also be converted.
Previous report
•Establishing contract manufacturing partnerships or making arrangements with third-party manufacturers;
Previous report
N.M. - Not meaningful
Previous report
Cost of Revenue
Previous report
Cost of revenue increased by $2,103,832 to $2,238,820 for the year ended December 31, 2024 from $134,988 for the year ended December 31, 2023. The increase in cost of revenue was primarily attributable to the sale of eleven QT Breast Scanners in the year of 2024 as compared with no scanners sold in the year of 2023, which was partially offset by inventory write-offs in the year of 2023.
Previous report
Research and development expenses increased by $1,781,704 to $3,267,340 for the year ended December 31, 2024 from $1,485,636 for the year ended December 31, 2023. The increase in research and development expenses was primarily attributable to an increase in employee compensation costs of $1,120,308 and professional and outside services costs of $491,368, and decrease in grant income from the National Institute of Health of $260,518, which was partially offset by a decrease in depreciation and amortization expense of $229,007.
Previous report
Selling, general and administrative expenses increased by $8,121,822 to $11,549,512 for the year ended December 31, 2024 from $3,427,690 for the year ended December 31, 2023. This change was primarily attributable to increases in non-recurring transaction expenses of $3,944,924 related to the business combination, professional and outside services costs of $723,655, non-recurring recruiting and employee conversion costs of $210,500, employee compensation costs of $1,734,342, insurance costs of $776,185, and information technology costs of $276,405.
Previous report
Other expense, net increased by $16,082 to $560,648 for the year ended December 31, 2024, from $544,566 for the year ended December 31, 2023. The expense for the year ended December 31, 2024 was primarily due to a loss on debt extinguishment of $383,511 related to the conversion of the Extension Note, and a modification expense of $200,513 related to the decrease in exercise price of our private placement warrants and working capital note warrants. The expense for the year ended December 31, 2023 was primarily due to a debt extinguishment loss of $376,086 related to an amendment and issuance of the senior secured convertible promissory note to US Capital as part of the Bridge Loan (as defined below), and an induced conversion expense of $168,356 related to the conversion of the principal balance and accrued interest of the 2020 Notes into 100,000 shares of QT Imaging common stock during the year ended December 31, 2023.
Previous report
Change in fair value of warrant liability was $187,173 for the year ended December 31, 2024. The change in fair value of warrants relates to the liability classified private placement warrants and working capital note warrants and reflects the decrease of the publicly traded price per warrant during the year ended December 31, 2024.
Previous report
Change in the fair value of earnout liability was $3,230,000 for the year ended December 31, 2024. The change in fair value of derivatives was primarily driven by the decline in the value of our common stock during the year ended
Previous report
December 31, 2024. The earnout liability relates to the contingent consideration for the Merger Earnout Consideration Shares pursuant to the Business Combination Agreement dated December 8, 2022, as amended in September of 2023. We did not have an earnout liability for the year ended December 31, 2023.
Previous report
Interest expense, net increased by $3,952,955 to $4,497,781 for the year ended December 31, 2024 from $544,826 for the year ended December 31, 2023. This change is primarily driven by an increase in the amortization of debt discount of $3,568,137 for the Bridge Loans, the Pre-Paid Advance, the Cable Car Note and the Extension Note, an increase in interest expense of $474,106 and payment premium of $57,270 for the Pre-Paid Advance, and an increase in interest of $160,000 paid in cash related to the Bridge Loans, partially offset by decrease in interest expense of $399,398 related to a convertible promissory note with US Capital (the “US Capital Note”).
Previous report
Since our inception, we have incurred significant operating losses and negative cash flows. As of December 31, 2024 and 2023, we had an accumulated deficit of $31,940,527 and $17,770,145, respectively. As of December 31, 2024 and 2023, we had cash and restricted cash and cash equivalents of $1,192,104 and $184,686, respectively. Our primary uses of cash are for general working capital requirements, and capital expenditures. Cash flows from operations have been historically negative as we invested in product development, clinical trials, and manufacturing. We expect to be cash flow negative for the foreseeable future, although we may have quarterly results where cash flows from operations are positive.
Previous report
In connection with the Business Combination, we entered into various agreements to obtain financing through the issuance of debt and through stock subscription agreements. In March of 2024, we received the Pre-Paid Advance net of issuance costs of $9,025,000 from Yorkville pursuant to the SEPA and issued Yorkville the Yorkville Note in the amount of $10.0 million for such Pre-Paid Advance, $500,000 of cash proceeds from an investor related to a stock subscription agreement, and $1,500,000 in cash proceeds through a note payable from Cable Car. The SEPA provides us with access to an additional $40 million of potential capital through the issuance of common stock to Yorkville. During the time we have a balance under the Yorkville Note, advances can be received under the SEPA with written consent of Yorkville or upon a Trigger Event, which following the effectiveness of the registration statement on Form S-1 that we filed to register the shares to be issued pursuant to the SEPA occurs when the daily VWAP is less than the Floor Price (as such term is defined in the Yorkville Note) for five consecutive trading days, which prior to October 31, 2024, was $0.8768 per share. As previously disclosed in a Current Report on Form 8-K with the SEC on September 13, 2024, a Trigger Event occurred on September 11, 2024, following which on September 13, 2024, we made a payment to Yorkville on the Yorkville Note of $1,521,581 which included $1,145,407 as repayment of principal. See Yorkville Pre-Paid Advance below for a further discussion of the effect of this Trigger Event and an amendment to the documents pertaining to the Yorkville Note. On November 12, 2024, the Company executed a securities purchase agreement with related parties for the issuance of shares of common stock plus warrants for the purchase of common stock as a Private Investment in Public Equity (the “PIPE”) with an aggregate purchase price of $2.56 million, the closing of which occurred on November 22, 2024. On December 11, 2024, the Company and NXC entered into the Amended Distribution Agreement (which we further amended on March 28, 2025), which provides the Company with MOQs that could result in cash inflows of up to $18.0 million in 2025 and $27.0 million in 2026. On February 26, 2025, the Company entered into the Credit Agreement that provides the Lynrock Lake Term Loan with Lynrock Lake for a term loan in the aggregate principal amount of $10.1 million and repaid the secured Cable Car Note, and fully settled its obligations under the Yorkville Note and terminated the Yorkville SEPA by paying $3.0 million in cash and issuing a 5-year warrant for 15 million shares. Net of these payments, the Company had $5.4 million of net proceeds for working capital purposes. Management believes that the cash received for the Lynrock Lake Term Loan and additional revenue anticipated from MOQs per the Amended Distribution Agreement will be sufficient to fund the Company’s current operating plan for at least …
Excerpt shortened here; the source contains the full paragraph.
Previous report
Paycheck Protection Program Loan
Previous report
On February 24, 2021 and May 5, 2020, we received loans (“PPP Loans”) from US Bank to fund payroll, rent and utilities through the Paycheck Protection Program (“PPP”). We received partial forgiveness on the PPP Loans during fiscal year 2021. The remaining balances on the PPP Loans are being repaid on a monthly basis, with interest of 1% per annum and the final payment due in February 2026.
Previous report
As of December 31, 2024, the total principal outstanding under the PPP Loans was $95,981, of which $86,784 was current and $9,197 was noncurrent. As of December 31, 2023, the total principal outstanding under the PPP Loans was $226,348, of which $130,366 was current and $95,982 was noncurrent.
Previous report
In June 2021, we entered into a convertible promissory note agreement (the “Note”) with USCG for advances of up to $10,000,000. We could have made advances on the Note up to six months after the inception of the Note unless extensions for advances were mutually agreed between both parties. The Note bore interest at 12% per annum on any amounts drawn with a maturity date of July 6, 2024. The Note was collateralized by all our assets and was guaranteed by QT Labs. The terms of the Note include non-financial covenants and, as of March 4, 2024 when the Note converted, we were in compliance with those covenants. Through December 31, 2023, we issued warrants in connection with the note to purchase a total of 5,091 shares of common stock which 3,540 shares were exercisable at a price of $12.40 per share and 1,551 shares were exercisable at a price of $11.67 per share. On March 4, 2024, these warrants were terminated in accordance with the Business Combination Agreement.
Previous report
The Note was convertible, at our option, before the Note matured upon the closing of a single transaction or a series of transactions with a minimum of $15,000,000 of cash proceeds raised in the aggregate. If elected, the conversion price is 90% of the price per share in the qualified financing.
Previous report
As of December 31, 2024, there was no amount outstanding for the Note and US Capital Note. As of December 31, 2023, the total Note and US Capital Note balance was $3,294,659 net of unamortized debt issuance costs of $36,194, and accrued interest of $50,037.
Previous report
On March 4, 2024, the Note principal and related accrued interest balance of$3,233,388 and the US Capital Note principal balance of $200,000 (as further discussed below under the Bridge Loan section) was converted into 359,266 and 100,000 shares of our common stock, respectively. Additionally, warrants to purchase 16,320 shares of our common stock were net settled into 5,594 shares of our common stock.
Previous report
Bridge Loan
Previous report
In November 2023, we entered into a Securities Purchase Agreement and raised the private secured “Bridge Loan” in the aggregate amount of $1,000,000 from five investors.
Previous report
Each Bridge Loan of $200,000 bore no interest but had a cash option value at the date maturity of 120%, or $240,000, of the Bridge Loan at each Bridge Lender’s option. The maturity date was the closing date of the Business Combination as defined in Note 1 to the accompanying consolidated financial statements. The Bridge Loan conversion was at $2.00 per share on a post-business combination. On March 4, 2024,4 of the 5 Bridge Loan holders elected the cash option and were paid an aggregate of $960,000 on the Merger Date.
Previous report
As of December 31, 2024, there was no amount outstanding for the Bridge Loan. As of December 31, 2023, the outstanding amount of the Bridge Loan, excluding the US Capital Note, was $774,337, net of unamortized debt issuance costs of $25,663.
Previous report
Yorkville Pre-Paid Advance
Previous report
On March 4, 2024, we received the Pre-Paid Advance of $10,000,000 from Yorkville and issued Yorkville the Yorkville Note in the amount of $10.0 million for such Pre-Paid Advance that was originally due 15 months from the date of issuance, and interest shall accrue on the outstanding balance of the Yorkville Note at an annual rate equal to 6%, subject to an increase to 18% upon an event of default as described in the Yorkville Note. The Yorkville Note is convertible by Yorkville into shares of our common stock. As consideration for the Pre-Paid Advance, immediately prior to, and substantially concurrently with, the closing of the Business Combination, QT Imaging issued to Yorkville that number of QT Imaging shares which converted in the aggregate into 1,000,000 shares of our common stock upon the completion of the Business Combination.
Previous report
On September 13, 2024, we made a payment of $1,521,581 to Yorkville, which comprised of $1,145,407 of principal, $318,904 of accrued interest, and $57,270 of 5% early payment premium as a result of a trigger event occurring under the terms of the Yorkville Note.
Previous report
On September 26, 2024, we and Yorkville entered into the Omnibus Amendment, pursuant to which we and Yorkville agreed to amend certain terms of the Yorkville Note to reduce our obligations resulting from certain trigger events. Pursuant to the Omnibus Amendment, the maturity date of the Yorkville Note was extended approximately six months from June 4, 2025 to December 15, 2025. Further, the Omnibus Amendment acknowledges our obligation to make monthly payments to Yorkville due to the occurrence of certain trigger events provided that no further monthly payments will be owed during the period beginning on the date of the Omnibus Amendment and ending on January 15, 2025. In exchange for this relief, beginning on January 15, 2025, and continuing on the same day of each successive calendar month until and including November 15, 2025, whether or not trigger events have occurred, we will make a monthly payment in an amount equal to $500,000 of principal plus a payment premium of 5% and unpaid accrued interest as of each payment date.
Previous report
On October 31, 2024, we and Yorkville executed the Second Amendment, pursuant to which the maturity date of the Yorkville Note was extended from December 15, 2025 to March 31, 2026. Further, the Second Amendment acknowledges our obligation to make monthly payments to Yorkville due to the occurrence of the certain trigger events and no further monthly payments will be owed during the period beginning on the date of the Second Amendment and ending on February 15, 2025. In exchange for this relief, beginning on February 15, 2025, and continuing on the same day of each successive calendar month until and including February 15, 2026, whether or not trigger events have occurred and are continuing as of such dates, we will make monthly payments in an amount equal to$500,000 of principal plus a payment premium of 5% and unpaid accrued interest as of each such payment date. Such monthly payments will not be reduced or offset by any amount, including, but not limited to, any net sales proceeds of theimmediately prior to, and substantially concurrently with, the Closing of the Business Combination, or any value of such shares based on the VWAP as quoted by Bloomberg, LP. Further, pursuant to the terms of the Second Amendment, we elected to reduce the Floor Price to$0.50 per share, effective as of the date of the Second Amendment.
Showing the first 40 of 55 passages. Open the source sections for the rest.
Reworded paragraphs (30)
Previous wording
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Condition and Results of Operations” to “we,” “our,” “us,” “QT Imaging,” and the “Company” refer to the business and operations of QT Imaging and its subsidiary prior to the Business Combination and to QT Imaging Holdings and its subsidiaries after the Business Combination. Terms not defined herein are as defined in the annual report.
Current wording
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Condition and Results of Operations” to “we,” “our,” “us,” “QT Imaging,” “QT Imaging Holdings, Inc.” or the “Company” and other similar terms refer to QT Imaging Holdings, Inc. and its consolidated subsidiaries. You should read the following discussion and analysis of QT Imaging Holdings’ financial condition and results of operations in conjunction with the audited consolidated financial statements and notes thereto contained in this Annual Report.
Previous wording
With the support of nearly $18 million in financial support from the U.S. National Institutes of Health, we developed a novel, comprehensive body imaging technology that has high resolution, high sensitivity, high specificity, high positive and negative predictive values, and is safe and inexpensive. The technology is based on ultra-low frequency transmitted sound and uses a one-of-a-kind novel sound back-scatter design and inverse-scattering reconstruction to create its images.
Current wording
With the support of nearly $18.0 million in financial support from the U.S. National Institutes of Health, we developed a novel, comprehensive body imaging technology that has high resolution, high sensitivity, high specificity, high positive and negative predictive values, and is safe and inexpensive. The technology is based on ultra-low frequency transmitted sound and uses a one-of-a-kind novel sound back-scatter design and inverse-scattering reconstruction to create its images.
Previous wording
Our current QT Breast Scanner is a Class II device subject to premarket notification and clearance under Section 510(k) of the FDCA. On August 23, 2016, we (formerly, QT Ultrasound LLC) submitted a Section 510(K) Summary of Safety and Effectiveness application for the QT Breast Scanner in accordance with 21 CFR 807.92 under 510(K) Number K162372. As part of meeting the general requirements for basic safety and essential performance of the QT Breast Scanner (formerly, QT Ultrasound Breast Scanner) pursuant to AAMI ES60601-1:2005/(R)2012 and A1:2012 Medical electrical equipment, testing was conducted by Intertek, an independent testing laboratory, located in Menlo Park, CA. Intertek also conducted applicable testing pursuant to IEC 60601-1-6 Edition 3.1 2013-10-Medical electrical equipment Part 1-6 General requirements for safety - Collateral Standard: Usability.
Current wording
Our current QT Breast Scanner is a Class II device subject to premarket notification and clearance under Section 510(k) of the FDCA. On August 23, 2016, we (formerly, QT Ultrasound LLC) submitted a Section 510(K) Summary of Safety and Effectiveness application for the QT Breast Scanner in accordance with 21 CFR 807.92 under 510(K) Number K162372. As part of meeting the general requirements for basic safety and essential performance of the QT Breast Scanner (formerly, QT Ultrasound Breast Scanner) pursuant to AAMI ES60601-1:2005/(R)2012 and A1:2012 Medical electrical equipment, testing was conducted by Intertek, an independent testing laboratory, located in Menlo Park, CA. Intertek also conducted applicable testing pursuant to IEC 60601-1-6 Edition 3.1 2013-10-Medical electrical equipment Part 1-6 General requirements for safety - Collateral Standard: Usability. In addition, we conducted, and Intertek witnessed, all applicable testing pertaining to the requirements for the safety of ultrasonic medical diagnostic and monitoring equipment and to demonstrate compliance with the “Acoustic Output Measurement Standard for Diagnostic Ultrasound Equipment”. This test on acoustic output was pursuant to IEC 60601-2-37 Edition 2.0.2007 Medical electrical equipment - Part 2-37: Particular requirements for the basic safety and essential performance of ultrasonic medical diagnostic and monitoring equipment. Finally, system verification testing was conducted to ensure that the QT Breast Scanner met all design and other requirements including but not limited to that no new issues of safety or effectiveness compared to the predicate device, SoftVue System manufactured by Delphinus Medical Technologies, were raised.
Previous wording
Since our inception, we have devoted substantially all our financial resources to acquiring and developing the base technology for our body imaging systems, conducting research and development activities, securing related intellectual property rights, and for general corporate operations and growth. On June 6, 2017, FDA, in response to QT Imaging’s Section 510(K) Summary of Safety and Effectiveness premarket notification, determined that the QT Breast Scanner is substantially equivalent to the predicate device. Our use of the words “safe”, “safety”, “effectiveness”, and “efficacy” in relation to the QT Breast Scanner in this Management's Discussion and Analysis and all other documents related to us is limited to the context of the Section 510(K) Summary of Safety and Effectiveness that was reviewed and responded to by the FDA.
Current wording
Since our inception, we have devoted substantially all our financial resources to acquiring and developing the base technology for our body imaging systems, conducting research and development activities, securing related intellectual property rights, and for general corporate operations and growth. On June 6, 2017, the FDA, in response to QT Imaging’s Section 510(K) Summary of Safety and Effectiveness premarket notification, determined that the QT Breast Scanner is substantially equivalent to the predicate device. Our use of the words “safe”, “safety”, “effectiveness”, and “efficacy” in relation to the QT Breast Scanner in this Management's Discussion and Analysis and all other documents related to us is limited to the context of the Section 510(K) Summary of Safety and Effectiveness that was reviewed and responded to by the FDA.
Previous wording
•Perform small scale manufacturing internally to the Company and partner strategically for large scale manufacturing.
Current wording
•Perform manufacturing internally to us and partner strategically for large scale manufacturing.
Previous wording
Consistent with our strategy, on May 31, 2023, we entered into the NXC Sales Agent Agreement with NXC, pursuant to which we appointed NXC as the non-exclusive agent for the sale of QT Imaging products and services in non-exclusive territories: the U.S., U.S. territories, and U.S. Department of Defense installations. Additionally, NXC was appointed as the exclusive servicer of QT Imaging products sold by NXC under the terms of the NXC Agreement. Effective June 10, 2024, the NXC Agreement was superseded by the NXC Distribution Agreement that was entered into with NXC on June 18, 2024. Under the NXC Distribution Agreement, NXC is appointed as the exclusive reseller to market, advertise, and resell QT Breast Scanners in the U.S. and U.S. territories. NXC will purchase for the purpose of reselling, leasing or renting QT Breast Scanners directly to its customers, but is not obligated to purchase any particular quantity of QT Breast Scanners from us. We have reserved the right to sell directly to customers as an exception. Furthermore, we may, in our sole discretion, sell the QT Breast Scanners to any other person or entity anywhere in the world without notice to NXC or NXC’s prior consent. NXC is also allowed to assign sales agents for the purpose of QT Breast Scanner sales. NXC’s purchases will be in accordance with an agreed upon product pricing schedule (subject to change upon 60 days’ prior written notice by us), provided that neither NXC nor its assigned sales agents may mark-up the cost of the QT Breast Scanners more than twenty percent (20%) unless otherwise mutually agreed to between NXC and us. Each order will include information reasonably requested by us and is subject to our acceptance, after which it becomes an approved order. Any such approved orders are non-cancellable and not subject to rescheduling after acceptance by us. Any orders not accepted by us in writing are deemed rejected. As of December 31, 2024, we have delivered eight QT Breast Scanners to NXC’s customers pursuant to the NXC Sales Agent Agreement and NXC Distribution Agreement. On December 11, 2024, we and NXC entered into the Amended Distribution Agreement, which amends and restates the NXC Distribution Agreement in its entirety, making some modifications to the NXC Distribution Agreement but retaining other terms. We further amended the Amended Distribution Agreement on March 28, 2025. The Amended Distribution Agreement has a term that runs until December 31, 2026, unless earlier terminated or extended by mutual written agreement.
Current wording
On June 18, 2024, we entered into the NXC Distribution Agreement with NXC Imaging, Inc. (“NXC”) to appoint NXC as the exclusive reseller to market, advertise, and resell QT Breast Scanners in the U.S. and U.S. territories. NXC will purchase for the purpose of reselling, leasing or renting QT Breast Scanners directly to its customers, but is not obligated to purchase any particular quantity of QT Breast Scanners from us. We have reserved the right to sell directly to customers as an exception. Furthermore, we may, in our sole discretion, sell the QT Breast Scanners to any other person or entity anywhere in the world without notice to NXC or NXC’s prior consent. NXC is also allowed to assign sales agents for the purpose of QT Breast Scanner sales. NXC’s purchases will be in accordance with an agreed upon product pricing schedule (subject to change upon 60 days’ prior written notice by us), provided that neither NXC nor its assigned sales agents may mark-up the cost of the QT Breast Scanners more than twenty percent (20%) unless otherwise mutually agreed to between NXC and us. Each order will include information reasonably requested by us and is subject to our acceptance, after which it becomes an approved order. Any such approved orders are non-cancellable and not subject to rescheduling after acceptance by us. Any orders not accepted by us in writing are deemed rejected. On December 11, 2024, we and NXC entered into the Amended NXC Distribution Agreement, which amends and restates the NXC Distribution Agreement in its entirety, making some modifications to the NXC Distribution Agreement but retaining other terms. We further amended the Amended NXC Distribution Agreement on March 28, 2025. The Amended NXC Distribution Agreement has a term that runs until December 31, 2026, unless earlier terminated or extended by mutual written agreement. As of December 31, 2025, we have delivered 48 QT Breast Scanners to NXC and NXC’s customers pursuant to the NXC Sales Agent Agreement and Amended NXC Distribution Agreement.
Previous wording
On March 28, 2025, we entered into the Canon Manufacturing Agreement with CMSC. Pursuant to the terms of the Canon Manufacturing Agreement, we appoint CMSC as the exclusive manufacture of the QT Breast Scanners to be distributed by NXC. The purchase prices applicable to the purchase orders as of the date of the Canon Manufacturing Agreement shall be separately agreed between the parties in writing. The term of the Canon Manufacturing Agreement is through December 31, 2026.
Current wording
On March 28, 2025, we entered into the Canon Manufacturing Agreement (the “Canon Manufacturing Agreement”) with Canon Medical Systems, Inc. (“CMSC”). Pursuant to the terms of the Canon Manufacturing Agreement, we appointed CMSC as the exclusive manufacturer of the QT Breast Scanners to be distributed by NXC. QTI retains the right to perform manufacturing in Novato, California. The purchase prices applicable to the purchase orders as of the date of the Canon Manufacturing Agreement shall be separately agreed between the parties in writing. The term of the Canon Manufacturing Agreement is through December 31, 2026.
Previous wording
We have incurred net operating losses and negative cash flows from operations since our inception and had an accumulated deficit of $31,940,527 as of December 31, 2024. During the year ended December 31, 2024, we incurred a net loss of $8,984,880 and used $10,033,477 of cash in operating activities, which includes the repayment of net liabilities assumed from the business combination. We continue to incur losses, and our ability to achieve and sustain profitability will depend on the achievement of sufficient revenues to support our cost structure. We may never achieve profitability and, unless and until we do, we will need to continue to raise additional capital.
Current wording
We have incurred net operating losses and negative cash flows from operations since our inception and had an accumulated deficit of $53.0 million as of December 31, 2025. During the year ended December 31, 2025, we incurred a net loss of $21.1 million and used $9.0 million of cash in operating activities. We continue to incur losses, and our ability to achieve and sustain profitability will depend on the achievement of sufficient revenues to support our cost structure. We may never achieve profitability and, unless and until we do, we will need to continue to raise additional capital.
Previous wording
On February 26, 2025, the Company entered into a credit agreement (the “Credit Agreement”) that provides a senior secured term loan (the “Lynrock Lake Term Loan”) with Lynrock Lake. The Credit Agreement is secured by a first priority lien on substantially all assets of the Company and provides for a term loan in the aggregate principal amount of $10,100,000 at an interest rate of 10.0% per annum, compounded quarterly. The maturity date of the Credit Agreement is March 31, 2027. Furthermore, in connection with the Lynrock Lake Term Loan, the Company issued to Lynrock Lake, pursuant to the terms of a Warrant to Purchase common stock (the “Lynrock Lake Warrant”), warrants to purchase 61,000,000 shares of its common stock at an exercise price of $0.40 per share. The Lynrock Lake Warrant is exercisable until February 26, 2035. Lynrock Lake may cashless exercise the Lynrock Lake Warrant. The Lynrock Lake Warrant is also subject to anti-dilution adjustments to the exercise price and the number of shares which may be purchased upon exercise of the Lynrock Lake Warrant in the event that the Company issues shares of common stock (or derivative securities) at a price that is either less than the $0.40 exercise price or the fair market value of a share of common stock from the immediately prior trading day.
Current wording
On February 26, 2025, we entered into the Lynrock Lake Credit Agreement that provides a senior secured term loan (the “Lynrock Lake Term Loan”) with Lynrock Lake. The Lynrock Lake Credit Agreement is secured by a first priority lien on substantially all our assets and provides for a term loan in the aggregate principal amount of $10.1 million at an interest rate of 10.0% per annum, compounded quarterly. The maturity date of the Lynrock Lake Credit Agreement is March 31, 2027. Furthermore, in connection with the Lynrock Lake Term Loan, we issued the Lynrock Lake Warrant, which is a warrant to purchase 20,333,623 shares of our common stock at an exercise price of $1.20 per share. The Lynrock Lake Warrant is exercisable until February 26, 2035. Lynrock Lake may cashless exercise the Lynrock Lake Warrant. The Lynrock Lake Warrant is also subject to anti-dilution adjustments to the exercise price and the number of shares which may be purchased upon exercise of the Lynrock Lake Warrant in the event that we issue shares of common stock (or derivative securities) at a price that is either less than the $1.20 exercise price or the fair market value of a share of common stock from the immediately prior trading day.
Previous wording
On February 26, 2025, the Company used a portion of the proceeds of the Lynrock Lake Term Loan to pay Yorkville an amount equal to $3,000,000 in cash and issued to Yorkville warrants to purchase 15,000,000 shares of its common stock at an exercise price of $0.40 per share pursuant to a Warrant to Purchase common stock (the “Yorkville Warrant”) to fully settle and discharge the Company’s obligations under the Yorkville Note and extinguish the Yorkville Note as having been fully performed. The Yorkville Warrant is exercisable until February 26, 2030. Yorkville may cashless exercise the Yorkville Warrant. The Yorkville Warrant is also subject to adjustments in the event that the Company’s common stock undergoes a split, reverse-split or similar event. Furthermore, the Yorkville Warrant has provided the holder with piggyback registration rights. The Company and Yorkville also entered into that certain Termination Agreement, dated February 26, 2025 (the “Termination Agreement”), pursuant to which the parties acknowledged the termination of the SEPA effective February 26, 2025.
Current wording
On February 26, 2025, we used a portion of the proceeds of the Lynrock Lake Term Loan to pay Yorkville an amount equal to $3.0 million in cash and issued to Yorkville a warrant to purchase 5,000,071 shares of its common stock at an exercise price of $1.20 per share pursuant to a Warrant to Purchase Common Stock (the “Yorkville Warrant”) to fully settle and discharge our obligations under the Yorkville Note and extinguish the Yorkville Note as having been fully performed. The Yorkville Warrant is exercisable until February 26, 2030. Yorkville may cashless exercise the Yorkville Warrant. The Yorkville Warrant is also subject to adjustments in the event that our common stock undergoes a split, reverse-split or similar event. Furthermore, the Yorkville Warrant has provided the holder with piggyback registration rights. We and Yorkville also entered into that certain Termination Agreement, dated February 26, 2025 (the “Termination Agreement”), pursuant to which the parties acknowledged the termination of the SEPA effective February 26, 2025.
Previous wording
On February 26, 2025, the Company used a portion of the proceeds of the Lynrock Lake Term Loan to pay Cable Car an amount equal to the full principal, interest and fees amount of approximately $1,625,000 in cash to fully settle and discharge the Company’s obligations under the Cable Car Note and extinguish the Cable Car Note as having been fully performed.
Current wording
On February 26, 2025, we used a portion of the proceeds of the Lynrock Lake Term Loan to pay Cable Car an amount equal to the full principal, interest and fees amount of approximately $1.6 million in cash to fully settle and discharge our obligations under the Cable Car Note and extinguish the Cable Car Note as having been fully performed.
Previous wording
Revenue consists of revenue from the sale of our products including the QT Breast Scanner, accessories, and related services, which are primarily training and maintenance. For sales of products (which include the QT Breast Scanner and any accessories), revenue is recognized when a customer obtains control of the promised goods. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these goods. Service revenue is generally related to maintenance and training the customer.. Service revenue is recognized at the time the related performance obligation is satisfied, in an amount that reflects the consideration that we expect to receive in exchange for those services.
Current wording
Revenue consists of revenue from the sale of our products including the QT Breast Scanner, associated software, accessories, and related services, which are primarily training and maintenance. For sales of products (which include the QT Breast Scanner and any accessories), revenue is recognized when a customer obtains control of the promised goods. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these goods. Service revenue is generally related to maintenance and training the customer. Service revenue is recognized at the time the related performance obligation is satisfied, in an amount that reflects the consideration that we expect to receive in exchange for those services.
Previous wording
We expense all research and development costs in the periods in which such costs are incurred. Research and development activities are central to our business. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to invest in the development of the QT Breast Scanner and devote significant resources to the research and development of the full-body scanner product candidate intended for orthopedic and pediatric use.
Current wording
We expense all research and development costs in the periods in which such costs are incurred. Research and development activities are central to our business. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to invest in the development of the QT Breast Scanner.
Previous wording
We cannot reasonably determine the nature, timing and costs of the efforts that will be necessary to complete the enhancements ofthe QT Breast Scanner, or estimate the nature, timing and costs that will be necessary to complete the development of, and obtain regulatory approval for, the full-body scanner product candidate. The process of conducting the necessary research and development to obtain regulatory approval of a product candidate is costly and time-consuming, and the successful development of our product candidates is highly uncertain. Our research and development expenses may vary significantly based on factors such as, without limitation:
Current wording
We cannot reasonably determine the nature, timing and costs of the efforts that will be necessary to build our QTI Cloud SaaS platform, run clinical trials that are necessary to generate biomarker data, and reduce the bill of materials and other costs to manufacture the QT Breast Scanner. Our research and development expenses may vary significantly based on factors such as, without limitation:
Previous wording
•The success of our distribution arrangements, and our ability to establish new licensing or collaboration arrangements;
Current wording
•The success of our distribution arrangements, and our ability to establish new licensing or collaboration arrangements outside of U.S.;
Previous wording
Revenue increased by $4,838,310 to $4,878,665 for the year ended December 31, 2024 from $40,355 for the year ended December 31, 2023. The increase in revenue was primarily attributable to the sale of eleven QT Breast Scanners in the year of 2024 as compared with no scanners sold in the year of 2023 due to the timing of sales orders received, availability of scanners that were earmarked and ready for sale to customers.
Current wording
Revenue increased by $14.0 million to $18.9 million for the year ended December 31, 2025 from $4.9 million for the year ended December 31, 2024. The increase in revenue was primarily due to the sale of 40 QT Breast Scanners for year ended December 31, 2025 as compared with twelve scanners sold for the year ended December 31, 2024 due to the MOQs in accordance with the Amended NXC Distribution Agreement.
Previous wording
Change in the fair value of derivative liability was $4,817,600 for the year ended December 31, 2024. The change in fair value of derivatives was primarily driven by the decline in the value of our common stock during the year ended December 31, 2024.
Current wording
Change in the fair value of derivative liability changed by $4.7 million to income of $0.1 million for the year ended December 31, 2025 from income of $4.8 million for the year ended December 31, 2024. The change was primarily due to the decline in the value of our common stock. The derivative liability was extinguished during the first quarter of 2025 as a result of the extinguishment of the loan with Yorkville.
Previous wording
As of December 31, 2024, the outstanding amount of the Yorkville Note was $3,532,591, net of the unamortized debt discount of $4,807,820 and accrued interest of $155,203.
Current wording
As of December 31, 2025, the outstanding amount of the Lynrock Lake Term Loan was $0.7 million, net of the unamortized debt discount of $9.4 million, and accrued interest of $0.9 million.
Previous wording
In July 2020, we issued three convertible notes to three of its stockholders for advances up to $3,500,000 in principal (the “2020 Notes”) and bearing annual interest of 5% on any amounts drawn. An additional note was issued in March 2022 as part of the 2020 Notes, but with an annual interest rate of 8%. All principal and interest payments are due on or before July 1, 2025. The 2020 Notes are convertible, at the holder’s option, into shares of common stock at the lower of $14.59 per share or the offering price in a financing of at least $5,000,000 in equity from unaffiliated parties. As of December 31,
Current wording
Our three convertible notes to three of our stockholders for advances up to $3.5 million in principal issued in July 2020 (the “2020 Notes”) bear annual interest of 5% on any amounts drawn. The additional note issued in March 2022 as part of the 2020 Notes, has an annual interest rate of 8%. All principal and interest payments were initially due on or before July 1, 2025. In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity date on these convertible notes payable was extended to October 21, 2027.
Previous wording
As of December 31, 2024 and 2023, the outstanding amount of the 2020 Notes was $3,143,725 and accrued interest of $550,430 and $377,772, respectively.
Current wording
As of December 31, 2025 and 2024, the outstanding amount of the 2020 Notes was $3.2 million and $3.1 million, respectively, and accrued interest was $0.7 million and $0.6 million, respectively.
Previous wording
Related Party Working Capital Loan and Extension Note
Current wording
Related Party Working Capital Loan
Previous wording
On May 3, 2023, we issued a promissory note (the “Working Capital Note”) to a stockholder for a principal amount of $250,000. The Working Capital Note was subsequently amended and restated six times on June 12, 2023 to add an additional principal amount of $100,000, August 15, 2023 to add an additional principal amount of $75,000, August 29, 2023 to add an additional principal amount of $100,000, September 12, 2023 to add an additional principal amount of $75,000, September 15, 2023 to add an additional principal amount of $50,000, and October 26, 2023 to add an additional principal amount of $55,000, for an aggregate principal amount outstanding as of December 31, 2023 under the Working Capital Note of $705,000. The Working Capital Note was issued to provide us with additional working capital during the period prior to consummation of the Business Combination Agreement with GigCapital5. The Working Capital Note is interest-free and originally matured on the earlier of (i) the date on which we consummated the Business Combination with GigCapital5, Inc.; (ii) the date we wind up; or (iii) December 31, 2023. On March 4, 2024, the Working Capital Note was agreed to be amended and subordinated pursuant to and in accordance with the terms of the Business Combination Agreement. Effective on the Closing of the Business Combination, the Working Capital Note cannot be repaid prior to the repayment or conversion of the Yorkville Note issued to Yorkville. In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity date on the Related Party Working Capital Note Payable was extended to October 21, 2027.
Current wording
On May 3, 2023, we issued a promissory note (the “Working Capital Note”) to a stockholder for a principal amount of $0.3 million. The Working Capital Note was subsequently amended and restated six times on June 12, 2023 to add an additional principal amount of $0.1 million, August 15, 2023 to add an additional principal amount of $0.1 million, August 29, 2023 to add an additional principal amount of $0.1 million, September 12, 2023 to add an additional principal amount of $0.1 million, September 15, 2023 to add an additional principal amount of $0.1 million, and October 26, 2023 to add an additional principal amount of $0.1 million, for an aggregate principal amount outstanding as of December 31, 2025 and 2024 under the Working Capital Note of $0.7 million. The Working Capital Note was issued to provide the Company with additional working capital during the period prior to consummation of the Business Combination Agreement with
Previous wording
Net cash used in operating activities was $10,033,477 for the year ended December 31, 2024 as compared to $2,651,143 for the year ended December 31, 2023. The primary use of our cash was to fund research and development and general and administrative expenses. Net cash used for the year ended December 31, 2024 consisted of a net loss of $8,984,880, adjusted for non-cash expenses primarily including depreciation and amortization of $230,804, stock-based compensation of $289,795, fair value of common stock issued in exchange for services and in connection with non-redemption agreements of $3,698,350, issuance of common stock in connection with a stock subscription agreement of $206,000, warrant modification expense of $200,513, loss on debt extinguishment of $383,511, non-cash interest of $3,589,728, decrease in warrant liability of $187,173, decrease in derivative liability of $4,817,600, decrease in earnout liability of $3,230,000, and the net change in operating assets and liabilities of $1,384,385. The net change in operating assets and liabilities was primarily due an increase accounts receivable of $67,119, an increase in prepaid expenses and other current assets of $200,770, a decrease in accounts payable of $1,954,768, a decrease in accrued expenses and other current liabilities of $542,878, and a decrease in deferred revenue of $298,254, partially offset by a decrease in inventory of $1,506,746 and an increase in other liabilities of $172,658.
Current wording
Net cash used in operating activities was $9.0 million for the year ended December 31, 2025 as compared to $10.0 million for the year ended December 31, 2024. The primary use of our cash was to fund research and development and general and administrative expenses. Net cash used for the year ended December 31, 2025 consisted of a net loss of $21.1 million, adjusted for non-cash expenses primarily including depreciation and amortization of $0.1 million, stock-based compensation of $0.8 million, loss on issuance of the Lynrock Lake Term Loan of $6.6 million, debt extinguishment loss of $2.1 million, debt modification expense of $0.1 million, non-cash interest of $1.2 million, change in fair value of warrant liability of $3.6 million, change in fair value of derivative liability of $0.1 million, change in fair value of earnout liability of $1.8 million. The net change in operating assets and liabilities was primarily due an increase in accounts receivable of $5.7 million, an increase in prepaid expenses and other current assets of $0.3 million, and an increase in inventory of $1.9 million, partially offset primarily by an increase in accounts payable of $2.5 million, an increase in accrued expenses and other current liabilities of $0.4 million, and an increase in other liabilities of $1.1 million.
Previous wording
Net cash used in investing activities was $87,790 for the year ended December 31, 2024 as compared to $13,040 for the year ended December 31, 2023. The use of net cash used in investing activities for both periods was related to the purchase of property and equipment.
Current wording
Net cash used in investing activities was $0.1 million for the year ended December 31, 2025 as compared to $0.1 million for the year ended December 31, 2024. The use of net cash used in investing activities for both periods was related to the purchase of property and equipment.
Previous wording
During the year ended December 31, 2024, net cash provided by financing activities was $11,128,685, primarily due to $10,525,000 of net proceeds received from issuance of long-term debt related to the Yorkville Pre-Paid Advance and the Cable Car Note, net proceeds of $1,238,529 received from the Merger, net proceeds from sale of common stock and warrants of $999,998, and cash proceeds of $500,000 received from issuance of common stock pursuant to a subscription agreement, partially offset by repayment of the Bridge Loan of $800,000, cash paid for debt issuance costs of $59,069, and repayments against the Yorkville Note and PPP loans of $1,275,773.
Current wording
During the year ended December 31, 2024, net cash provided by financing activities was $11.1 million, primarily due to $10.5 million of net proceeds received from issuance of long-term debt related to the Yorkville Pre-Paid Advance and the Cable Car Note, $1.0 million of net proceeds from the sale of common stock, cash proceeds of $0.5 million received from issuance of common stock pursuant to a subscription agreement, and net proceeds of $1.2 million received from the business combination of QT Imaging, Inc. and GigCapital5, Inc. (the “Merger”), partially offset by repayment of long-term debt of $1.3 million and repayment of bridge loans of $0.8 million.
Previous wording
We expect to incur increased significant expenses in connection with our ongoing activities, particularly as we continue the research and development of our products and product candidates, seek expanded regulatory clearances for the QT Breast Scanner, and build a U.S. sales and marketing team. As part of the effort to build the sales and marketing capabilities in the United States, QT Imaging entered into the Amended Distribution Agreement, pursuant to which QT Imaging appointed NXC as the exclusive agent for the sale of the QT Breast Scanner in the U.S. and U.S. territories. Since our consummation of the Merger, we expect to incur additional costs associated with operating as a public company. Our future funding requirements, both short-and long-term, will depend on many factors, including, without limitation:
Current wording
We expect to incur increased significant expenses in connection with our ongoing activities, particularly as we continue the research and development of our products and product candidates, seek expanded regulatory clearances for the QT Breast Scanner, and build a U.S. sales and marketing team. As part of the effort to build the sales and marketing capabilities in the United States, QT Imaging entered into the Amended NXC Distribution Agreement, pursuant to which QT Imaging appointed NXC as the exclusive agent for the sale of the QT Breast Scanner in the U.S. and U.S. territories. We expect to incur additional costs associated with operating as a public company. Our future funding requirements, both short-and long-term, will depend on many factors, including, without limitation:
Previous wording
•Expand or enhance our distribution with third-party distribution channels;
Current wording
•Expand or enhance our distribution with third-party distribution channels outside of the U.S.;
Previous wording
•The costs, timing, and outcomes of regulatory review of applications for expanded clearances for the QT Breast Scanner and clearance for other products;
Current wording
•The costs, timing, and outcomes of regulatory review of applications for expanded clearances for the QT Breast Scanner;
Previous wording
We are an emerging growth company (“EGC”), as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company, or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Current wording
We are an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company, or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Previous wording
The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate these estimates, and assumptions, including those related to revenue, inventories and income taxes, among others. Our estimates are derived from historical experience, current conditions and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates. In addition, any change in these estimates or their underlying assumptions could have a material adverse effect on our operating results.
Current wording
The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate these estimates, and assumptions, including those related to revenue, inventories and income taxes, among others. Our estimates are derived from historical experience, current conditions and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates. In addition, any change in these estimates or their underlying assumptions could have a material adverse effect on our operating results.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
We have incurred net operating losses and negative cash flows from operations since our inception and had an accumulated deficit of $53.0 million as of December 31, 2025. During the year ended December 31, 2025, we incurred a net loss of $21.1 million and used $9.0 million of cash in operating activities. We expect to continue to incur losses, and our ability to achieve and sustain profitability will depend on the achievement of sufficient revenues to support our cost structure. We may never achieve profitability and, unless and until we do, we will need to continue to raise additional capital.
Current report — wording carried from elsewhere
Furthermore, in connection with the Lynrock Lake Term Loan, we issued to Lynrock Lake, pursuant to the terms of a Warrant to Purchase common stock, the Lynrock Lake Warrant to purchase 20,333,623 shares of common stock at an exercise price of $1.20 per share. The Lynrock Lake Warrant is exercisable until February 26, 2035. Lynrock Lake may cashless exercise the Lynrock Lake Warrant. The Lynrock Lake Warrant is also subject to anti-dilution adjustments to the exercise price and the number of shares which may be purchased upon exercise of the Lynrock Lake Warrant in the event that we issue shares of common stock (or derivative securities) at a price that is either less than the $1.20 exercise price or the fair market value of a share of common stock from the immediately prior trading day. The fair value of the Lynrock Warrant at issuance amounted to $16.5 million.
Current report — wording carried from elsewhere
The 2020 Notes are convertible, at the holder’s option, into shares of our common stock at the lower of $43.77 per share or the offering price in a financing of at least $5.0 million in equity from unaffiliated parties. As of December 31, 2025, an aggregate of 89,303 shares of common stock would be issued if the entire principal and interest under the 2020 Notes was converted.
Current report — wording carried from elsewhere
GigCapital5. The Working Capital Note is interest-free and originally matured on the earlier of (i) the date on which the Company consummated the Business Combination with GigCapital5; (ii) the date the Company winds up; or (iii) December 31, 2023. The Working Capital Note may be prepaid without penalty. On March 4, 2024, the holder of the Working Capital Note agreed to extend and subordinate the promissory note pursuant to and in accordance with the terms of the Business Combination Agreement. Effective on the closing of the Business Combination, the Working Capital Note cannot be repaid prior to the repayment or conversion of the Yorkville Note received from Yorkville. In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity date on the Working Capital Note was extended to October 1, 2027.
Current report — wording carried from elsewhere
Net cash used for the year ended December 31, 2024 consisted of a net loss of $9.0 million, adjusted for non-cash expenses including depreciation and amortization of $0.2 million, stock-based compensation of $0.3 million, warrant modification expense of $0.2 million, fair value of common stock issued in exchange for services and in connection with non-redemption agreements of $3.7 million, a loss of $0.2 million related to issuance of common stock in connection with a stock subscription agreement, non-cash interest of $3.6 million, a decrease in fair value of warrant liability of $0.2 million, a decrease in fair value of derivative liability of $4.8 million, a decrease in fair value of earnout liability of $3.2 million. The net change in operating assets and liabilities was primarily due to an increase in accounts receivable of $0.1 million, an increase in prepaid expenses and other current assets of $0.2 million, a decrease in accounts payable of $2.0 million, a decrease in accrued expenses and other liabilities of $0.8 million, partially offset by a decrease in inventory of $1.5 million, and an increase in other liabilities of $0.2 million.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
In addition, we conducted, and Intertek witnessed, all applicable testing pertaining to the requirements for the safety of ultrasonic medical diagnostic and monitoring equipment and to demonstrate compliance with the “Acoustic Output Measurement Standard for Diagnostic Ultrasound Equipment”. This test on acoustic output was pursuant to IEC 60601-2-37 Edition 2.0.2007 Medical electrical equipment - Part 2-37: Particular requirements for the basic safety and essential performance of ultrasonic medical diagnostic and monitoring equipment. Finally, system verification testing was conducted to ensure that the QT Breast Scanner met all design and other requirements including but not limited to that no new issues of safety or effectiveness compared to the predicate device, SoftVue System manufactured by Delphinus Medical Technologies, were raised.
Previous report — wording carried elsewhere
On February 26, 2025, the Company used a portion of the proceeds of the Lynrock Lake Term Loan to pay Yorkville an amount equal to $3,000,000 in cash and issued to Yorkville warrants to purchase 15,000,000 shares of its common stock at an exercise price of $0.40 per share pursuant to the Yorkville Warrant to fully settle and discharge the Company’s obligations under the Yorkville Note and extinguish the Yorkville Note as having been fully performed. The Yorkville Warrant is exercisable until February 26, 2030. Yorkville may cashless exercise the Yorkville Warrant. The Yorkville Warrant is also subject to adjustments in the event that the Company’s common stock undergoes a split, reverse-split or similar event. Furthermore, the Yorkville Warrant has provided the holder with piggyback registration rights. The Company and Yorkville also entered into that certain Termination Agreement, dated February 26, 2025 (the “Termination Agreement”), pursuant to which the parties acknowledged the termination of the SEPA effective February 26, 2025.
Previous report — wording carried elsewhere
On February 26, 2025, the Company used a portion of the proceeds of the Lynrock Lake Term Loan to pay Cable Car an amount equal to the full principal, interest and fees amount of approximately $1,625,000 in cash to fully settle and discharge the Company’s obligations under the Cable Car Note and extinguish the Cable Car Note as having been fully performed.
Previous report — wording carried elsewhere
2024, an aggregate of 253,199 shares of common stock would be issued if the entire principal and interest under the 2020 Notes was converted.
Previous report — wording carried elsewhere
Net cash used for the year ended December 31, 2023 consisted of a net loss of $6,098,951, adjusted for non-cash expenses including depreciation and amortization of $480,694, stock-based compensation of $709,394, non-cash interest of $66,367, induced conversion expense of $168,356, debt extinguishment loss of $376,086, and non-cash operating lease expense of $8,246, partially offset by the net change in operating assets and liabilities of $1,655,033. The net change in operating assets and liabilities was primarily due to a decrease in inventory of $98,594, an increase in accounts payable of $876,074, an increase in accrued expenses and other current liabilities $645,840, and an increase in deferred revenue of $347,619, partially offset primarily by a decrease in other liabilities of $205,701 and an increase in prepaid expenses and other current assets of $116,103.