QT IMAGING HOLDINGS, INC.

Previous wording

We have a history of net losses and negative cash flow from operations since inception and we expect such losses and negative cash flows from operations to continue in the foreseeable future. As of March 31, 2025 and December 31, 2024, we had working capital of $4.5 million and a working capital deficit of $4.9 million, respectively, and an accumulated deficit of approximately $43.1 million and $31.9 million, respectively. For the three months ended March 31, 2025 and 2024, we incurred net losses of approximately $11.1 million and $0.6 million, respectively. For the three months ended March 31, 2025 and 2024, we used cash in operations of $3.5 million and $6.0 million, respectively. We anticipate our losses will continue to increase from current levels because we expect to incur additional costs related to developing our business, including research and development costs, manufacturing costs, employee-related costs, costs of complying with government regulations, intellectual property development and prosecution costs, marketing and promotion costs, capital expenditures, general and administrative expenses, and costs associated with operating as a public company.

Current wording

We have a history of net losses and negative cash flow from operations since inception and we expect such losses and negative cash flows from operations to continue in the foreseeable future. As of June 30, 2025 and December 31, 2024, we had working capital of $4.4 million and a working capital deficit of $4.9 million, respectively, and an accumulated deficit of approximately $47.1 million and $31.9 million, respectively. For the three months ended June 30, 2025 and 2024, we incurred net losses of approximately $4.0 million and $1.2 million, respectively. For the six months ended June 30, 2025 and 2024, we incurred net losses of approximately $15.1 million and $1.9 million, respectively. For the six months ended June 30, 2025 and 2024, we used cash in operations of $5.0 million and $7.0 million, respectively. We anticipate our losses will continue to increase from current levels because we expect to incur additional costs related to developing our business, including research and development costs, manufacturing costs, employee-related costs, costs of complying with government regulations, intellectual property development and prosecution costs, marketing and promotion costs, capital expenditures, general and administrative expenses, and costs associated with operating as a public company.

Previous wording

The Company has registered in a resale registration statement on Form S-1 declared effective by the SEC on May 22, 2024, securities held by certain stockholders of the Company which have the right, subject to certain conditions, to require us to register the sale of their shares of common stock under the Securities Act, pursuant to the terms of a registration statement that we entered into with GigAcquisitions5 and certain other securityholders of GigCapital5 and QT Imaging (the “GigCapital5 Registration Rights Agreement”). The Company has also registered in a resale registration statement on From S-1 declared effective by the SEC on February 5, 2025, the securities sold in the Private Placement as the purchaser received the right, subject to certain conditions, to require us to register the sale of their shares of common stock under the Securities Act, pursuant to the terms of of a registration statement that we entered into (“PIPE Registration Rights Agreement”). The sale of a large number of shares by these stockholders could cause the prevailing market price of shares of common stock to decline. Significant sales of shares of common stock may have negative pressure on the public trading price of our common stock.

Current wording

The Company has registered in a resale registration statement on Form S-1 declared effective by the SEC on May 22, 2024, securities held by certain stockholders of the Company which have the right, subject to certain conditions, to require us to register the sale of their shares of common stock under the Securities Act, pursuant to the terms of a registration statement that we entered into with GigAcquisitions5 and certain other securityholders of GigCapital5 and QT Imaging (the “GigCapital5 Registration Rights Agreement”). The Company has also registered in a resale registration statement on From S-1 declared effective by the SEC on February 5, 2025, the securities sold in the Private Placement as the purchaser received the right, subject to certain conditions, to require us to register the sale of their shares of common stock under the Securities Act, pursuant to the terms of a registration statement that we entered into (“PIPE Registration Rights Agreement”). The sale of a large number of shares by these stockholders could cause the prevailing market price of shares of common stock to decline. Significant sales of shares of common stock may have negative pressure on the public trading price of our common stock.

Previous wording

The shares already registered for resale currently represent over 50% of the total number of shares outstanding, based on the number of shares of common stock outstanding as of May 12, 2025. Even though the current trading price is significantly below the Company’s initial public offering price, based on the closing price of the common stock on May 12, 2025, certain of our stockholders may have an incentive to sell their shares because they will still profit on sales due to the lower prices at which they purchased their shares as compared to the public investors. For example, members of our founding stockholder, GigAcquisitions5, who received a distribution of shares from GigAcquisitions5 for which there is an effective resale registration statement, have a cost basis in up to 5,735,000 shares of common stock that were acquired at an effective purchase price of $0.0043592 per share, and, therefore, based on the closing price of the common stock on May 12, 2025, could earn an aggregate profit of approximately $4,835,412 from the resale of such shares.

Current wording

The shares already registered for resale currently represent over 50% of the total number of shares outstanding, based on the number of shares of common stock outstanding as of August 6, 2025. Even though the current trading price is significantly below the Company’s initial public offering price, based on the closing price of the common stock on August 6, 2025, certain of our stockholders may have an incentive to sell their shares because they will still profit on sales due to the lower prices at which they purchased their shares as compared to the public investors. For example, members of our founding stockholder, GigAcquisitions5, who received a distribution of shares from GigAcquisitions5 for which there is an effective resale registration statement, have a cost basis in up to 5,735,000 shares of common stock that were acquired at an effective purchase price of $0.0043592 per share, and, therefore, based on the closing price of the common stock on August 6, 2025, could earn an aggregate profit of approximately $9,839,200 from the resale of such shares.

Previous wording

As of March 31, 2025, the Company had 23,889,364 warrants outstanding that were exercisable for cash at an exercise price of $2.30 per share, and an additional 4,383,558 warrants outstanding that would become exercisable for cash on May 22, 2025 with an exercise price of $0.672 per share. On February 26, 2025, the Company issued a warrant to purchase 61,000,000 shares of common stock to Lynrock Lake and a warrant to purchase 15,000,000 shares of common stock to YA II PN, Ltd. which are exercisable on a "cashless basis" with an exercise price of $0.40 per share as part of the $10.1 million term loan received from Lynrock Lake and cancellation of debt with YA II PN, Ltd. The exercise of any of these warrants would result in the issuance of shares which could then be sold.

Current wording

As of June 30, 2025, the Company had 23,889,364 warrants outstanding that were exercisable for cash at an exercise price of $2.30 per share, and an additional 4,383,558 warrants outstanding that became exercisable for cash on May 22, 2025 with an exercise price of $0.672 per share. On February 26, 2025, the Company issued a warrant to purchase 61,000,000 shares of common stock to Lynrock Lake and a warrant to purchase 15,000,000 shares of common stock to YA II PN, Ltd. which are exercisable on a "cashless basis" with an exercise price of $0.40 per share as part of the $10.1 million term loan received from Lynrock Lake and cancellation of debt with YA II PN, Ltd. The exercise of any of these warrants would result in the issuance of shares which could then be sold. On April 24, 2025, the Company issued warrants in a private placement with a term of ten years from the initial exercise date to purchase up to an additional 1,569,858 shares of common stock with a per share exercise price of $0.72 that become exercisable on October 24, 2025. On May 12, 2025, the Company issued warrants in a private placement with a term of five years from the initial exercise date to purchase up to 205,339 shares of common stock with a per share exercise price of $1.12 that become exercisable on November 12, 2025.

Previous wording

On February 26, 2025, the Company issued to Lynrock Lake, pursuant to the terms of the Lynrock Lake Warrant, a warrant to purchase 61,000,000 shares of 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. As of March 31, 2025, the Lynrock Lake Warrant to purchase 61,000,000 shares of common stock was outstanding.On February 26, 2025, the Company issued to Yorkville a warrant to purchase 15,000,000 shares of its common stock at an exercise price of $0.40 per share pursuant to the Yorkville Warrant. The Yorkville Warrant is exercisable until February 26, 2030. As of March 31, 2025, the Yorkville Warrant to purchase 15,000,000 shares of common stock was outstanding. Both the Lynrock Lake Warrant and Yorkville Warrant are classified as liability.

Current wording

On February 26, 2025, the Company issued to Lynrock Lake, pursuant to the terms of the Lynrock Lake Warrant, a warrant to purchase 61,000,000 shares of 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. As of June 30, 2025, the Lynrock Lake Warrant to purchase 61,000,000 shares of common stock was outstanding. On February 26, 2025, the Company issued to Yorkville a warrant to purchase 15,000,000 shares of its common stock at an exercise price of $0.40 per share pursuant to the Yorkville Warrant. The Yorkville Warrant is exercisable until February 26, 2030. As of June 30, 2025, the Yorkville Warrant to purchase 15,000,000 shares of common stock was outstanding. Both the Lynrock Lake Warrant and Yorkville Warrant were initially classified as a warrant liability. On June 11, 2025, the Lynrock Lake Warrant was amended to update the provisions that would trigger cash settlement such that, when such events occur, the holders of the warrants receive the same form of consideration as the underlying stockholders. According to ASC 815-40, Derivatives and Hedging: Contracts in an Entities Own Equity, equity classification is permitted for an instrument that requires net-cash settlement if the holders of the contract’s underlying shares receive the same form of consideration in transactions outside the company’s control. Consequently, upon modification, the warrants were revalued and then reclassified to additional paid-in capital on the condensed consolidated balance sheets.