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What changed in QT IMAGING HOLDINGS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of QT IMAGING HOLDINGS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+861 added−935 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-31)

Top changes in QT IMAGING HOLDINGS, INC.'s 2023 10-K

861 paragraphs added · 935 removed · 187 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

35 edited+57 added−86 removed23 unchanged
Biggest changeThe Working Capital Note was subsequently amended and restated six more times on October 26, 2022 (an additional $65,000 added to the Working Capital Note), November 28, 2022 (an additional $65,000 added to the Working Capital Note), December 27, 2022 (an additional $65,000 added to the Working Capital Note), January 25, 2023 (an additional $65,000 added to the Working Capital Note), February 27, 2023 (an additional $350,000 added to the Working Capital Note) and March 28, 2023 (an additional $130,000 added to the Working Capital Note), respectively, for a collective principal amount of $805,000.
Biggest changeThe Working Capital Note was subsequently amended and restated eleven more times on October 26, 2022 (an additional $65,000 added to the Working Capital Note), November 28, 2022 (an additional $65,000 added to the Working Capital Note), December 27, 2022 (an additional $65,000 added to the Working Capital Note), January 25, 2023 (an additional $65,000 added to the Working Capital Note), February 27, 2023 (an additional $350,000 added to the Working Capital Note), March 28, 2023 (an additional $130,000 added to the Working Capital Note), April 27, 2023 (an additional $65,000 added to the Working Capital Note), June 26, 2023 (an additional $130,000 added to the Working Capital Note), July 25, 2023 (an additional $65,000 added to the Working Capital Note), October 27, 2023 (an additional $381,360 added to the Working Capital Note) and December 13, 2023 (an additional $53,640 added to the Working Capital Note), respectively, for a collective principal amount of $1,500,000.
Third Extension On November 28, 2022, the Company further amended and restated the First Restated Extension Note (the “Second Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the Second Restated Extension Note of $480,000. The Sponsor deposited such funds into the Company’s trust account with Continental Stock Transfer & Trust Company.
The Sponsor deposited such funds into the Company’s trust account with Continental Stock Transfer & Trust Company. Third Extension On November 28, 2022, the Company further amended and restated the First Restated Extension Note (the “Second Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the Second Restated Extension Note of $480,000.
The Sponsor deposited the additional principal amount of $160,000 into the Company’s trust account with Continental Stock Transfer & Trust Company.
The Sponsor deposited the additional principal amount of $160,000 into the Company’s trust account with Continental Stock Transfer & Trust Company.
The Sponsor deposited the additional principal amount of $160,000 into the Company’s trust account with Continental Stock Transfer & Trust Company.
The Sponsor deposited the additional principal amount of $160,000 into the Company’s trust account with Continental Stock Transfer & Trust Company.
Fifth Extension On January 26, 2023, the Company further amended and restated the Third Restated Extension Note (the “Fourth 5 Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the Fourth Restated Extension Note of $800,000.
Fifth Extension On January 26, 2023, the Company further amended and restated the Third Restated Extension Note (the “Fourth Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the Fourth Restated Extension Note of $800,000.
Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. 13
Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Subject to the terms of the Business Combination Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the common stock of QT Imaging, par value $0.001 per share (the “QT Imaging Common Stock”) (excluding each share of QT Imaging Common Stock held in the treasury of QT Imaging which will be cancelled without any conversion of such shares of QT Imaging Common Stock held in the treasury and dissenting shares) will be automatically cancelled and converted into (A) the right to receive a number of shares of common stock, par value $0.0001 per share, of GigCapital5 (the “GigCapital5 Common Stock”) calculated based on the Exchange Ratio (as defined below) and (B) the contingent right to receive a portion of additional shares of GigCapital5 Common Stock based on the performance of the Combined Company if certain requirements are achieved in accordance with the terms of the Business Combination Agreement, if, as and when payable.
Subject to the terms of the Business Combination Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the common stock of QT Imaging, par value $0.001 per share (the “QT Imaging Common Stock”) (excluding each share of QT Imaging Common Stock held in the treasury of QT Imaging which was cancelled without any conversion of such shares of QT Imaging Common Stock held in the treasury and dissenting shares) was automatically cancelled and converted into (A) the right to receive a number of shares of common stock, par value $0.0001 per share, of GigCapital5 (the “GigCapital5 Common Stock”) calculated based on the Exchange Ratio (as defined below) and (B) the contingent right to receive a portion of additional shares of GigCapital5 Common Stock based on the performance of the Combined Company if certain requirements are achieved in accordance with the terms of the Business Combination Agreement, if, as and when payable.
In connection with the March 2023 Special Meeting, the Company’s stockholders elected to redeem 995,049 shares of the Company’s common stock, which represented approximately 4.3% of the shares that were part of the public units sold in the Offering. Following such redemptions, $10,449,626 is being withdrawn from the trust account.
In connection with the March 2023 Special Meeting, the Company’s stockholders elected to redeem 995,049 shares of the Company’s common stock, which represented approximately 4.3% of the shares that were part of the public units sold in the Offering. Following such redemptions, $10,449,625 is being withdrawn from the trust account.
On March 28, 2023, the Company held a second special meeting of its stockholders (the “March 2023 Special Meeting”) and the Company’s stockholders approved the following proposals: (i) a proposal to amend (the “March 2023 Charter Amendment”) the Company’s Amended and Restated Certificate of Incorporation giving the Company the right to extend the date by which it has to consummate a business combination (the “Combination Period”) six (6) times for an additional one (1) month each time, from March 28, 2023 to September 28, 2023 (i.e., for a period of time ending 24 months from the consummation of its initial public offering and (ii) a proposal to amend the Company’s investment management trust agreement, dated as of September 23, 2021 (the “March 2023 Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, allowing the Company to extend the Combination Period six (6) times for an additional one (1) month each time from March 28, 2023 to September 28, 2023 by depositing $100,000 into the trust account for each one-month extension.
In the March 2023 Special Meeting, the Company’s stockholders approved the following proposals: (i) a proposal to amend (the “March 2023 Charter Amendment”) the Company’s Amended and Restated Certificate of Incorporation giving the Company the right to extend the date by which it has to consummate a business combination (the “Combination Period”) six (6) times for an additional one (1) month each time, from March 28, 2023 to September 28, 2023 (i.e., for a period of time ending 24 months from the consummation of its initial public offering and (ii) a proposal to amend the Company’s investment management trust agreement, dated as of September 23, 2021 (the “March 2023 Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, allowing the Company to extend the Combination Period six (6) times for an additional one (1) month each time from March 28, 2023 to September 28, 2023 by depositing $100,000 into the trust account for each one-month extension.
Accordingly, once a suitable target business to acquire has been located, management will spend more time investigating such target business and negotiating and processing the business combination (and consequently spend more time on our affairs) than had been spent prior to locating a suitable target business.
Accordingly, once a suitable target business to acquire had been located, management spent more time investigating such target business and negotiating and processing the business combination (and consequently spend more time on our affairs) than had been spent prior to locating a suitable target business.
Incentive Plans In connection with the Merger, the parties will cooperate to establish, prior to the Effective Time an equity incentive award plan (the “Equity Plan”) for QTI Holdings with an award pool of GigCapital5 Common Stock equal to (i) eleven percent of the fully diluted shares of GigCapital5 Common Stock outstanding as of immediately after the Effective Time (rounded up to the nearest whole share) (the “Initial Equity Plan Pool”), which Equity Plan will include an “evergreen” provision pursuant to which such award pool will automatically increase on each January 1st that occurs within the ten year period following stockholder approval of such plan by an amount equal to five percent of the shares of GigCapital5 Common Stock outstanding as of 12:01 a.m.
Incentive Plans In connection with the Merger, the parties established, prior to the Effective Time an equity incentive award plan (the “Equity Plan”) for QTI Holdings with an award pool of GigCapital5 Common Stock equal to (i) eleven percent of the fully diluted shares of GigCapital5 Common Stock outstanding as of immediately after the Effective Time (rounded up to the nearest whole share) (the “Initial Equity Plan Pool”), which Equity Plan includes an “evergreen” provision pursuant to which such award pool will automatically increase on each January 1st that occurs within the ten year period following stockholder approval of such plan by an amount equal to five percent of the shares of GigCapital5 Common Stock outstanding as of 12:01 a.m.
On September 23, 2022, the Company held a special meeting of its stockholders (the “September 2022 Special Meeting”) and the Company’s stockholders approved the following proposals: (i) a proposal to amend (the “ September 2022 Charter Amendment”) the Company’s Amended and Restated Certificate of Incorporation giving the Company the right to extend the date by which it has to consummate a business combination (the “Combination Period”) six (6) times for an additional one (1) month each time, from September 28, 2022 to March 28, 2023 (i.e., for a period of time ending 18 months from the consummation of its Offering) and (ii) a proposal to amend the Company’s investment management trust 4 agreement, dated as of September 23, 2021 (the “ September 2022 Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, allowing the Company to extend the Combination Period six (6) times for an additional one (1 ) month each time from September 28, 2022 to March 28, 2023 by depositing into the t rust a ccount for each one-month extension $160,000 .
On September 23, 2022, the Company held a special meeting of its stockholders (the “September 2022 Special Meeting”) and the Company’s stockholders approved the following proposals: (i) a proposal to amend (the “September 2022 Charter Amendment”) the Company’s Amended and Restated Certificate of Incorporation giving the Company the right to extend the date by which it has to consummate a business combination (the “Combination Period”) six (6) times for an additional one (1) month each time, from September 28, 2022 to March 28, 2023 (i.e., for a period of time ending 18 months from the consummation of its Offering) and (ii) a proposal to amend the Company’s investment management trust 4 Table of Contents agreement, dated as of September 23, 2021 (the “September 2022 Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, allowing the Company to extend the Combination Period six (6) times for an additional one (1) month each time from September 28, 2022 to March 28, 2023 by depositing into the trust account for each one-month extension $160,000.
Upon such election, the convertible note will convert, at a price of $10.00 per unit, into units identical to the Private Placement Units issued in connection with the Offering. An aggregate of 80,500 Private Placement Units of the Company would be issued if the entire principal balance of the Working Capital Note is converted.
Upon such election, the convertible note will convert, at a price of $10.00 per unit, into units identical to the Private Placement Units issued in connection with the Offering. An aggregate of 150,000 Private Placement Units of the Company would be issued if the entire principal balance of the Working Capital Note is converted.
In addition, at the Effective Time, certain warrants of QT Imaging to purchase QT Imaging Common Stock will be converted into a warrant to acquire a number of shares of GigCapital5 Common Stock at an adjusted exercise price per share.
In addition, at the Effective Time, certain warrants of QT Imaging to purchase QT Imaging Common Stock were converted into a warrant to acquire a number of shares of GigCapital5 Common Stock at an adjusted exercise price per share.
These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs.
These individuals were not obligated to devote any specific number of hours to our matters and intended to devote only as much time as they deem necessary to our affairs.
The Merger Pursuant to the terms of the Business Combination Agreement, Merger Sub will merge with and into QT Imaging (the “Merger”), with QT Imaging as the surviving company in the Merger (the “Surviving Corporation”), and after giving effect to the Merger, the Surviving Corporation will be a wholly owned subsidiary of GigCapital5, which will be renamed as QT Imaging Holdings, Inc.
The Merger Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into QT Imaging (the “Merger”) and has done so, with QT Imaging as the surviving company in the Merger (the “Surviving Corporation”), and after giving effect to the Merger, the Surviving Corporation became a wholly owned subsidiary of GigCapital5, which was renamed as QT Imaging Holdings, Inc.
Each Assumed Warrant will be subject to the same terms and conditions as were applicable to such corresponding in-the-money QT Imaging warrant immediately prior to the Effective Time (including applicable vesting conditions), except to the extent such terms or conditions are rendered 3 inoperative by the t ransactions.
Each Assumed Warrant was subject to the same terms and conditions as were applicable to such corresponding in-the-money QT Imaging warrant immediately prior to the Effective Time (including applicable vesting conditions), except to the extent such terms or conditions are rendered 3 Table of Contents inoperative by the transactions.
Second Extension On October 26, 2022, the Company further amended and restated the Extension Note (the “First Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the First Restated Extension Note of $320,000. The Sponsor deposited such funds into the Company’s trust account with Continental Stock Transfer & Trust Company.
The Sponsor deposited such funds into the Company’s trust account with Continental Stock Transfer & Trust Company. Fourth Extension On December 27, 2022, the Company further amended and restated the Second Restated Extension Note (the “Third Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the Third Restated Extension Note of $640,000.
The amount of time they will devote in any time period will vary based on whether a target business has been selected for the business combination and the stage of the business combination process the Company is in.
The amount of time they devoted in any time period varied based on whether a target business had been selected for the business combination and the stage of the business combination process the Company is in.
In connection with the September 2022 Special Meeting, t he Company’s stockholders elected to redeem 18,985,950 shares of the Company’s common stock, which represented approximately 82. 5 % of the shares that were part of the p ublic u nits sold in the Offering. Following such redemptions, $192,138,312 was withdrawn from the t rust a ccount on September 27, 2022.
In connection with the September 2022 Special Meeting, the Company’s stockholders elected to redeem 18,985,950 shares of the Company’s common stock, which represented approximately 82.5% of the shares that were part of the public units sold in the Offering. Following such redemptions, $192,138,312 was withdrawn from the trust account on September 27, 2022.
We presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full-time employees prior to the consummation of a business combination.
Our executive officers devoted such amount of time as they reasonably believe is necessary to our business. We did not have any full-time employees prior to the consummation of the Business Combination.
At the Effective Time, each c ompany w arrant (other than any i n-the- m oney QT Imaging w arrant) that is outstanding immediately prior to the Effective Time, whether vested or unvested, will, in accordance with the provisions of such c ompany w arrant (for the avoidance of doubt, as may be amended following the date of this c urrent r eport with the written approval of GigCapital5), be canceled without any conversion of such c ompany w arrant and no payment or distribution will be made, and the holder of such c ompany w arrant will cease to have any rights, with respect to such c ompany w arrant.
At the Effective Time, each company warrant (other than any in-the-money QT Imaging warrant) that was outstanding immediately prior to the Effective Time, whether vested or unvested, was in accordance with the provisions of such company warrant (for the avoidance of doubt, as may be amended following the date of this current report with the written approval of GigCapital5), was canceled without any conversion of such company warrant and no payment or distribution was made, and the holder of such company warrant ceased to have any rights, with respect to such company warrant.
Accordingly, as of the Effective Time: (A) each such Assumed Warrant will be exercisable solely for shares of GigCapital5 Common Stock; (B) the number of shares of GigCapital5 Common Stock subject to each Assumed Warrant will be determined by multiplying the number of shares of C ompany c ommon s tock subject to such i n-the- m oney QT Imaging w arrant, as in effect immediately prior to the Effective Time, by the p er s hare m erger c onsideration, and rounding the resulting number down to the nearest whole number of shares of GigCapital5 Common Stock; (C) the per share exercise price for the GigCapital5 Common Stock issuable upon exercise of each Assumed Warrant will be determined by dividing the per share exercise price for the shares of c ompany c ommon s tock subject to the i n-the- m oney QT Imaging w arrant, as in effect immediately prior to the Effective Time, by the p er s hare m erger c onsideration, and rounding the resulting exercise price up to the nearest whole cent; and (D ) the holder of each i n-the- m oney QT Imaging w arrant outstanding as of immediately prior to the Effective Time will be entitled to the contingent right to receive a portion of the m erger c onsideration e arnout s hares, if, as and when payable.
Accordingly, as of the Effective Time: (A) each such Assumed Warrant was exercisable solely for shares of GigCapital5 Common Stock; (B) the number of shares of GigCapital5 Common Stock subject to each Assumed Warrant was determined by multiplying the number of shares of Company common stock subject to such in-the-money QT Imaging warrant, as in effect immediately prior to the Effective Time, by the per share merger consideration, and rounding the resulting number down to the nearest whole number of shares of GigCapital5 Common Stock; (C) the per share exercise price for the GigCapital5 Common Stock issuable upon exercise of each Assumed Warrant was determined by dividing the per share exercise price for the shares of company common stock subject to the in-the-money QT Imaging warrant, as in effect immediately prior to the Effective Time, by the per share merger consideration, and rounding the resulting exercise price up to the nearest whole cent; and (D) the holder of each in-the-money QT Imaging warrant outstanding as of immediately prior to the Effective Time was entitled to the contingent right to receive a portion of the merger consideration earnout shares, if, as and when payable.
Further, we intend to share best practices and key learnings, gathered from our management team’s operating and investing experience, as well as strong relationships in the advanced medical equipment industries to help shape corporate strategies.
Our management team has significant hands-on experience helping companies optimize their existing and new growth initiatives. We intend to share best practices and key learnings, gathered from our management team’s operating and investing experience, as well as strong relationships in the advanced medical equipment industries to help shape corporate strategies.
At the Effective Time, the board of directors of QT Imaging Holdings (the “QTI Holdings Board”) will consist of seven directors in a classified board of directors with three classes, the initial members of which (the “Initial Post-Closing QTI Holdings Directors”) will consist of three individuals identified by GigCapital5 who will serve either in Class I or Class III, and will include the chairman of the QTI Holdings Board, and four individuals identified by QT Imaging who will serve in either Class I, Class II or Class III, and will include the Chief Executive Officer of QT Imaging.
Following the Effective Time, the board of directors of QT Imaging Holdings (the “QTI Holdings Board”) consists of seven directors classified in three classes, the initial members of which (the “Initial Post-Closing QTI Holdings Directors”) consisted of three individuals identified by GigCapital5 who will serve either in Class I, Class II or Class III, and included the chairman of the QTI Holdings Board, and three individuals identified by QT Imaging who will serve either in Class I, Class II or Class III, and one more board seat was filled by the GigCapital5 Board prior to Closing.
At the Effective Time, each outstanding in-the-money QT Imaging warrant that is not exercised and exchanged prior to the Effective Time will automatically, without any action on the part of the holder of an in-the-money QT Imaging warrant, in accordance with the provisions of an in-the-money QT Imaging warrant, be converted into a warrant to acquire a number of shares of GigCapital5 Common Stock at an adjusted exercise price per share (each such resulting warrant, an “Assumed Warrant”).
The shares of the Combined Company common stock are currently listed on the Nasdaq Global Market (“Nasdaq”) under the symbol “QTI,” and the warrants trade at the OTC Markets Group Inc. under the symbols “GIAWW.” At the Effective Time, each outstanding in-the-money QT Imaging warrant that was not exercised and exchanged prior to the Effective Time automatically, without any action on the part of the holder of an in-the-money QT Imaging warrant, in accordance with the provisions of an in-the-money QT Imaging warrant, was converted into a warrant to acquire a number of shares of GigCapital5 Common Stock at an adjusted exercise price per share (each such resulting warrant, an “Assumed Warrant”).
Business Combination As set forth below and in the Current Report on Form 8-K filed with the Securities Exchange Commission (the “SEC”) dated December 12, 2022, the Company executed a Business Combination Agreement (the “Business Combination Agreement”), dated as of December 8, 2022, with QTI Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of GigCapital5 (“Merger Sub”), and QT Imaging (the transactions contemplated by the Business Combination Agreement, the “Business Combination”).
Our products do not emit radiation, but are subject to regulation as medical devices in the U.S. under the FDCA and as implemented and enforced by the FDA, and under comparable regulatory schemes in foreign jurisdictions. 2 Table of Contents Business Combination As set forth below and in the Current Report on Form 8-K filed with the Securities Exchange Commission (the “SEC”) dated December 12, 2022, the Company executed a Business Combination Agreement (the “Business Combination Agreement”), dated as of December 8, 2022, with QTI Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of GigCapital5 (“Merger Sub”), and QT Imaging (the transactions contemplated by the Business Combination Agreement, the “Business Combination”).
Further, prior to the Effective Time, QT Imaging will, in a manner acceptable to GigCapital5, take such actions as are necessary to terminate each QT Imaging option that is outstanding immediately prior to the Effective Time, whether vested or unvested, including by payment or in accordance with the terms of the QT Imaging option plan, the company options will be terminated without any conversion of such company options and no payment or distribution will be made, and the holder of any company options will cease to have any rights, with respect to such company options.
Further, prior to the Effective Time, QT Imaging terminated each QT Imaging option that was outstanding immediately prior to the Effective Time, whether vested or unvested, without any conversion of such company options and no payment or distribution was made, and the holder of any company options ceased to have any rights, with respect to such company options.
If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively. Employees We have three executive officers.
Having completed our Business Combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to the Business Combination, we will have the resources or ability to compete effectively. Intellectual Property We believe that our intellectual property rights are valuable and important to our business.
Fourth Extension On December 27, 2022, the Company further amended and restated the Second Restated Extension Note (the “Third Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the Third Restated Extension Note of $640,000.
Eighth Extension On May 19, 2023, the Company further amended and restated the Sixth Restated Extension Note (the “Seventh Restated Extension Note”) to reflect an additional principal amount of $100,000 for a collective principal amount under the Seventh Restated Extension Note of $1,160,000.
By consummating our initial business combination with only a single entity, our lack of diversification may: ▪ Subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and ▪ Cause us to depend on the marketing and sale of a single product or limited number of products or services.
By consummating our initial business combination with only a single entity, our lack of diversification may: • Subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and • Cause us to depend on the marketing and sale of a single product or limited number of products or services. 8 Table of Contents Competition Although we expected to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including private equity groups, venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions, as described above we were successful in completing the Business Combination.
Lack of Business Diversification For an indefinite period of time after consummation of our initial business combination, the prospects for our 6 success may depend entirely on the future performance of a single business.
The Third Non-Convertible Working Capital Note bears no interest and is repayable in full upon the consummation of the Business Combination by the Company. 7 Table of Contents Lack of Business Diversification For an indefinite period of time after consummation of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
First Extension On September 26, 2022, the Company issued an unsecured, non-interest-bearing promissory note (the “Extension Note”) to the Sponsor for a principal amount of $160,000. The proceeds from the Extension Note were deposited into the trust account in accordance with the terms of the Company’s Amended and Restated Certificate of Incorporation.
Following such redemptions, $26,201 was withdrawn from the Trust Account on January 4, 2024 and approximately $23.3 million remains in the trust account following the redemption. First Extension On September 26, 2022, the Company issued an unsecured, non-interest-bearing promissory note (the “Extension Note”) to the Sponsor for a principal amount of $160,000.
The Extension Note matures on the earlier of the date on which the Company consummates its initial business combination or the date the Company winds up and may be prepaid without penalty.
The Extension Note matures on the earlier of the date on which the Company consummates its initial business combination or the date the Company winds up and may be prepaid without penalty. 5 Table of Contents Second Extension On October 26, 2022, the Company further amended and restated the Extension Note (the “First Restated Extension Note”) to reflect an additional principal amount of $160,000 for a collective principal amount under the First Restated Extension Note of $320,000.
To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ended December 31, 2022.
These financial statements will need to be prepared in accordance with or reconciled to accounting principles generally accepted in the United States (“GAAP”) or international financial reporting standards, as issued by the International Accounting Standards Board (“IFRS”). 9 Table of Contents Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ended December 31, 2023.
Removed
Upon consummation of the business combination with QT Imaging, we expect to change our name and be known as QT Imaging Holdings, Inc. We seek to capitalize on the significant experience and contacts of our management team to complete our initial business combination.
Added
Upon consummation of the business combination with QT Imaging, on March 4, 2024, we changed our legal name to QT Imaging Holdings, Inc. QT Imaging Holdings, Inc. is a medical device company engaged in the research, development, and commercialization of innovative body imaging systems using low energy sound.
Removed
We believe our management team’s distinctive background and record of acquisition and operational success could have a transformative impact on verified target businesses. Our management team has significant hands-on experience helping companies optimize their existing and new growth initiatives.
Added
We believe that medical imaging is critical to the detection, diagnosis, monitoring and treatment of diseases, and we believe that it should be made safe, affordable and accessible. Our goal is to improve global health outcomes by leveraging imaging device technologies to tackle critical healthcare challenges with accuracy and precision without exposure to ionizing radiation.
Removed
We intend to apply a unique “Mentor-Investor” philosophy to partner with QT Imaging where we will offer financial, operational and executive mentoring in order to accelerate its growth and development from a privately held entity to a publicly traded company.
Added
Our Values Most conventional imaging technologies—X-ray computed tomography (“ CT ”), MRI and positron-emission tomography (“ PET ”)—used in tertiary care require high energy, protective shielding of the patient, trained medical staff to operate the equipment, the administration of chemical agents to the patient to increase contrast and optimize visualization and specialized trained technicians to operate the equipment and ensure patient safety.
Removed
Business Strategy Our business strategy is to identify and complete our initial business combination with a company that complements the experience of our management team and can benefit from our management team’s operational expertise.
Added
Furthermore, the imaging procedures using these technologies are cumbersome, time-consuming and expensive. In addition, these conventional imaging technologies or modalities are not amenable to direct-to-consumer (“ DTC ”) or point-of-care (“ POC ”) settings or available in LRE.
Removed
Our selection process leverages our management team’s broad and deep relationship network and unique technology, media and telecommunications (“TMT”), aerospace and defense (“A&D”), advanced medical equipment, intelligent automation and sustainable industries expertise, including proven deal-sourcing and structuring capabilities, to provide us with a multitude of business combination opportunities.
Added
QT Imaging believes that its new technology can address the issues presented by these conventional imaging technologies with its accurate, safe, less expensive and easily deployable imaging systems.
Removed
Our management team has experience: ▪ operating companies, setting and changing strategies, and identifying, mentoring and recruiting world-class talent; ▪ developing and growing companies, both organically and inorganically, and expanding the product ranges and geographic footprints of a number of businesses; ▪ sourcing, structuring, acquiring and selling businesses and achieving synergies to create stockholder value; ▪ establishing a wide deal flow and efficient methodology of screening superior mergers and acquisitions (“M&A”) targets worldwide; ▪ addressing business and technological changes in an evolving global TMT industries landscape; ▪ evaluating the viability of emerging business models; 2 ▪ providing complete “one stop shop” services required for a successful process of becoming public, including, but not limited to, access to investors, legal and accounting support, investment and commercial banking services, investor and public relations services, and human resources services; ▪ fostering relationships with sellers, capital providers and target management teams; ▪ accessing the capital markets across various business cycles, including financing businesses and assisting companies with the transition to public ownership; and ▪ Structuring and streamlining operations of early-stage public companies toward growth in the market.
Added
The Clinical Problem The current medical imaging technologies—CT, MRI and PET—are commonly used in advanced health care facilities in North America, Europe, Japan and South Korea, with more limited deployment in selected tertiary care facilities in other countries—usually large urban areas.
Removed
The GigCapital5 public units, each comprised of one share of GigCapital5 Common Stock and one GigCapital5 warrant to purchase shares of GigCapital5 Common Stock, are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols “GIA.U,” “GIA” and “GIA.WS,” respectively.
Added
These current technologies are based on advanced engineering solutions that use high energy (X-rays, positrons or nuclear magnetic resonance signals) to see inside of the human body. These technologies require large capital investments, are limited to specialized facilities and require advanced certifications for the machines and their operators to insure safe operation.
Removed
We intend to apply for listing of the common stock of the Combined Company and the warrants of the Combined Company on the NYSE under the symbols “QTI” and “QTI.WS,” respectively, upon the closing.
Added
These machines are also expensive to purchase and maintain. All these factors combine to restrict their deployment to advanced clinical centers and tertiary care institutions.
Removed
P I PE S u b s cr i ption Agree m ent Prior to the Effective Time, GigCapital5 may enter into agreements with investors (the private investment in public equity (the "PIPE") and “PIPE Investors”) for the subscription for GigCapital5 Common Stock, convertible promissory notes or other securities or any combination of such securities to be subscribed for pursuant to the terms of one or more subscription agreements (all such subscription agreements, collectively the “PIPE Subscription Agreements”) on terms and conditions mutually agreeable to GigCapital5 and QT Imaging (such agreement not to be unreasonably withheld, conditioned or delayed), provided that, unless otherwise agreed to, the aggregate gross proceeds under the PIPE Subscription Agreements will target $26,000,000 (the “PIPE Investment Amount”).
Added
A Solution to Increasing the Quality of Health Care and Lowering Costs Advances in technology offer an opportunity to provide: (a) a means for obtaining better image quality in medical images, (b) access to DTC or direct-to-practitioner (“ DTP ”) medical imaging, (c) lower cost medical imaging, (d) reduced inconvenience and risk for patients by providing a safe alternative to high-energy imaging and (e) a lower cost solution for making a medical diagnosis.
Removed
As of the date of this Annual Report, there are no PIPE Subscription Agreements in place. The consummation of the Business Combination is subject to the receipt of the requisite approval of the stockholders of each of GigCapital5 and QT Imaging, and the fulfillment of certain other conditions, as described in greater detail this Form 10-K.
Added
QT Imaging believes that its technology is ideal for DTC, DTP and POC use because of its high performance, safety and relatively low cost. Furthermore, we believe that providing increased patient access to safe medical imaging is one important solution to increasing access and lowering the costs of medical care.
Removed
Stockholders May Not Have the Ability to Approve Our Business Combination In connection with any proposed Business Combination, we will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein.
Added
Our Competitive Strengths We believe that our competitive strengths include the following: • The world-wide market for medical imaging is large and it has a potential to expand in the areas where QT Imaging has differentiation: • A non-ionizing, non-injection imaging modality; • A lower price point than conventional high-energy imaging equipment; • QT Imaging technology can be deployed to LREs because of its low power, no shielding, no injection, and automation; • QT Imaging technology is portable and can be used in POC settings such as LREs; and • QT Imaging technology is deployable in outdoor settings such as sports, military, and naval settings. • The QT Imaging technology is well-suited for lowering health care costs by being affordable and easily accessed. • The QT Imaging technology is well-suited for DTC and DTP applications, that are outside traditional tertiary care hospitals. • QT Imaging technology is uniquely proprietary, disruptive and a one-of-a kind product that can address a variety of unmet medical needs in the medical marketplace. • QT Imaging products have potential strong revenue growth, with capital purchase or subscription-based recurring revenues supporting substantial long-term gross margin.
Removed
We will seek stockholder approval if it is required by applicable law or stock exchange listing requirement, provided that we may also decide to seek stockholder approval for business or other reasons.
Added
Our Strategies We believe that our strategies include the following: • Create disruptive innovation—a dedication to using technology (siliconization, software, artificial intelligence, and smart physics) to improve medical imaging and thus health care quality and access. • Introduce the first comprehensive body-safe imaging technology into the marketplace, enabling for the first-time well-person body imaging health screening, and the first health screening medical imaging for infants. • Provide DTC and DTP approaches to de-centralize medical imaging from the large, comprehensive medical centers; enabling the ability to lower health care costs and increase access via personal medical imaging. • Provide a new social and economic opportunity for consumers to take control of some aspects of their own health care—such as imaging for minor injuries or medical conditions without needing a healthcare “gate-keeper.” • Enable more patient and practitioner control—or “democratization” of healthcare using technology. • Focus on patient-outcomes and customer success by using novel multi-channel go-to-market approaches. • Focus our intellectual capabilities and ethical framework to become unified in our mission to improve the quality and lower the cost of health care world-wide . . .
Removed
Under the rules of the NYSE, stockholder approval would be required for our initial business combination if, for example: ▪ We issue (other than in a public offering for cash) a number of shares of common stock that would either (a) be equal to or in excess of 20% of the number of shares of common stock then outstanding or (b) have voting power equal to or in excess of 20% of the voting power then outstanding; ▪ Any of our management team or substantial security holders (as defined by the rules of the NYSE) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance in the case of any of our management team or (b) 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance in the case of any substantial security holders; or ▪ The issuance or potential issuance of shares of our common stock will result in our undergoing a change of control.
Added
“It’s about time.” QT Imaging Products & Product Road Map The Company currently offers two products: QT Breast Scanner and QTviewer ® . QT Breast Scanner is a fixed, mechanical scanner used to evaluate the breast without the use of either ionizing radiation or compression associated with mammography, or the injections required for breast MRI.
Removed
The proposed Business Combination with QT Imaging will be required by the above-referenced rules to be approved by our stockholders at a meeting called for such purpose.
Added
With the QT Breast Scanner, the patient lies comfortably on a table which contains an opening through which the breast is placed in a warm water bath (see Image 1) and gently immobilized using a magnetic retention pad fixed to a magnetic rod.
Removed
Approval of the proposed Business Combination will require the affirmative vote (in person or by proxy) of the holders of a majority of the shares of our common stock entitled to vote thereon and actually cast at the stockholders’ meeting, voting as a single class.
Added
The QT Breast Scanner differs from the handheld ultrasound used in breast imaging in that it utilizes reflection and transmission data from low-frequency sound waves, providing a significant increase in diagnostic information using the speed of sound characteristics of the breast and acquiring in true 3D a very accurate rendering of the breast tissue.
Removed
The Sponsor is entitled to vote an aggregate of 6,530,000 shares of our common stock, which constitutes a majority of our common stock.
Added
The QT Breast Scanner provides sub-millimeter, high-definition, image resolution enabling identification of normal and abnormal breast structures and the accurate depiction of the precise shape and location of findings. The technology uniquely quantifies breast density using transmission information to further personalize a patient’s management recommendations.
Removed
Concurrently with the execution of the Business Combination Agreement, the Sponsor entered into a Sponsor Support Agreement with the Company and QT Imaging, pursuant to which the Sponsor agreed, at any meeting of our stockholders and in connection with any action by written consent of our stockholders, to (i) appear or cause all shares or other voting securities of us that it holds, owns, or is entitled to vote, whether as shares or as a constituent part of a unit of securities to be counted present for quorum purposes, (ii) vote (or execute an action by written consent) or cause to be voted (A) in favor of the Business Combination Agreement, the Merger, and any other transactions contemplated by the Business Combination Agreement, (B) against any action, agreement or transaction or proposal that would result in a breach of the Business Combination Agreement or that would reasonably be expected to result in a failure to consummate the Merger, (C) in favor of the proposals and any other matters necessary or reasonably requested by us for the consummation of the proposed Business Combination, (D) against any business combination proposal other than with QT Imaging and any other action that would reasonably be expected to materially impede, 7 delay, or adversely affect the proposed Business Combination or result in a breach of any obligation or agreement of the Sponsor contained in the Sponsor Support Agreement.
Added
Surface-to-volume ratios and volumetric doubling time growth rate characteristics can be calculated to determine significance of lesions and improve specificity of the ultrasound.
Removed
If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender any or all of his, her or its shares rather than some pro rata portion of his, her or its shares.
Added
The QT Breast Scanner creates true 3D images of the patient’s breast viewable in the Quantitative Transmission Ultrasound Viewer (known as QTviewer ® ), a software product designed for healthcare professionals to view the transmission (speed of sound) and reflection images.
Removed
The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited to: ▪ the timing of the proposed transaction, including in the event we determine stockholder approval would require additional time and there is either not enough time to seek stockholder approval or doing so would place us at a disadvantage in the transaction or result in other additional burdens on us; ▪ the expected cost of holding a stockholder vote; ▪ the risk that our stockholders would fail to approve the initial business combination; ▪ other time and budget constraints; and ▪ potential additional legal complexities of an initial business combination that would be time-consuming and burdensome to present to stockholders.
Added
This application can display correlated Digital Imaging and Communications in Medicine (“ DICOM ® ”) images in multiple orientations (coronal, sagittal, and axial). QTviewer can manipulate image views and analyze pixel data with various functions. The QTviewer has additional functionality which enables the us e r to measure mass size and volume as well as fibroglandular tissue volume.
Removed
Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combination and related conversions of public shares for cash upon consummation of such initial business combination even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers.
Added
The current version of the QT Breast Scanner is FDA-cleared “for use as an ultrasonic imaging system to provide reflection-mode and transmission-mode images of a patient’s breast.
Removed
In that case, we will file tender offer documents with the SEC, which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules.
Added
The device is not intended to be used as a replacement for screening mammography.” 1 The QT Breast Scanner has current applicability as a supplementary imaging device, not as a replacement for screening mammography; near-term applicability for determining breast density, measuring mass size and growth, and diagnosing lesions using artificial intelligence; and medium- to long-term applicability for breast screening.
Removed
We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder approval, the affirmative vote of the holders of a majority of the shares of common stock that are voted at a stockholder meeting held to consider the initial business combination.
Added
Sales and Marketing 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.
Removed
We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors: ▪ our ability to maintain our listing on a national stock exchange or the ability to obtain or maintain the listing of the common stock of the Combined Company on a national stock exchange following the Business Combination; ▪ our being a company with no operating history and no revenues; ▪ the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement; ▪ our ability to complete an initial business combination, including the proposed b usiness combination; ▪ satisfaction or waiver (if applicable) of the conditions of the proposed Merger; ▪ future financial performance following the proposed business combination ; ▪ the outcome of any legal proceedings that may be instituted against the Company, QT Imaging, or others following announcement of the business combination and the transactions contemplated in the Business Combination Agreement and other litigation and regulatory risks; ▪ the inability to complete the transactions contemplated by the Business Combination Agreement due to the failure to obtain approval of the equity holders of the Company, QT Imaging or other conditions to closing in the Business Combination Agreement; ▪ our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the proposed business combination; ▪ our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; ▪ the risk that the proposed transaction disrupts current plans and operations as a result of the announcement and consummation of the business combination; ▪ the ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, the ability of the Company to grow and manage growth profitably, maintain relationships with customers, compete within its industry and retain its key employees; ▪ costs related to the proposed Business Combination; ▪ the ability of QT Imaging to execute its business model, including market acceptance of its planned products and services and achieving sufficient production volumes at acceptable quality levels and prices; ▪ QT Imaging’s ability to obtain additional financing to complete the proposed business combination ; ▪ factors relating to the business, operations and financial performance of the Combined Company and its subsidiaries, including without limitation: o the ability of the Combined Company to maintain an effective system of internal controls over financial reporting; 14 o the success of the Combined Company’s products and product candidates, as well as clinical and related programs; o the ability to establish marketing and sales capabilities to enter into agreements with third parties to market and sell the Combined Company’s existing products and, subject to regulatory approval thereof, future product candidates; o the ability to adequately protect the Combined Company’s intellectual property rights; o the ability to maintain the confidentiality and integrity of the Combined Company’s data and other sensitive information; o the ability of the Combined Company to grow market share in QT Imaging’s existing markets or any new markets it may enter; o the ability of the Combined Company to respond to general economic conditions; o the ability of the Combined Company to manage its use of cash and its growth effectively; o the ability of the Combined Company to achieve and maintain profitability in the future; o the ability of the Combined Company to access sources of capital to finance operations and growth; o the impact of the COVID-19 pandemic; and ▪ the other risks and uncertainties discussed in “Risk Factors” and elsewhere in this Annual Report.
Biggest changeThese risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors: • our being a development-stage company with limited operating history and significant losses; • our ability to successfully execute our business model, including market acceptance of our planned products and product candidates at acceptable prices; • our ability to sustain revenue growth or profitability; • future financial performance following the proposed business combination; • the ability to obtain clearances and approvals from the FDA for current and future products; • the occurrence of a pandemic, epidemic, or outbreak of infectious disease that may materially or adversely affect our business, financials, and product development; • our ability to compete and adapt in our industry; • the ability of third-party manufacturers to supply certain components parts needed for our products; • our plan to do business globally is subject to additional risks and uncertainties; • the impact of recent changes in the United States related to payment policies for imaging procedures; • the success of key supplier or distribution agreements; • the outcome of any legal proceedings that may be instituted against our business and other litigation and regulatory risks; • our success in recruiting and retaining key employees; • our management team’s limited experience managing a public company; • our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business; • the ability to maintain the confidentiality and integrity of the Company’s data and other sensitive information; • the ability of the business to respond to changes in general economic conditions; • our limited experience in working with large-scale contracts with medical device manufacturers; • the ability to adequately protect the Company’s intellectual property rights; • the impact of the terms and conditions of licenses and sublicenses granted by third-parties; • our ability to enforce covenants not to compete; • the ability to manage growth effectively; • the effect of the Company’s warrants on the market price of its Common Stock; • the effect of unanticipated changes in effective tax rates on operations and financials; • factors relating to the business, operations and financial performance of the Combined Company; • the ability of the Combined Company to maintain an effective system of internal controls over financial reporting; • the impact of the COVID-19 pandemic; • our being an emerging growth company; • our governing documents’ effect on stock price and stockholders’ ability to gain favorable judicial forums; and • the other risks and uncertainties discussed in “Risk Factors” and elsewhere in this Annual Report.
As a result, the Combined Company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if GigCapital5’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with GigCapital5’s preliminary risk analysis.
As a result, the Combined Company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if GigCapital5’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with the GigCapital5’s preliminary risk analysis.
Any provision of the Combined Company’s proposed charter and bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Any provision of the Charter, the Combined Company’s bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
All shares issued as merger consideration in the proposed Business Combination will be freely tradable without registration under the Securities Act and without restriction by persons other than our “affiliates” (as defined under Rule 144), including our directors, executive officers and other affiliates, and certain other former QT Imaging stockholders.
All shares issued as merger consideration in the Business Combination will be freely tradable without registration under the Securities Act and without restriction by persons other than our “affiliates” (as defined under Rule 144), including our directors, executive officers and other affiliates, and certain other former QT Imaging stockholders.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
If any of the analysts that may cover us change their 63 recommendation regarding our securities adversely, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline.
If any of the analysts that may cover us change their recommendation regarding our securities adversely, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline.
Considering just GigCapital5 prior to the consummation of the proposed Business Combination (i.e., no shares issued as merger consideration are included in this hypothetical determination of equity valuation), if because GigCapital5 is not an 48 operating company it is assumed that its equity value is equal to its cash and no enterprise value is attributed to it, that would result in an equity value of approximately $41.4 million at the time that GigCapital5 entered into the Business Combination Agreement.
Considering just GigCapital5 prior to the consummation of the Business Combination (i.e., no shares issued as merger consideration are included in this hypothetical determination of equity valuation), if because GigCapital5 is not an operating company it is assumed that its equity value is equal to its cash and no enterprise value is attributed to it, that would result in an equity value of approximately $41.4 million at the time that GigCapital5 entered into the Business Combination Agreement.
Following the consummation of the proposed Business Combination, the Combined Company will face increased legal, accounting, administrative and other costs and expenses as a public company that the Combined Company does not incur as a private company.
Following the consummation of the Business Combination, the Combined Company will face increased legal, accounting, administrative and other costs and expenses as a public company that the Combined Company does not incur as a private company.
Among other things, the proposed charter and/or the Combined Company’s bylaws will include the following provisions: ▪ a staggered board, which means that the Combined Company Board will be classified into three classes of directors with staggered three-year terms and directors will only be able to be removed from office for cause; ▪ limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; ▪ prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; ▪ a forum selection clause, which means certain litigation against us can only be brought in Delaware; ▪ the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and ▪ advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Among other things, the Charter and/or the Combined Company’s bylaws include the following provisions: • a staggered board, which means that the Combined Company Board is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause; • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; • prohibition on stockholder action by written consent, which means that our stockholders are only able to take action at a meeting of stockholders and are not able to take action by written consent for any matter; • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
In addition, the shares of Combined Company’s common stock reserved for future issuance under the Equity Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable.
In addition, the shares of Combined Company Common Stock reserved for future issuance under the Equity Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable.
As a result of the foregoing, Sponsor and its affiliates, rather than liquidate if we fail to complete our initial business combination by the Combination Period, may have more of an economic incentive for us to enter into an initial business combination on potentially less favorable terms with a potentially less favorable, riskier, weaker-performing or financially unstable business, or an entity lacking an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their Founder Shares.
As a result of the foregoing, Sponsor and its affiliates may have more of an economic incentive for us to, rather than liquidate if we fail to complete our initial business combination by the Completion Window, enter into an initial business combination on potentially less favorable terms with a potentially less favorable, riskier, weaker-performing or financially unstable business, or an entity lacking an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their Founder Shares.
These broad market and industry factors may materially reduce the market price of shares of Combined Company’s common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of Combined Company’s common stock is low. As a result, you may suffer a loss on your investment.
These broad market and industry factors may materially reduce the market price of shares of Combined Company Common Stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of Combined Company Common Stock is low. As a result, you may suffer a loss on your investment.
Any such decision will also be subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness. In addition, we may incur additional indebtedness, the terms of which may further restrict or prevent us from paying dividends on our common stock.
Any such decision will also be subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness. In addition, we may incur additional indebtedness, the terms of which may further restrict or prevent us from paying dividends on Combined Company Common Stock.
You may not be able to resell your shares at an attractive price due to a number of factors , including the following: • the impact of the COVID-19 pandemic on our financial condition and the results of operations; • our operating and financial performance and prospects; 62 • quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products and/or services; • future announcements concerning our business, our clients’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the Jumpstart Our Business Startups Act (the “ JOBS Act ”); • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • privacy and data protection laws, privacy or data breaches, or the loss of data; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “Risks Related to QT Imaging’s Business and Industry ” and the following: • the impact of the COVID-19 pandemic on our financial condition and the results of operations; • our operating and financial performance and prospects; • quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products and/or services; • future announcements concerning our business, our clients’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the Jumpstart Our Business Startups Act (the “ JOBS Act ”); • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • privacy and data protection laws, privacy or data breaches, or the loss of data; • changes in accounting standards, policies, guidance, interpretations or principles; 57 Table of Contents • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
Any settlement amount not equal to the difference between the fair value of a fixed number of the Company’s equity shares and a fixed monetary amount precludes these warrants from being considered indexed to its own stock, and therefore, from being accounted for as equity.
Any settlement amount not equal to the difference between the fair value of a fixed number of GigCapital5’s equity shares and a fixed monetary amount precludes these warrants from being considered indexed to its own stock, and therefore, from being accounted for as equity.
As a result, you may have to sell some or all of your shares of Combined Company’s common stock after price appreciation in order to generate cash flow from your investment, which you may not be able to do.
As a result, you may have to sell some or all of your shares of Combined Company Common Stock after price appreciation in order to generate cash flow from your investment, which you may not be able to do.
The issuance by us of additional shares of Combined Company’s common stock or securities convertible into Combined Company’s common stock would dilute your ownership of us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of shares of Combined Company’s common stock.
The issuance by us of additional shares of Combined Company Common Stock or securities convertible into Combined Company Common Stock would dilute your ownership of us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of shares of Combined Company Common Stock.
We do not intend to pay dividends on shares of Combined Company’s common stock for the foreseeable future . We currently intend to retain all available funds and any future earnings to fund the development and growth of our business.
We do not intend to pay dividends on shares of Combined Company Common Stock for the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
In addition, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, Public Company Accounting Oversight Board (the “PCAOB”) and the securities exchanges, impose additional reporting and other obligations on public companies.
The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, Public Company Accounting Oversight Board (the “ PCAOB ”) and the securities exchanges, impose additional reporting and other obligations on public companies.
The trading market for shares of Combined Company’s common stock will depend in part on the research and reports that third-party securities analysts publish about us and the industries in which we operate.
The trading market for shares of Combined Company Common Stock will depend in part on the research and reports that third-party securities analysts publish about us and the industries in which we operate.
The Combined Company’s proposed charter and bylaws and Delaware law contain or will contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the Combined Company Board.
The Charter, the Combined Company’s bylaws and Delaware law contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the Combined Company Board.
Issuing additional shares of our capital stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of shares of Combined Company’s common stock, or both.
Issuing additional shares of our capital stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of shares of Combined Company Common Stock, or both.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: ▪ changes in the valuation of our deferred tax assets and liabilities; ▪ expected timing and amount of the release of any tax valuation allowances; ▪ tax effects of stock-based compensation; ▪ costs related to intercompany restructurings; ▪ changes in tax laws, regulations or interpretations thereof; or 19 ▪ lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany restructurings; • changes in tax laws, regulations or interpretations thereof; or 51 Table of Contents • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
GigCapital5 has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, GigCapital5, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade the Combined Company’s common stock, the price of shares of Combined Company’s common stock could decline .
If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade the Combined Company Common Stock, the price of shares of Combined Company Common Stock could decline.
From time to time in the future, we may also issue additional shares of Combined Company’s common stock or securities convertible into Combined Company’s common stock pursuant to a variety of transactions, including acquisitions.
From time to time in the future, we may also issue additional shares of Combined Company Common Stock or securities convertible into Combined Company Common Stock pursuant to a variety of transactions, including acquisitions.
Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock.
Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Combined Company Common Stock.
As a result, holders of Combined Company’s common stock bear the risk that our future offerings may reduce the market price of shares of Combined Company’s common stock and dilute their percentage ownership.
As a result, holders of Combined Company Common Stock bear the risk that our future offerings may reduce the market price of shares of Combined Company Common Stock and dilute their percentage ownership.
These factors could also make it more difficult for us to raise additional funds through future offerings of shares of Combined Company’s common stock or other securities.
These factors could also make it more difficult for us to raise additional funds through future offerings of shares of Combined Company Common Stock or other securities.
The market price of the Combined Company’s common stock may decline as a result of the proposed Business Combination if we do not achieve the perceived benefits of the proposed Business Combination as rapidly, or to the extent anticipated by, financial analysts or the effect of the proposed Business Combination on our financial results is not consistent with the expectations of financial analysts.
The market price of the Combined Company Common Stock may decline as a result of the Business Combination if we do not achieve the perceived benefits of the Business Combination as rapidly, or to the extent anticipated by, financial analysts or the effect of the Business Combination on our financial results is not consistent with the expectations of financial analysts.
It may also be more expensive to obtain director and officer liability insurance. Risks associated with the Combined Company’ status as a public company may make it more difficult to attract and retain qualified persons to serve on the Combined Company’s Board of Directors or as executive officers.
It may also be more expensive to obtain director and officer liability insurance. Risks associated with the Combined Company’ status as a public company may make it more difficult to attract and retain qualified persons to serve on the Combined Company Board or as executive officers.
This implies a per share equity value of $3.92 as of the time that GigCapital5 entered into the Business Combination Agreement, which is substantially less than either the implied purchase price for shares of GigCapital5 Common Stock at the time of the GigCapital5 ’s Offering or the amount that would be paid to any public stockholder exercising its redemption rights.
This implies a per share equity value of $3.92 as of the time that GigCapital5 54 Table of Contents entered into the Business Combination Agreement, which is substantially less than either the implied purchase price for shares of GigCapital5 Common Stock at the time of the GigCapital5 Offering or the amount that would be paid to any Public Stockholder exercising its Redemption Rights.
As a result, we do not anticipate declaring or paying any cash dividends on shares of Combined Company’s common stock in the foreseeable future.
As a result, we do not anticipate declaring or paying any cash dividends on shares of Combined Company Common Stock in the foreseeable future.
The sale of substantial amounts of shares of Combined Company’s common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock.
The sale of substantial amounts of shares of Combined Company Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Combined Company Common Stock.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 51 203 of the DGCL, which prevents interested stockholders, such as certain stockholders holding more than 15% of our outstanding common stock, from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the B oard of D irectors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock, or (iii) following board approval, such business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents interested stockholders, such as certain stockholders holding more than 15% of our outstanding common stock, from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the board of directors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock, or (iii) following board approval, such business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder.
In connection with the proposed Business Combination, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of shares of Combined Company’s common stock issued or reserved for issuance under the Equity Incentive Plan.
In connection with the Business Combination, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of shares of Combined Company Common Stock issued or reserved for issuance under the Equity Incentive Plan.
As equity value is equal to enterprise value plus net cash, the fact that the Sponsor has paid less cash for shares of GigCapital5 Common Stock than the p ublic stockholders means that there is less cash resulting from the issuance of the Founders Shares for purposes of increasing the value of the Combined Company from its enterprise value to its equity value, but the equity value is equal to the sum of all Combined Company’s common stock multiplied by its stock price.
As equity value is equal to enterprise value plus net cash, the fact that the Sponsor has paid less cash for shares of GigCapital5 Common Stock than the Public Stockholders means that there is less cash resulting from the issuance of the Founders Shares for purposes of increasing the value of the Combined Company from its enterprise value to its equity value, but the equity value is equal to the sum of all Combined Company Common Stock multiplied by its stock price.
To the extent such warrants, Private Placement Warrants and Assumed Warrants are exercised, additional shares of Combined Company’s common stock will be issued, which will result in dilution to the holders of Combined Company’s common stock and increase the number of shares eligible for resale in the public market.
To the extent such Warrants and Private Placement Warrants are exercised, additional shares of Combined Company Common Stock will be issued, which will result in dilution to the holders of Combined Company Common Stock and increase the number of shares eligible for resale in the public market.
As a result, the value of any non-redeemed Public Share s upon the closing of the proposed Business Combination may be significantly less than they would have been if the Sponsor had paid a purchase price for the Founder Shares similar to that paid for the purchase of GigCapital5 Units in the GigCapital5 ’s Offering .
As a result, the value of any non-redeemed Public Shares upon the closing of the Business Combination may be significantly less than they would have been if the Sponsor had paid a purchase price for the Founder Shares similar to that paid for the purchase of GigCapital5 Units in the GigCapital5 Offering.
Under GAAP, the Company is required to evaluate contingent exercise provisions of these warrants and then their settlement provisions to determine whether they should be accounted for as a warrant liability or as equity.
Under GAAP, GigCapital5 is required to evaluate contingent exercise provisions of these warrants and then their settlement provisions to determine whether they should be accounted for as a warrant liability or as equity.
Sales of substantial numbers of such shares in the public market or the fact that such warrants, Private Placement Warrants and Assumed Warrants may be exercised could adversely affect the market price of Combined Company’s common stock.
Sales of substantial numbers of such shares in the public market or the fact that such Warrants and Private Placement Warrants may be exercised could adversely affect the market price of Combined Company Common Stock.
The financial condition and operating requirements of the Combined Company may limit GigCapital5’s ability to obtain cash from the Combined Company.
The financial condition and operating requirements of the Combined Company may limit the Company’s ability to obtain cash from the Combined Company.
GigCapital5 will depend on the Combined Company for distributions, loans and other payments to generate the funds necessary to meet its financial obligations, including its expenses as a publicly traded company and to pay any dividends with respect to GigCapital5 Common Stock.
The Company depends on the Combined Company for distributions, loans and other payments to generate the funds necessary to meet its financial obligations, including its expenses as a publicly traded company and to pay any dividends with respect to the Combined Company Common Stock.
As a result of the provision that the Private Placement Warrants, when held by someone other than the initial purchasers or their permitted transferees, will be redeemable by the Company, the requirements for accounting for these warrants as equity are not satisfied.
As a result of the provision that these warrants, when held by someone other than the initial purchasers or their permitted transferees, will be redeemable by GigCapital5, the requirements for accounting for these warrants as equity are not satisfied.
In connection with the GigCapital5’s Offering , GigCapital5 issued an aggregate of 23,795,000 GigCapital5 warrants, including Private Placement Warrants (as defined below) issued to the Sponsor as a part of the units in the private placement.
In connection with the GigCapital5 Offering, GigCapital5 issued an aggregate of 23,795,000 GigCapital5 warrants, including Private Placement Warrants issued to the Sponsor as a part of the units in the private placement.
Warrants, Private Placement Warrants and any Assumed Warrants will become exercisable for Combined Company’s common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
Warrants and Private Placement Warrants will become exercisable for Combined Company Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
Following the consummation of the proposed Business Combination, GigCapital5’s only significant asset will be its ownership interest in the Combined Company and such ownership may not be sufficient to pay dividends or make distributions or loans to enable GigCapital5 to pay any dividends on its common stock or satisfy its other financial obligations.
Following the consummation of the Business Combination, the Company’s only significant asset is its ownership interest in the Combined Company and such ownership may not be sufficient to pay dividends or make distributions or loans to enable the Company to pay any dividends on the Company Common Stock or satisfy its other financial obligations.
Our inability or decision not to pay dividends, particularly when others in our industry have elected to do so, could also adversely affect the market price of shares of Combined Company’s c ommon stock.
Our inability or decision not to pay dividends, particularly when others in our industry have elected to do so, could also adversely affect the market price of shares of Combined Company Common Stock.
In contrast, GigCapital5’s public stockholders will suffer losses unless GigCapital5’s trading price remains at or above the price paid for such shares, which has never traded for lower than $9.87 on the NYSE, and if no business combination is consummated they would receive $10.37 in principal plus accrued interest per share from GigCapital5’s Trust Account.
In contrast, GigCapital5’s Public Stockholders will suffer losses unless GigCapital5’s trading price remains at or above the price paid for such shares, which has never traded for lower than $9.87 on the NYSE or Nasdaq, and if no business combination is consummated they would receive $11.02 per share from GigCapital5’s Trust Account.
In addition, pursuant to the Registration Rights Agreement, certain stockholders of QT Imaging will have the right, subject to certain conditions, to require us to register the sale of their shares of Combined Company’s common stock under the 64 Securitie s Act .
In addition, pursuant to the Registration Rights Agreement, certain stockholders of QT Imaging will have the right, subject to certain conditions, to require us to register the sale of their shares of Combined Company Common Stock under the Securities Act.
Accordingly, holders of the Combined Company’s common s tock following the consummation of the proposed Business Combination may experience a loss as a result of a decline in the market price of such Combined Company’s common stock.
Accordingly, holders of the Combined Company Common Stock following the consummation of the Business Combination may experience a loss as a result of a decline in the market price of such Combined Company Common Stock.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
Future sales, or the perception of future sales, of Combined Company’s common stock by us or our existing stockholders in the public market following the closing could cause the market price for our common stock to decline.
See “Description of Capital Stock of the Combined Company .” Future sales, or the perception of future sales, of Combined Company Common Stock by us or our existing stockholders in the public market following the Closing could cause the market price for our Combined Company Common Stock to decline.
The ability of the Combined Company to make distributions, loans and other payments to us for the purposes described above and for any other purpose may be limited by credit agreements to which the Combined Company is party from time to time, including the existing loan and security agreement of QT Imaging and will be subject to the negative covenants set forth therein.
The ability of the Combined Company to make distributions, loans and other payments to us for the purposes described above and for any other purpose may be limited by credit agreements to which the Combined Company is party from time to time, including the existing loan and security agreement described in “ QT Imaging’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” and will be subject to the negative covenants set forth therein.
However, the Sponsor paid only $25,000 for the Founder Shares, or approximately $0.0043592 per share after adjustment for forfeitures. The equity value of the Combined Company will be based upon all outstanding shares of Combined Company’s common stock, including the Founder Shares.
The offering price of GigCapital5 Units was $10.00 per unit. However, the Sponsor paid only $25,000 for the Founder Shares, or approximately $0.0043592 per share after adjustment for forfeitures. The equity value of the Combined Company will be based upon all outstanding shares of Combined Company Common Stock, including the Founder Shares.
The earnings from, or other available assets of, the Combined Company may not be sufficient to pay 47 dividends or make distributions or loans to enable us to pay any dividends on GigCapital5’s c ommon s tock or satisfy its other financial obligations.
The earnings from, or other available assets of, the Combined Company may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on the Company Common Stock or satisfy its other financial obligations.
The trading price of shares of Combined Company’s common stock following the proposed Business Combination is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies.
You may lose some or all of your investment. The trading price of shares of Combined Company Common Stock following the Business Combination is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies.
As restrictions on resale end or if these stockholders exercise their registration rights, the market price of shares of Combined Company’s common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them.
See “Other Agreements-Registration Rights Agreement ” for a description of these registration rights. As restrictions on resale end or if these stockholders exercise their registration rights, the market price of shares of Combined Company Common Stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them.
We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. If we identify any material weaknesses in the future, any such identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.
If we identify any material weaknesses in the future, any such identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.
Therefore, the Company is required to account for the Private Placement Warrants as a warrant liability and record (a) that liability at fair value, which was determined to approximate the fair value of the warrants included in the units sold in the Company’s Offering, and (b) any subsequent changes in fair value as of the end of each period for which earnings are reported.
Therefore, GigCapital5 is required to account for these warrants as a warrant liability and record (a) that liability at fair value, and (b) any subsequent changes in fair value as of the end of each period for which earnings are reported.
Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
Additionally, once we are no longer an emerging growth company, we will be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
Certain of our warrants are accounted for as a warrant liability and are recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock . We issued 795,000 Private Placement Warrants concurrently with the Offering.
Other General Risks Related to GigCapital5 Certain of GigCapital5’s warrants are accounted for as a warrant liability and were recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of GigCapital5 Common Stock. As of February 1, 2024, 795,000 Private Placement Warrants were outstanding.
Following the consummation of the proposed Business Combination, GigCapital5 will have no direct operations and no significant assets other than its ownership of the Combined Company. GigCapital5 and certain investors, the QT Imaging equity holders, and directors and officers of QT Imaging and its affiliates will become stockholders of the Combined Company at that time.
Following the consummation of the Business Combination, the Company has no direct operations and no significant assets other than its ownership of the Combined Company. Upon the Closing, the Company and certain investors, the QT Imaging equity holders, and directors and officers of QT Imaging and its affiliates became stockholders of the Combined Company.
Furthermore, even if the trading price of GigCapital5’s Public Share s declines substantially after consummation of the proposed Business Combination, the Sponsor may nonetheless make a significant profit on its investment of $7,975,000 in the aggregate for its 6,530,000 shares of GigCapital5 Common Stock, or approximately $1.22 per share if no value is attributed to the Private Placement Warrants.
If that does occur, the Sponsor may nonetheless make a significant profit on its investment of $7,975,000 in the aggregate for its 6,530,000 shares of GigCapital5 Common Stock, or approximately $1.22 per share if no value is attributed to the Private Placement Warrants.
Our Amended and Restated Certificate of Incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
The Charter provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
We expect to file one or more registration statements on Form S-8 under the Securities Act to register shares of Combined Company’s common stock or securities convertible into or exchangeable for shares of Combined Company’s common stock issued pursuant to our equity incentive plans. Any such Form S-8 registration statements will automatically become effective upon filing.
We expect to file one or more registration statements on Form S-8 under the Securities Act to register shares of Combined Company Common Stock or securities convertible into or exchangeable for shares of Combined Company Common Stock issued pursuant to our equity incentive plans, including the assumed QT Imaging Options.
The number of shares to be reserved for future issuance under the Equity Incentive Plan will be equal to 11% of the total number of shares of Combined Company’s common s tock outstanding after the closing after giving effect to any shares issued pursuant to the PIPE Investment.
The number of shares to be reserved for future issuance under the Equity Incentive Plan will be equal to 11% of the total number of shares of Combined Company Common Stock outstanding after the Closing.
If the proposed Business Combination is completed, outstanding warrants to purchase an aggregate of 23,000,000 shares of Combined Company’s common stock will become exercisable in accordance with the terms of the warrant agreement governing those securities, as well as Private Placement Warrants to purchase an aggregate of up to 795,000 shares of Combined Company’s common stock, and any warrants that exist at the closing that may be assumed in the proposed Business Combination.
Outstanding Warrants to purchase an aggregate of 23,000,000 shares of Combined Company Common Stock will become exercisable in accordance with the terms of the warrant agreement governing those securities, as well as Private Placement Warrants to purchase an aggregate of up to 795,000 shares of Combined Company Common Stock, 30 days after the completion of the Business Combination.
If the proposed Business Combination’s benefits do not meet the expectations of financial analysts, the market price of the Combined Company’s common stock may decline.
As such, the Warrants and Private Placement Warrants may expire worthless. If the Business Combination’s benefits do not meet the expectations of financial analysts, the market price of the Combined Company Common Stock may decline.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS” Act), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
As an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to obtain an assessment of the effectiveness of our internal controls over financial reporting from our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or employees which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees.
In addition, potential targets may seek a SPAC that does not have warrants or that does not have warrants that are accounted for as derivative liabilities, which may make it more difficult for us to consummate an initial business combination with a target business.
In addition, potential targets may seek a SPAC that does not have warrants or that does not have warrants that are accounted for as derivative liabilities, which may make it more difficult for us to consummate an initial business combination with a target business. 56 Table of Contents Risks Related to Ownership of Combined Company Common Stock Following the Business Combination The price of shares of Combined Company Common Stock may be volatile or may decline regardless of our operating performance.
However, there is no guarantee that the warrants and Private Placement Warrants will ever be in-the-money prior to their expiration (the Assumed Warrants will have to be in-the-money at the closing ), and the historical trading prices for shares of GigCapital5 Common Stock have varied between a low of approximately $9.81 per share on January 11, 2022 to a high of approximately $10.64 per share on March 24, 2023, and have not approached the $11.50 per share exercise price for the warrants and Private Placement Warrants.
However, there is no guarantee that the Warrants and Private Placement Warrants will ever be in-the-money prior to their expiration, and the historical trading prices for shares of common stock of GigCapital5 have varied between a low of approximately $9.80 per share on November 4, 2021 to a high of approximately $14.40 per share on February 26, 2024.
In addition, charges of this nature may cause the Combined Company to be unable to obtain future financing on favorable terms or at all. Our management team and our stockholders may not be able to maintain control of a target business after our initial business combination.
In addition, charges of this nature may cause the Combined Company to be unable to obtain future financing on favorable terms or at all.
In addition, a decline in the market price of the Combined Company’s common stock following the consummation of the proposed Business Combination could adversely affect our ability to issue additional securities and to obtain additional financing in the future.
In addition, a decline in the market price of the Combined Company Common Stock following the consummation of the Business Combination could adversely affect our ability to issue additional securities and to obtain additional financing in the future. 55 Table of Contents Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
Our issuance of additional shares of Combined Company’s common stock or securities into Combined Company’s common stock could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.
Moreover, if one or more of the analysts who cover us downgrades the Combined Company Common Stock, or if our reporting results do not meet their expectations, the market price of shares of Combined Company Common Stock could decline. 58 Table of Contents Our issuance of additional shares of Combined Company Common Stock or securities into Combined Company Common Stock could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.
Risks Relating to the Post-Business Combination Company Subsequent to our consummation of our initial business combination, we may be required to take write-downs or write-offs, or we may be subject to restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our common stock, which could cause you to lose some or all of your investment.
Similarly, any dividends, distributions or similar payments to us from the Combined Company will be permitted only to the extent there is an applicable exception to the dividends and distributions covenants under these credit agreements. 52 Table of Contents Subsequent to the consummation of the Business Combination, the Combined Company may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
The equity value of the Combined Company is affected by the existence of the Founder Shares having been purchased by the Sponsor at a nominal purchase price, and the Sponsor may make a profit on its investment in circumstances where holders of GigCapital5’s Public Shares would not. The offering price of GigCapital5 Units was $10.00 per unit.
Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs. 53 Table of Contents Risks Related to the Business Combination The equity value of the Combined Company is affected by the existence of the Founder Shares having been purchased by the Sponsor at a nominal purchase price, and the Sponsor may make a profit on its investment in circumstances where holders of GigCapital5’s Public Shares would not.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

15 edited+7 added−4 removed16 unchanged
Biggest changeThe Working Capital Note was subsequently amended and restated six more times on October 26, 2022 (an additional $65,000 added to the Working Capital Note), November 28, 2022 (an additional $65,000 added to the Working Capital Note), December 27, 2022 (an additional $65,000 added to the Working Capital Note), January 25, 2023 (an additional $65,000 added to the Working Capital Note), February 27, 2023 (an additional $350,000 added to the Working Capital Note) and March 28, 2023 (an additional $130,000 added to the Working Capital Note), respectively, for a collective principal amount of $805,000.
Biggest changeThe Working Capital Note was subsequently amended and restated eleven more times on October 26, 2022 (an additional $65,000 added to the Working Capital Note), November 28, 2022 (an additional $65,000 added to the Working Capital Note), December 27, 2022 (an additional $65,000 added to the Working Capital Note), January 25, 2023 (an additional $65,000 added to the Working Capital Note), February 27, 2023 (an additional $350,000 added to the Working Capital Note) and March 28, 2023 (an additional $130,000 added to the Working Capital Note), April 27, 2023 (an additional $65,000 added to the Working Capital Note), June 26, 2023 (an additional $130,000 added to 66 Table of Contents the Working Capital Note), July 25, 2023 (an additional $65,000 added to the Working Capital Note), October 27, 2023 (an additional $381,360 added to the Working Capital Note) and December 13, 2023 (an additional $53,640 added to the Working Capital Note), respectively, for a collective principal amount of $1,500,000.
Each Private Placement Unit consists of one share of the Company’s common stock, par value $0.0001 per share, and one 67 redeemable warrant. The warrants constituting a part of the Private Placement Units would be exercisable, subject to the terms and conditions of the warrant and during the exercise period as provided in the warrant agreement governing the warrants.
Each Private Placement Unit consists of one share of the Company’s common stock, par value $0.0001 per share, and one redeemable warrant. The warrants constituting a part of the Private Placement Units would be exercisable, subject to the terms and conditions of the warrant and during the exercise period as provided in the warrant agreement governing the warrants.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. (a) Market Information On November 1, 2021, the Company announced that the holders of the Company’s units may elect to separately trade the securities underlying such units which commenced on November 4, 2021.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. (a) Market Information On November 1, 2021, the Company announced that the holders of the Company’s Public Units may elect to separately trade the securities underlying such Public Units which commenced on November 4, 2021.
Use of Proceeds On September 23, 2021, the SEC declared the Company’s initial Registration Statement on Form S-1 (File No 333-254038), in connection with the Offering of $200.0 million, effective. The Company entered into an underwriting agreement with Wells Fargo Securities, LLC and William Blair & Company, L.L.C.
Use of Proceeds On September 23, 2021, the SEC declared the Company’s initial Registration Statement on Form S-1 (File No 333-254038), in connection with the Offering of $200.0 million, effective. The Company entered into an underwriting agreement with Wells Fargo Securities, LLC (“Wells Fargo”) and William Blair & Company, L.L.C.
(collectively, the “Underwriters”) on September 23, 2021 to conduct the Offering of 20,000,000 public units (the “Public Units”) in the amount of $200.0 million in gross proceeds, with a 45-day option provided to the underwriters to purchase up to 3,000,000 additional Public Units solely to cover over-allotments, if any, in the amount of up to $30.0 million in additional gross proceeds.
(“William Blair”) (collectively, the “Underwriters”) on September 23, 2021 to conduct the Offering of 20,000,000 public units (the “Public Units”) in the amount of $200.0 million in gross proceeds, with a 45-day option provided to the underwriters to purchase up to 3,000,000 additional Public Units solely to cover over-allotments, if any, in the amount of up to $30.0 million in additional gross proceeds.
Weightman, its Treasurer and Chief Financial Officer, pursuant to the Insider Shares Grant Agreement dated September 23, 2021 between the Company and Mr. Weightman. The 5,000 shares granted to Mr. Weightman are subject to forfeiture and cancellation if he resigns or the services are terminated for cause prior to the completion of the business combination.
Weightman, its Treasurer and Chief Financial Officer, pursuant to the Insider Shares Grant Agreement dated September 23, 2021 between the Company and Mr. Weightman. The 5,000 shares granted to Mr. Weightman are subject to forfeiture and cancellation if he resigns or the services are terminated for cause prior to the completion of the business combination. On February 26, 2024, Mr.
Upon such election, the convertible note will convert, at a price of $10.00 per unit, into units identical to the Private Placement Units issued in connection with the Offering. An aggregate of 80,500 Private Placement Units of the Company would be issued if the entire principal balance of the Working Capital Note is converted.
Upon such election, the convertible note will convert, at a price of $10.00 per unit, into units identical to the Private Placement Units issued in connection with the Offering. An aggregate of 150,000 Private Placement Units of the Company would be issued if the entire principal balance of the Working Capital Note is converted.
It is the present intention of our Board of Directors to retain all earnings, if any, for use in our business operations and, accordingly, our Board of Directors does not anticipate declaring any dividends in the foreseeable future. d) Securities Authorized for Issuance Under Equity Compensation Plans None. e) Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings Founder Shares 66 During the period from January 19, 2021 (date of inception) to Dec ember 3 1 , 2021, the Founder purchased a net of 5,735,000 shares of common stock (the “Founder Shares”), after giving effect to the forfeiture on September 23, 2021 of 4,312,500 Founder Shares, for an aggregate purchase price of $25,000 , or $0.0043592 per share.
It is the present intention of our Board of Directors to retain all earnings, if any, for use in our business operations and, accordingly, our Board of Directors does not anticipate declaring any dividends in the foreseeable future. d) Securities Authorized for Issuance Under Equity Compensation Plans None. 65 Table of Contents e) Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings Founder Shares During the period from January 19, 2021 (date of inception) to December 31, 2021, the Founder purchased a net of 5,735,000 shares of common stock (the “Founder Shares”), after giving effect to the forfeiture on September 23, 2021 of 4,312,500 Founder Shares, for an aggregate purchase price of $25,000, or $0.0043592 per share.
The Company also issued 10,000 Insider Shares to Interest Solutions, LLC, a Connecticut limited liability company and an affiliate of ICR, LLC, an investor relations firm providing services to the Company (“ICR”). The 10,000 Insider Shares granted to ICR are not subject to forfeiture. The grant date fair value of the 10,000 shares was expensed upon issuance.
Weightman voluntarily surrendered the shares and they were canceled. The Company also issued 10,000 Insider Shares to Interest Solutions, LLC, a Connecticut limited liability company and an affiliate of ICR, LLC, an investor relations firm providing services to the Company (“ICR”). The 10,000 Insider Shares granted to ICR are not subject to forfeiture.
Convertible Working Capital Loans On September 26, 2022, the Company issued the Working Capital Note to the Sponsor for a principal amount of $65,000.
The grant date fair value of the 10,000 shares was expensed upon issuance. Working Capital Loans On September 26, 2022, the Company issued the Working Capital Note to the Sponsor for a principal amount of $65,000.
On March 20, 2023, one of the underwriters, Wells Fargo, waived all of their portion of the deferred underwriting fees totaling $6,440,000.
On March 20, 2023, one of the underwriters, Wells Fargo, waived all of their portion of the deferred underwriting fees totaling $6,440,000. As of December 31, 2023, we had cash of $2,438 held outside the Trust Account for working capital purposes.
Any units not separated will continue to trade on the NYSE under the symbol “GIA.U”. Any underlying shares of common stock and warrants that are separated will trade on the NYSE under the symbols “GIA,” and “GIA.WS”, respectively. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
Any Public Units not separated continued to trade on the NYSE under the symbol “GIA.U.” Any underlying shares of common stock and warrants that were separated traded on the NYSE under the symbols “GIA,” and “GIA.WS,” respectively.
The proceeds held in the Trust Account may be invested by the trustee only in U.S. government treasury bills with a maturity of one hundred and eighty-five (185) days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations.
The proceeds held in the Trust Account may be invested by the trustee only in U.S. government treasury bills with a maturity of one hundred and eighty-five (185) days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. 67 Table of Contents The Company incurred $13,193,740 in transaction costs, consisting of $4,600,000 of underwriting fees, $9,200,000 of deferred underwriting fees for the two underwriters, Wells Fargo and William Blair, and $843,740 of offering costs, of which $25,000 remains in accounts payable as of December 31, 2023, partially offset by the reimbursement of $1,450,000 of offering expenses by the Underwriters.
Units (GIA.U) Common Stock (GIA) Warrants (GIA.WS) High Low High Low High Low Year Ended December 31, 2022 Quarter ended March 31, 2022 $ 10.82 $ 10.12 $ 10.00 $ 9.81 $ 0.60 $ 0.19 Quarter ended June 30, 2022 $ 10.36 $ 10.03 $ 10.13 $ 9.96 $ 0.28 $ 0.05 Quarter ended September 30, 2022 $ 10.19 $ 10.03 $ 10.34 $ 10.01 $ 0.08 $ 0.02 Quarter ended December 31, 2022 $ 10.54 $ 10.09 $ 10.28 $ 10.09 $ 0.05 $ 0.01 (b) Holders At March 29, 2023, there were two holders of record of our units and four holders of record of our separately traded shares of common stock.
Units (GIAFU) Warrants (GIAFW) High Low High Low Year Ended December 31, 2023 Quarter ended March 31, 2023 $ 11.00 $ 10.24 $ 0.04 $ 0.02 Quarter ended June 30, 2023 $ 10.65 $ 2.03 $ 0.03 $ 0.01 Quarter ended September 30, 2023 $ 10.49 $ 10.49 $ 0.04 $ — Quarter ended December 31, 2023 $ 10.49 $ 10.49 $ 0.05 $ 0.01 (b) Holders At March 15, 2024, there were 624 holders of record of our separately traded shares of common stock and two holders of record of our warrants.
The following table sets forth, for the calendar quarter indicated, the high and low sales prices for our units, shares of common stock and warrants as reported on the NYSE for the calendar year ended December 31, 2022.
The symbol for the warrants was rejected so only the common stock is trading on the Nasdaq under the symbol “QTI.” The warrants trade in the over-the-counter market under the symbol “QTIWW.” The following table sets forth, for the calendar quarter indicated, the high and low sales prices for our units, shares of common stock and wa r rants as reported on the Nasdaq and the OTC Market, respectively, for the calendar year ended December 31, 20 23.
Removed
Each warrant entitles the holder to purchase one share of common stock at a price of $11.50.
Added
On April 21, 2023, the Company delisted the Public Units, shares of common stock and warrants from NYSE and listed the shares of the Company common stock on the Nasdaq Global Market (“Nasdaq”) under the symbol “GIA.” From April 21, 2023 until the Effective Time, the Public Units and the warrants trade at the OTC Markets Group Inc.
Removed
Each warrant will become exercisable on the later of 30 days after the completion of the Company’s initial business combination or 12 months from the closing of the Offering and will expire five years after the completion of the Company’s initial business combination or earlier upon redemption.
Added
(the “OTC Market”) under the symbols “GIAFU” and “GIAFW,” respectively. The Company applied for listing of the common stock of the Combined Company and the warrants of the Combined Company on the Nasdaq under the symbols “QTI” and “QTI.WS,” respectively, at the Effective Time.
Removed
The Company incurred $13,193,740 in transaction costs, consisting of $4,600,000 of underwriting fees, $9,200,000 of deferred underwriting fees for the two underwriters, Wells Fargo and William Blair, and $843,740 of offering costs, of which $25,000 remains in accounts payable as of December 31, 2022, partially offset by the reimbursement of $1,450,000 of offering expenses by the Underwriters.
Added
On December 13, 2023, the Company issued an additional unsecured non-convertible promissory note to the Sponsor for a collective principal amount of $66,360 (the “First Non-Convertible Working Capital Note”). The First Non-Convertible Working Capital Note was issued to provide the Company with additional working capital and will not be deposited into the Trust Account.
Removed
Using a portion of the net proceeds of the Offering that was not placed in the Trust Account, we repaid promissory notes issued to our Sponsor and an affiliate, which bore a total combined outstanding principal amount of $133,465. As of December 31, 2022, we had cash of $78,196 held outside the Trust Account for working capital purposes.
Added
On February 7, 2024, the Company amended and restated the First Non-Convertible Working Capital Note (the “Second Non-Convertible Working Capital Note”) to reflect an additional principal amount of $195,887 extended by the Sponsor to the Company for a collective principal amount under the Second Non-Convertible Working Capital Note of $262,247.
Added
The Second Non-Convertible Working Capital Note was issued to provide the Company with additional working capital and will not be deposited into the Trust Account. The Company issued the Second Non-Convertible Working Capital Note in consideration for an additional loan from the Sponsor to fund the Company’s working capital requirements.
Added
On February 15, 2024, the Company amended and restated the Second Non-Convertible Working Capital Note (the “Third Non-Convertible Working Capital Note”) to reflect an additional principal amount of $35,000 extended by the Sponsor to the Company for a collective principal amount under the Third Non-Convertible Working Capital Note of $297,247.
Added
The Third Non-Convertible Working Capital Note was issued to provide the Company with additional working capital and will not be deposited into the Trust Account. The Third Non-Convertible Working Capital Note bears no interest and is repayable in full upon the consummation of the Business Combination by the Company.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

44 edited+38 added−16 removed38 unchanged
Biggest changeSimilarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in: ▪ default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations; ▪ acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; ▪ our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; ▪ our inability to obtain necessary additional financing if any document governing such debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding; ▪ our inability to pay dividends on our shares of common stock; ▪ using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; ▪ limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; ▪ increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and ▪ limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
Biggest changeThe issuance of additional shares of common stock or the creation of one or more classes of preferred stock during our initial business combination: • may significantly dilute the equity interest of investors in the Offering who would not have pre-emption rights in respect of any such issue; • may subordinate the rights of holders of common stock if the rights, preferences, designations and limitations attaching to the preferred shares are senior to those afforded our shares of common stock; • could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; • may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and • may adversely affect prevailing market prices for our shares of common stock. 69 Table of Contents Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in: • default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations; • acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; • our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; • our inability to obtain necessary additional financing if any document governing such debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding; • our inability to pay dividends on our shares of common stock; • using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; • limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; • increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and • limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
Further, we intend to share best practices and key learnings, gathered from our management team’s operating and investing experience, as well as strong relationships in the advanced medical equipment industries to help shape corporate strategies.
We intend to share best practices and key learnings, gathered from our management team’s operating and investing experience, as well as strong relationships in the advanced medical equipment industries to help shape corporate strategies.
Transaction costs for the Offering amounted to $13,193,740, consisting of $4,600,000 of underwriting fees, $9,200,000 of deferred underwriting fees for the two underwriters, Wells Fargo and William Blair, and $843,740 of offering costs, of which $25,000 remains in accounts payable as of December 31, 2022, partially offset by the reimbursement of $1,450,000 of offering expenses by the Underwriters.
Transaction costs for the Offering amounted to $13,193,740, consisting of $4,600,000 of underwriting fees, $9,200,000 of deferred underwriting fees for the two underwriters, Wells Fargo and William Blair, and $843,740 of offering costs, of which $25,000 remains in accounts payable as of December 31, 2023, partially offset by the reimbursement of $1,450,000 of offering expenses by the Underwriters.
Contractual Obligations As of December 31, 2022 and 2021, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Sponsor a monthly fee of $30,000 for office space, administrative services and secretarial support.
Contractual Obligations As of December 31, 2023 and 2022, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Sponsor a monthly fee of $30,000 for office space, administrative services and secretarial support.
Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, as of December 31, 2022 and 2021, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ deficit section of our balance sheets.
Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, as of December 31, 2023 and 2022, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ deficit section of our balance sheets.
On September 23, 2022, the Company held the September 2022 Special Meeting and the Company’s stockholders approved the September 2022 Charter Amendment that extends the date by which the Company must consummate a Business Combination transaction from September 28, 2022 up to March 28, 2023 in one-month extensions.
On September 23, 2022, the Company held a special meeting (the “September 2022 Special Meeting”) and the Company’s stockholders approved the September 2022 Charter Amendment that extends the date by which the Company must consummate a Business Combination transaction from September 28, 2022 up to March 28, 2023 in one-month extensions.
We believe our management team’s distinctive background and record of acquisition and operational success could have a transformative impact on verified target businesses. Our management team has significant hands-on experience helping companies optimize their existing and new growth initiatives.
We believe our management team’s distinctive background and record of acquisition and operational success could have a transformative impact on the target businesses. Our management team has significant hands-on experience helping companies optimize their existing and new growth initiatives.
For the year ended December 31, 2022, we had a net loss of $2,774,307, which consisted of operating expenses of $4,279,100, a provision for income taxes of $486,615, and interest expense of $23,098, that were partially offset by other income from the change in fair value of warrant liability of $381,600 and note payable of $2,508, and interest income on marketable securities held in the Trust Account of $1,630,398.
For the year ended December 31, 2022, we had a net loss of $2,774,307, which consisted of operating expenses of $4,279,100, a provision for income taxes of $486,615, and interest expense of $23,098, that were partially offset by other income from the change in fair value of warrant liability and note payable of $384,108, and interest income on marketable securities held in the Trust Account of $1,630,398.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable by us). We may withdraw interest to pay taxes. We estimate our annual franchise tax obligations to be approximately $161,000.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable by us). We may withdraw interest to pay taxes. We estimate our annual franchise tax obligations to be approximately $160,800.
We intend to effectuate our initial business combination using cash from the proceeds from the sale of the Public Units in our Offering, the sale of the Private Placement Units to our Founder, the sale of common stock to our Founder, our common equity or any preferred equity that we may create in accordance with the terms of our charter documents, debt, or a combination of cash, common or preferred equity and debt.
We effectuated the Business Combination using cash from the proceeds from the sale of the Public Units in our Offering, the sale of the Private Placement Units to our Founder, the sale of common stock to our Founder, our common equity or any preferred equity that we may create in accordance with the terms of our charter documents, debt, or a combination of cash, common or preferred equity and debt.
The marketable securities consisted of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. Interest income earned from the funds held in the Trust Account may be used by us to pay taxes.
In addition, there was interest receivable to the Trust Account of $133,211. The marketable securities consisted of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. Interest income earned from the funds held in the Trust Account may be used by us to pay taxes.
The Private Placement generated aggregate gross proceeds of $7,950,000. Following the closing of the Offering, net proceeds in the amount of $225,400,000 from the sale of the Public Units and proceeds in the amount of $6,900,000 from the sale of Private Placement Units, for a total of $232,300,000, were placed in the Trust Account, which is described further below.
Following the closing of the Offering, net proceeds in the amount of $225,400,000 from the sale of the Public Units and proceeds in the amount of $6,900,000 from the sale of Private Placement Units, for a total of $232,300,000, were placed in the Trust Account, which is described further below.
If our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate 73 our business prior to our initial b usiness c ombination.
If our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination.
At that time, the portion of the warrant liability related to the common stock warrants will be reclassified to additional paid-in capital. Convertible Promissory Note --Related Party The Company accounts for its Working Capital Note under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging ("ASC 815").
At that time, the portion of the warrant liability related to the common stock warrants will be reclassified to additional paid-in capital. 77 Table of Contents Convertible Promissory Note —Related Party The Company accounts for its Working Capital Note under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”).
On March 28, 2023, the Company held the March 2023 Special Meeting and the Company’s stockholders approved the March 2023 Charter Amendment that extends the date by which the Company must consummate a Business Combination transaction from March 28, 2023 up to September 28, 2023 in one-month extensions.
On March 28, 2023, the Company held a special meeting (the “March 2023 Special Meeting”) and the Company’s stockholders approved the March 2023 Charter Amendment that extended the date by which the Company must consummate an initial Business Combination transaction from March 28, 2023 up to September 28, 2023 in one-month extensions.
We generate non-operating income in the form of interest income on cash and marketable securities held in the Trust Account at Oppenheimer & Co., Inc. in New York, New York with Continental Stock Transfer & Trust Company acting as trustee, which was funded after the Offering to hold an amount of cash and marketable securities equal to that raised in the Offering.
We generate non-operating income in the form of interest income on cash and marketable securities held in the Trust Account at Oppenheimer & Co., Inc. in New York, New York until December 2023 and a cash account with Morgan Stanley Smith Barney LLC in December 2023 with Continental Stock Transfer & Trust Company acting as trustee, which was funded after the Offering to hold an amount of cash and marketable securities equal to that raised in the Offering.
In connection with the September 2022 extension of the Combination Period as approved by the stockholders of the Company, on a monthly basis and with a required deposit in the amount of $160,000 each month beginning September 28, 2022 up to February 28, 2023, on September 26, 2022, the Company issued a non-convertible, non-interest bearing, unsecured promissory note to the Sponsor, which prior to December 31, 2022, was subsequently amended and restated three more times on October 26, 2022, November 28, 2022, and December 27, 2022 (the 70 “Extension Note”) (and has since been amended three additional times during 2023) , respectively, for a collective principal amount of $640,000 as of December 31, 2022 .
In connection with the September 2022 extension of the combination period as approved by the stockholders of the Company, on a monthly basis and with a required deposit in the amount of $160,000 each month beginning September 28, 2022 up to February 28, 2023, on September 26, 2022, the Company issued a non-convertible, non-interest bearing, unsecured promissory note to the Sponsor, which was subsequently amended and restated five more times on October 26, 2022, November 28, 2022, December 27, 2022, January 25, 2023 and February 27, 2023 (the “Extension Note”), respectively, for a collective principal amount of $960,000 as of February 28, 2023.
In order to finance operating and/or transaction costs in connection with a b usiness c ombination, our Founder, executive officers, directors, or their affiliates may, but are not obligated to, loan us funds.
In order to finance operating and/or transaction costs in connection with a business combination, our Founder, our Sponsor, executive officers, directors, or their affiliates may, but are not obligated to, loan us funds.
Moreover, we may need to obtain additional financing either to consummate our initial b usiness c ombination or because we become obligated to redeem a significant number of our Public Share s upon consummation of our initial b usiness c ombination, in which case we may issue additional securities or incur debt in connection with such b usiness c ombination.
Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination.
Upon consummation of the business combination with QT Imaging, we expect to change our name and be known as QT Imaging Holdings, Inc. We seek to capitalize on the significant experience and contacts of our management team to complete our initial business combination.
Upon consummation of the business combination with QT Imaging, we changed our name and will be known as QT Imaging Holdings, Inc. We have capitalized on the significant experience and contacts of our management team to complete our initial business combination.
Results of Operations We have neither engaged in any operations nor generated any revenues to date. For the year ended December 31, 2022, our only activities have been to search for a target business for the business combination. We do not expect to generate any operating revenues until after completion of our initial business combination.
For the year ended December 31, 2023, our only activities have been to search for a target business for the business combination. We do not expect to generate any operating revenues until after completion of our initial business combination.
As of December 31, 2022 and 2021, we had cash of $78,196 and $421,549, respectively, held outside the Trust Account.
As of December 31, 2023 and 2022, we had cash of $2,438 and $78,196, respectively, held outside the Trust Account.
Up to $1,500,000 of such loans may be convertible into u nit s of the post- b usiness c ombination entity at a price of $10.00 per u nit at the option of the lender. The u nit s would be identical to the Private Placement Units .
Up to $1,500,000 of such loans may be convertible into units of the post-business combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Placement Units.
Accordingly, net loss per common share, basic and diluted, is calculated as follows: Year Ended December 31, 2022 Period from January 19, 2021 (Inception) through December 31, 2021 Common stock subject to possible redemption Numerator: Earnings allocable to common stock subject to redemption Interest earned on marketable securities held in Trust Account, net of taxes $ 1,143,783 $ 4,195 Net income attributable to common stock subject to possible redemptions $ 1,143,783 $ 4,195 Denominator: Weighted-average common shares subject to redemption Basic and diluted weighted-average shares outstanding, common stock subject to possible redemption 17,954,419 6,296,830 Basic and diluted net income per share, common stock subject to possible redemption $ 0.06 $ 0.00 Non-Redeemable common stock Numerator: Net loss minus net earnings - Basic and diluted Net loss $ (2,774,307 ) $ (1,107,730 ) Less: net income attributable to common stock subject to redemption (1,143,783 ) (4,195 ) Net loss attributable to non-redeemable common stock $ (3,918,090 ) $ (1,111,925 ) Denominator: Weighted-average non-redeemable common shares Weighted-average non-redeemable common shares outstanding, basic and diluted 6,540,000 8,185,533 Net loss per share, non-redeemable common stock, basic and diluted $ (0.60 ) $ (0.14 ) 75 Common stock subject to possible redemption Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value.
Accordingly, net loss per common share, basic and diluted, is calculated as follows: Year Ended December 31, 2023 Year Ended December 31, 2022 Common stock subject to possible redemption Numerator: Earnings allocable to common stock subject to redemption Interest earned on marketable securities held in Trust Account, net of taxes $ 1,107,741 $ 1,143,783 Net income attributable to common stock subject to possible redemptions $ 1,107,741 $ 1,143,783 Denominator: Weighted-average common shares subject to redemption Basic and diluted weighted-average shares outstanding, common stock subject to possible redemption 3,020,634 17,954,419 Basic and diluted net income per share, common stock subject to possible redemption $ 0.37 $ 0.06 Non-Redeemable common stock Numerator: Net loss minus net earnings - Basic and diluted Net loss $ (4,024,591 ) $ (2,774,307 ) Less: net income attributable to common stock subject to redemption (1,107,741 ) (1,143,783 ) Net loss attributable to non-redeemable common stock $ (5,132,332 ) $ (3,918,090 ) Denominator: Weighted-average non-redeemable common shares Weighted-average non-redeemable common shares outstanding, basic and diluted 6,540,000 6,540,000 Net loss per share, non-redeemable common stock, basic and diluted $ (0.78 ) $ (0.60 ) Common stock subject to possible redemption Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value.
Liquidity and Capital Resources On September 28, 2021 , the Company consummated the Offering of 23,000,000 Public Units, including the issuance of 3,000,000 Public Units as a result of the Underwriters exercise in full of their over-allotment option.
Liquidity and Capital Resources On September 28, 2021, the Company consummated the Offering of 23,000,000 Public Units, including the issuance of 3,000,000 Public Units as a result of the Underwriters exercise in full of their over-allotment option. The Public Units were sold at a price of $10.00 per Public Unit, generating gross proceeds to the Company of $230,000,000.
As of December 31, 2022, we held cash and marketable securities in the amount of $41,561,656 (including $759,969 of interest earned, net of amounts withdrawn to pay for taxes) in the Trust Account. In addition, there was interest receivable to the Trust Account of $133,211.
As of December 31, 2023, taxes payable relating to interest earned on the Trust Account totaled $79,162. As of December 31, 2022, we held cash and marketable securities in the amount of $41,561,656 (including $759,969 of interest earned, net of amounts withdrawn to pay for taxes) in the Trust Account.
The 71 Public Unit s were sold at a price of $10.00 per Public Unit , generating gross proceeds to the Company of $230,000,000 . Simultaneously with the closing of the Offering, the Company consummated the closing of the Private Placement to the Sponsor of 795,000 Private Placement Units, at a price of $10.00 per Private Placement Unit.
Simultaneously with the closing of the Offering, the Company consummated the closing of the Private Placement to the Sponsor of 795,000 Private Placement Units, at a price of $10.00 per Private Placement Unit. The Private Placement generated aggregate gross proceeds of $7,950,000.
On September 23, 2022, the Company’s stockholders elected to redeem 18,985,950 shares of the Company’s common stock, which represented approximately 82.5% of the shares that were part of the Public Units sold in the Offering. Following such redemptions, $192,138,312 was withdrawn from the Trust Account on September 27, 2022.
The Company’s stockholders elected to redeem 18,985,950 shares of the Company’s common stock. Following such redemptions, $192,138,312 was withdrawn from the Trust Account on September 27, 2022.
For the year ended December 31, 2022, cash provided by investing activities was $192,241,509, consisting of cash withdrawn from the Trust Account of $192,881,509 that was partially offset by an investment of cash in Trust Account of $640,000.
For the year ended December 31, 2023, cash provided by investing activities was $19,919,611, consisting of cash withdrawn from the Trust Account of $20,839,611 that was partially offset by an investment of cash in Trust Account of $920,000.
We have elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will adopt the new or revised accounting standard at the time private companies adopt the new or revised standard. 74 Net Loss Per Common Share Our statements of operations and comprehensive loss include a presentation of income per share for common stock subject to possible redemption in a manner similar to the two-class method of income (loss) per share.
We have elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will adopt the new or revised accounting standard at the time private companies adopt the new or revised standard.
For the period from January 19, 2021 (date of inception) through December 31, 2021, cash used in investing activities was $232,300,000, consisting of a cash investment in Trust Account of $232,300,000. 72 For the year ended December 31, 2022 , cash used in financing activities was $191, 323,31 2 , consisting of cash paid for the redemption of P ublic U nits of $192,138,31 2 and the payment of offering costs of $85,000, that were partially offset by cash proceeds from a related party borrowing of $64 0 ,000 on the extension note and $260,000 on the Working Capital Note .
For the year ended December 31, 2022, cash used in financing activities was $191,323,312, consisting of cash paid for the redemption of Public Units of $192,138,312 and the payment of offering costs of $85,000, that were partially offset by cash proceeds from a related party borrowing of $640,000 on the extension note and $260,000 on the convertible Working Capital Note.
When calculating our diluted net loss per share, we have not considered the effect of (i) the incremental number of shares of common stock to settle warrants sold in the Offering and Private Placement, as calculated using the treasury stock method and (ii) the shares issued to Mr.
Net loss per share, basic and diluted, for non-redeemable common stock is calculated by dividing the net loss, adjusted for income or loss on marketable securities attributable to common stock subject to possible redemption, by the weighted-average number of non-redeemable common stock outstanding for the period, basic and diluted. 76 Table of Contents When calculating our diluted net loss per share, we have not considered the effect of (i) the incremental number of shares of common stock to settle warrants sold in the Offering and Private Placement, as calculated using the treasury stock method and (ii) the shares issued to Mr.
As of December 31, 2021, tax relating to interest earned on the Trust Account totaled $1,783.
As of December 31, 2022, taxes payable relating to interest earned on the Trust Account totaled $88,021.
On March 20, 2023, one of the underwriters, Wells Fargo, waived all of their portion of the deferred underwriting fees totaling $6,440,000. The Company’s remaining cash after payment of the Offering costs will be held outside of the Trust Account for working capital purposes.
On March 20, 2023, one of the underwriters, Wells Fargo, waived all of their portion of the deferred underwriting fees totaling $6,440,000.
For the period from January 19, 2021 (date of inception) through December 31, 2021, we had a net loss of $1,107,730, which consisted of operating expenses of $1,081,298, a provision for income taxes of $1,783 and other expense from the change in fair value of warrant liability of $30,627, that were partially offset by interest income on marketable securities held in the Trust Account of $5,978.
For the year ended December 31, 2023, we had a net loss of $4,024,591, which consisted of operating expenses of $4,927,599, a provision for income taxes of $419,119, and interest expense of $219,686, that were partially offset by other income from the change in fair value of warrant liability and note payable of $14,953, and interest income on marketable securities held in the Trust Account of $1,526,860.
The Company previously entered into an Investment Management Trust Agreement (the “IMTA”), dated September 23, 2021, with Continental Stock Transfer & Trust Company, as trustee.
The certificate of amendment was filed with the Delaware Secretary of State and has an effective date of December 28, 2023. 70 Table of Contents The Company previously entered into an Investment Management Trust Agreement (the “IMTA”), dated September 23, 2021, with Continental Stock Transfer & Trust Company, as trustee.
Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. 75 Table of Contents Off-Balance Sheet Arrangements As of December 31, 2023 and 2022, we have not entered into any off-balance sheet financing arrangements.
We began incurring these fees on September 24, 2021, and will continue to incur these fees monthly until the earlier of the completion of the business combination or our liquidation.
We began incurring these fees on September 24, 2021, and will continue to incur these fees monthly through February 2024.
We expect to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our initial business combination will be successful.
We expect to incur significant costs in the pursuit of our acquisition plans. We completed the Business Combination on March 4, 2024.
On March 24, 2023, in conjunction with the approval of the extension of the date by which the Company must consummate a Business Combination from March 28, 2023 to September 28, 2023, the Company's stockholders elected to redeem 995,049 shares of the Company's common stock, which represented approximately 4.3% of the shares that were part of the Public Units sold in the Offering.
Also, in conjunction with the special meeting, the stockholders elected to redeem 995,049 Public Shares, which represented approximately 4.3% of the shares that were part of the Public Units sold in the Offering. Following such redemptions, $10,449,625 was withdrawn from the Trust Account. On September 28, 2023, the Company held the September 2023 Special Meeting.
Prior to December 31, 2022, the Extension Note was subsequently amended and restated three more times on October 26, 2022, November 28, 2022, and December 27, 2022, respectively, for a collective principal amount of $640,000 as of December 31, 2022 (and has since been amended three additional times during 2023) .
The Extension Note was subsequently amended and restated five more times on October 26, 2022, November 28, 2022, December 27, 2022, January 25, 2023 and February 27, 2023, respectively, for a collective principal amount of $960,000 as of February 28, 2023. The Sponsor deposited such funds into the Company’s Trust Account with Continental Stock Transfer & Trust Company.
For the period from January 19, 2021 (date of inception) through December 31, 2021, cash used in operating activities was $1,369,711, consisting of a net loss of $1,107,730, interest received on marketable securities held in the Trust Account of $5,978, plus an increase in prepaid expenses and other current assets of $740,241 and an increase in other long-term assets of $165,230 , that were partially offset by the increase in accounts payable of $3,100 , payable to related parties of $72,857 , accrued legal fees of $225,146, accrued liabilities of $220,755 , and other current liabilities of $1,783 , plus an increase in the fair value of the warrant liability of $30,627 and stock-based compensation of $95,200.
For the year ended December 31, 2023, cash used in operating activities was $1,944,104, consisting of a net loss of $4,024,591 interest received on marketable securities held in the Trust Account of $1,526,860, and a decrease in the fair value of the warrant liability and related party note of $14,953, and a decrease in other current liabilities of $8,859, that were partially offset by the decrease in prepaid expenses and other current assets of $78,500, plus an increase in accounts payable of $572,551, payable to related parties of $829,314, accrued legal fees of $1,342,963, accrued liabilities of $588,145 and amortization on debt discount on notes to related party of $219,686.
The Sponsor deposited such funds into the Company’s Trust Account with Continental Stock Transfer & Trust Company. The Extension Note is expected to be paid back upon the completion of the Business Combination.
The Extension Note is expected to be paid back upon the completion of the Business Combination. 74 Table of Contents On March 28, 2023, the Company held the March 2023 Special Meeting.
The C ompan y ’s initial publ i c offeri n g p r o s pectus and Amended and Restated Certificate of Incorporation provid e d that the C ompany initially had until September 28, 2022 ( t he date which was 12 months after the con s ummation o f the Offeri n g) to complete the B u s ine s s C ombination.
The Company’s Offering prospectus and Amended and Restated Certificate of Incorporation provided that the Company initially had until September 28, 2022 (the date which was 12 months after the consummation of the Offering) to complete the Business Combination.
Removed
We intend to apply a unique “Mentor-Investor” philosophy to partner with QT Imaging where we will offer financial, operational and executive mentoring in order to accelerate its growth and development from a privately held entity to a publicly traded company.
Added
On September 28, 2023, the Company held a special meeting (the “September 2023 Special Meeting”) and the Company’s stockholders approved to extend the date by which the Company must consummate an initial business combination from September 28, 2023 up to December 31, 2023.
Removed
The issuance of additional shares of common stock or the creation of one or more classes of preferred stock during our initial business combination: ▪ may significantly dilute the equity interest of investors in the Offering who would not have pre-emption rights in respect of any such issue; ▪ may subordinate the rights of holders of common stock if the rights, preferences, designations and limitations attaching to the preferred shares are senior to those afforded our shares of common stock; ▪ could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; ▪ may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and 69 ▪ may adversely affect prevailing market prices for our shares of common stock.
Added
On December 28, 2023, the Company held a special meeting of its stockholders (the “December 2023 Special Meeting”). At the meeting, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation that extended the date by which the Company must consummate a business combination transaction from December 31, 2023 up to March 31, 2024.
Removed
The Extension Note is expected to be paid back upon the completion of the proposed Business Combination. The Company further amended and restated the Extension Note to reflect additional principal amounts of $160,000 each on January 25, 2023 and February 27, 2023, the Fourth Restated Extension Note and Fifth Restated Extension Note, respectively.
Added
The Sponsor deposited such funds into the Company’s Trust Account with Continental Stock Transfer & Trust Company. On September 23, 2022, the Company’s stockholders elected to redeem 18,985,950 shares of the Company’s common stock, which represented approximately 82.5% of the shares that were part of the Public Units sold in the Offering.
Removed
In conjunction with each extension the Sponsor deposited the additional principal amount of $160,000 into the Company's Trust Account.
Added
Following such redemptions, $192,138,312 was withdrawn from the Trust Account on September 27, 2022. On March 28, 2023, the Company held the March 2023 Special Meeting.
Removed
Furthermore, in conjunction with the March 2023 Trust Amendment, on March 28, 2023, the Company further amended and restated the Extension Note to reflect an additional principal amount of $100,000 which was deposited into the Trust Account by the Sponsor to extend the time the Company has to complete an initial business combination to April 28, 2023.
Added
At such meeting, the stockholders approved two proposals: (A) to amend the Company’s Amended and Restated Certificate of Incorporation, giving the Company the right to extend the date by which it has to consummate a Business Combination up to six (6) times for an additional one (1) month each time, from March 28, 2023 to September 28, 2023 provided that the Sponsor (or its designees) must deposit into the Trust Account for each one-month extension funds equal to $100,000 (the “Second Extension”); (B) to amend the Company’s investment management trust agreement, dated as of September 23, 2021, by and between the Company and Continental Stock Transfer & Trust Company, allowing the Company to extend the Combination Period up to six (6) times for an additional one (1) month each time from March 28, 2023 to September 28, 2023 by depositing into the Trust Account for each one-month extension, the sum of $100,000.
Removed
Following such redemptions, and after the deposit of the additional principal amount of $100,000, approximately $31.8 million will remain in the Trust Account on March 28, 2023.
Added
The Extension Note was further amended on March 28, 2023, April 27, 2023, May 25, 2023, June 26, 2023, July 25, 2023 and August 28, 2023 to increase the principal amount to $1,560,000.
Removed
As of December 31, 2022, taxes payable relating to interest earned on the Trust Account totaled $88,021. As of December 31, 2021, we held cash and marketable securities in the amount of $232,304,005 (including $4,005 of interest earned) in the Trust Account. In addition, there was interest receivable to the Trust Account of $1,973.
Added
Also, in conjunction with the special meeting, the stockholders elected to redeem 995,049 Public Shares, which represented approximately 4.3% of the shares that were part of the Public Units sold in the Offering. Following such redemptions, $10,449,625 was withdrawn from the Trust Account.
Removed
The marketable securities consisted of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. Interest income earned from the funds held in the Trust Account may be used by us to pay taxes.
Added
On March 4, 2024, the Company and the Sponsor agreed to amend and restate the extension Note to extend the date of maturity until March 4, 2025. On September 28, 2023, the Company held the September 2023 Special Meeting.
Removed
For the period from January 19, 2021 (date of inception) through December 31, 2021, financing activities provided cash of $234,091,260 due to the proceeds from the sale of common stock to Founders of $25,000, from the sale of Public Units, net of underwriting discounts paid, of $226,850,000, from the sale of Private Placement Units to Founders of $7,950,000, and from the borrowing from related parties of $133,465, that were partially offset by the repayment of borrowing from related parties of $133,465 and the payment of offering costs of $733,740.
Added
At such special meeting, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation that extended the date by which the Company must consummate a business combination transaction from September 28, 2023 (the date which is 24 months from the closing date of the Offering) up to December 31, 2023 without any additional payment to the Trust Account.
Removed
From September 2022 to March 2023, we obtained working capital loans from the Sponsor to e n s ur e the proceeds not held in the Trust Account will be sufficient to allow us to operate for at least 24 months from the closing date of the Offering, assuming that a business combination will be consummated during that time.
Added
The certificate of amendment was filed with the Delaware Secretary of State and has an effective date of September 28, 2023. Also, in conjunction with the September special meeting, the stockholders elected to redeem 904,023 Public Shares. Following such redemptions, $9,828,000 was withdrawn from the Trust Account. On December 28, 2023, the Company held the December 2023 Special Meeting.
Removed
Over this time period, we intend to use these funds primarily for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.
Added
At the meeting, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation that extended the date by which the Company must consummate a business combination transaction from December 31, 2023 up to March 31, 2024.
Removed
The C ompa n y’s s tockhold e rs elected to r e deem 18,985,950 s hares of the C ompany’s com m on s tock, p ar value $0 . 00 0 1 per s hare . Following such redemptions, $192,138,312 was withdrawn from the Trust Account on September 27, 2022.
Added
The certificate of amendment was filed with the Delaware Secretary of State and has an effective date of December 28, 2023. 71 Table of Contents In connection with the December 2023 Special Meeting, stockholders elected to redeem 2,385 shares of the Company’s common stock, par value $0.0001 per share, which represented approximately 0.01% of the shares that were part of the Public Units sold in the Offering after the redemption.
Removed
In the event that our initial b usiness c ombination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment.
Added
Following such redemptions, $26,201 was withdrawn from the Trust Account on January 4, 2024 and approximately $23.3 million remained in the trust account.
Removed
If the Company is unable to consummate its initial Business Combination by September 28, 2023, the Company shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares of common stock for a per share pro rata portion of the Trust Account, including interest, but less taxes payable (less up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its creditors and remaining stockholders, as part of its plan of dissolution and liquidation.
Added
In conjunction with the Company’s annual meeting on February 20, 2024, stockholders elected to redeem 848,003 shares of the Company’s common stock, which represented approximately 3.7% of the shares that were part of the Public Units sold in the Offering.
Removed
The mandatory liquidation and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. Off-Balance Sheet Arrangements As of December 31, 2022 and 2021, we have not entered into any off-balance sheet financing arrangements.
Added
Following such redemptions, $9,356,221 was withdrawn from the Trust Account and approximately $13.95 million remained in the trust account after the redemption. On March 4, 2024, the Company consummated its business combination and the remaining balance in the Trust Account was liquidated. Results of Operations We have neither engaged in any operations nor generated any revenues to date.
Removed
Net loss per share, basic and diluted, for non-redeemable common stock is calculated by dividing the net loss, adjusted for income or loss on marketable securities attributable to common stock subject to possible redemption, by the weighted-average number of non-redeemable common stock outstanding for the period, basic and diluted.
Added
The Company’s remaining cash after payment of the Offering costs will be held outside of the Trust Account for working capital purposes. 72 Table of Contents As of December 31, 2023, we held cash in the amount of $23,302,116 (including $1,858,055 of interest earned, net of amounts withdrawn to pay for taxes) in the Trust Account.
Added
For the year ended December 31, 2022, cash provided by investing activities was $192,241,509, consisting of cash withdrawn from the Trust Account of $192,881,509 that was partially offset by an investment of cash in Trust Account of $640,000. 73 Table of Contents For the year ended December 31, 2023, cash used in financing activities was $18,051,625, consisting of cash paid for the redemption of Public Units of $20,277,625, that were partially offset by cash proceeds from a related party borrowing of $920,000 on the extension note, $66,360 on the Non-Convertible Working Capital Note and $1,240,000 on the convertible Working Capital Note.
Added
In conjunction with the consummation of the business combination on March 4, 2024, the Combined Company received approximately $826,420 from the Trust Account, after payment of certain closing costs, $9,005,000 net cash from a Pre-Paid Advance from Yorkville, and $1,500,000 from a note payable.
Added
Management of the Combined Company expects that the additional cash received as a result of the Business Combination will be sufficient to fund the Combined Company’s operating cash needs for at least the next 12 months.
Added
At such meeting, the stockholders approved two proposals: (A) to amend the Company’s Amended and Restated Certificate of Incorporation, giving the Company the right to extend the date by which it has to consummate a Business Combination up to six (6) times for an additional one (1) month each time, from March 28, 2023 to September 28, 2023 provided that the Sponsor (or its designees) must deposit into the Trust Account for each one-month extension funds equal to $100,000 (the “Second Extension”); (B) to amend the Company’s investment management trust agreement, dated as of September 23, 2021, by and between the Company and Continental Stock Transfer & Trust Company, allowing the Company to extend the Combination Period up to six (6) times for an additional one (1) month each time from March 28, 2023 to August 28, 2023 by depositing into the Trust Account for each one-month extension, the sum of $100,000.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

0 edited+1 added−2 removed1 unchanged
Removed
As of December 31, 2022, the net proceeds from our Offering held in the Trust Account were comprised entirely of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest solely in United States treasuries.
Added
As of December 31, 2023, the net proceeds from our Offering held in the Trust Account were comprised entirely of cash. As of December 31, 2023, $23,302,116 was held in the Trust Account for the purposes of consummating an initial business combination. 78 Table of Contents
Removed
Due to the short-term nature of the money market fund’s investments, we do not believe that there will be an associated material exposure to interest rate risk. As of December 31, 2022, $41,561,656 was held in the Trust Account for the purposes of consummating an initial business combination. 76

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